-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LWOa18ImW2w+TnRXmyuXIFGcvlIXw1Wn23vtztuDA05Vg9TB5nhnjirhEuRI8GIN pLBokYgYR4Tn+0c3XIsWxA== 0000950124-98-003943.txt : 19980727 0000950124-98-003943.hdr.sgml : 19980727 ACCESSION NUMBER: 0000950124-98-003943 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 43 FILED AS OF DATE: 19980724 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL BINDING CORP CENTRAL INDEX KEY: 0000040461 STANDARD INDUSTRIAL CLASSIFICATION: OFFICE MACHINES, NEC [3579] IRS NUMBER: 360887470 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-59819 FILM NUMBER: 98671146 BUSINESS ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 7082723700 MAIL ADDRESS: STREET 1: ONE GBC PLZ CITY: NORHBROOK STATE: IL ZIP: 60062 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VELOBIND INC CENTRAL INDEX KEY: 0000103168 STANDARD INDUSTRIAL CLASSIFICATION: PRINTING TRADES MACHINERY & EQUIPMENT [3555] IRS NUMBER: 362922009 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-59819-01 FILM NUMBER: 98671147 BUSINESS ADDRESS: STREET 1: ONE GBC PLAZA CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 8472723700 MAIL ADDRESS: STREET 1: ONE GBC PLAZA CITY: NORTHBROOK STATE: IL ZIP: 60062 FORMER COMPANY: FORMER CONFORMED NAME: ABILDGAARD LABORATORIES INC DATE OF NAME CHANGE: 19730503 FILER: COMPANY DATA: COMPANY CONFORMED NAME: U S RING BINDER CORP CENTRAL INDEX KEY: 0001066822 STANDARD INDUSTRIAL CLASSIFICATION: OFFICE MACHINES, NEC [3579] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-59819-02 FILM NUMBER: 98671148 BUSINESS ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 7082723700 MAIL ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BAKER SCHOOL SPECIALTY CO INC CENTRAL INDEX KEY: 0001066823 STANDARD INDUSTRIAL CLASSIFICATION: OFFICE MACHINES, NEC [3579] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-59819-03 FILM NUMBER: 98671149 BUSINESS ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 7082723700 MAIL ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GBC BUSINESS EQUIPMENT INC CENTRAL INDEX KEY: 0001066824 STANDARD INDUSTRIAL CLASSIFICATION: OFFICE MACHINES, NEC [3579] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-59819-04 FILM NUMBER: 98671150 BUSINESS ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 7082723700 MAIL ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GBC INDIA HOLDINGS INC CENTRAL INDEX KEY: 0001066825 STANDARD INDUSTRIAL CLASSIFICATION: OFFICE MACHINES, NEC [3579] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-59819-05 FILM NUMBER: 98671151 BUSINESS ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 7082723700 MAIL ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GBC INTERNATIONAL INC CENTRAL INDEX KEY: 0001066826 STANDARD INDUSTRIAL CLASSIFICATION: OFFICE MACHINES, NEC [3579] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-59819-06 FILM NUMBER: 98671152 BUSINESS ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 7082723700 MAIL ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GBC METALS CORP CENTRAL INDEX KEY: 0001066827 STANDARD INDUSTRIAL CLASSIFICATION: OFFICE MACHINES, NEC [3579] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-59819-07 FILM NUMBER: 98671153 BUSINESS ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 7082723700 MAIL ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IBICO INC CENTRAL INDEX KEY: 0001066828 STANDARD INDUSTRIAL CLASSIFICATION: OFFICE MACHINES, NEC [3579] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-59819-08 FILM NUMBER: 98671154 BUSINESS ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 7082723700 MAIL ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRO TECH ENGINEERING CO INC CENTRAL INDEX KEY: 0001066829 STANDARD INDUSTRIAL CLASSIFICATION: OFFICE MACHINES, NEC [3579] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-59819-09 FILM NUMBER: 98671155 BUSINESS ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 7082723700 MAIL ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SICKINGER CO CENTRAL INDEX KEY: 0001066830 STANDARD INDUSTRIAL CLASSIFICATION: OFFICE MACHINES, NEC [3579] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-59819-10 FILM NUMBER: 98671156 BUSINESS ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 7082723700 MAIL ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 S-4 1 S-4 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 24, 1998 REGISTRATION NO. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------------- GENERAL BINDING CORPORATION BAKER SCHOOL SPECIALTY CO., INC. GBC BUSINESS EQUIPMENT, INC. GBC INDIA HOLDINGS INC. GBC INTERNATIONAL, INC. GBC METALS CORP. IBICO INC. PRO-TECH ENGINEERING CO., INC. SICKINGER COMPANY U.S. RING BINDER CORP. VELOBIND, INCORPORATED (Exact Name of Registrant as Specified in Its Charter) ---------------------- DELAWARE 3579 36-0887470 MASSACHUSETTS 3952 04-2431217 FLORIDA 3579 36-3047585 NEVADA 3579 36-3064670 NEVADA 3579 36-3061171 NEVADA 2782 36-3838831 ILLINOIS 3579 36-2833397 WISCONSIN 3579 39-1565642 MICHIGAN 3579 38-1714934 MASSACHUSETTS 2782 36-2922009 DELAWARE 3579 94-1671377 (State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Incorporation or Organization) Classification Code Number Identification No.)
ONE GBC PLAZA NORTHBROOK, ILLINOIS 60062 (847) 272-3700 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrants' Principal Executive Offices) STEVEN RUBIN VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL GENERAL BINDING CORPORATION ONE GBC PLAZA NORTHBROOK, ILLINOIS 60062 (847) 272-3700 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service) --------------------- Copy to: LARRY A. BARDEN PRAN JHA SIDLEY & AUSTIN ONE FIRST NATIONAL PLAZA CHICAGO, ILLINOIS 60603 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [ ] CALCULATION OF REGISTRATION FEE
================================================================================================================================= PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE - --------------------------------------------------------------------------------------------------------------------------------- 9 3/8% Senior Subordinated Notes due 2008............................... $150,000,000 100% $150,000,000 $44,250 - --------------------------------------------------------------------------------------------------------------------------------- Guarantees of 9 3/8% Senior Subordinated Notes due 2008........ $150,000,000 (2) (2) None =================================================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act of 1933, as amended (the "Securities Act"), and computed pursuant to Rule 457(f) under the Securities Act. (2) Pursuant to Rule 457(n) under the Securities Act, no additional fee is payable. --------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. ================================================================================ 2 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED JULY 24, 1998 PROSPECTUS GENERAL BINDING CORPORATION OFFER TO EXCHANGE [GENERAL BINDING CORPORATION LOGO] 9 3/8% SENIOR SUBORDINATED NOTES DUE 2008 FOR ANY AND ALL OUTSTANDING 9 3/8% SENIOR SUBORDINATED NOTES DUE 2008 THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED. General Binding Corporation, a Delaware corporation (the "Issuer") hereby offers (the "Exchange Offer"), upon the terms and conditions set forth in this Prospectus (the "Prospectus") and the accompanying Letter of Transmittal (the "Letter of Transmittal"), to exchange $1,000 principal amount of its 9 3/8% Senior Subordinated Notes due 2008 (the "Exchange Notes"), registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to the Registration Statement of which this Prospectus is a part, for each $1,000 principal amount of its outstanding 9 3/8% Senior Subordinated Notes due 2008 (the "Old Notes"), of which $150,000,000 aggregate principal amount is outstanding. The form and terms of the Exchange Notes are the same as the form and terms of the Old Notes except that (i) the Exchange Notes will bear a different CUSIP Number from the Old Notes, (ii) the Exchange Notes have been registered under the Securities Act and, therefore, will not bear legends restricting the transfer thereof and (iii) the holders of the Exchange Notes will not be entitled to certain rights under the Registration Rights Agreement (as defined), including the provisions providing for an increase in the interest rate on the Old Notes in certain circumstances relating to the timing of the exchange offer, which rights will terminate when the Exchange Offer is consummated. The Old Notes and the Exchange Notes are sometimes referred to herein collectively as the "Notes." The Exchange Notes will evidence the same debt as the Old Notes and will be issued under and be entitled to the benefits of the Indenture dated as of May 27, 1998 (the "Indenture") by and among the Issuer, the Subsidiary Guarantors (as defined) and First Union National Bank, as trustee, governing the Notes. See "Exchange Offer" and "Description of the Notes." The Issuer will accept for exchange any and all Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time on , 1998, unless extended by the Issuer in its sole discretion (the "Expiration Date"). Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m. on the Expiration Date. The Exchange Offer is subject to certain customary conditions. See "Exchange Offer." The Old Notes were issued by the Issuer on May 27, 1998 to BT Alex. Brown Incorporated, CIBC Oppenheimer Corp., ABN AMRO Incorporated, First Chicago Capital Markets, Inc. and Nesbitt Burns Securities Inc. (the "Initial Purchasers") in a transaction not registered under the Securities Act in reliance upon an exemption under the Securities Act (the "Initial Offering"). The Initial Purchasers subsequently resold the Old Notes to (i) qualified institutional buyers in reliance upon Rule 144A under the Securities Act and (ii) qualified buyers outside the United States in reliance upon Regulation S under the Securities Act. Accordingly, the Old Notes may not be reoffered, resold or otherwise transferred in the United States or to U.S. Persons (as defined in Regulation S under the Securities Act) unless registered under the Securities Act or unless an applicable exemption from the registration requirements of the Securities Act is available. The Exchange Notes are being offered hereunder in order to satisfy the obligations of the Issuer and the Subsidiary Guarantors under the Registration Rights Agreement entered into by the Issuer, the Subsidiary Guarantors and the Initial Purchasers in connection with the Initial Offering. See "Exchange Offer." Interest on the Notes will accrue from the date of original issuance and will be payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 1998, at the rate of 9 3/8% per annum. The Notes will be redeemable, in whole or in part, at the option of the Issuer on or after June 1, 2003, at redemption prices set forth herein plus accrued and unpaid interest to the date of redemption. In addition, at any time and from time to time prior to June 1, 2001, the Issuer may, at its option, redeem up to 35% of the aggregate principal amount of the Notes originally issued in the Offering with the net cash proceeds of one or more Public Equity Offerings (as defined), at a redemption price equal to 109.375% of the amount thereof plus accrued and unpaid interest to the date of redemption; provided, however, that after giving effect to any such redemption, at least 65% of the aggregate principal amount of the Notes originally issued remains outstanding. Upon a Change in Control (as defined), the Issuer will be required to make an offer to repurchase the Notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase. In addition, the Issuer will be obligated to offer to repurchase the Notes at 100% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase in the event of certain Asset Sales (as defined). See "Description of the Notes." The Notes will be general unsecured senior subordinated obligations of the Issuer and will be subordinated in right of payment to all existing and future Senior Indebtedness (as defined) of the Issuer. The Notes will rank pari passu in right of payment with all senior subordinated indebtedness of the Issuer and will be senior in right of payment to all other subordinated indebtedness of the Issuer. The Notes will be unconditionally guaranteed (the "Guarantees") on a senior subordinated basis by the Issuer's material direct and indirect domestic Restricted Subsidiaries (as defined) (the "Subsidiary Guarantors"). The Guarantees will be general unsecured obligations of the Subsidiary Guarantors and will be subordinated in right of payment to all existing and future Guarantor Senior Indebtedness (as defined). The Notes will be effectively subordinated to all obligations of any subsidiary that is not a Subsidiary Guarantor. As of December 31, 1997, on a pro forma basis after giving effect to the Transactions (as defined), the Issuer and the Subsidiary Guarantors would have had an aggregate principal amount of approximately $439 million of total indebtedness, of which approximately $289 million would have constituted Senior Indebtedness or Guarantor Senior Indebtedness (in each case, excluding unused commitments under the Credit Facility and outstanding letters of credit totaling approximately $224 million). In addition, as of such date, on a pro forma basis after giving effect to the Transactions, subsidiaries of the Issuer that will not be Subsidiary Guarantors would have had approximately $63 million of indebtedness outstanding (excluding intercompany loans). See "Risk Factors -- Significant Leverage and Debt Service; Restrictive Covenants" and "Description of the Notes -- Ranking." (Cover continued on next page) ------------------------ The date of this Prospectus is , 1998. 3 (Continued from cover page) Under existing interpretations of the Securities and Exchange Commission (the "Commission") contained in several no-action letters to third parties, the Exchange Notes (and the related Guarantees) will be freely transferable by holders thereof (other than affiliates of the Issuer) after the Exchange Offer without further registration under the Securities Act; provided, however, that each holder that wishes to exchange its Old Notes for Exchange Notes will be required to represent (i) that any Exchange Notes to be received by it will be acquired in the ordinary course of its business, (ii) that at the time of the commencement of the Exchange Offer it has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Notes in violation of the Securities Act, (iii) that it is not an "affiliate" (as defined in Rule 405 promulgated under the Securities Act) of the Issuer, (iv) if such holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of Exchange Notes and (v) if such holder is a broker-dealer (a "Participating Broker-Dealer") that will receive Exchange Notes for its own account in exchange for the Notes that were acquired as a result of market-making or other trading activities, that it will deliver a prospectus in connection with any resale of such Exchange Notes. The Commission has taken the position that Participating Broker-Dealers may fulfill their prospectus delivery requirements with respect to the Exchange Notes (other than a resale of an unsold allotment from the original sale of the Notes) with the prospectus contained in the Exchange Offer Registration Statement (as defined). The Issuer and the Subsidiary Guarantors have agreed to make available, during the period required by the Securities Act, a prospectus meeting the requirements of the Securities Act for use by Participating Broker-Dealers and other persons, if any, with similar prospectus delivery requirements for use in connection with any resale of Exchange Notes. The Issuer will not receive any proceeds from the Exchange Offer. The Issuer has agreed to bear the expenses of the Exchange Offer. No underwriter is being used in connection with the Exchange Offer. Holders of Old Notes not tendered and accepted in the Exchange Offer will continue to hold such Old Notes and will be entitled to all the rights and benefits and will be subject to the limitations applicable thereto under the Indenture and with respect to transfer under the Securities Act. See "Exchange Offer." There has not previously been any public market for the Old Notes or the Exchange Notes. The Issuer does not intend to list the Exchange Notes on any securities exchange or to seek approval for quotation through any automated quotation system. There can be no assurance that an active market for the Exchange Notes will develop. See "Risk Factors -- Absence of a Public Market Could Adversely Affect the Value of Exchange Notes." Moreover, to the extent that Old Notes are tendered and accepted in the Exchange Offer, the trading market for untendered and tendered but unaccepted Old Notes could be adversely affected. THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE ISSUER ACCEPT SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION. NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE ISSUER OR THE SUBSIDIARY GUARANTORS. NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, NOR ANY EXCHANGE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. THE EXCHANGE NOTES WILL BE AVAILABLE INITIALLY ONLY IN BOOK-ENTRY FORM. EXCEPT AS DESCRIBED UNDER "BOOK-ENTRY; DELIVERY AND FORM," THE ISSUER EXPECTS THAT THE EXCHANGE NOTES ISSUED PURSUANT TO THE EXCHANGE OFFER WILL BE REPRESENTED BY A GLOBAL NOTE (AS DEFINED), WHICH WILL BE 4 DEPOSITED WITH, OR ON BEHALF OF, THE DEPOSITORY TRUST COMPANY ("DTC") AND REGISTERED IN ITS NAME OR IN THE NAME OF CEDE & CO., ITS NOMINEE. BENEFICIAL INTERESTS IN THE GLOBAL NOTE REPRESENTING THE EXCHANGE NOTES WILL BE SHOWN ON, AND TRANSFERS THEREOF WILL BE EFFECTED THROUGH, RECORDS MAINTAINED BY DTC AND ITS PARTICIPANTS. AFTER THE INITIAL ISSUANCE OF THE GLOBAL NOTE, NOTES IN CERTIFICATED FORM WILL BE ISSUED IN EXCHANGE FOR THE GLOBAL NOTE ONLY UNDER LIMITED CIRCUMSTANCES AS SET FORTH IN THE INDENTURE. SEE "BOOK-ENTRY; DELIVERY AND FORM." PROSPECTIVE INVESTORS IN THE EXCHANGE NOTES ARE NOT TO CONSTRUE THE CONTENTS OF THIS PROSPECTUS AS INVESTMENT, LEGAL OR TAX ADVICE. EACH INVESTOR SHOULD CONSULT ITS OWN COUNSEL, ACCOUNTANT AND OTHER ADVISORS AS TO LEGAL, TAX, BUSINESS, FINANCIAL AND RELATED ASPECTS OF THE EXCHANGE NOTES. NEITHER THE ISSUER NOR ANY OF THE SUBSIDIARY GUARANTORS IS MAKING ANY REPRESENTATION TO ANY PROSPECTIVE INVESTOR IN THE EXCHANGE NOTES REGARDING THE LEGALITY OF AN INVESTMENT THEREIN BY SUCH PERSON UNDER APPROPRIATE LEGAL INVESTMENT OR SIMILAR LAWS. ------------------------ SEE "RISK FACTORS" COMMENCING ON PAGE 14 FOR CERTAIN INFORMATION THAT SHOULD BE CONSIDERED BY HOLDERS WHO TENDER OLD NOTES IN THE EXCHANGE OFFER. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 5 NOTICE TO NEW HAMPSHIRE RESIDENTS NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER THIS CHAPTER WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. ------------------------- CAUTIONARY STATEMENTS FOR PURPOSES OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Certain statements in this Prospectus under the captions "Prospectus Summary," "Risk Factors," "Unaudited Combined Pro Forma Condensed Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" and elsewhere constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this Prospectus, the words "anticipate," "believe," "estimate," "expect" and similar expressions are generally intended to identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and other important factors include, among others, competition within the office products and lamination film products markets, the effects of economic conditions, the issues associated with the acquisition and integration of recently acquired operations, including Ibico GmbH, operating risks, the ability of the Company's distributors to successfully market and sell the Company's products, the ability of the Company to obtain capital to finance planned growth, the availability and price of raw materials, dependence on certain suppliers of manufactured products, the effect of consolidation in the office products industry, and other factors disclosed under "Risk Factors" and elsewhere in this Prospectus. These forward-looking statements speak only as of the date of this Prospectus. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. AVAILABLE INFORMATION The Issuer has filed with the Commission a Registration Statement on Form S-4 (the "Exchange Offer Registration Statement," which term shall encompass all amendments, exhibits, annexes and schedules thereto) pursuant to the Securities Act, and the rules and regulations promulgated thereunder, covering the Exchange Notes being offered hereby. This Prospectus does not contain all the information set forth in the Exchange Offer Registration Statement. For further information with respect to the Company and the Exchange Offer, reference is made to the Exchange Offer Registration Statement. Statements made in this Prospectus as to the contents of any contract, agreement or other document referred to herein are not necessarily complete. With respect to each such contract, agreement or other document filed as an exhibit to the Exchange Offer Registration Statement, reference is made to the exhibit for a more complete description of the document or matter involved, and each statement shall be deemed qualified in its entirety by such reference. i 6 The Issuer is subject to the informational requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports, proxy statements and other information with the Commission. Such reports, proxy statements and other information can be inspected and copied at the office of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as the regional offices of the Commission at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of such information can be obtained by mail from the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Additionally, the Commission maintains a Web site that contains reports, proxy statements and other information regarding registrants that file electronically with the Commission. The address of the Commission's Web site is http://www.sec.gov. The Issuer's Common Stock is listed on The NASDAQ Stock Market and copies of reports, proxy statements and other information concerning the Issuer also can be inspected at the National Association of Securities Dealers, Inc. 1735 K Street, N.W., Washington, D.C. 20006. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents heretofore filed with the Commission pursuant to the Exchange Act are incorporated herein by reference: (a) The Issuer's Annual Report on Form 10-K for the year ended December 31, 1997; (b) The Issuer's Quarterly Report on Form 10-Q for the three months ended March 31, 1998; and (c) The Issuer's Current Reports on Form 8-K dated June 3, 1998, June 24, 1998 and July 10, 1998. All documents filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the Exchange Offer shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of the filing of such documents. Any statement contained in this Prospectus or in a document incorporated or deemed to be incorporated by reference in this Prospectus shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained in this Prospectus or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM PAUL J. BORS, TREASURER, GENERAL BINDING CORPORATION, ONE GBC PLAZA, NORTHBROOK, ILLINOIS 60062, (TELEPHONE NUMBER (847) 272-3700). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY , 1998. ii 7 PROSPECTUS SUMMARY The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial data, including the Consolidated Financial Statements and Notes thereto, included elsewhere in this Prospectus. Prospective purchasers should carefully consider the information set forth or referred to under the caption "Risk Factors." Unless otherwise stated in this Prospectus or unless the context indicates or otherwise requires, the "Issuer" shall mean General Binding Corporation; the "Company" and "GBC" shall mean General Binding Corporation and its subsidiaries; "Quartet" shall mean Quartet Manufacturing Company, a division of GBC; "Ibico" shall mean Ibico GmbH, a wholly owned subsidiary of GBC and the successor to Ibico AG; "Ibico Acquisition" shall mean the acquisition of Ibico by GBC; "Management" shall mean the management of the Company; "EBITDA" shall have the meaning set forth in Note 2 to the "Summary Consolidated Historical and Combined (Unaudited) Pro Forma Financial Data" included in this Prospectus; "CAGR" shall mean compound annual growth rate; and the "Transactions" shall mean the Initial Offering and the application of the net proceeds therefrom and the Ibico Acquisition, which was consummated on February 27, 1998. The pro forma information in this Prospectus, unless otherwise indicated, gives effect to the Transactions as if they had occurred as of January 1, 1997. THE COMPANY GBC is a worldwide leader in the design, manufacture and marketing of branded office products, office equipment and related supplies, and thermal laminating film. GBC's major products include (i) binding equipment and supplies, (ii) laminating equipment and supplies, (iii) visual communication products (such as marker boards, bulletin/planning boards and easels), (iv) paper shredders and (v) thermal laminating film (used primarily to encapsulate or protect documents, book covers and school-related materials). GBC also provides maintenance services for its binding and lamination equipment customers. Revenues derived from sales of consumable supplies and maintenance services together accounted for approximately 55% of GBC's 1997 pro forma revenues of $883 million. GBC sells its products both to resellers and directly to end-users with an emphasis on providing customers with a broad range of high-quality products supported by high levels of customer and value-added services. GBC is one of the largest suppliers of office products, equipment and supplies to resellers with 1997 pro forma revenues of $429 million in the Company's Office Products Group. GBC's customers include most of the major U.S. office products resellers, such as office products superstores, wholesalers, contract/ commercial stationers, mail order companies and other retail dealers, as well as office products resellers in Europe, the Asia/Pacific region and Latin America. In addition, GBC sells its binding equipment and related supplies, lamination equipment and thermal laminating film, and related services, through the Company's Document Finishing Group and Films Group directly to approximately 100,000 active customers in the United States and abroad. These customers include general office customers (e.g., consulting, financial services, legal and accounting firms), commercial customers (e.g., reprographic centers and copy shops), education/training customers (e.g., schools and training centers), commercial printers and government agencies. The Company increased its revenue base from $458 million in 1995 to $883 million, on a pro forma basis, in 1997, representing a CAGR of 39%. During this same period, the Company's EBITDA more than doubled from $53 million to $109 million on a pro forma basis, representing a CAGR of 43%, while its EBITDA margin increased from 11.6% to 12.3% on a pro forma basis. The majority of the Company's revenue growth occurred in the Office Products Group, where revenues grew from $97 million in 1995 to $429 million on a pro forma basis in 1997, through acquisitions, principally Quartet and Ibico, and internal revenue growth. Effective January 1, 1997, the Company acquired Quartet, a leading manufacturer and marketer of visual communication products, for approximately $216 million, including the assumption of debt. On February 27, 1998, the Company acquired Ibico, a leading manufacturer and marketer of binding and laminating equipment and supplies, for cash consideration and assumption of debt of approximately $130 million. These and other recent acquisitions have provided the Company with further penetration into the U.S. and international markets, new key customer relationships and additional complementary product lines. 1 8 INDUSTRY FUNDAMENTALS From 1995 to 1997, GBC's revenues from existing operations, excluding the impact of acquisitions, increased by 18%, primarily due to strong industry fundamentals. Management believes that the primary driving factors resulting in the Company's strong intrinsic growth in its Business Groups include: (i) the increasing number of office workers as the U.S. economy continues to shift from a manufacturing base to a service base; (ii) the increasing number of document finishing sites as the number of home offices and small- and medium-sized businesses continues to grow in the U.S. and printing capabilities migrate toward individual end-users and away from traditional commercial printers and publishing houses; (iii) a growing interest in creating finished and distinctive documents, partly as a method of differentiation, caused by a general increase in the number of documents being produced; (iv) an increased worldwide focus on education and training activities, particularly in the United States, and the preparation and display of related materials; (v) an increasing demand for lamination products to preserve, protect and enhance the output of a rapidly-growing base of color copiers and digital printers, particularly desktop and large-format digital color printers; and (vi) increasing environmental concerns and regulations in international markets which Management believes will cause commercial printers and other users to favor the thermal films marketed by the Company over solvent-based films. GBC's Office Products Group has experienced particularly strong sales growth due to, in addition to the above-mentioned factors, the rapid growth and consolidation of office products superstores, contract/ commercial stationers and wholesalers with which GBC enjoys strong customer relationships. The major superstores, contract/commercial stationers and wholesalers on average have experienced an approximate 38% CAGR in their sales over the past five years. Sales to these customers accounted for $251 million of GBC's 1997 pro forma revenues. 2 9 The following table describes the Company's three primary global Business Groups:
OFFICE DOCUMENT PRODUCTS FINISHING FILMS GROUP GROUP GROUP - Binding equipment - Binding equipment - Thermal films - Laminating equipment - Binding supplies - Mid-range laminators - Binding and laminating - Punching equipment - Commercial high-speed supplies laminators KEY PRODUCTS _______ - Custom binders/folders/ AND SERVICES - Document shredders covers/index tabs - Large-format digital print laminators - Visual communication - Maintenance and repair products (e.g., marker - L.D. laminators (e.g., licenses boards, bulletin/planning and security and boards, and easels) membership cards) - Desktop accessories - Maintenance and repair PRIMARY DISTRIBUTION - Indirect - Direct - Direct CHANNEL - Office products - General office markets - General office markets superstores (e.g., consulting, (e.g., consulting, financial services, financial services, - Contract/commercial legal and accounting legal and accounting stationers firms) firms) - Wholesalers - Commercial (e.g., - Commercial (e.g., reprographic centers reprographic centers CUSTOMER BASE _______ - Mail order companies and copy shops) and copy shops) - Retail dealers - Education/training (e.g., - Education/training (e.g., schools and training schools and training centers) centers) - Government - Commercial printers - Government 1997 PRO FORMA REVENUES(1) $429 million $249 million $185 million (% OF COMPANY TOTAL) 48.6% 28.2% 20.9%
- ------------------------- (1) Other products and services consisting primarily of binding and laminating equipment and supplies sold in certain emerging markets contributed an additional $20 million, or 2.3%, to 1997 pro forma revenues. 3 10 COMPETITIVE STRENGTHS Management believes that the following competitive strengths have been the principal factors in the Company's success in establishing itself as a worldwide leader in the design, manufacture and marketing of branded office products, office equipment and related supplies, and thermal laminating film: LEADING MARKET POSITIONS IN MAJOR PRODUCT CATEGORIES WITH STRONG BRAND NAMES. The Company maintains leading market positions worldwide in binding and laminating equipment and supplies, certain visual communication products, including marker boards, bulletin/planning boards and easels, thermal laminating film products and paper shredders. GBC attributes its leading market positions primarily to its reputation for high-quality and reliable products, high levels of customer and value-added services, broad product offerings, technological innovation and state-of-the-art manufacturing facilities. Well-known brand names, including GBC(R), VeloBind(R), Shredmaster(R), Quartet(R), Pro-Tech(TM), Bates(R) and newly-acquired Ibico(R), have enhanced the Company's ability to successfully differentiate its product lines from those of its competitors. STRONG CUSTOMER RELATIONSHIPS. The Company enjoys long-standing relationships with many of its significant customers, averaging over 15 years with its top 10 customers, which collectively generated approximately 30% of the Company's pro forma revenues in 1997. The Company sells products both to resellers ("indirect channel") and directly to end users ("direct channel"). The Company sells to virtually all of the major U.S. indirect channel resellers in its markets and currently has approximately 100,000 active direct channel customers. GBC's indirect channel customers include the major U.S. office products superstores (e.g., Staples, Office Depot and OfficeMax), wholesalers (e.g., United Stationers and S.P. Richards), contract/commercial stationers (e.g., Boise Cascade Office Products Corporation, Corporate Express Inc., BT Office Products International, Inc., U.S. Office Products Company and the contract stationer divisions of Staples, Inc. and Office Depot, Inc.), mail order companies (e.g., Quill, Reliable Corporation, Viking Office Products, Inc., Global DirectMail Corp. and Staples Direct) and other retail dealers, as well as office products resellers in Europe, the Asia/Pacific region and Latin America. The Company's direct channel customers include general office customers (e.g., consulting, financial services, legal and accounting firms), commercial customers (e.g., reprographic centers and copy shops), education/training customers (e.g., schools and training centers), commercial printers and government agencies. Management believes that the Company's strong customer relationships will enable it to capitalize on the increasing demand for office products, office equipment and related supplies and film as well as facilitate its introduction of new products and services. SIGNIFICANT REVENUE FROM CONSUMABLE SUPPLIES AND SERVICES. GBC has approximately 100,000 direct channel customers with installed binding and laminating equipment. These customers provide the Company with the opportunity to generate significant recurring and higher-margin revenues from the sale of consumable supplies and services, such as binding materials, thermal film products, presentation covers, index tabs and maintenance contracts. Revenue generated from sales of consumable supplies and maintenance services to these direct channel customers and to indirect channel customers accounted for approximately 55% of GBC's 1997 pro forma revenues. SUPERIOR LEVELS OF CUSTOMER AND VALUE-ADDED SERVICES. The Company provides its customers in both the indirect and direct channels with high levels of customer and value-added services. Value-added services include providing marketing consultation to indirect channel customers (e.g., designing appealing product displays) and assisting customers with enhancing their inventory management systems (e.g., delivering bar-coded shipments to customers to facilitate the customers' inventories and distribution processes). In addition, the Company has developed efficient distribution systems for its office and film products which enhance its ability to fill customer orders quickly, ship complete multiple-product orders in a single shipment, ensure prompt deliveries and achieve high customer order fill rates. Management believes that the Company's high levels of customer and value-added services have enabled it to build strong relationships with customers and successfully differentiate itself from many of its competitors. EXPERIENCED MANAGEMENT TEAM. The Company has a highly-experienced management team with a record of achieving strong internal growth and successfully integrating strategic acquisitions. The Chief Executive Officer and the heads of the Company's Office Products Group, Document Finishing Group and Films Group have, on average, 22 years of experience in their respective sectors. The Company's current management team has completed the acquisition of 10 businesses or product lines since 1995, with aggregate 4 11 annualized revenues at the time of such acquisitions of approximately $324 million. From 1995 to 1997, this management team also has overseen revenue growth, excluding the impact of acquisitions, of 18%. MANUFACTURING EFFICIENCY. Management believes that the Company's manufacturing operations are among the most efficient in its major product lines, allowing the Company to maintain a highly competitive cost structure. High-volume production at the Company's major facilities provides significant economies of scale, enables the Company to invest in selective vertical integration, and allows the Company to achieve meaningful purchasing power for raw materials and outsourced manufacturing services. In addition, the Company has made significant investments in state-of-the-art manufacturing equipment to ensure efficient production and minimize waste. LANE INDUSTRIES OWNERSHIP AND SPONSORSHIP. Approximately 62% of the Issuer's outstanding Common Stock (after giving effect to the possible conversion of Class B Common Stock) is owned by Lane Industries, a diversified holding company located in Northbrook, Illinois. Lane Industries was recently ranked among the largest privately-held companies in the United States and has provided important financial support and management and professional services to GBC (e.g., Lane Industries provided a $100 million subordinated bridge facility to the Company in connection with the Ibico Acquisition). BUSINESS STRATEGY The Company's objective is to strengthen its position as a worldwide leader in the design, manufacture and marketing of branded office products, office equipment and related supplies, and thermal laminating film by pursuing the following strategies: MAINTAIN AND EXPAND RELATIONSHIPS WITH KEY CUSTOMERS. The Company enjoys long-standing relationships with many of its significant customers, averaging over 15 years with its top 10 customers in 1997, and seeks to expand its market positions and customer base by offering a broad range of high-quality products supported by high levels of customer and value-added services. In particular, the Company believes that it has the opportunity to achieve greater market penetration in both its direct and indirect channels by introducing new and technologically enhanced products at competitive prices. PURSUE GLOBAL GROWTH OPPORTUNITIES. Management believes that certain of the international markets for its products are expanding at growth rates significantly higher than those in the United States. The Company has marketed its products outside of North America for over 40 years and currently operates in over 115 countries. The Company believes that it has built an infrastructure, in part through the Ibico Acquisition, capable of accommodating significant global expansion. Many of the Company's major Office Products Group customers are expanding into international markets and are demanding the same levels of quality and service as they require in North America. Management believes that GBC is well-positioned to service these customers due to its broad product offerings and extensive distribution capabilities. The Company also expects its Films Group to experience strong growth as thermal lamination films marketed by the Company continue to displace solvent lamination films as a result of increased environmental concerns and regulations in international markets. The Company has expanded its international sales from $165 million in 1995 (or 36% of the Company's total revenues) to $291 million, on a pro forma basis in 1997 (or 33% of the Company's total pro forma revenues). SELECTIVELY PURSUE ACQUISITIONS AND JOINT VENTURES. The Company believes that opportunities exist to expand the market positions of each of its global Business Groups through strategic acquisitions and joint ventures. The Company intends to target companies and product lines that (i) maintain and strengthen its competitive leadership positions, (ii) complement its existing businesses through expanded product lines, (iii) enhance its relationships with existing customers and establish relationships with new customers, or (iv) facilitate penetration into new and developing business areas and geographic territories. The Company believes that it can realize significant sales growth and improved profitability through acquisitions as a result of economies of scale, operating synergies resulting from the integration of manufacturing and distribution operations, and expansion of the Company's presence in the United States and in growing international markets. ------------------------- GBC is a Delaware corporation which was incorporated in 1947. Its executive offices are located at One GBC Plaza, Northbrook, Illinois 60062, and its telephone number is (847) 272-3700. 5 12 THE INITIAL OFFERING Offering of Old Notes......... The Old Notes were issued by the Issuer on May 27, 1998 to BT Alex. Brown Incorporated, CIBC Oppenheimer Corp., ABN AMRO Incorporated, First Chicago Capital Markets, Inc. and Nesbitt Burns Securities Inc. (the "Initial Purchasers") pursuant to a Purchase Agreement dated as of May 21, 1998 (the "Purchase Agreement"). The Initial Purchasers subsequently resold the Old Notes to (i) qualified institutional buyers pursuant to Rule 144A under the Securities Act and (ii) qualified buyers outside the United States in reliance upon Regulation S under the Securities Act. Registration Rights Agreement................... Pursuant to the Purchase Agreement, the Issuer, the Subsidiary Guarantors and the Initial Purchasers entered into a Registration Rights Agreement dated as of May 27, 1998 (the "Registration Rights Agreement"), which grants the holders of the Old Notes certain exchange and registration rights. The Exchange Offer is intended to satisfy such exchange rights, which rights shall terminate upon consummation of the Exchange Offer. THE EXCHANGE OFFER Securities Offered............ $150,000,000 aggregate principal amount of 9 3/8% Senior Subordinated Notes due 2008 of the Issuer. The Exchange Offer............ $1,000 principal amount of Exchange Notes in exchange for each $1,000 principal amount of Old Notes. As of the date hereof, $150,000,000 aggregate principal amount of Old Notes are outstanding. The Issuer will issue the Exchange Notes to holders on or promptly after the Expiration Date. Based on interpretations by the staff of the Commission set forth in no-action letters issued to third parties, the Issuer believes that Exchange Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by any holder thereof (other than any such holder which is an "affiliate" of the Issuer within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such holder's business and that such holder does not intend to participate and has no arrangement or understanding with any person to participate in the distribution of such Exchange Notes. Any Participating Broker-Dealer that acquired Old Notes for its own account as a result of market-making activities or other trading activities may be a statutory underwriter. Each Participating Broker-Dealer that receives Exchange Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a Participating Broker-Dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to 6 13 time, may be used by a Participating Broker-Dealer in connection with resales of Exchange Notes received in exchange for Old Notes where such Old Notes were acquired by such Participating Broker-Dealer as a result of market-making activities or other trading activities. The Issuer and the Subsidiary Guarantors have agreed that, for a period of 180 days after the Expiration Date, they will make this Prospectus available to any Participating Broker-Dealer for use in connection with any such resale. See "Plan of Distribution." Any holder who tenders in the Exchange Offer with the intention to participate, or for the purpose of participating, in a distribution of the Exchange Notes cannot rely on the position of the staff of the Commission enunciated in no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Failure to comply with such requirements in such instance may result in such holder incurring liability under the Securities Act for which such holder is not indemnified by the Issuer. Expiration Date............... 5:00 p.m., New York City time, on , 1998 unless the Exchange Offer is extended, in which case the term "Expiration Date" means the latest date and time to which the Exchange Offer is extended. Accrued Interest on the Exchange Notes and the Old Notes................... Each Exchange Note will bear interest from its issuance date. Holders of Old Notes that are accepted for exchange will receive, in cash, accrued interest thereon to, but not including, the issuance date of the Exchange Notes. Such interest will be paid with the first interest payment on the Exchange Notes. Interest on the Old Notes accepted for exchange will cease to accrue upon issuance of the Exchange Notes. Conditions to the Exchange Offer....................... The Exchange Offer is subject to certain customary conditions, which may be waived by the Issuer. See "Exchange Offer -- Conditions." Procedures for Tendering Old Notes................... Each holder of Old Notes wishing to accept the Exchange Offer must complete, sign and date the accompanying Letter of Transmittal, or a facsimile thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Letter of Transmittal, or such facsimile, together with the Old Notes and any other required documentation to the Exchange Agent (as defined) at the address set forth herein. By executing the Letter of Transmittal, each holder will represent to the Issuer that, among other things, the Exchange Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the person receiving such Exchange Notes, whether or not such person is the holder, that neither the holder nor any such other person has any arrangement or understanding with any person to participate in the distribution of such Exchange Notes and that neither the holder nor any such other person is an 7 14 "affiliate," as defined under Rule 405 of the Securities Act, of the Issuer. See "Exchange Offer -- Purpose and Effect of the Exchange Offer" and "Exchange Offer -- Procedures for Tendering." Untendered Old Notes.......... Following the consummation of the Exchange Offer, holders of Old Notes eligible to participate in the Exchange Offer but who do not tender their Old Notes will not have any further exchange rights and such Old Notes will continue to be subject to certain restrictions on transfer. Accordingly, the liquidity of the market for such Old Notes could be adversely affected. Consequences of Failure to Exchange.................. The Old Notes that are not exchanged pursuant to the Exchange Offer will remain restricted securities. Accordingly, such Old Notes may be resold only (i) to the Issuer, (ii) pursuant to Rule 144A or Rule 144 under the Securities Act or pursuant to some other exemption under the Securities Act, (iii) outside the United States to a foreign person pursuant to the requirements of Rule 904 under the Securities Act, or (iv) pursuant to an effective registration statement under the Securities Act. See "Exchange Offer -- Consequences of Failure to Exchange." Special Procedures for Beneficial Owners........... Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such owner's own behalf, such owner must, prior to completing and executing the Letter of Transmittal and delivering its Old Notes, either make appropriate arrangements to register ownership of the Old Notes in such owner's name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time. See "Exchange Offer -- Procedures For Tendering." Guaranteed Delivery Procedures.................. Holders of Old Notes who wish to tender their Old Notes and whose Old Notes are not immediately available or who cannot deliver their Old Notes, the Letter of Transmittal or any other documents required by the Letter of Transmittal to the Exchange Agent (or comply with the procedures for book-entry transfer) prior to the Expiration Date must tender their Old Notes according to the guaranteed delivery procedures set forth in "Exchange Offer -- Guaranteed Delivery Procedures." Withdrawal Rights............. Tenders may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. Acceptance of Old Notes and Delivery of Exchange Notes....................... The Issuer will accept for exchange any and all Old Notes which are properly tendered in the Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date. The Exchange Notes issued pursuant to the Exchange Offer will be delivered promptly 8 15 following the Expiration Date. See "Exchange Offer -- Terms of the Exchange Offer." Exchange Agent................ First Union National Bank (the "Exchange Agent"). Certain United States Federal Tax Considerations............ Holders of Old Notes should review the information set forth under "Certain United States Federal Tax Consequences" prior to tendering Old Notes in the Exchange Offer. EXCHANGE NOTES General....................... The form and terms of the Exchange Notes are the same as the form and terms of the Old Notes except that (i) the Exchange Notes will bear a different CUSIP Number from the Old Notes, (ii) the Exchange Notes have been registered under the Securities Act and, therefore, will not bear legends restricting the transfer thereof and (iii) the holders of Exchange Notes will not be entitled to certain rights under the Registration Rights Agreement, including the provisions providing for an increase in the interest rate on the Old Notes in certain circumstances relating to the timing of the exchange offer, which rights will terminate when the Exchange Offer is consummated. See "Exchange Offer -- Purpose and Effect of the Exchange Offer." The Exchange Notes will evidence the same debt as the Old Notes and will be entitled to the benefits of the Indenture. See "Description of the Notes." The Old Notes and the Exchange Notes are referred to herein collectively as the "Notes." Securities Offered............ $150,000,000 aggregate principal amount of 9 3/8% Senior Subordinated Notes due 2008. Issuer........................ General Binding Corporation, a Delaware corporation. Maturity Date................. June 1, 2008. Interest Payment Dates........ Interest on the Exchange Notes will accrue from the Issue Date and will be payable semi-annually in arrears on each June 1 and December 1 of each year, commencing December 1, 1998. Ranking....................... The Exchange Notes will be general unsecured obligations of the Issuer and will be subordinated in right of payment to all existing and future Senior Indebtedness of the Issuer and will be effectively subordinated to all obligations of any subsidiary of the Issuer that is not a Subsidiary Guarantor. The Exchange Notes will also be effectively subordinated to all secured Indebtedness of the Issuer and the Subsidiary Guarantors to the extent of the value of the assets securing such Indebtedness. The Exchange Notes will rank pari passu in right of payment with all senior subordinated indebtedness of the Issuer and will be senior in right of payment to all other existing and future subordinated indebtedness of the Issuer. As of December 31, 1997, on a pro forma basis, the Issuer and the Subsidiary Guarantors would have had an aggregate principal amount of approximately $439 million of total indebtedness, of which $289 million would have constituted Senior Indebtedness or Guarantor Senior Indebtedness (in each case, excluding unused 9 16 commitments under the Credit Facility and outstanding letters of credit totaling approximately $224 million). Under the Indenture, the Issuer and the Subsidiary Guarantors have the ability to incur additional indebtedness in the future, including indebtedness which constitutes Senior Indebtedness or Guarantor Senior Indebtedness. See "Use of Proceeds," "Unaudited Combined Pro Forma Condensed Financial Data" and "Description of Credit Facility." Guarantees.................... The Exchange Notes will be unconditionally guaranteed on a senior subordinated basis by the Subsidiary Guarantors. The Guarantees will be general unsecured obligations of the Subsidiary Guarantors and will be subordinated in right of payment to all existing and future Guarantor Senior Indebtedness. The Guarantees will rank pari passu with any senior subordinated indebtedness of the Subsidiary Guarantors and will rank senior in right of payment to any other subordinated obligations of the Subsidiary Guarantors. Optional Redemption........... The Exchange Notes will be redeemable at the Issuer's option, in whole or in part, on and after June 1, 2003 at the redemption prices set forth herein, plus accrued and unpaid interest to the date of redemption. In addition, at any time on or prior to June 1, 2001, the Issuer, at its option, may redeem up to 35% of the aggregate principal amount of the Exchange Notes originally issued with the net cash proceeds of one or more Public Equity Offerings, at a redemption price equal to 109.375% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption, provided that at least 65% of the aggregate principal amount of the Exchange Notes originally issued remains outstanding immediately following any such redemption. See "Description of the Notes -- Redemption." Change of Control............. Upon a Change of Control, each Holder will have the right to require the Issuer to repurchase such Holder's Exchange Notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase. Certain Covenants............. The Indenture contains certain covenants that limit the ability of the Issuer and its Restricted Subsidiaries (as defined) to, among other things: incur additional indebtedness; pay dividends or make certain other restricted payments; consummate certain asset sales; enter into certain transactions with affiliates; incur indebtedness that is subordinate in right of payment to any Senior Indebtedness or Guarantor Senior Indebtedness and senior in right of payment to the Exchange Notes or the Guarantees, as the case may be; incur liens; impose restrictions on the ability of a Restricted Subsidiary to pay dividends or make certain payments to the Issuer and its Restricted Subsidiaries; merge or consolidate with any other person; or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the assets of the Issuer. In addition, under certain circumstances, the Issuer is required to offer to purchase the Exchange Notes at a purchase price equal to 100% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase with the Net Cash Proceeds (as defined herein) of certain Asset Sales. As of the date of this Prospectus, each 10 17 subsidiary of the Issuer is a Restricted Subsidiary. See "Description of the Notes -- Certain Covenants." Use of Proceeds............... There will be no cash proceeds to the Issuer or the Subsidiary Guarantors from the exchange pursuant to the Exchange Offer. The approximately $145 million of net proceeds from the Initial Offering were used to repay approximately $60 million of indebtedness owed by the Issuer to Lane Industries that was incurred to partially finance the Ibico Acquisition and to repay borrowings under the Credit Facility. See "Use of Proceeds." RISK FACTORS See "Risk Factors" for a discussion of certain factors that should be considered in evaluating an investment in the Exchange Notes. 11 18 SUMMARY CONSOLIDATED HISTORICAL AND COMBINED (UNAUDITED) PRO FORMA FINANCIAL DATA The following selected historical consolidated financial data as of and for the years ended December 31, 1993, 1994, 1995, 1996 and 1997 have been derived from the Consolidated Financial Statements of the Company audited by Arthur Andersen LLP. The following selected historical consolidated data as of and for the three month periods ended March 31, 1997 and 1998 have been derived from the Consolidated Financial Statements of the Company and are unaudited. The interim results, in the opinion of Management, include all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial information for such periods; however, such results are not necessarily indicative of the results that may be expected for any other interim period or for a full year. The results of operations include the results of acquisitions described under "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Acquisitions" and have been included in the Company's Consolidated Financial Statements from the date of the respective acquisitions. The summary unaudited combined pro forma financial data of the Company set forth below give effect to (i) the Offering and the application of the net proceeds therefrom as described herein and (ii) the Ibico Acquisition. The unaudited combined pro forma statement of operations and other financial data give effect to the Transactions as if they had occurred on January 1, 1997, while the unaudited combined pro forma balance sheet data give effect to the Transactions as if they had occurred on December 31, 1997. The summary unaudited combined pro forma financial data do not purport to be indicative of the financial position or results of operations of future periods or indicative of results that would have occurred had the Transactions been consummated on the dates indicated. The summary unaudited combined pro forma financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Combined Pro Forma Condensed Financial Data," the Consolidated Financial Statements and the Notes thereto and Ibico's consolidated financial statements and notes thereto included elsewhere in this Offering Memorandum.
AS OF OR FOR THE THREE MONTHS ENDED AS OF OR FOR THE YEAR ENDED DECEMBER 31, MARCH 31, ---------------------------------------------------------------- ------------------- PRO FORMA 1993 1994 1995 1996 1997 1997 1997 1998 ---- ---- ---- ---- ---- --------- ---- ---- (DOLLARS IN THOUSANDS) STATEMENT OF OPERATIONS DATA: Total sales.................. $376,138 $420,449 $458,391 $536,836 $770,001 $883,499 $180,505 $213,944 Costs and expenses: Cost of sales.............. 209,340 237,492 263,706 315,949 440,625 516,487 104,569 122,004 Selling, service and administrative........... 137,674 147,639 153,690 171,473 247,185 277,494 57,333 69,664 Goodwill and related intangibles.............. 754 784 901 1,699 7,859 9,964 1,629 2,470 Provision for restructuring expense(1)............... -- 4,000 -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- -------- -------- Operating income............. 28,370 30,534 40,094 47,715 74,332 79,554 16,974 19,806 Interest expense............. 3,609 3,776 4,259 6,172 24,577 39,848 5,228 7,472 Other (income) expense, net........................ 456 1,058 2 (1,011) 1,575 1,211 460 509 -------- -------- -------- -------- -------- -------- -------- -------- Income before taxes.......... 24,305 25,700 35,833 42,554 48,180 38,495 11,286 11,825 Income taxes................. 9,311 9,997 14,333 17,341 19,513 15,590 4,514 4,730 -------- -------- -------- -------- -------- -------- -------- -------- Net income................... $ 14,994 $ 15,703 $ 21,500 $ 25,529 $ 28,667 $ 22,905 $ 6,772 $ 7,095 ======== ======== ======== ======== ======== ======== ======== ======== OTHER FINANCIAL DATA: EBITDA(2).................... $ 38,661 $ 41,557 $ 52,906 $ 63,744 $ 99,965 $109,466 $ 23,530 $ 27,318 Adjusted EBITDA(3)........... 38,661 41,557 52,906 63,744 99,965 116,466(4) 23,530 27,318 Capital expenditures......... 10,595 12,788 15,046 27,778 29,619 33,753 6,219 6,385 Depreciation and amortization............... 10,747 12,081 12,814 15,018 27,208 31,123 7,016 8,021 Ratio of earnings to fixed charges(5)................. 5.0x 5.0x 6.1x 5.8x 2.8x 1.9x 2.9x 2.4x Ratio of EBITDA to interest expense(2)................. 10.7x 11.0x 12.4x 10.3x 4.1x 2.7x 4.5x 3.7x Ratio of Adjusted EBITDA to interest expense(3)........ 10.7x 11.0x 12.4x 10.3x 4.1x 2.9x 4.5x 3.7x Ratio of total debt to EBITDA(2).................. 1.3x 1.6x 1.2x 1.9x 3.7x 4.6x Ratio of total debt to Adjusted EBITDA(3)......... 1.3x 1.6x 1.2x 1.9x 3.7x 4.3x BALANCE SHEET DATA: Cash and cash equivalents.... $ 4,462 $ 5,569 $ 6,864 $ 6,721 $ 3,753 $ 3,753 $ 7,444 $ 13,347 Working capital.............. 80,591 86,550 96,820 125,085 175,643 190,626 154,707 192,803 Net property, plant and equipment.................. 62,095 65,530 61,461 69,011 113,421 125,712 108,411 126,119 Total assets................. 251,109 284,278 298,872 393,706 692,914 848,038 639,446 869,389 Total debt................... 48,408 66,508 61,823 119,212 365,039 501,312 349,534 520,985 Stockholders' equity......... 133,531 141,089 154,141 172,132 191,043 191,043 175,081 193,371
12 19 - ------------------------- (1) The 1994 provision for restructuring expense reflects costs associated with discontinuing manufacturing in certain locations along with an overall downsizing of the Company's infrastructure. (2) EBITDA represents net income before income taxes, interest expense and depreciation and amortization. EBITDA is not a measure of financial performance under generally accepted accounting principles and does not necessarily indicate that cash flow will be sufficient to fund cash requirements. The Company understands that certain investors believe EBITDA measures a company's ability to service debt and to utilize cash for other purposes. EBITDA should not be considered in isolation or as a substitute for net income, cash flows from operations, or other income or cash flow data prepared in accordance with generally accepted accounting principles or as a measure of a company's profitability or liquidity. (3) Adjusted EBITDA is EBITDA as modified to reflect certain adjustments which Management believes are relevant in evaluating the future operating performance of the Company. These adjustments, which eliminate the impact of certain nonrecurring charges and reflect the estimated impact of Management's business and operating strategy, are based on estimates and assumptions made and believed to be reasonable by the Company, but are inherently uncertain and are subject to change. Adjusted EBITDA should not be viewed as indicative of actual or future results and is not computed in accordance with GAAP or with regulations of the Commission. (4) Pro forma Adjusted EBITDA for the fiscal year ended December 31, 1997 includes the supplemental cost savings relating to the Ibico Acquisition described in Note 9 on Page 22. (5) For purposes of determining the ratio of earnings to fixed charges, "earnings" consist of net income before provision for income taxes, undistributed earnings (loss) of equity investments and fixed charges. Fixed charges consist of interest expense and the interest portion of the Company's rent expense (deemed to be one-third of operating lease rental expense). RECENT DEVELOPMENTS On June 22, 1998, the Company issued a press release announcing that it expects its net income for the second quarter ended June 30, 1998 to be approximately $0.35-$0.37 per share, approximately $0.08-$0.10 per share below second quarter 1997 earnings of $0.45 per share diluted. The factors cited by the Company as contributing to the expected reduction in earnings include a temporary decline in sales in the Company's Document Finishing Group as a result of the specialization of its U.S. sales force completed at year-end 1997 and the negative effect on the Company's European operations of investments made by the Company to expand its global business with major retailers. In the press release, the Company stated that it expects net income for 1998 to be approximately equal to or slightly better than 1997 on a year-to-year, diluted basis. In the press release, the Company also stated that it expects cash flow for the second quarter of 1998, as measured by EBITDA, to increase by approximately 12% over the second quarter of 1997. On July 6, 1998, the Company issued a press release announcing the consummation of the sale of its U.S. RingBinder business. The Company said that it expects to use the proceeds of the sale to reduce its outstanding debt. The Company also announced that it would record a one-time pre-tax charge of $2.9- $3.5 million, or $0.11-$0.13 net per diluted share, in the Company's second quarter earnings relating to the sale. 13 20 RISK FACTORS In addition to the other information contained in this Prospectus, including "Selected Historical Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the Company's Consolidated Financial Statements and Notes thereto included elsewhere herein, the following risk factors should be considered carefully by prospective investors prior to tendering Old Notes in exchange for Exchange Notes. The risk factors set forth below are generally applicable to the Old Notes as well as the Exchange Notes. SIGNIFICANT LEVERAGE AND DEBT SERVICE; RESTRICTIVE COVENANTS The Company has indebtedness that is substantial in relation to its stockholders' equity, as well as interest and other debt service requirements which will be significant compared to its cash flow from operations. As of December 31, 1997, on a pro forma basis, the Company would have had approximately $501.3 million of indebtedness outstanding, which would have represented 72.4% of the Company's total capitalization. In addition, the Indenture permits the Company and its subsidiaries to incur substantial additional indebtedness, including Senior Indebtedness and Guarantor Senior Indebtedness, subject to certain limitations. See "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Description of Credit Facility" and "Description of the Notes -- Certain Covenants." The Company's high degree of leverage could have important consequences to holders of the Exchange Notes, including, but not limited to the following: (i) a substantial portion of the Company's cash flow from operations must be dedicated to debt service and will not be available for operations and other purposes; (ii) the Company's ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or general corporate purposes may be limited; (iii) certain of the Company's borrowings are and will continue to be at variable rates of interest, which exposes the Company to the risk of increased interest rates; (iv) the Company may be substantially more leveraged than certain of its competitors, which may place the Company at a competitive disadvantage; and (v) the Company's level of indebtedness could make it more vulnerable to economic downturns and limit its ability to withstand competitive pressures. See "Description of Credit Facility" and "Description of the Notes." The Company's ability to make scheduled payments or to refinance its obligations with respect to its indebtedness (including the Exchange Notes) will depend upon the Company's future financial and operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, many of which are beyond the Company's control. There can be no assurance that the Company's operating results will be sufficient for the Company to meet its obligations. If the Company is unable to generate sufficient cash flow from operations in the future to service its debt, it may be required to refinance all or a portion of its existing debt, including the Exchange Notes, or to obtain additional financing. No assurance can be given that any such refinancing would be possible on terms acceptable to the Company or that additional financing could be obtained. If the Company is unable to service its indebtedness or obtain refinancing of its indebtedness, it will be forced to adopt an alternative strategy that may include actions such as reducing or delaying capital expenditures or the expansion of the Company, selling assets or seeking additional equity capital. There can be no assurance that any of these strategies could be effected on terms acceptable to the Company, or at all. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources." The Credit Facility and the Indenture contain certain restrictive covenants which will affect, and in many respects significantly limit or prohibit, among other things, the ability of the Issuer and its Restricted Subsidiaries to incur indebtedness, make prepayments of certain indebtedness, make investments, pay dividends or make certain other restricted payments, engage in transactions with affiliates, create liens, sell assets and engage in mergers and consolidations. The Credit Facility also requires the Company to maintain specified financial ratios and to satisfy certain financial tests on a consolidated basis. The Company's failure to comply with its obligations under the Credit Facility or the Indenture, or in agreements relating to indebtedness incurred in the future, could result in an event of default under such agreements, which could permit acceleration of the related debt and acceleration of debt under other financing arrangements that may 14 21 contain cross-acceleration or cross-default provisions. If any such indebtedness were to be accelerated, there can be no assurance that the assets of the Company would be sufficient to repay in full such indebtedness and the other indebtedness of the Company, including the Exchange Notes. See "Description of Credit Facility" and "Description of the Notes -- Subordination" and "Description of the Notes -- Certain Covenants." SUBORDINATION OF THE EXCHANGE NOTES AND GUARANTEES The Exchange Notes will be subordinated in right of payment to all existing and future Senior Indebtedness of the Issuer, including indebtedness under the Credit Facility, and the Guarantees will be subordinated to all existing and future Guarantor Senior Indebtedness of the Subsidiary Guarantors. In addition, the Exchange Notes and the Guarantees will be effectively subordinated to all existing and future secured indebtedness of the Issuer and the Subsidiary Guarantors, respectively, and all obligations of any subsidiary of the Issuer that is not a Subsidiary Guarantor. Under the terms of the Indenture, the Issuer and its Restricted Subsidiaries are restricted, but not prohibited, from incurring additional indebtedness, including Senior Indebtedness, Guarantor Senior Indebtedness and additional secured indebtedness. See "Description of Credit Facility," and "Description of the Notes -- Subordination" and "-- Certain Covenants." As of December 31, 1997, on a pro forma basis, the Issuer and the Subsidiary Guarantors would have had an aggregate principal amount of approximately $289 million of indebtedness that would have constituted Senior Indebtedness or Guarantor Senior Indebtedness (excluding unused commitments under the Credit Facility and outstanding letters of credit totaling approximately $224 million). In addition, as of such date, on a pro forma basis, subsidiaries of the Issuer that will not be Subsidiary Guarantors would have had approximately $63 million of indebtedness outstanding (excluding intercompany loans). Management expects that, subject to the restrictions contained in the Company's debt agreements, the Issuer and the Subsidiary Guarantors will incur additional Senior Indebtedness and Guarantor Senior Indebtedness, respectively, including indebtedness under the Credit Facility, in connection with the implementation of the Company's business strategy. By reason of the subordination described in the preceding paragraph, in the event of the insolvency, liquidation, reorganization, dissolution or other winding up of the Issuer, creditors of the Issuer who are not holders of Senior Indebtedness, including holders of the Exchange Notes, may recover less, ratably, than holders of Senior Indebtedness. Similarly, the creditors of a Subsidiary Guarantor who are not holders of Guarantor Senior Indebtedness, including holders of the Exchange Notes, may also recover less, ratably, than holders of Guarantor Senior Indebtedness. In addition, the holders of any secured indebtedness of the Issuer or the Subsidiary Guarantors will be entitled to a claim on the assets securing such indebtedness which is prior to any claim of the holders of the Exchange Notes or the Guarantees, as the case may be. If the Issuer or a Subsidiary Guarantor incurs additional pari passu unsecured indebtedness, the holders of such debt would be entitled to share ratably with the holders of the Exchange Notes in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding up of the Issuer. This may have the effect of reducing the amount of proceeds paid to holders of the Exchange Notes. In addition, no payments may be made with respect to the principal of or interest on the Exchange Notes if a payment default exists with respect to Designated Senior Indebtedness (as defined herein) and, under certain circumstances, no payments may be made with respect to the principal of or interest on the Exchange Notes for certain periods of time if a non-payment default exists with respect to Designated Senior Indebtedness. See "Description of the Notes -- Subordination." COMPETITION The Company's products and services are sold in highly competitive markets. Management believes that the principal points of competition in the Company's markets are product and service quality, price, design and engineering capabilities, product development, conformity to customer specifications, timeliness and completeness of delivery, and quality of post-sale support. Certain of the Company's current competitors have, and potential competitors may have, greater financial, marketing, and research and development resources than the Company. Competitive conditions often require the Company to match or better competitors' prices to retain business or market share. Maintaining and improving the Company's competitive position will require continued investment by the Company in manufacturing, quality standards, marketing and customer service 15 22 and support. There can be no assurance that the Company will have sufficient resources to continue to make such investment or that it will be successful in maintaining its competitive position. There are no significant barriers to entry in the markets for many of the Company's products and services. See "Business -- Competition." DEPENDENCE ON MAJOR CUSTOMERS In 1997, on a pro forma basis, approximately 30% of the Company's net sales were to the Company's 10 largest customers, although no single customer accounted for more than 10% of sales. The loss of, or major reduction in business from, one or more of the Company's major customers could have a material adverse effect on the Company's financial position or results of operations. See "Business -- Customers." EXPOSURE TO COST AND SUPPLY FLUCTUATIONS IN CERTAIN RAW MATERIALS The primary materials used in the manufacture of many of the Company's products are polyester and polypropylene substrates, PVC, wood and aluminum. These materials are available from a number of suppliers and the Company is not dependent upon any single supplier for any of these materials. Based on its experience, Management believes that adequate quantities of these materials will be available in the foreseeable future, but there can be no assurance that such materials will continue to be available in adequate supply in the future or that shortages in supply will not result in price increases that could have a material adverse effect on the Company's financial position or results of operations. In general, the Company's gross profit is affected from time to time by fluctuations in the prices of these materials because competitive markets for its products may make it difficult to pass through price increases to customers. DEPENDENCE ON KEY PERSONNEL The Company is dependent on the continued services of certain members of its senior management team. Although the Company believes it could replace key personnel in an orderly fashion should the need arise, the loss of, and inability to attract replacements for, any of such key personnel could have a material adverse effect on the Company's financial position or results of operations. See "Management." CONTROLLING STOCKHOLDER By virtue of its direct ownership of 7,383,059 shares of the Issuer's Common Stock and 100% of the 2,398,275 shares of the Issuer's Class B Common Stock outstanding (on a combined basis, representing 62% of all outstanding capital stock), Lane Industries controlled 88% of the aggregate voting power of the Issuer's outstanding voting securities as of March 1, 1998. As a result, Lane Industries has the ability to control the affairs and policies of the Company. There can be no assurance that the interests of Lane Industries with respect to the Company will not conflict with the interests of holders of the Exchange Notes. See "Certain Relationships and Related Transactions." ACQUISITION AND JOINT VENTURE STRATEGY The Company intends to consider future acquisitions and joint ventures to strengthen its market positions for each of its global business units. Such acquisitions and joint ventures entail risks inherent in assessing the value, strengths and weaknesses of acquisition candidates or ventures. The success of such acquisitions and joint ventures will depend on, and may be limited by, the availability of suitable acquisition candidates or venture partners, the Company's ability to obtain financing therefor and by restrictions contained in the Indenture, the Credit Facility and the Company's other existing and future financing arrangements. The Ibico Acquisition as well as any future acquisitions, if made, could divert resources and management time and will require integration with the Company's existing products and services. There can be no assurance that any acquisitions will occur in the future or that the Ibico Acquisition or any other acquisitions, if made, would be made on favorable terms or would be successfully integrated into the Company's operations. See "Business - --Business Strategy." 16 23 DEPENDENCE ON CERTAIN SUPPLIERS OF MANUFACTURED PRODUCTS The Company relies on GMP Co. Ltd. ("GMP"), in which it holds a 33% equity interest, as its sole supplier of many of the laminating machines it distributes. It is estimated that laminating machines sourced from GMP accounted for approximately $28 million of the Company's 1997 pro forma net sales. The Company has a long-term supply contract with GMP; however, there can be no assurance that GMP will be able to perform any or all of its contractual obligations. GMP's equipment manufacturing facility is located in the Republic of Korea and, therefore, GMP's ability to fulfill the Company's requirements for laminating machines could be significantly affected by economic and political conditions in Korea and in other parts of Asia. Although the Company believes that it could find alternative suppliers if GMP is not able to fulfill the Company's requirements, there can be no assurance that the Company would be able to find such alternative suppliers on a timely basis so as to avoid a disruption of supply or on favorable terms. Any material disruption in the Company's ability to deliver orders for laminating machines on a timely basis could have a material adverse effect on the Company's reputation with customers and its financial position or results of operations. See "Business -- Manufacturing and Strategic Supply Relationships." RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS The Company has significant operations outside the United States. Approximately 33% of the Company's 1997 pro forma revenues were from international sales. The Company's international operations may be significantly affected by economic, political and governmental conditions in the countries where the Company has manufacturing facilities or where its products are sold. In addition, changes in economic or political conditions in any of the countries in which the Company operates could result in unfavorable exchange rates, new or additional currency or exchange controls, other restrictions being imposed on the operations of the Company or expropriation. The Company's results of operations and financial position also may be adversely affected by significant fluctuations in the value of the United States dollar relative to international currencies. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." ENVIRONMENTAL MATTERS The Company and its operations, both in the U.S. and abroad, are subject to national, state, provincial and/or local laws and regulations that impose limitations and prohibitions on the discharge and emission of, and establish standards for the use, disposal, and management of, certain materials and waste, and impose liability for the costs of investigating and cleaning up, and certain damages resulting from, present and past spills, disposals, or other releases of hazardous substances or materials (collectively, "Environmental Laws"). Environmental Laws can be complex and may change often, capital and operating expenses to comply can be significant, and violations may result in substantial fines and penalties. In addition, Environmental Laws such as the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA," or "Superfund"), in the United States, impose liability on several grounds for the investigation and cleanup of contaminated soil, groundwater, and buildings, and for damages to natural resources, at a wide range of properties. For example, contamination at properties formerly owned or operated by the Company as well as properties the Company currently owns or operates, and properties to which hazardous substances were sent by the Company, may result in liability for the Company under Environmental Laws. As a manufacturer, the Company has an inherent risk of liability under Environmental Laws both with respect to ongoing operations and with respect to contamination that may have occurred in the past on its properties or as a result of its operations. There can be no assurance that the costs of complying with Environmental Laws, any claims concerning noncompliance, or liability with respect to contamination will not in the future have a material adverse effect on the Company's financial position or results of operations. FRAUDULENT TRANSFER CONSIDERATIONS If, under relevant federal and state fraudulent transfer and conveyance statutes, in a bankruptcy, reorganization or liquidation case or similar proceeding or a lawsuit by or on behalf of unpaid creditors of the Issuer, a court were to find that, at the time the Exchange Notes were issued by the Issuer, (a) the Issuer 17 24 issued the Exchange Notes with the intent of hindering, delaying or defrauding current or future creditors or (b)(i) the Issuer received less than reasonably equivalent value or fair consideration for issuing the Exchange Notes, and (ii) after applying the proceeds, the Issuer (A) was insolvent or was rendered insolvent by reason of such transactions, (B) was engaged, or about to engage, in a business or transaction for which its assets constituted unreasonably small capital to carry on its business, or (C) intended to incur, or believed or reasonably should have believed that it would incur, debts beyond its ability to pay as such debts matured or became due (as all of the foregoing terms are defined in or interpreted under the relevant fraudulent transfer or conveyance statutes), such court could avoid the obligations under the Exchange Notes or further subordinate the Exchange Notes to presently existing and future indebtedness of the Issuer or take other action detrimental to the holders of the Exchange Notes, including, under certain circumstances, invalidating the Exchange Notes. In that event, there can be no assurance that any repayment on the Exchange Notes would ever be received by holders of the Exchange Notes. The avoidance of such Exchange Notes could result in an event of default with respect to other debt of the Issuer and its subsidiaries, which could result in acceleration of such debt. In the event that under relevant state or federal law a Subsidiary Guarantor is determined, at the time it executed its Guarantee, to have come within clauses (a) and (b) of the first paragraph of this subsection, the Guarantee by such Subsidiary Guarantor may be voidable (in whole or in part) or the claim of the holders of the Exchange Notes in respect of such Guarantee may be subordinated (in whole or in part) to other obligations and liabilities of such Subsidiary Guarantor, in each case based on the theory that such Guarantee constituted a fraudulent conveyance under applicable federal or state fraudulent transfer or conveyance statutes. In the event that such claims are asserted after any payments are made by a Subsidiary Guarantor under its Guarantee, there is a risk that persons who received such payments will be ordered by a court to return to such Subsidiary Guarantor's creditors or its trustee in bankruptcy all or a portion of such payments. The measure of insolvency for purposes of the foregoing considerations will vary depending upon the law of the jurisdiction that is to be applied. Generally, however, a company would be considered insolvent if, at the time it incurred indebtedness, either (i) it is unable to pay its debts as they become due in the usual course of its business, (ii) the sum of its debts, including contingent liabilities, is greater than its assets at a fair valuation or (iii) the present fair saleable value of its assets is less than the amount required to pay the probable liability on its total existing debts and liabilities (including contingent liabilities), as they become absolute and matured. There can be no assurance as to what standards a court would use to determine whether the Issuer was solvent at the relevant time, or whether, whatever standard was used, the Exchange Notes or the Guarantees would be avoided on another of the grounds set forth above. Each of the Issuer and the Subsidiary Guarantors believes that it will receive equivalent value at the time the indebtedness under the Exchange Notes and the Guarantees is incurred. Pursuant to the terms of the Guarantees, the liability of each Subsidiary Guarantor is limited to the maximum amount of indebtedness permitted, at the time of the grant of such Guarantee, to be incurred in compliance with fraudulent conveyance or similar laws. In addition, neither the Issuer nor any Subsidiary Guarantor believes that it, after giving effect to the Transactions, (i) was or will be insolvent or rendered insolvent, (ii) was or will be engaged in a business or transaction for which its remaining assets constituted unreasonably small capital or (iii) intends or intended to incur, or believes or believed that it will or would incur, debts beyond its ability to pay such debts as they mature. These beliefs are based on the Company's operating history and analysis of internal cash flow projections and estimated values of assets and liabilities of the Issuer and the Subsidiary Guarantors at the time of the Exchange Offer. There can be no assurance, however, that a court passing on these issues would make the same determination. ABSENCE OF A PUBLIC MARKET COULD ADVERSELY AFFECT THE VALUE OF EXCHANGE NOTES The Old Notes were issued to, and the Issuer believes are currently owned by, a relatively small number of beneficial owners. Prior to the Exchange Offer, there has not been any public market for the Old Notes. The Old Notes have not been registered under the Securities Act and will be subject to restrictions on transferability to the extent that they are not exchanged for Exchange Notes by holders who are entitled to participate in this Exchange Offer. The holders of Old Notes (other than any such holder that is an "affiliate" 18 25 of the Issuer within the meaning of Rule 405 under the Securities Act) who are not eligible to participate in the Exchange Offer are entitled to certain registration rights, and the Issuer is required to file a shelf registration statement (a "Shelf Registration Statement") with respect to such Old Notes. The Exchange Notes will constitute a new issue of securities with no established trading market. The Issuer does not intend to list the Exchange Notes on any national securities exchange or seek the admission thereof to trading in the National Association of Securities Dealers Automated Quotation System. The Initial Purchasers have advised the Issuer that they currently intend to make a market in the Exchange Notes, but they are not obligated to do so and may discontinue such market making at any time. In addition, such market making activity will be subject to the limits imposed by the Securities Act and the Exchange Act and may be limited during the Exchange Offer and the pendency of a Shelf Registration Statement. Accordingly, no assurance can be given that an active public or other market will develop for the Exchange Notes or as to the liquidity of the trading market for the Exchange Notes. If a trading market does not develop or is not maintained, holders of the Exchange Notes may experience difficulty in reselling the Exchange Notes or may be unable to sell them at all. If a market for the Exchange Notes develops, any such market may be discontinued at any time. If a public trading market develops for the Exchange Notes, future trading prices of such securities will depend on many factors, including, among other things, prevailing interest rates, the Company's results of operations and the market for similar securities. Depending on prevailing interest rates, the market for similar securities and other factors, including the financial condition of the Company, the Exchange Notes may trade at a discount from their principal amount. FAILURE TO FOLLOW EXCHANGE OFFER PROCEDURES COULD ADVERSELY AFFECT HOLDERS Issuance of the Exchange Notes in exchange for the Old Notes pursuant to the Exchange Offer will be made only after a timely receipt by the Issuer of such Old Notes, a properly completed and duly executed Letter of Transmittal and all other required documents. Therefore, holders of the Old Notes desiring to tender such Old Notes in exchange for Exchange Notes should allow sufficient time to ensure timely delivery. The Issuer is under no duty to give notification of defects or irregularities with respect to the tenders of Old Notes for exchange. Old Notes that are not tendered or are tendered but not accepted will, following the consummation of the Exchange Offer, continue to be subject to the existing restrictions upon transfer thereof, and, upon consummation of the Exchange Offer certain registration rights under the Registration Rights Agreement will terminate. In addition, any holder of Old Notes who tenders in the Exchange Offer for the purpose of participating in a distribution of the Exchange Notes may be deemed to have received restricted securities, and if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Each broker-dealer that receives Exchange Notes for its own account in exchange for Old Notes, where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." To the extent that Old Notes are tendered and accepted in the Exchange Offer, the trading market for untendered and tendered but unaccepted Old Notes could be adversely affected. See "Exchange Offer." CHANGE OF CONTROL Upon the occurrence of a Change of Control, each holder of the Exchange Notes will have the right to require the Issuer to repurchase such holder's Exchange Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of repurchase. See "Description of the Notes -- Change of Control." If a Change of Control were to occur and any holders were to exercise their right to require the Issuer to repurchase such holders' Exchange Notes, there can be no assurance that the Issuer would have sufficient financial resources, or would be able to arrange financing, to pay the repurchase price for all Exchange Notes tendered by the holders thereof. Further, the provisions of the Indenture may not afford holders of Exchange Notes protection in the event of a highly leveraged transaction, reorganization, restructuring, merger or similar transaction involving the Issuer that may adversely affect holders of Exchange Notes, if such transaction does not result in a Change of Control. In addition, the terms of the Credit Facility limit the Issuer's ability to purchase any Exchange Notes and also identify certain events that would constitute 19 26 a change of control, as well as certain other events with respect to the Issuer or its subsidiaries, that would constitute an event of default under the Credit Facility. See "Description of Credit Facility." Any future credit agreements or other agreements relating to other indebtedness to which the Issuer becomes a party may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when the Issuer is prohibited from purchasing Exchange Notes, the Company could seek the consent of its lenders to the purchase of Exchange Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company not obtain such consent or repay such borrowing, the Issuer would remain prohibited from purchasing Exchange Notes. In such case, the Issuer's failure to purchase validly tendered Exchange Notes would constitute an Event of Default under the Indenture, which would, in turn, constitute a further default under certain of the Company's other agreements and may constitute a default under the terms of other debt agreements that the Company may enter into from time to time. See "Description of the Notes -- Change of Control." USE OF PROCEEDS The Exchange Offer is intended to satisfy certain of the Issuer's obligations under the Purchase Agreement and the Registration Rights Agreement. The Issuer will not receive any cash proceeds from the issuance of the Exchange Notes offered hereby. In consideration for issuing the Exchange Notes as contemplated in this Prospectus, the Company will receive Old Notes in like principal amount, the form and terms of which are the same as the form and terms of the Exchange Notes, except as otherwise described herein. The Old Notes surrendered in exchange for Exchange Notes will be retired and canceled and cannot be reissued. Accordingly, issuance of the Exchange Notes will not result in any increase or decrease in the indebtedness of the Company. As a result, no effect has been given to the Exchange Offer in the pro forma financial statements or capitalization table included herein. The approximately $145 million of net proceeds to the Issuer from the Initial Offering were used to repay in full the $60 million aggregate principal amount of outstanding indebtedness and accrued interest thereon owed by the Issuer to Lane Industries under the Note Purchase Agreement dated as of February 25, 1998 (the "Bridge Loan") between the Issuer and Lane Industries, which indebtedness was incurred to partially finance the Ibico Acquisition and to repay approximately $85 million of indebtedness under the Credit Facility. Affiliates of the Initial Purchasers are lenders under the Credit Facility. The indebtedness repaid under the Bridge Loan accrued interest at a variable rate of interest, which was equal to 7.7% on the date of consummation of the Initial Offering, and was payable on demand. See "Certain Relationships and Related Transactions." Indebtedness under the Credit Facility bears interest at a variable rate, which was equal to 6.5% on the date of consummation of the Initial Offering. See "Description of Credit Facility" and "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources." 20 27 CAPITALIZATION The following table sets forth the consolidated cash position and capitalization of the Company as of December 31, 1997 and on a pro forma basis after giving effect to the Transactions. The information set forth below should be read in conjunction with the "Selected Historical Consolidated Financial Data," the "Unaudited Combined Pro Forma Condensed Financial Data" and the Consolidated Financial Statements and the Notes thereto included elsewhere in this Prospectus.
DECEMBER 31, 1997 -------------------------------------------- HISTORICAL ADJUSTMENTS PRO FORMA ---------- ----------- --------- (DOLLARS IN THOUSANDS) Cash and cash equivalents................. $ 3,753 -- $ 3,753 ======== ======== ======== Total debt: Credit Facility(1)...................... $307,128 $(49,615)(2) $257,513 9 3/8% Senior Subordinated Notes due 2008................................. -- 150,000(3) 150,000 Other................................... 57,911 35,888(4) 93,799 -------- -------- -------- Total debt........................... 365,039 136,273 501,312 Stockholders' equity: Common stock, $.125 par value; 40,000,000 shares authorized; 15,693,747 shares issued and outstanding.......................... 1,962 -- 1,962 Class B common stock, $.125 par value; 4,796,550 shares authorized; 2,398,275 shares issued and outstanding.......................... 300 -- 300 Additional paid-in capital.............. 9,708 -- 9,708 Cumulative translation adjustments...... (6,108) -- (6,108) Retained earnings....................... 208,394 -- 208,394 Treasury stock.......................... (23,213) -- (23,213) -------- -------- -------- Total stockholders' equity........... 191,043 -- 191,043 -------- -------- -------- Total capitalization................. $556,082 $136,273 $692,355 ======== ======== ========
- ------------------------- (1) The Credit Facility provides total borrowing availability of up to $475 million, subject to increase to $550 million under certain circumstances. Subject to certain conditions, extensions of credit under the Credit Facility may be borrowed, repaid and reborrowed at any time prior to the maturity of the Credit Facility. See "Description of Credit Facility." (2) Represents borrowings of $35.4 million under the Credit Facility to finance the portion of the purchase price for the Ibico Acquisition not financed by the Bridge Loan, net of repayment of $85 million of the indebtedness outstanding under the Credit Facility with a portion of the proceeds of the Initial Offering. (3) Represents gross proceeds to the Company from the Initial Offering, of which approximately $85 million was used to repay borrowings under the Credit Facility, $60 million was used to repay borrowings under the Bridge Loan and approximately $5 million was or is expected to be used to pay fees and expenses relating to the Initial Offering. See "Use of Proceeds." (4) Represents indebtedness assumed by the Company in connection with the Ibico Acquisition, consisting primarily of working capital facilities and long-term notes, net of cash and cash equivalents acquired in connection with the Ibico Acquisition. 21 28 SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA The following selected historical consolidated financial data have been derived from the consolidated financial statements of the Company. The data as of and for the years ended December 31, 1993, 1994, 1995, 1996 and 1997 are derived from the consolidated financial statements of the Company audited by Arthur Andersen LLP. The following selected historical consolidated data as of and for the three month periods ended March 31, 1997 and 1998 have been derived from the Consolidated Financial Statements of the Company and are unaudited. The interim results, in the opinion of Management, include all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial information for such periods; however, such results are not necessarily indicative of the results that may be expected for any other interim period or for a full year. The results of operations include the results of acquisitions described under "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Acquisitions" and have been included in the Company's consolidated financial statements from the date of the related acquisitions. The information contained in this table should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements and accompanying Notes thereto included elsewhere in this Prospectus.
AS OF OR FOR THE THREE MONTHS ENDED AS OF OR FOR THE YEAR ENDED DECEMBER 31, MARCH 31, -------------------------------------------------------- -------------------- 1993 1994 1995 1996 1997 1997 1998 ---- ---- ---- ---- ---- ---- ---- (DOLLARS IN THOUSANDS) STATEMENT OF OPERATIONS DATA: Total sales.................... $376,138 $420,449 $458,391 $536,836 $770,001 $180,505 $213,944 Costs and expenses: Cost of sales................ 209,340 237,492 263,706 315,949 440,625 104,569 122,004 Selling, service and administrative............. 137,674 147,639 153,690 171,473 247,185 57,333 69,664 Goodwill and related intangibles................ 754 784 901 1,699 7,859 1,629 2,470 Provision for restructuring expense(1)................. -- 4,000 -- -- -- -- -- -------- -------- -------- -------- -------- -------- -------- Operating income............... 28,370 30,534 40,094 47,715 74,332 16,974 19,806 Interest expense............... 3,609 3,776 4,259 6,172 24,577 5,228 7,472 Other (income) expense, net.... 456 1,058 2 (1,011) 1,575 460 509 -------- -------- -------- -------- -------- -------- -------- Income before taxes............ 24,305 25,700 35,833 42,554 48,180 11,286 11,825 Income taxes................... 9,311 9,997 14,333 17,341 19,513 4,514 4,730 -------- -------- -------- -------- -------- -------- -------- Net income..................... $ 14,994 $ 15,703 $ 21,500 $ 25,213 $ 28,667 $ 6,772 $ 7,095 ======== ======== ======== ======== ======== ======== ======== OTHER FINANCIAL DATA: EBITDA(2)...................... $ 38,661 $ 41,557 $ 52,906 $ 63,744 $ 99,965 $ 23,530 $ 27,318 Capital expenditures........... 10,595 12,788 15,046 27,778 29,619 6,219 6,385 Depreciation and amortization................. 10,747 12,081 12,814 15,018 27,208 7,016 8,021 Ratio of earnings to fixed charges(3)................... 5.0x 5.0x 6.1x 5.8x 2.8x 2.9x 2.4x Ratio of EBITDA to interest expense(2)................... 10.7x 11.0x 12.4x 10.3x 4.1x 4.5x 3.7x Ratio of total debt to EBITDA(2).................... 1.3x 1.6x 1.2x 1.9x 3.7x BALANCE SHEET DATA: Cash and cash equivalents...... $ 4,462 $ 5,569 $ 6,864 $ 6,721 $ 3,753 $ 7,444 $ 13,347 Working capital................ 80,591 86,550 96,820 125,085 175,643 154,707 192,803 Net property, plant and equipment.................... 62,095 65,530 61,461 69,011 113,421 108,411 126,119 Total assets................... 251,109 284,278 298,872 393,706 692,914 639,446 869,389 Total debt..................... 48,408 66,508 61,823 119,212 365,039 349,534 520,985 Stockholders' equity........... 133,531 141,089 154,141 172,132 191,043 175,081 193,371
- ------------------------- (1) The 1994 provision for restructuring expense reflects costs associated with discontinuing manufacturing in certain locations along with an overall downsizing of the Company's infrastructure. (2) EBITDA represents net income before income taxes, interest expense and depreciation and amortization. EBITDA is not a measure of financial performance under generally accepted accounting principles and does not necessarily indicate that cash flow will be sufficient to fund cash requirements. The Company understands that certain investors believe EBITDA measures a company's ability to service debt and to utilize cash for other purposes. EBITDA should not be considered in isolation or as a substitute for net income, cash flows from operations, or other income or cash flow data prepared in accordance with generally accepted accounting principles or as a measure of a company's profitability or liquidity. (3) For purposes of determining the ratio of earnings to fixed charges, "earnings" consist of net income before provision for income taxes, undistributed earnings (loss) of equity investments and fixed charges. Fixed charges consist of interest expense and the interest portion of the Company's rent expense (deemed to be one-third of operating lease rental expense). 22 29 UNAUDITED COMBINED PRO FORMA CONDENSED FINANCIAL DATA The following unaudited combined pro forma condensed statement of operations and other financial data includes the historical results of the Company and gives effect to the Initial Offering, the application of proceeds therefrom and the Ibico Acquisition as if such transactions had occurred as of January 1, 1997. The unaudited combined pro forma condensed balance sheet includes the historical results of the Company and gives effect to the Initial Offering, the application of proceeds therefrom and the Ibico Acquisition as if such transactions had occurred as of December 31, 1997. For information regarding the Ibico Acquisition and the Initial Offering, see "Business -- Ibico Acquisition" and "Use of Proceeds." The pro forma adjustments made are based upon currently available information as well as upon certain assumptions that Management believes are reasonable. The Ibico Acquisition was accounted for as a purchase with the acquired assets and assumed liabilities recorded at their estimated fair market values. Management believes that actual fair market value adjustments will not differ materially from the preliminary allocation of the purchase price contained in the pro forma adjustments reflected in the pro forma financial information. The unaudited combined pro forma condensed financial statements are not necessarily indicative of either future results of operations or results that might have been achieved had the foregoing transactions been consummated as of the indicated dates. The unaudited combined pro forma condensed financial statements should be read in conjunction with the notes thereto, the Consolidated Financial Statements and the Notes thereto, Ibico's consolidated financial statements and notes thereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operations," all of which are presented elsewhere in this Prospectus. 23 30 UNAUDITED COMBINED PRO FORMA CONDENSED STATEMENT OF OPERATIONS AND OTHER FINANCIAL DATA
FOR THE YEAR ENDED DECEMBER 31, 1997 ------------------------------------------------------- GBC IBICO PRO FORMA HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA ---------- ---------- ----------- --------- (DOLLARS IN THOUSANDS) STATEMENT OF OPERATIONS DATA: Total sales...................................... $770,001 $113,498 -- $883,499 Costs and expenses: Cost of sales.................................. 440,625 76,257 $ (395)(1) 516,487 Selling, service and administrative............ 247,185 33,856 (3,547)(2) 277,494 Goodwill and related intangibles............... 7,859 -- 2,105(3) 9,964 Provision for restructuring expense............ -- 1,181 (1,181)(4) -- -------- -------- ------- -------- Operating income................................. 74,332 2,204 3,018 79,554 Interest expense............................... 24,577 3,561 11,710(5) 39,848 Other (income) expense, net.................... 1,575 (364) -- 1,211 -------- -------- ------- -------- Income (loss) before taxes....................... 48,180 (993) (8,692) 38,495 Income taxes................................... 19,513 295 (4,218)(6) 15,590 -------- -------- ------- -------- Net income (loss)................................ $ 28,667 $ (1,288) $(4,474) $ 22,905 ======== ======== ======= ======== Net income per common share Basic.......................................... 1.82 1.45 Diluted........................................ 1.80 1.44 Weighted average number of common shares outstanding Basic.......................................... 15,760 15,760 Diluted........................................ 15,890 15,890 OTHER FINANCIAL DATA: EBITDA(7)........................................ $ 99,965 $ 4,773 $ 4,728 $109,466 Adjusted EBITDA(8)............................... 99,965 4,773 11,728(9) 116,466 Capital expenditures............................. 29,619 4,134 -- 33,753 Depreciation and amortization.................... 27,208 2,205 1,710(10) 31,123 Total debt....................................... 365,039 43,057 93,216 501,312 Ratio of earnings to fixed charges(11)........... 2.8x 1.9x Ratio of EBITDA to interest expense(7)........... 4.1x 2.7x Ratio of Adjusted EBITDA to interest expense(8)..................................... 4.1x 2.9x Ratio of total debt to EBITDA(7)................. 3.7x 4.6x Ratio of total debt to Adjusted EBITDA (8)....... 3.7x 4.3x
- ------------------------- (1) Reflects an adjustment to conform Ibico's fixed asset depreciation methodology to the Company's methodology. (2) Reflects cost savings in the aggregate amount of $3,200, as a result of the Ibico Acquisition, that were fully implemented prior to the date of this Prospectus and are expected to have a continuing impact on the Company relating to (i) the rationalization of U.S. sales forces, (ii) the reduction in sales commission costs, (iii) the elimination of duplicate advertising and tradeshow expenses, (iv) the elimination of salaries and expenses paid to members of the family of the sole shareholder of Ibico and (v) the elimination of certain consulting, audit, legal, tax and insurance expenses. Also reflects the elimination of $347 of fees paid by Ibico to certain advisors in connection with the Ibico Acquisition. (3) Represents the amortization over 40 years on a straight-line basis of estimated goodwill related to the Ibico Acquisition as a result of the application of purchase accounting. Actual goodwill may change pending studies and valuations currently in process. (4) Represents expenditures associated with the transfer of certain Ibico administrative and support functions from Ibico's facility in Elk Grove Village, Illinois to facilities in Del Rio, Texas and Acuna, Mexico. These costs were incurred and the functions were transferred to the new locations prior to the acquisition of Ibico. The adjustment eliminates these costs as they are non-recurring and will not be required for future operations. 24 31 (5) Interest expense is adjusted for: (a) Interest on the Notes at the coupon rate of 9.375%...... $14,063 (b) Amortization of financing and hedging costs related to the Initial Offering.................................... 862 (c) Reduction of interest expense related to repayment of indebtedness under the Credit Facility.................. (3,215) ------- $11,710 =======
(6) Represents the income tax effects of the pro forma adjustments based upon GBC's effective income tax rate during 1997, which is not materially different than the statutory rate. (7) EBITDA represents net income before income taxes, interest expense and depreciation and amortization. EBITDA is not a measure of financial performance under generally accepted accounting principles and does not necessarily indicate that cash flow will be sufficient to fund cash requirements. The Company understands that certain investors believe EBITDA measures a company's ability to service debt and to utilize cash for other purposes. EBITDA should not be considered in isolation or as a substitute for net income, cash flows from operations, or other income or cash flow data prepared in accordance with generally accepted accounting principles or as a measure of a company's profitability or liquidity. (8) Adjusted EBITDA is EBITDA as modified to reflect certain adjustments which Management believes are relevant in evaluating the future operating performance of the Company. These adjustments, which eliminate the impact of certain nonrecurring charges and reflect the estimated impact of Management's business and operating strategy, are based on estimates and assumptions made and believed to be reasonable by the Company, but are inherently uncertain and are subject to change. Adjusted EBITDA should not be viewed as indicative of actual or future results and is not computed in accordance with GAAP or with regulations of the Commission. (9) Adjusted for Management's estimated recurring net cost savings due to the synergies to be achieved as a result of the Ibico Acquisition. Net savings in the aggregate amount of $7,000 are expected to result from (i) the elimination and consolidation of certain distribution facilities, (ii) lower freight costs resulting from larger order sizes, (iii) the elimination and combination of sales/administrative, corporate, warehousing and manufacturing facilities and (iv) the redirection of sourcing of raw material and equipment to leverage purchasing efficiencies. The adjustment excludes approximately $4,700 of expenditures that Management expects to be incurred in 1998 to achieve these cost savings. (10) Represents adjustment to amortize goodwill related to the Ibico Acquisition over 40 years on a straight-line basis, as well as the adjustment to conform Ibico's fixed asset depreciation methodology to the Company's methodology. (11) For purposes of determining the ratio of earnings to fixed charges, "earnings" consist of net income before provision for income taxes, undistributed earnings (loss) of equity investments and fixed charges. Fixed charges consist of interest expense and the interest portion of the Company's rent expense (deemed to be one-third of operating lease rental expense). 25 32 UNAUDITED COMBINED PRO FORMA CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 1997 ----------------------------------------------------- GBC IBICO PRO FORMA HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA ---------- ---------- ----------- --------- (DOLLARS IN THOUSANDS) ASSETS Current assets: Cash and cash equivalents...................... $ 3,753 $ 7,169 $ (7,169)(1) $ 3,753 Receivables, net............................... 160,787 20,198 -- 180,985 Inventories.................................... 143,569 27,040 1,000(2) 171,609 Deferred tax assets............................ 9,323 1,713 -- 11,036 Other.......................................... 10,313 2,058 -- 12,371 -------- ------- -------- -------- Total current assets........................ 327,745 58,178 (6,169) 379,754 Net property, plant and equipment................ 113,421 12,291 -- 125,712 Other............................................ 251,748 3,287 87,537(3) 342,572 -------- ------- -------- -------- Total assets..................................... $692,914 $73,756 $ 81,368 $848,038 ======== ======= ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable.................................. $ 40,247 $26,307 $ (7,169)(1) $ 59,385 Current maturities of long-term debt........... 722 479 -- 1,201 Accounts payable............................... 42,979 8,520 -- 51,499 Accrued liabilities............................ 68,154 8,889 -- 77,043 -------- ------- -------- -------- Total current liabilities................... 152,102 44,195 (7,169) 189,128 Long-term debt................................... 324,070 16,271 100,385(4) 440,726 Other liabilities................................ 11,368 851 -- 12,219 Deferred tax liability........................... 14,331 591 -- 14,922 Stockholders' equity............................. 191,043 11,848 (11,848) 191,043 -------- ------- -------- -------- Total liabilities and stockholders' equity....... $692,914 $73,756 $ 81,368 $848,038 ======== ======= ======== ========
- ------------------------- (1) Represents the application of Ibico's cash to repay short-term debt. (2) Represents the adjustment to reflect the estimated increase in book value of inventory as a result of the application of purchase accounting. (3) Reflects the increase in other assets resulting from the Ibico Acquisition and the Initial Offering. The total consideration and direct transaction costs are as follows: Cash purchase price for Ibico Acquisition(a)........... $129,273 Estimated costs related to the Ibico Acquisition....... 2,000 Estimated costs related to the Initial Offering........ 5,000 -------- Total consideration and costs..................... 136,273 Ibico's estimated tangible net assets acquired(b)...................................... (46,079) Estimated increase in book value of inventory (see Note (2) above).................................. (1,000) -------- 89,194 Writeoff of Ibico's intangible asset............ (1,657) -------- Net pro forma adjustment........................ $ 87,537 ========
(a) the purchase price was 188,400,000 Swiss francs (CHF); for purposes of the unaudited pro forma condensed financial statements, the unhedged portion of the purchase price was translated using the December 31, 1997 translation rate, which differs from the translation rate on the date of the closing. (b) excludes cash, debt and intangible assets. 26 33 The actual allocation of the purchase price will be based upon the fair market value of Ibico's assets and liabilities. Valuations and studies to determine the fair market value of assets are currently in process. For purposes of the unaudited combined pro forma condensed balance sheet, the preliminary purchase price allocation has been estimated as follows:
AMORTIZABLE AMOUNT LIFE ------- ----------- Excess cost over the estimated fair value of net assets acquired.................................................. $84,194 40 years Estimated costs related to the Initial Offering............. 5,000 10 years ------- $89,194 =======
(4) Represents the increase in long-term debt incurred in connection with the Ibico Acquisition, consisting of $150,000 of the Notes, less $49,615 of the proceeds thereof used to repay borrowings under the Credit Facility. 27 34 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of the Company's results of operations, financial condition and liquidity should be read in conjunction with "Unaudited Combined Pro Forma Condensed Financial Data," "Selected Historical Consolidated Financial Data," and the Company's Consolidated Financial Statements and Notes thereto contained elsewhere in this Prospectus. ACQUISITIONS One of the Company's principal business strategies is to selectively pursue acquisitions and joint ventures that (i) maintain and strengthen its competitive leadership positions, (ii) complement its existing businesses through expanded product lines, (iii) enhance its relationships with existing customers and establish relationships with new customers, or (iv) facilitate penetration into new and developing business areas and geographic territories. Acquisitions and joint ventures also provide the Company opportunities to realize sales growth and improved profitability as a result of economies of scale and operating synergies resulting from the integration of manufacturing and distribution operations. The Company has completed several acquisitions and entered into a joint venture during the past three years. The following is a summary of these recently completed acquisitions and the joint venture:
APPROXIMATE ANNUAL COMPANY OR REVENUES BUSINESS ACQUIRED OF ACQUIRED DATE (PRINCIPAL LOCATION) COMPANY(1) BUSINESS LINES ---- -------------------- ----------- -------------- (DOLLARS IN MILLIONS) February 27, 1998............. Ibico AG (Switzerland) $113 Manufacturer and distributor of binding and lamination equipment and supplies January 22, 1998... Allfax group of $6 Manufacturer and distributor of companies (U.K.) visual communication products August 27, 1997.... Danka Datakey <$1 Distributor and servicer of (Australia) mailroom equipment July 25, 1997...... Printing Wire Supplies $2 Manufacturer of wire binding Ltd. (Ireland) supplies July 23, 1997...... Jenrite (New Zealand) $2 Distributor of laminating equipment and supplies June 13, 1997...... Visucom (Australia) $2 Manufacturer and distributor of presentation boards April 23, 1997..... Baker School Specialty $17 Manufacturer and distributor of Company (USA) presentation boards ("Baker") January 1, 1997.... Quartet Manufacturing $149 Manufacturer and distributor of Company (USA) visual communication products October 10, 1996... GMP Co. Ltd. (Republic Joint Developer and manufacturer of of Korea) Venture lamination equipment and supplies January 22, 1996... Fordigraph Pty. Ltd. $21 Distributor of office and (Australia) mailroom products December 21, 1995............. Pro-Tech Engineering $11 Manufacturer and distributor of Co., Inc. (USA) lamination equipment and supplies for the digital printing market
- ------------------------- (1) Approximate annual revenues at time of acquisition. See Note 13 to the Consolidated Financial Statements for additional information on the Company's recent acquisitions. 28 35 RESULTS OF OPERATIONS FIRST QUARTER 1998 COMPARED TO FIRST QUARTER 1997 Sales Net sales for the first quarter of 1998 totaled $213.9 million, an increase of 18.5% over the first quarter of 1997. The Company's first quarter results include the results of Ibico from the date of acquisition, February 27, 1998. Excluding the acquisition of Ibico, GBC's sales were $202.7 million, an increase of 12.3% over the first quarter of 1997. The first quarter 1998 sales increase was primarily due to increased sales of personal shredders and writing boards through the Company's Office Products Group. Sales of writing boards in the first quarter of 1998 benefited from the Company's acquisitions of Baker, Visucom and Allfax. Gross Margin, Costs and Expenses Gross profit margin improved in the first quarter of 1998 to 43.0%, compared to 42.1% in the first quarter of 1997. The improvement in gross margin was due principally to higher margins achieved in the Company's commercial laminating business and the Office Products Group. Selling, service, and administrative expenses increased 21.5% in the first quarter of 1998, compared to the first quarter of 1997, primarily due to increased sales resulting in higher related selling expenses. As a percentage of sales, selling, service and administrative expenses increased to 32.6% in 1998 from 31.8% in the first quarter of 1997, principally due to higher rebate programs for certain customers. Amortization of goodwill and intangibles increased to $2.5 million in the first quarter of 1998, compared to $1.6 million in the first quarter of 1997, due to acquisitions. Interest expense for the first quarter of 1998 increased to $7.5 million, compared to $5.2 million in the first quarter of 1997. The primary reason for the increase was higher average debt levels as a result of indebtedness incurred to finance the Ibico, Baker and Allfax acquisitions. Net Income As a result of the factors described above, net income for the first quarter of 1998 was $7.1 million, or $0.45 per share, versus $6.8 million, or $0.43 per share, in the first quarter of 1997. The inclusion of Ibico's first quarter results had a dilutive effect on earnings of approximately $0.02 per share. 1997 COMPARED TO 1996 Sales The Company reported sales of $770.0 million in 1997, a 43.4% increase over 1996 sales of $536.8 million. The acquisitions of Quartet and Baker, as discussed in Note 13 to the Consolidated Financial Statements, accounted for approximately $183.0 million of the increase. Excluding the effect of acquisitions, 1997 sales increased by 9.4% primarily due to increased sales of the Company's laminators and related supplies, paper shredders and binding equipment. Gross Margin, Costs and Expenses Gross profit margin improved in 1997 to 42.8% compared to 41.1% in 1996, as a result of a more favorable sales mix of higher-margin office products. The improvement in gross margin was achieved despite lower gross margins from certain film products due to competitive market pricing. Further, in 1997 the Company's business in Europe experienced lower gross margins due to increased costs on imported products as a result of the strength of the U.S. dollar. Selling, service and administrative expenses increased 44.2% in 1997, primarily as a result of the acquisition of Quartet. Selling, service and administrative expenses as a percentage of sales increased to 32.1% in 1997, compared to 31.9% in 1996, due primarily to higher rebate programs for certain customers. 29 36 Interest expense increased to $24.6 million in 1997 from $6.2 million in 1996 primarily as a result of increased outstanding indebtedness under the Company's Credit Facility incurred primarily to finance acquisitions. Amortization of goodwill and related intangibles increased by $6.2 million in 1997 as a result of increased amortization related to acquisitions. The shut-down of a manufacturing plant in Costa Rica related to the Company's non-core ring metals business and unfavorable currency transactions accounted for the majority of the $2.6 million increase in other expenses from 1996 to 1997. Income Taxes The Company's worldwide effective income tax rate decreased to 40.5% in 1997 from 40.8% in 1996. Numerous items impacted the effective tax rate as discussed in Note 10 to the Consolidated Financial Statements. Net Income Net income increased by 13.9% (or $3.4 million) in 1997 to $28.7 million (or $1.82 per share basic) from $25.2 million (or $1.60 per share basic). The increase resulted primarily from the acquisitions of Quartet and Baker, improved margins due to synergies achieved as a result of the acquisitions and increased sales in the Company's core businesses. 1996 COMPARED TO 1995 Sales The Company reported sales of $536.8 million in 1996, a 17.1% increase over 1995 sales of $458.4 million. The increase resulted primarily from sales volume increases of film, office products and binding and laminating products, as well as the acquisitions of Fordigraph and Pro-Tech. Gross Margin, Costs and Expenses Gross profit margin decreased to 41.1% in 1996 from 42.5% in 1995. The reduction in gross margin was primarily due to worldwide competitive pricing pressures and a continuing product mix shift resulting in growth in lower-margin office products, film, and graphics products. Gross profit margins in 1996 were also negatively impacted by margin erosion in the Company's non-core ringmetals business, along with higher outlays for research and development spending. Selling, service and administrative expenses increased by 11.6% in 1996 compared to 1995 primarily as a result of increased sales. As a percentage of sales, selling, service and administrative expenses declined to 31.9% in 1996 from 33.5% in 1995. The decrease as a percentage of sales resulted primarily from improved efficiency due to the increased scale of the Company's operations. Interest expense increased by 44.9% in 1996 primarily as a result of higher average debt levels caused by increased working capital investments, the acquisitions of Fordigraph and Pro-Tech and the Company's investment in GMP. Other income and expenses decreased slightly in 1996. The most significant factors affecting the favorable change in 1996 were a gain on the sale of the Company's manufacturing facility in Australia and foreign currency gains compared to currency losses in 1995. Income Taxes The Company's effective tax rate increased to 40.8% from 40.0% in 1995. The 1996 rate increased primarily as a result of an increase in nondeductible goodwill and a tax charge incurred pursuant to its tax allocation agreement with Lane Industries, its majority shareholder. 30 37 Net Income Net income for 1996 was $25.2 million (or $1.60 per share basic), a 17.3% increase over 1995 net income of $21.5 million (or $1.37 per share basic). The increase in net income was primarily due to higher sales. LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of liquidity and capital resources include cash provided by operations and borrowings under the Company's revolving credit facilities, and short-term borrowings from banks. Cash provided by operating activities was $20.7 million in 1997, compared to $2.3 million in 1996 and $27.0 million in 1995. The increase in operating cash flow in 1997 was primarily due to significantly higher earnings before depreciation and amortization ($55.9 million in 1997 compared to $40.2 million in 1996). Further, while inventories and receivables increased in 1997, the growth in those working capital items supported the Company's higher sales volumes. The decrease in operating cash flow in 1996 compared to 1995 was primarily due to increased investment in working capital. Net cash generated from operating activities was $4.6 million for the first quarter of 1998, compared to cash used of $7.3 million for the first quarter of 1997. The favorable swing in 1998 was due primarily to a reduction in inventory and slower growth in receivables. The unfavorable cash flow during the first quarter of 1997 resulted from higher levels of receivables, inventories and advances on product purchased from overseas vendors. Capital expenditures were $29.6 million in 1997 compared to $27.8 million in 1996 and $15.0 million in 1995. Major projects in 1997 and 1996 included the implementation of new business information systems in Europe and the U.S. ($6.8 million in 1997 and $9.4 million in 1996), the equipping and fitting three manufacturing facilities in the U.S. ($7.3 million in 1997), the completion of additional films manufacturing capacity in Europe and the U.S. ($5.8 million in 1996), facilities to support the integration of the Company's Office Products Group business with Quartet, and the acquisition of certain tooling for new products. Capital expenditures during the first quarter of 1998 were $6.4 million, compared to $6.2 million in the first quarter of 1997. Major expenditures in 1998 include the investments associated with the Company's new custom supplies facility in Wisconsin and new document finishing facility in Illinois. The Company invested $241.2 million, $28.9 million and $1.5 million in acquisitions in 1997, 1996 and 1995, respectively. Acquisitions in 1997 and 1996 were primarily financed by borrowings under the Company's Credit Facility. Cash dividends paid in 1997 increased to $6.9 million (or $.44 per share) from $6.8 million (or $.43 per share). Cash dividends paid during the first quarter of both 1998 and 1997 were $0.11 per share, respectively. The Company had access to $67.0 million in uncommitted short-term credit lines as of December 31, 1997 and, as of such date, had $40.2 million in borrowings outstanding under these lines. The Company also had access to various U.S. and international credit facilities, including the Credit Facility providing for up to $475 million of unsecured revolving credit borrowings through January 2002. The Credit Facility, established on January 13, 1997, contains, among other things, certain restrictive covenants which require the Company to maintain certain ratios regarding current assets and liabilities, leverage and interest coverage. As of May 31, 1998, the Company had $298.0 million in borrowings outstanding under the Credit Facility. See Note 6 to the Consolidated Financial Statements and "Description of Credit Facility" for additional information. The Company believes that cash flow from operations, together with available credit facilities, will be sufficient to fund the Company's ongoing operating and capital requirements. RISK MANAGEMENT The Company is exposed to market risk from changes in interest rates and foreign exchange rates. To manage the risk from interest rate and foreign currency fluctuations, the Company enters into various hedging transactions that have been authorized pursuant to the Company's policies and procedures. The Company does not use financial instruments for trading purposes and is not a party to any leveraged derivatives. 31 38 A discussion of the Company's accounting policies for financial instruments is included in Note 1 to the Consolidated Financial Statements, and further disclosure related to financial instruments is included in Note 7 to the Consolidated Financial Statements. Interest Rates The Company uses interest rate swaps, treasury rate-lock agreements, and interest rate cap agreements to manage exposure to interest rate movements. The Company's exposure to interest rate risk consists primarily of floating rate credit facilities that are benchmarked to U.S. and European short-term interest rates. Foreign Exchange The Company uses foreign currency forward exchange contracts to hedge exposure to changes in foreign exchange rates primarily associated with inventory purchases. The foreign currency forward exchange contracts purchased generally have durations of 12 months or less. The Company's exposure to foreign exchange risk primarily exists with the Dutch guilder, British pound, Italian lira, Japanese yen and Mexican peso against the U.S. dollar. NEW ACCOUNTING STANDARDS The Company will adopt Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income" effective with first quarter 1998 reporting. This statement requires that certain items recorded directly in stockholders' equity be classified as comprehensive income. Comprehensive income and its components may be presented in a separate statement, or may be included in the statement of stockholders' equity or the statement of income. The currency translation adjustment is the Company's only item which will be classified as comprehensive income. The Company is in the process of evaluating the method of presentation that will be used upon adoption of the statement. The Company will adopt SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information" effective with year-end 1998 reporting. This statement will require the Company to present information in the notes to the financial statements regarding reportable operating segments using the same basis as is used for internally evaluating segment performance and deciding how to allocate resources to segments. The Company is currently evaluating the requirements of this standard and upon adoption, may disclose more than one reportable segment. YEAR 2000 COMPLIANCE Many existing computer programs use only two digits to identify a year in the date field. These programs were designed without considering the impact of the upcoming change in the century. If not corrected, many computer applications and systems could fail or create erroneous results by or at the year 2000. The Company has established a Year 2000 task force and developed an extensive plan to ensure that its systems have the ability to process transactions in the next century. The Company believes that it has identified the applications which will need to be modified and both internal and external resources will be utilized to reprogram and test software for year 2000 compliance. It is anticipated that the Company's Year 2000 modification project will be completed on time at an estimated total cost of approximately $2.0 million. This cost will be expensed as incurred except for the installation of new applications which are already Year 2000 compliant, the cost of which will be capitalized. Although the Company believes that it will be able to achieve Year 2000 compliance through these efforts, no assurance can be given that these efforts will be successful. The Company believes that the expenses and capital expenditures associated with achieving Year 2000 compliance will not have a material effect on future financial results. The Company is also in the process of responding to customer surveys and evaluating whether key suppliers and customers are Year 2000 compliant. In the event that any of the Company's key suppliers do not successfully and timely achieve Year 2000 compliance, the Company's business or operations could be adversely affected. 32 39 BUSINESS GENERAL GBC is a worldwide leader in the design, manufacture and marketing of branded office products, office equipment and related supplies, and thermal laminating film. GBC's major products include (i) binding equipment and supplies, (ii) laminating equipment and supplies, (iii) visual communication products (such as marker boards, bulletin/planning boards and easels), (iv) paper shredders and (v) thermal laminating film (used primarily to encapsulate or protect documents, book covers and school-related materials). GBC also provides maintenance services for its binding and lamination equipment customers. Revenues derived from sales of consumable supplies and maintenance services together accounted for approximately 55% of GBC's 1997 pro forma revenues of $883 million. GBC sells its products both to resellers and directly to end-users with an emphasis on providing customers with a broad range of high-quality products supported by high levels of customer and value-added services. GBC is one of the largest suppliers of office products, equipment and supplies to resellers with 1997 pro forma revenues of $429 million in the Company's Office Products Group. GBC's customers include most of the major U.S. office products resellers, such as office products superstores, wholesalers, contract/commercial stationers, mail order companies and other retail dealers, as well as office products resellers in Europe, the Asia/Pacific region and Latin America. In addition, GBC sells its binding equipment and related supplies, lamination equipment and thermal laminating film, and related services, through the Company's Document Finishing Group and Films Group directly to approximately 100,000 active customers in the United States and abroad. These customers include general office customers (e.g., consulting, financial services, legal and accounting firms), commercial customers (e.g., reprographic centers and copy shops), education/training customers (e.g., schools and training centers), commercial printers and government agencies. The Company increased its revenue base from $458 million in 1995 to $883 million, on a pro forma basis, in 1997, representing a CAGR of 39%. During this same period, the Company's EBITDA more than doubled from $53 million to $109 million on a pro forma basis, representing a CAGR of 43%, while its EBITDA margin increased from 11.6% to 12.3% on a pro forma basis. The majority of the Company's revenue growth occurred in the Office Products Group, where revenues grew from $97 million in 1995 to $429 million on a pro forma basis in 1997, through acquisitions, principally Quartet and Ibico, and internal revenue growth. Effective January 1, 1997, the Company acquired Quartet, a leading manufacturer and marketer of visual communication products, for approximately $216 million, including the assumption of debt. On February 27, 1998, the Company acquired Ibico, a leading manufacturer and marketer of binding and laminating equipment and supplies, for cash consideration and assumption of debt of approximately $130 million. These and other recent acquisitions have provided the Company with further penetration into the U.S. and international markets, new key customer relationships and additional complementary product lines. INDUSTRY FUNDAMENTALS From 1995 to 1997, GBC's revenues from existing operations, excluding the impact of acquisitions, increased by 18% primarily due to strong industry fundamentals. Management believes that the primary factors resulting in the Company's strong intrinsic growth in its Business Groups include: (i) the increasing number of office workers as the U.S. economy continues to shift from a manufacturing base to a service base; (ii) the increasing number of document finishing sites as the number of home offices and small- and medium-sized businesses continues to grow in the U.S. and printing capabilities migrate toward individual end-users and away from traditional commercial printers and publishing houses; (iii) a growing interest in creating finished and distinctive documents, partly as a method of differentiation, caused by a general increase in the number of documents being produced; 33 40 (iv) an increased worldwide focus on education and training activities, particularly in the United States, and the preparation and display of related materials; (v) an increasing demand for lamination products to preserve, protect and enhance the output of a rapidly-growing base of color copiers and digital printers, particularly desktop and large-format digital color printers; and (vi) increasing environmental concerns and regulations in international markets which Management believes will cause commercial printers and other users to favor the thermal films marketed by the Company over solvent-based films. GBC's Office Products Group has experienced particularly strong sales growth due to, in addition to the above-mentioned factors, the rapid growth and consolidation of office products superstores, contract/ commercial stationers and wholesalers with which GBC enjoys strong customer relationships. The major superstores, contract/commercial stationers and wholesalers on average have experienced an approximate 38% CAGR in their sales over the past five years. Sales to these customers accounted for $251 million of GBC's 1997 pro forma revenues. COMPETITIVE STRENGTHS Management believes that the following competitive strengths have been the principal factors in the Company's success in establishing itself as a worldwide leader in the design, manufacture and marketing of branded office products, office equipment and related supplies, and thermal laminating film: LEADING MARKET POSITIONS IN MAJOR PRODUCT CATEGORIES WITH STRONG BRAND NAMES. The Company maintains leading market positions worldwide in binding and laminating equipment and supplies, certain visual communication products, including marker boards, bulletin/planning boards and easels, thermal laminating film products and paper shredders. GBC attributes its leading market positions primarily to its reputation for high-quality and reliable products, high levels of customer and value-added services, broad product offerings, technological innovation and state-of-the-art manufacturing facilities. Well-known brand names, including GBC(R), VeloBind(R), Shredmaster(R), Quartet(R), Pro-Tech(TM), Bates(R) and newly-acquired Ibico(R), have enhanced the Company's ability to successfully differentiate its product lines from those of its competitors. STRONG CUSTOMER RELATIONSHIPS. The Company enjoys long-standing relationships with many of its significant customers, averaging over 15 years with its top 10 customers, which collectively generated approximately 30% of the Company's pro forma revenues in 1997. The Company sells products both to resellers ("indirect channel") and directly to end users ("direct channel"). The Company sells to virtually all of the major U.S. indirect channel resellers in its markets and currently has approximately 100,000 active direct channel customers. GBC's indirect channel customers include the major U.S. office products superstores (e.g., Staples, Inc., Office Depot, Inc. and OfficeMax, Inc.), wholesalers (e.g., United Stationers and S.P. Richards), contract/commercial stationers (e.g., Boise Cascade Office Products Corporation, Corporate Express Inc., BT Office Products International, Inc., U.S. Office Products Company and the contract stationer divisions of Staples, Inc. and Office Depot, Inc.), mail order companies (e.g., Quill, Reliable Corporation, Viking Office Products, Inc., Global DirectMail Corp. and Staples Direct) and other retail dealers, as well as office products resellers in Europe, the Asia/Pacific region and Latin America. The Company's direct channel customers include general office customers (e.g., consulting, financial services, legal and accounting firms), commercial customers (e.g., reprographic centers and copy shops), education/training customers (e.g., schools and training centers), commercial printers and government agencies. Management believes that the Company's strong customer relationships will enable it to capitalize on the increasing demand for office products, office equipment and related supplies and film as well as facilitate its introduction of new products and services. SIGNIFICANT REVENUE FROM CONSUMABLE SUPPLIES AND SERVICES. GBC has approximately 100,000 direct channel customers with installed binding and laminating equipment. These customers provide the Company the opportunity to generate significant recurring and higher-margin revenues from the sale of consumable 34 41 supplies and services, such as binding materials, thermal film products, presentation covers, index tabs and maintenance contracts. Revenue generated from sales of consumable supplies and maintenance services to these direct channel customers and to indirect channel customers accounted for approximately 55% of GBC's 1997 pro forma revenues. SUPERIOR LEVELS OF CUSTOMER AND VALUE-ADDED SERVICES. The Company provides its customers in both the indirect and direct channels with high levels of customer and value-added services. Value-added services include providing marketing consultation to indirect channel customers (e.g., designing appealing product displays) and assisting customers with enhancing their inventory management systems (e.g., delivering bar-coded shipments to customers to facilitate the customers' inventories and distribution processes). In addition, the Company has developed efficient distribution systems for its office and film products which enhance its ability to fill customer orders quickly, ship complete multiple-product orders in a single shipment, ensure prompt deliveries and achieve high customer order fill rates. Management believes that the Company's high levels of customer and value-added services have enabled it to build strong relationships with customers and successfully differentiate itself from many of its competitors. EXPERIENCED MANAGEMENT TEAM. The Company has a highly-experienced management team with a record of achieving strong internal growth and successfully integrating strategic acquisitions. The Chief Executive Officer and the heads of the Company's Office Products Group, Document Finishing Group and Films Group have, on average, 22 years of experience in their respective sectors. The Company's current management team has completed the acquisition of 10 businesses or product lines since 1995, with aggregate annualized revenues at the time of such acquisitions of approximately $324 million. From 1995 to 1997, this management team also has overseen revenue growth, excluding the impact of acquisitions, of 18%. MANUFACTURING EFFICIENCY. Management believes that the Company's manufacturing operations are among the most efficient in its major product lines, allowing the Company to maintain a highly competitive cost structure. High-volume production at the Company's major facilities provides significant economies of scale, enables the Company to invest in selective vertical integration, and allows the Company to achieve meaningful purchasing power for raw materials and outsourced manufacturing services. In addition, the Company has made significant investments in state-of-the-art manufacturing equipment to ensure efficient production and minimize waste. LANE INDUSTRIES OWNERSHIP AND SPONSORSHIP. Approximately 62% of the Issuer's outstanding Common Stock (after giving effect to the possible conversion of Class B Common Stock) is owned by Lane Industries, a diversified holding company located in Northbrook, Illinois. Lane Industries was recently ranked among the largest privately-held companies in the United States and has provided important financial support and management and professional services to GBC (e.g., Lane Industries provided a $100 million subordinated bridge facility to the Company in connection with the Ibico Acquisition). BUSINESS STRATEGY The Company's objective is to strengthen its position as a worldwide leader in the design, manufacture and marketing of branded office products, office equipment and related supplies, and thermal laminating film by pursuing the following strategies: MAINTAIN AND EXPAND RELATIONSHIPS WITH KEY CUSTOMERS. The Company enjoys long-standing relationships with many of its significant customers, averaging over 15 years with its top 10 customers in 1997, and seeks to expand its market positions and customer base by offering a broad range of high-quality products supported by high levels of customer and value-added services. In particular, the Company believes that it has the opportunity to achieve greater market penetration in both its direct and indirect channels by introducing new and technologically enhanced products at competitive prices. PURSUE GLOBAL GROWTH OPPORTUNITIES. Management believes that certain of the international markets for its products are expanding at growth rates significantly higher than those in the United States. The Company has marketed its products outside of North America for over 40 years and currently operates in over 115 countries. The Company believes that it has built an infrastructure, in part through the Ibico Acquisition, 35 42 capable of accommodating significant global expansion. Many of the Company's major Office Products Group customers are expanding into international markets and are demanding the same levels of quality and service as they require in North America. Management believes that GBC is well-positioned to service these customers due to its broad product offerings and extensive distribution capabilities. The Company also expects its Films Group to experience strong growth as thermal lamination films marketed by the Company continue to displace solvent lamination films as a result of increased environmental concerns and regulations in international markets. The Company has expanded its international revenue from $165 million in 1995 (or 36% of the Company's total revenues) to $291 million, on a pro forma basis in 1997 (or 33% of the Company's total pro forma revenues). SELECTIVELY PURSUE ACQUISITIONS AND JOINT VENTURES. The Company believes that opportunities exist to expand the market positions of each of its global Business Groups through strategic acquisitions and joint ventures. The Company intends to target companies and product lines that (i) maintain and strengthen its competitive leadership positions, (ii) complement its existing businesses through expanded product lines, (iii) enhance its relationships with existing customers and establish relationships with new customers, or (iv) facilitate penetration into new and developing business areas and geographic territories. The Company believes that it can realize significant sales growth and improved profitability through acquisitions as a result of economies of scale, operating synergies resulting from the integration of manufacturing and distribution operations, and expansion of the Company's presence in the United States and in growing international markets. INDUSTRY OVERVIEW The Company operates primarily in two markets, the office products market and the lamination film products market. THE OFFICE PRODUCTS MARKET. Manufacturers and distributors in the office products market supply office products to end-users through the direct and indirect channels. Sales are generated through the direct channel by sales forces, dealers and telemarketers and through the indirect channel by office products superstores, contract/commercial stationers, wholesalers, mail order companies, retail dealers and mass merchandisers. End-users in the market primarily consist of (i) general office markets (e.g., large corporations and professional organizations or firms, primarily service-related companies, with in-house users and/or reprographics departments, including manufacturing, consulting, financial service, accounting, legal, architectural, engineering and advertising firms), (ii) small businesses and individual consumers with home offices, (iii) commercial markets (e.g., reprographic centers and quick printers/copy shops), (iv) education markets (e.g., schools and training centers), and (v) government markets (e.g., federal, state, and local governments and government agencies). In the United States, consolidation has occurred at all levels of the indirect channel of the office products market, with superstores gaining significant market share over the past several years. In 1997, the three major superstores had revenues of $15.7 billion (a portion of which were derived from other office product reseller channels), the four major independent contract/commercial stationers had revenues of $10.9 billion, the two major wholesalers had revenues of $3.6 billion and the three major independent mail order firms had estimated revenues of $3.2 billion. The following table of information from industry sources illustrates the trend toward consolidation in the indirect channel over the past several years as shown by changes in shipments of office supplies, a subset of the overall office products market. 36 43 MANUFACTURERS' SHIPMENTS OF OFFICE SUPPLIES BY SEGMENT
1990 1997 ---- ---- Superstores................................................. 7.3% 24.3% Contract/commercial stationers.............................. 23.7 28.4 Wholesalers................................................. 22.4 16.5 Mail order companies........................................ 4.6 3.6 Small and medium size dealers............................... 12.5 2.5 Mass merchandisers.......................................... 14.2 15.3 Government and direct....................................... 6.6 1.1 Other....................................................... 8.7 8.3 ----- ----- 100.0% 100.0%
International office product markets are, by comparison, relatively undeveloped and fragmented, with little cross-border distribution. U.S.-based superstores are beginning to penetrate international markets, and the Company believes that a consolidation trend similar to the trend experienced in the U.S. will occur in international markets, particularly in the European market. THE LAMINATION FILM PRODUCTS MARKET. Lamination significantly enhances a product's real and perceived value by adding durability (e.g., making paper stock more tear resistant and stronger), increasing attractiveness (e.g., making materials look and feel more substantial, as well as protecting inks and images against fading, scratching and smudging), and adding security (e.g., making security products, such as identification badges, drivers' licenses and passports more difficult to alter). The lamination film products market includes three primary types of laminating films and related equipment: (i) solvent-based films (which are believed to adversely affect the environment) and aqueous-based films (which are believed to be more environmentally-neutral), both of which are considered "wet" films; (ii) thermal films; and (iii) "cold" or pressure-sensitive films. End-users primarily consist of (i) general office markets (e.g., primarily service-related corporations and professional organizations or firms with in-house users and/or reprographics departments, including manufacturing, consulting, financial service, accounting, legal, architectural, engineering, graphic design/advertising firms, as well as small businesses and individual consumers with home offices), (ii) commercial markets (e.g., reprographic centers, quick printers/copy shops, screen printers, photo labs), (iii) education/training markets (e.g., schools and training centers), (iv) the commercial printing market, and (v) government markets (e.g., federal, state, and local governments and government agencies). PRINCIPAL BUSINESS GROUPS OFFICE PRODUCTS GROUP. GBC's Office Products Group is one of the world's leading suppliers of office products in its major product categories. Its products include binding and lamination equipment and supplies, visual communication products (such as marker boards, bulletin/planning boards and easels, as well as related accessories) and paper shredders. The Office Products Group distributes its products principally to the indirect office products channel, consisting of office products superstores, contract/commercial stationers, wholesalers, mail order companies and other smaller resellers. The Office Products Group seeks to leverage its strong brand names (e.g., GBC, VeloBind, Shredmaster, Quartet, Ibico, Bates and Baker), logistics, service and distribution capabilities, breadth of product lines and experienced management team to capitalize on growth opportunities resulting from the consolidation trend in the office products industry. Such consolidation has resulted in greater demands being placed on suppliers, such as GBC, for broader product lines, competitively-priced products, consistent quality, short delivery times, high fill rates and enhanced customer service. GBC believes it is well-positioned to maintain its leadership positions across its product lines in the United States and to advance its international presence as its customers expand into international markets and demand similar levels of quality and service as they require in North America. GBC markets its office products through the Company's own sales organization, consisting of 15 sales persons, and a network of approximately 85 independent sales representatives and groups. 37 44 DOCUMENT FINISHING GROUP. The Document Finishing Group markets GBC's most comprehensive range of binding equipment and supplies. The Group supplies plastic comb, ring, strip, thermal, and plastic coil and wire binding products, and provides maintenance services directly to general office, commercial, education/ training and governmental users. The Document Finishing Group manufactures and markets both manual and electric punching and binding systems ranging from small desktop machines for the occasional user to high-capacity products to serve the commercial printing and fast-growing on-demand publishing markets. It recently introduced in-line punching and binding systems which attach directly to high-volume electrostatic printers to automate the process of high-speed printing, punching and binding finished documents. The Document Finishing Group also offers professionally designed loose-leaf binders, customized covers, index tabs and other image-enhancing binding and presentation products, primarily to commercial and corporate customers, utilizing high-technology graphics and printing capabilities. In addition, the Company believes that it is the only industry participant offering extensive nationwide, on-site maintenance services to customers which use its mid-to high-end punching and binding equipment. The Group sells it products and services through a direct sales organization of approximately 275 field and management staff, an inbound and outbound telemarketing operation of approximately 100 employees and a technical service and repair organization of approximately 105 employees. Augmenting the direct sales organization, the Document Finishing Group also markets its products through a full-line dealer organization consisting of approximately 160 independent dealers who sell a wide range of GBC products. FILMS GROUP. The Films Group is one of the world's largest manufacturers and marketers of thermal laminating film products, which are used to preserve, protect and enhance the appearance of documents. The Films Group sells its products primarily to the general office, commercial, education/training, commercial printing (primarily to support the book publishing industry) and government markets. Management attributes its leadership position primarily to its state-of-the-art film manufacturing technology, broad-based and innovative product lines, well-established customer relationships and low-cost production capabilities. The Films Group offers customers a wide variety of lamination equipment ranging from desktop equipment, commonly used in schools, to high-speed lamination systems, commonly used by large commercial printers, and films ranging from standard film products to customized film solutions to meet specific customer needs. The Films Group also offers extensive nationwide, on-site maintenance service to users of its laminating equipment. Lamination product applications include book covers, annual reports, menus, magazine covers, packaging, posters, drivers' licenses and passports. The Films Group also provides a wide range of lamination products under its Pro-Tech brand product line to the rapidly expanding large-format, short-run, digital color printing market. Management believes that the demand for lamination products to enhance the color of images and provide protection against fading and wrinkling will increase significantly as color copiers and digital printing technology, especially for color printers, continues to decline in cost and be used to create more finished and distinctive documents. In addition, Management believes that large-format digital color printers will continue to displace traditional methods of reproducing large images for display advertising, point-of-purchase setups, posters, billboards and other materials. These products and services are marketed by the Group's direct sales organization of approximately 80 field and management staff, an inbound and outbound telemarketing operation of approximately 20 personnel and a technical service and repair organization of approximately 45 employees. IBICO ACQUISITION On February 27, 1998, the Company acquired all of the outstanding stock of Ibico, headquartered in Zurich, Switzerland, for cash consideration and the assumption of debt aggregating approximately $130 million. The Company financed the acquisition of Ibico with borrowings under its Credit Facility and $60 million of proceeds under the Bridge Loan. See "Certain Relationships and Related Transactions." The amount of the purchase price paid by the Company for Ibico is subject to a post-closing adjustment based on Ibico's audited EBITDA for the year ended December 31, 1997 and audited net working capital as of February 27, 1998. Based upon Ibico's audited financial statements, the Company believes that it is entitled to a reimbursement of a portion of the purchase price and is currently engaged in discussions with the former shareholder of Ibico to determine the amount of such adjustment. 38 45 Ibico is principally a manufacturer and marketer of branded binding and laminating equipment and related supplies, which it sells through the indirect channel in the United States, Europe, Asia and South America. Ibico's major indirect channel customers include Office Depot, Inc., OfficeMax, Inc. and Viking Office Products, Inc. Ibico generated revenues and EBITDA of $113.5 million and $4.8 million, respectively, for the year ended December 31, 1997, with over $60 million of revenues generated outside of the United States. Ibico manufactures its products at three manufacturing facilities located in Germany, Portugal and Mexico, which are supported by sales and marketing subsidiaries in the U.S., Canada, Chile, Singapore, Germany, Italy, England, The Netherlands, France, Taiwan, Spain and Sweden. The acquisition of Ibico represents a continuation of the Company's strategy to expand and strengthen relationships with existing and new customers and pursue global expansion, all of which Management believes will result in increased sales growth and improved profitability. In particular, the Ibico Acquisition (i) significantly expands the Company's global manufacturing and distribution base in Europe, South America and Asia, (ii) provides key new or expanded customer relationships with Office Depot, OfficeMax and Viking Office Products, and (iii) broadens the Company's product offerings with branded complementary products supported by strong research and development capabilities. Management also believes it has the potential to realize substantial cost savings through the integration of Ibico with the Company's existing businesses, which should result in greater purchasing power for raw materials and outsourced manufacturing services, more efficient plant utilization and the leveraging of the Company's distribution and fixed-cost structure. SALES, MARKETING AND DISTRIBUTION The Company markets its products to end-users through two primary channels of distribution: (i) directly through its own sales force, telemarketers and independent dealers; and (ii) indirectly through resellers purchasing from wholesalers and directly from the manufacturers. See "Industry Overview." The Company's Office Product Group markets a variety of office products to the indirect channel through its own sales force of 15 persons and a network of approximately 85 independent sales representative groups and organizations. The Company's Document Finishing Group markets its products and maintenance services to the direct channel through a direct sales organization consisting of approximately 275 field and management staff, an inbound and outbound telemarketing operation of approximately 100 employees and a network of approximately 160 independent dealers. The Company's Films Group markets its lamination products and services through its own direct sales network, consisting of 75 Company sales representatives in the United States, Europe and the Asia/Pacific region, and its inbound and outbound telemarketing operation of approximately 20 employees. CUSTOMERS As a result of the consolidation of indirect channel resellers of office products, equipment and supplies, the Company's largest customers tend to be customers of the Office Products Group, which primarily serves the indirect channel. The Document Finishing Group and the Films Group sell their products to a broad base of smaller customers through the direct channel. For the year ended December 31, 1997, on a pro forma basis, no single customer of the Company accounted for more than 10% of sales, and the top 10 customers of the Company accounted for approximately 30% of its sales. The Company's 10 largest customers based on pro forma sales for the year ended December 31, 1997 (in alphabetical order) are Boise Cascade Office Products Corporation, BT Office Products International, Inc., Corporate Express Inc., Office Depot, Inc., OfficeMax, Inc., Phoenix Color Corp., Quill, S.P. Richards, Staples, Inc. and United Stationers. Other major customers of the Company include Coral Graphics, Kinkos, Merrill Lynch, RR Donnelley & Sons and Salomon Smith Barney. COMPETITION The Company faces substantial competition in all of its product lines, although it knows of no other company with which it competes across the entire spectrum of its product offerings. In the desktop binding 39 46 product category, among its many worldwide competitors are Acco-Rexel, Ltd., Attalus S.A., Bind-It Corporation, Bohm & Co. GmbH, Channel Bind, Coverbind Corporation, Esselte AB, Krause Ind., Lamirel, Lassanne Plasticos Ltd., M.S. Yosan, S.A., NSC International, Performance Design, Inc., Plastikoil, Powis- Parker Company, Formatic, Renz GmbH, Southwest Plastic Binding Company, Spiral Binding Co., Tahsin, Unicoil and Ta-Ta Office Products. The Company not only competes with the foregoing manufacturers and distributors of equipment and supplies that are similar to the Company's desktop binding products, but it also competes with many other manufacturers and sellers of less expensive methods of binding or finishing documents. In the visual communication products category, the Company competes not only with other companies that have national and/or international distribution capabilities, but also with numerous companies that have more limited regional or local distribution. Among the larger competitors in this product category are Boone International, Inc., Ghent Manufacturing Inc., Stempel Manufacturing Co., Inc., Day Runner, Inc., Apollo Manufacturing, Testrite and Bretford. Among the larger competitors in the paper shredder product category are Fellowes Manufacturing Co., Acco-Rexel, Ideal Krug GmbH, Michael Business Machines, Dahle & Co., Schleicher & Co. AG and Meiko Shokai Co., Ltd. In all of the foregoing product categories, the Company also faces the threat of potential competition from new entrants as all of these categories can be easily entered without investing significantly in plant and equipment by parties with access to distribution in the office products channel. In the film lamination products category, the Company also competes in a worldwide market with many other manufacturers and distributors. Among the many competitors in this category are Banner American, Bryce Mfg., D&K Group, Inc., Glenroy, Inc., Seal Products Inc., Graphic Laminating, Inc., Morane and Transilwrap Company, Inc. With respect to all of the Company's product offerings, the Company believes that its long-term success is largely dependent on its ability to manufacture price-competitive products, provide superior levels of product quality, provide outstanding customer service, develop innovative products and market its products effectively. RAW MATERIALS The primary materials used to manufacture many of the Company's products are polyester and polypropylene substrates, PVC, aluminum and wood. These materials are available from a number of suppliers and the Company is not dependent upon any single supplier for any of these materials. The Company has certain economies of scale provided by its high-volume production allowing it to generally secure favorable raw material costs because of its significant purchasing requirements and long-term relationships with key suppliers. Based on its experience, the Company believes that these materials will be readily available for the foreseeable future. See "Risk Factors -- Exposure to Cost and Supply Fluctuations in Certain Raw Materials." In general, the Company's gross profit is affected from time to time by fluctuations in the prices of these materials because the highly competitive markets for its products may make it difficult to pass through price increases to customers. However, the Company believes that its competitors are affected in a similar way, and that differences in inventory levels among the Company and its competitors do not provide any company in the industry with a long-term competitive advantage. MANUFACTURING AND STRATEGIC SUPPLY RELATIONSHIPS Management believes that a key competitive manufacturing advantage of the Company is its strategically-located, state-of-the-art, high-volume manufacturing and assembly plants. Each global Business Group has dedicated manufacturing plants producing a distinct product line (e.g., binding supplies, punch and bind equipment, pouch and film products, visual communications products and customized supplies). The Company maintains highly-modernized equipment in its plants. The Company's film and plastic plants currently operate 24 hours a day, seven days a week, whereas the Company's other plants generally operate one or two shifts a day as needed to meet customer demand. The plants have the flexibility to meet fluctuations in demand and have the capacity to expand to accommodate growth. All plants have ongoing 40 47 programs to reduce costs and to improve quality and service. Quality control programs are maintained with respect to suppliers, line performance and product integrity. For certain products, such as laminating machines and supplies and paper shredder systems, the Company operates with partners through global manufacturing and marketing alliances to share research and development opportunities, lower product costs and minimize capital expenditures. In 1996, the Company invested approximately $10 million to acquire a 33% equity interest in GMP Co., a leading worldwide supplier of laminating systems and supplies, primarily for retail markets, located in the Republic of Korea. The Company also has a strategic alliance with Primax Ltd. of Taipei, Taiwan, a leading worldwide supplier of paper shredders. In 1997, on a pro forma basis, it is estimated that laminating machines manufactured by GMP represented approximately 3.2% of pro forma 1997 revenues and that paper shredders manufactured by Primax represented approximately 4.5% of pro forma 1997 revenues. See "Risk Factors -- Dependence on Certain Suppliers of Manufactured Products." EMPLOYEES At March 1, 1998, the Company had approximately 5,865 employees, approximately 60% of which were located in the United States. Of the Company's U.S. employees, approximately 75% are hourly wage employees, approximately 2% of which are members of various U.S. labor unions and are covered by collective bargaining agreements which expire prior to January 1, 1999. The Company has not experienced a work stoppage in its recent history. Management believes that the Company has excellent relations with its employees. ENVIRONMENTAL MATTERS The Company and its operations, both in the United States and abroad, are subject to Environmental Laws that impose limitations and prohibitions on the discharge and emission of, and establish standards for the use, disposal and management of certain materials and waste, and impose liability for the costs of investigating and cleaning up, and certain damages resulting from, present and past spills, disposals, or other releases of hazardous substances or materials. In addition, Environmental Laws such as CERCLA, in the United States, impose liability on several grounds for the investigation and cleanup of contaminated soil, groundwater, and buildings, and for damages to natural resources, at a wide range of properties. The Company is not aware of any material noncompliance with the Environmental Laws currently applicable to it and is not the subject of any material claim for liability with respect to contamination at any location. For its operations to comply with Environmental Laws, the Company has incurred, and will continue to incur, costs which were not material in fiscal 1997 and are not expected to be material in the foreseeable future. See "Risk Factors -- Environmental Matters." 41 48 FACILITIES In addition to the manufacturing locations listed below, the Company operates sales and service offices throughout the world, six regional distribution warehouses in the United States, a 60,000 square foot world headquarters building in Northbrook, Illinois and a 30,000 square foot headquarters for its Office Products Group in Skokie, Illinois. The Company believes that the Company's manufacturing, warehouse and administrative facilities are in good condition, are suitable and adequate for its operations and generally provide sufficient capacity to meet its needs for the foreseeable future. Major manufacturing is conducted at the following plant locations:
LOCATION SQ. FOOTAGE OWNED/LEASED - -------- ----------- ------------ (IN THOUSANDS) Booneville, Mississippi............................. 420 Owned Ashland, Mississippi................................ 180 Owned Addison, Illinois................................... 91 Owned Basingstoke, England................................ 81 Leased Buffalo Grove, Illinois............................. 80 Leased St. Louis, Missouri................................. 73 Owned Arcos de Valdevez, Portugal*........................ 68 Owned Pleasant Prairie, Wisconsin......................... 64 Leased Lincolnshire, Illinois.............................. 64 Leased Pleasant Prairie, Wisconsin......................... 56 Leased Acuna, Mexico*...................................... 53 Owned Nuevo Laredo, Mexico................................ 49 Leased Phoenix, Arizona.................................... 40 Owned Lottstetten, Germany*............................... 40 Owned Kerkrade, Holland................................... 37 Owned Hagerstown, Maryland................................ 33 Owned Perth, Australia.................................... 30 Owned Amelia, Virginia.................................... 26 Owned Auburn Hills, Michigan.............................. 26 Leased Madison, Wisconsin.................................. 25 Leased Tornaco, Italy...................................... 22 Owned Don Mills, Ontario, Canada.......................... 17 Leased
- ------------------------- * These facilities were acquired as part of the Ibico Acquisition on February 27, 1998. See "Business -- Ibico Acquisition" and Note 14 to the Consolidated Financial Statements for additional discussion of the Ibico Acquisition. INTELLECTUAL PROPERTY Many of the equipment and supply products manufactured and/or sold by the Company and certain application methods related to such products are covered by United States and foreign patents. Although the patents owned by the Company are highly important to its business, the Company does not consider its business materially dependent on any of those patents. The Company owns the GBC, VeloBind, Quartet, Ibico, Pro-Tech, Baker and Bates trademarks and considers those trademarks material to its business. The Company also owns numerous other important trademarks related to specific products; however, the Company does not consider its business materially dependent on any of those trademarks. LEGAL PROCEEDINGS The Company is party to various litigation matters arising in the ordinary course of business. The ultimate legal and financial liability of the Company with respect to currently pending litigation cannot be estimated with certainty, but the Company believes, based on its examination of such matters, experience to date and discussions with counsel, that such ultimate liability will not be material to the business, financial condition or results of operations of the Company. 42 49 MANAGEMENT The following table sets forth certain information concerning each of the Company's executive officers, key employees and directors.
NAME AGE POSITION(S) WITH THE COMPANY - ---- --- ---------------------------- William N. Lane III.................. 54 Chairman and Director Govi C. Reddy........................ 53 President, Chief Executive Officer and Director Howard B. Green...................... 42 Group President, Office Products Elliott L. Smith..................... 64 Group President, Document Finishing Walter M. Hebb....................... 58 Senior Vice President, Strategic Planning/Business Development William R. Chambers, Jr. ............ 43 Vice President and Chief Financial Officer Steven Rubin......................... 51 Vice President, Secretary and General Counsel Wally G. Schnell, Jr. ............... 52 Vice President, Business Technology Perry S. Zukowski.................... 40 Vice President, Human Resources Richard R. Gilbert................... 44 President, Quartet Manufacturing Division Robert O'Connor...................... 59 Vice President, Films Group -- Commercial Lamination John E. Turner....................... 49 Vice President, Films Group -- Large-Format Lamination Richard U. De Schutter............... 58 Director Theodore Dimitriou................... 71 Director Rudolph Grua......................... 69 Director Thomas V. Kalebic.................... 55 Director James A. Miller...................... 56 Director Arthur C. Nielsen, Jr. .............. 79 Director Warren R. Rothwell................... 81 Director Robert J. Stucker.................... 53 Director
William N. Lane III is the Chairman, President and a Director of Lane Industries, a diversified holding company which, in addition to its holdings in GBC, has interests in hotel, home security, farming and ranching operations and other investments, and has served in such capacity since September 1978. He was elected Chairman of the Company in May 1983. He also currently serves as a director of Wallace Computer Services, Inc., a business forms and computer service and supply company. Govi C. Reddy has been President and Chief Executive Officer and a Director of the Company since January 1995. Mr. Reddy has held progressively more responsible management positions since joining the Company in July 1978, the most recent of which was Senior Vice President, Subsidiary Operations and President of the Company's Film Products division. Howard B. Green has been Group President, Office Products since joining the Company in January 1997 as a result of the acquisition of the assets and business of Quartet Manufacturing Company by the Company where he served as Chief Executive Officer since 1995 and President from 1990 to 1995. Prior to that time, he was a corporate/tax attorney with Fried, Frank, Harris Shriver and Jacobson, a New York-based law firm. Elliott L. Smith was named Group President, Document Finishing in April 1998. Prior to that time he was Executive Vice President for more than five years. Before joining the Company in 1986, he held various executive positions at Dictaphone Corporation in sales and marketing. Walter M. Hebb has been Senior Vice President, Strategic Planning/Business Development of the Company since January 1998 after serving as Senior Vice President, Asia/Pacific since July 1995. Prior to July 1995, Mr. Hebb held various business development and marketing management positions with the Company. Prior to joining the Company in 1985, Mr. Hebb held various executive positions at Dictaphone Corporation and Automatic Data Processing in strategic planning, marketing and product development. William R. Chambers, Jr. has been Vice President and Chief Financial Officer of the Company since August 1997. Mr. Chambers joined the Company in November 1995 and served as Director of Manufacturing Development until 1997. Before joining the Company, he was an owner and chief executive officer of a custom 43 50 exhibit manufacturing and service company from 1988 to 1995. Prior to that time, Mr. Chambers held various positions at Lane Industries, including Vice President and Controller from 1983 to 1988, after holding various positions with Arthur Young & Co. Steven Rubin has been Vice President, Secretary and General Counsel since 1985 and has held various management and legal positions since joining the Company in 1972. Wally G. Schnell, Jr. has been Vice President, Business Technology since joining the Company in February 1997. Before joining the Company, he had been Managing Director of SHL Systemhouse since April 1995. Prior to that time he had been the Director of Information Services for Wallace Computer Services, Inc. Perry S. Zukowski has been Vice President, Human Resources of the Company since March 1998 and Assistant Vice President, Human Resources since March 1997. Prior to that time, Mr. Zukowski held various positions at Lane Industries since 1986, most recently holding the position of Assistant Treasurer and Risk Management Director. Prior to joining Lane Industries, his experience included various management positions at Walgreen Company. Richard R. Gilbert has been President, Quartet Manufacturing Division since joining the Company in January 1997 as a result of the Company's acquisition of the assets and business of Quartet Manufacturing Company where he served as President and Chief Operating Officer since 1995 and Executive Vice President since 1990. Mr. Gilbert joined Quartet Manufacturing Company in 1984 as Director of Sales and Marketing, and prior to that time, he held various sales and marketing positions with Abex Corporation, a subsidiary of IC Industries. Robert O'Connor has served as Vice President, Films Group -- Commercial Lamination of the Company since 1995. Prior to that time, Mr. O'Connor held various sales management positions since joining the Company in 1971. John E. Turner was named to the position of Vice President, Films Group -- Large-Format Lamination in October 1997 after serving as Vice President, European Film Products from December 1991 to October 1997. Prior to that time, Mr. Turner held various management positions in manufacturing and marketing in the Company's international operations since joining the Company in 1977. Richard U. De Schutter is currently the Chairman of the Board and Chief Executive Officer of G.D. Searle & Co., a specialty pharmaceutical and foods company, and has been in that position since April, 1995. Prior to assuming those responsibilities he served as President of Searle since December 1991. Theodore Dimitriou is currently the Chairman, and has been for more than the past five years, the Chairman and a director of Wallace Computer Services, Inc., a business forms and computer service and supply company. Rudolph Grua is a private investor. Prior to his retirement at the end of 1995, he had been the Company's Vice Chairman since January 1995. Before that time, he had been the Company's President and Chief Executive Officer since May 1984. He is also a director of the Varlen Corporation. Thomas V. Kalebic is currently Executive Vice President, Chief Operating Officer and a Director of Lane Industries. He has been an officer of Lane Industries since 1975. James A. Miller is currently President, Chief Executive Officer and Director of Alliant Food Service, Inc., a broadline foodservice distributor, and has been in that position since 1995. Prior to that time, Mr. Miller was affiliated with Kraft Foods since 1965, including serving as President of Kraft Foodservice unit since 1991, the predecessor to Alliant Food Service Inc. Arthur C. Nielsen, Jr. is Chairman Emeritus of the A.C. Nielsen Co., a market research firm, and now acts as a consultant to that company. Warren R. Rothwell is a private investor. He served as the Company's interim President from November 1983 to May 1984. He had previously been the Company's Chairman from November 1978 until his retirement in May 1983. Robert J. Stucker is a partner with the law firm of Vedder, Price, Kaufman & Kammholz. He is also a director of Lane Industries. 44 51 DIRECTOR'S COMPENSATION Directors who are not employees of the Company receive an annual director's fee of $20,000 and are paid $1,000 for each board meeting attended and $500 for each Audit Committee meeting attended. Employee directors receive $1,000 per meeting for attending regularly scheduled board meetings. In addition, Thomas V. Kalebic receives an annual fee of $5,000 to compensate him for board committee participation and for the additional service he provides the Issuer as a member of its Executive Committee. In addition to board fees, Rudolph Grua, in 1997, was paid a consulting fee of $50,000 and was paid $23,000 pursuant to a deferred compensation agreement he entered into with the Company when he was its President and Chief Executive Officer. Directors may elect to defer their annual and/or board meetings fees pursuant to a Phantom Stock Plan which was established by the Company in 1995. This Plan gives the Directors the ability to receive incentive compensation based on any appreciation of the Common Stock of the Company and on the dividends declared on such stock while the Directors remain in office. Management believes this Plan promotes a closer identity of interests between the Directors and the Company's shareholders. Any Director who elects to participate in the Plan receives Phantom Stock Units ("PSUS") in lieu of cash compensation for either or both of his annual director's or board meeting fees as he so chooses. PSUS received in lieu of the annual fee are credited as of the date of the Company's annual meeting of stockholders during the fiscal year in question. The number of PSUS credited is determined by dividing the amount of the annual fee by the average of the high and low prices at which the Company's Common Stock trades on The NASDAQ Stock Market on that date ("Value"). PSUS received in lieu of board meeting fees are credited to a Director's account at the Value on the day of the board meeting attended by the Director. Directors who maintain a PSUS account also receive dividend equivalents in a dollar amount equal to the cash dividend which the Director would have been entitled to receive if he had been the owner, on the record date for a dividend paid on the Company's Common Stock, of a number of shares of Common Stock equal to the total PSUS then credited to the Director's account. Dividend equivalents are converted into PSUS and credited to the Director's PSUS account at the Value existing on the last day of each fiscal year. A participating Director may only redeem his PSUS account through a lump sum cash payment within 30 days after he ceases to be a member of the board, and his rights under the Plan may not be assigned, encumbered or otherwise transferred except to a designated beneficiary in the event of the death of a participant. PSUS have no voting or other shareholder rights attached to them and the Company's obligation to redeem any PSUS is unsecured. At December 31, 1997, the PSUS account balances for the following named Directors were:
PHANTOM STOCK UNIT ACCOUNT BALANCE DECEMBER 31, 1997 PHANTOM STOCK UNITS ------------------------------- DIRECTOR EARNED IN 1997 (IN TOTAL UNITS) $ VALUE (1) -------- ------------------- ---------------- ----------- William N. Lane III............................... 244.936 646,481 19,516 Richard U. DeSchutter............................. 877.906 877.906 26,502 Theodore Dimitriou................................ 848.101 2,236.130 67,503 Thomas V. Kalebic................................. 780.855 2,303.209 69,528 James A. Miller................................... 353.345 353.345 10,667 Arthur C. Nielsen, Jr............................. 841.101 1,664.185 50,238 Govi C. Reddy..................................... 245.936 736.984 22,248 Robert J. Stucker................................. 748.359 2,211.773 66,768
- ------------------------- (1) Based on $30.1875 Value. 45 52 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION DECISIONS During 1997 and currently, Mr. Kalebic, a member of the Issuer's Executive Committee, served as an officer and director of Lane Industries of which William N. Lane III, the Company's Chairman is also the Chairman and Chief Executive Officer. See "Certain Relationships and Related Transactions." During 1997 and currently, Mr. Lane III has acted as Chairman of the Compensation Committee of the Board of Directors of Wallace Computer Services, Inc. of which Theodore Dimitriou, a Director of the Issuer, is Chairman of the Board. During 1997, executive officer compensation matters were principally decided by the Issuer's Executive Committee of the Board of Directors with the board in whole having oversight authority. The Executive Committee and the board also considered recommendations made by the Stock Option Plan Administrative Committee, whose members are currently Mr. Dimitriou, Mr. Rothwell and Mr. Miller, with respect to stock option matters. As members of the Issuer's board and its Executive Committee, Messrs. Lane III and Reddy participated in deliberations concerning their own compensation and the compensation of the other executive officers of the Company. 46 53 SENIOR EXECUTIVE COMPENSATION The compensation paid to executive officers of the Company is determined by the Executive Committee of the Board of Directors of the Company. The following table sets forth information regarding the compensation paid or accrued by the Company during its last three fiscal years to each of its five highest paid senior executive officers, including its Chief Executive Officer and one additional key employee (the "Named Executive Officers"), for services rendered to the Company in all capacities. SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION AWARDS ANNUAL COMPENSATION ------------ ---------------------------------------- SECURITIES TOTAL OTHER ANNUAL UNDERLYING ALL OTHER COMPENSATION NAME AND SALARY BONUS(1) COMPENSATION OPTIONS/SARS COMPENSATION (TOTAL OF PRINCIPAL POSITION YEAR ($)(A) ($)(B) (2)($)(C) (#) (3)($)(D) COLUMNS A-D)($) ------------------ ---- ------ -------- ------------ ------------ ------------ --------------- William N. Lane III................ 1997 230,000 115,000 -- 15,000 11,700(4) 356,700 Chairman of the 1996 229,991 161,000 -- 60,000 11,250 402,241 Board 1995 210,865 150,500 45 10,000 11,535 372,945 Govi C. Reddy........ 1997 450,609 225,004 14,264 12,000 11,700(4) 701,577 President and Chief 1996 350,012 262,500 13,060 48,000 11,250 636,822 Executive Officer 1995 294,234 225,000 9,327 25,000 11,535 540,096 Howard B. Green...... 1997 300,000 302,400 -- -- 32,750(6) 635,150 Group President, Office Products(5) Elliott L. Smith..... 1997 245,342 124,204 9,638 5,000 11,700 390,884 Group President, 1996 228,385 119,902 9,371 17,000 11,250 368,908 Document Finishing 1995 217,795 108,265 6,513 2,500 11,941 344,514 Walter M. Hebb....... 1997 183,846 -- 5,873 3,500 11,700 201,419 Senior Vice 1996 173,731 84,693 6,643 13,000 11,250 276,317 President, 1995 160,180 85,750 5,434 3,000 8,389 259,753 Strategic Planning/Business Development Richard R. Gilbert... 1997 240,000 180,000 -- -- 14,400(7) 434,400 President, Quartet Manufacturing Co. Division(5)
- ------------------------- (1) Annual bonus amounts are earned and accrued during the fiscal years indicated, and paid subsequent to the end of such year. (2) The above named individuals receive certain non-cash personal benefits, the aggregate cost of which to the Company are below applicable reporting thresholds. The amounts included in this column represent the amounts reimbursed to the named individuals for income taxes attributable to such personal benefits. (3) Unless otherwise noted below, these amounts for the year 1995 represent contributions by the Company to the Company's tax qualified Profit Sharing, Savings and Retirement Plan Trust and for the years 1996 and 1997 to the Company's 401(k) Savings and Retirement Plan on behalf of the named individuals and to their respective accounts established pursuant to the Company's non-tax qualified Supplemental Deferred Compensation Plan. (4) This amount also includes Board of Director's fees paid in 1995 to the following named individuals in amounts as follows -- Mr. Lane III $1,000 and Mr. Reddy $1,000. 47 54 (5) Mr. Green and Mr. Gilbert were hired by the Company in January, 1997 in connection with the Company's acquisition of the business and assets of The Quartet Manufacturing Company. As part of the transaction, Messrs. Green and Gilbert entered into non-competition agreements with the Company for which the Company is paying Mr. Green $17,000 per month and Mr. Gilbert $10,000 per month. The Company's obligation under these non-competition agreements ceases on either January 15, 2000 or the date upon which the employment by the Company of the respective individuals terminates, whichever first occurs. The non-competition obligations of Messrs. Green and Gilbert continue for a period of three years following any termination of their employment with the Company. The non-competition consideration paid to Messrs. Green and Gilbert is treated as base compensation in addition to their salaries for purposes of any award they earn pursuant to the Company's Management Incentive Compensation Plan. (6) Represents a $26,000 bonus paid to Mr. Green in lieu of retirement plan payments and a $6,750 Company contribution to his 401(k) Savings and Retirement Plan account. (7) Represents a $9,000 bonus paid to Mr. Gilbert in lieu of retirement plan payments and a $5,400 Company contribution to his 401(k) Savings and Retirement Plan account. RETIREMENT PLAN The Company maintains a Guaranteed Retirement Income Plan ("GRIP") covering all employees who participated in the Company's Profit Sharing Plan through December 31, 1995. GRIP provides in pertinent part for annual retirement benefits at age 65 and 30 years of benefit service equal to 50% of the average of the five highest consecutive years of compensation out of the last ten years worked. The retirement benefit is reduced by the annual income which would be provided by the purchase or funding of an annuity with the balance in the employee's retirement account under the Profit Sharing Plan and by 50% of the primary social security benefit payable at age 65. The amount of the retirement benefit and the social security offset are proportionately reduced for benefit service of less than 30 years. No benefit is payable, except in certain circumstances, to anyone with less than seven years participation in the Profit Sharing Plan. All benefits accruing and earned under GRIP for plan participants were frozen at the end of 1995 in connection with the Company's conversion of its Profit Sharing Plan to a 401(k) Savings Plan. As a result, no GRIP participant can accrue any additional plan benefits while GRIP remains frozen. No contribution was made by the Company in 1997 for GRIP because the Plan has been actuarially determined to be currently overfunded with respect to any Plan liability to participants. All of the Named Executive Officers presently participate in GRIP other than Mr. Green and Mr. Gilbert. For Named Executive Officers, their respective years of benefit service as of December 31, 1997 were as follows:
YEARS OF INDIVIDUAL BENEFIT SERVICE ---------- --------------- William N. Lane III......................................... 29 Govi C. Reddy............................................... 17 Elliott L. Smith............................................ 9 Walter M. Hebb.............................................. 9
Upon reaching age 65 the only Named Executive Officer entitled to receive a GRIP benefit would be Mr. Smith, and that benefit would be $556 per month. STOCK OPTION INFORMATION The following table sets forth the details of options to purchase Common Stock granted to the Named Executive Officers during 1997. The second table in this section sets forth certain information with respect to options exercised by those individuals in 1997 as well as the value of their unexercised options at the end of the year. 48 55 OPTION/SAR GRANTS IN LAST FISCAL YEAR(1)
INDIVIDUAL GRANTS ------------------------------------ NUMBER OF SECURITIES PERCENT OF TOTAL UNDERLYING OPTIONS/SAR'S GRANT DATE OPTION/SAR'S GRANTED TO EMPLOYEES EXERCISE OR BASE EXPIRATION PRESENT VALUE(2) NAME GRANTED(#) IN FISCAL YEAR PRICE($/SHARE) DATE ($) ---- ------------ -------------------- ---------------- ---------- ---------------- William N. Lane III..... 15,000 17.6 29.75 1/28/05 207,600 Govi C. Reddy........... 12,000 14.1 29.75 1/28/05 166,080 Elliott L. Smith........ 5,000 5.8 29.75 1/28/05 69,200 Walter M. Hebb.......... 3,500 4.1 29.75 1/28/05 48,400
- ------------------------- (1) All options granted to the named individuals were granted under the Company's 1989 Stock Option Plan on January 29, 1997. Twenty-five percent (25%) of each option first became exercisable one (1) year after the respective grant date. Only twenty-five percent (25%) of an initial option grant may be exercised during any one (1) year period commencing with the anniversary date of an option grant. All of these options were granted with an exercise price equal to the closing price of the Company's Common Stock after trading on the grant date in The NASDAQ Stock Market. No stock appreciation rights were granted in connection with these option grants. (2) Based on the Black-Scholes stock option pricing model. The following assumptions were made for purposes of calculating the Grant Date Present Value: the option term is assumed to be eight years; volatility at 37.15; a dividend yield of 1.5%; and, a risk-free interest rate of 6.65%. The actual value, if any, a named individual may realize will depend on the market value of the underlying shares at the time the option is exercised, so there is no assurance the value realized will be at or near the value estimated by the Black-Scholes model. The Company's use of this model should not be construed as an endorsement of its accuracy at valuing stock options. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END OPTION/SAR VALUES
VALUE OF UNEXERCISED NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS/SAR'S AT FISCAL OPTIONS/SARS AT FISCAL SHARES ACQUIRED ON VALUE REALIZED(1) YEAR-END EXERCISABLE/ YEAR-END(2) EXERCISABLE/ NAME EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE ($) ---- ------------------ ----------------- ----------------------- ------------------------ William N. Lane III................ 16,188 179,287 8,750/97,750 103,906/750,219 Govi C. Reddy........ 4,300 55,669 10,500/79,050 132,125/720,450 Elliott L. Smith..... -- -- 4,250/26,750 48,750/191,969 Walter M. Hebb....... 2,025 23,750 3,900/22,800 45,475/183,200
- ------------------------- (1) Value realized represents the difference between the option exercise price and the fair market value of the Company's Common Stock on the date the option was exercised. (2) Based on fair market value of $30.00 per share of Common Stock, the closing price on The NASDAQ Stock Market on December 31, 1997. 49 56 PRINCIPAL STOCKHOLDERS The following table sets forth certain information with respect to the beneficial ownership of the Issuer's Common Stock (including Common Stock and Class B Common Stock) as of March 1, 1998 by (i) each stockholder known by the Issuer to own beneficially 5% or more of the outstanding shares of Common Stock, (ii) each director and Named Executive Officer of the Issuer and (iii) all directors and executive officers of the Issuer as a group. To the knowledge of the Issuer, each stockholder has sole voting and investment power with respect to the shares indicated as beneficially owned, unless otherwise indicated in a footnote.
AMOUNT AND NATURE PERCENT OF BENEFICIAL BENEFICIALLY NAME CLASS OF STOCK OWNERSHIP OWNED(4) - ---- -------------- ----------------- ------------ Lane Industries, Inc.................... Class B Common Stock 2,398,275(1)(3) 100% One Lane Center Common Stock 9,781,334(2)(3) 62.2(4) Northbrook, IL 60062 Ariel Capital........................... Common Stock 1,471,891(5) 9.4(4) Management, Inc 307 N. Michigan Ave. Chicago, IL 60601 Richard U. De Schutter.................. Common Stock 1,000 * Theodore Dimitriou...................... Common Stock 2,000 * Rudolph Grua............................ Common Stock 48,964(6) * Thomas V. Kalebic....................... Common Stock 77,505(7) * William N. Lane III..................... Common Stock 261,602(8) 1.6 Arthur C. Nielsen, Jr................... Common Stock 25,500 * Govi C. Reddy........................... Common Stock 39,855(9) * Warren R. Rothwell...................... Common Stock 22,213(10) * Robert J. Stucker....................... Common Stock 4,500 * Howard B. Green......................... Common Stock 26,000 * Elliott L. Smith........................ Common Stock 21,234(11) * Walter M. Hebb.......................... Common Stock 13,826(12) * Richard R. Gilbert...................... Common Stock 1,300 * All Officers and Directors as a group... Common Stock 878,728(13) 5.6
- ------------------------- * Less than 1% (1) Class B Common Stock is convertible into Common Stock at the rate of one share of Common Stock for each Class B share upon presentation of a Class B share to the transfer agent and entitles the holder thereof to fifteen votes when voting together with the Common Stock. (2) Includes the 2,398,275 Class B shares described in note (1). (3) Lane Industries has the sole power to vote and to dispose of these shares. The voting stock of Lane Industries is owned by various trusts under which certain members of the family of William N. Lane, deceased, are beneficiaries. William N. Lane III, Chairman and a Director of the Issuer, and other members of the Lane family are considered to have control of Lane Industries by virtue of their control of the voting stock of Lane Industries through a Voting Trust Agreement under which they act as Voting Trustees. (4) As a percent of the outstanding shares after giving effect to the possible conversion of Class B Common Stock described in Note (1). (5) As of December 31, 1997, based upon information provided in a Schedule 13-G filed with the Securities and Exchange Commission and dated February 10, 1998. Ariel Capital has sole dispositive power over 50 57 all of these shares, has sole voting power over 1,365,316 of these shares, and shared voting power over 23,775 of these shares. (6) Includes 11,143 shares owned by Mr. Grua's wife, with respect to which Mr. Grua disclaims beneficial ownership. (7) At March 1, 1998 Mr. Kalebic had outstanding options to acquire from Lane Industries up to 180,000 shares of the Company's Common Stock at prices ranging from $14.50 to $30.00 each. Of those outstanding options, 20,250 were exercisable on March 1, 1998 but are not included in the figure incurred in the table. (8) Does not include 9,781,334 shares owned by Lane Industries, an affiliate of Mr. Lane III (see Notes (2) and (3)). Also includes 20,000 shares exercisable under stock options by May 1, 1998. (9) Includes 13,500 shares exercisable under stock options by May 1, 1998. (10) 1,213 of these shares are owned by Mr. Rothwell's wife. Mr. Rothwell disclaims beneficial ownership over these shares. (11) Includes 5,875 shares which could be obtained by exercising options under the Company's stock option plans by May 1, 1998. (12) Includes 4,775 shares which could be obtained by exercising options under the Company's stock option plans by May 1, 1998. (13) Includes 352,983 shares owned by the Company's Employee's 401(k) Savings and Retirement Plan. Messrs. Kalebic, Lane III and Reddy share the power to direct the disposition of these shares as members of the Company's Executive Committee of the Board. The members of the Executive Committee disclaim beneficial ownership of these shares. Also includes 49,238 shares exercisable under stock options or exercisable by May 1, 1998 under the Company's stock option plans. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Lane Industries is a diversified holding company which, in addition to its holdings in GBC, has interests in hotel, electronic security, farming and ranching operations and other investments. By virtue of its direct ownership of 7,383,059 shares of the Company's Common Stock and 100% of the 2,398,275 shares of the Issuer's Class B Common Stock outstanding (on a combined basis representing 62% of all outstanding capital stock) Lane Industries controlled 88% of the eligible votes of the Issuer's voting securities as of March 1, 1998. In 1978, the Company implemented a recapitalization plan (the "Plan") which had been previously approved by the stockholders. As part of the Plan, the Company entered into an agreement with Lane Industries under which the Company would receive 20% of Federal income tax savings realized from the filing by Lane Industries of consolidated Federal income tax returns. In 1997, the Company made $6.2 million in payments pursuant to this agreement which represented the Company's portion of its tax liability under this agreement. In 1985, the Company entered into an agreement with Lane Industries under which the Company would receive 20% of tax savings, if any, realized by filing unitary state tax returns on a combined basis with Lane Industries. In 1997, the Company made $41,000 in payments pursuant to such agreement which represented the Company's portion of its state tax liabilities under this agreement. Certain Lane Industries personnel perform federal and state income tax planning, legal, risk management, acquisition due diligence and finance services for the Company. The Company paid $2,257,769, $1,425,545 and $889,063 to Lane Industries for these and related support services and facilities costs in 1997 and the first two months of 1998, 1996 and the first two months of 1997 and 1995 and the first two months of 1996, respectively. The Company will pay amounts to Lane Industries for acquisition due diligence and advisory services in connection with the Ibico Acquisition and the Initial Offering. Management believes that the services provided by Lane Industries have been on fair and reasonable terms, and that the expense 51 58 incurred is less than the expense the Company would incur for employing its own personnel with comparable levels of skill and experience to perform these services. The Company makes reservations for business travel and accommodations through a travel agency which is controlled by Lane Industries. The Company pays the rates charged by the various carriers, hotels and car rental companies which in turn pay commissions to this travel agency. The Company booked approximately $1,105,600, $1,032,000 and $987,900 of business travel and accommodations through such travel agency in 1997 and the first two months of 1998, 1996 and the first two months of 1997 and 1995 and the first two months of 1996, respectively. On October 20, 1997, in anticipation of needing Swiss francs to complete the Ibico Acquisition, the Company agreed to purchase 20 million Swiss francs from Lane Investment Limited Partnership ("LILP"), of which Lane Industries is the general partner, at a cost of approximately $13,829,000. The price paid for the Swiss francs was based on the mid-point between the bid and ask forward exchange rates for April 30, 1998, the date the francs were to be delivered to the Company, as established on the contract date by The Bank of New York. The delivery date of the purchase was subsequently changed to February 27, 1998 to coincide with the scheduled closing date of the Ibico Acquisition. On the delivery date, the Company paid LILP approximately $13,831,200 to acquire the Swiss francs, reflecting the average foreign currency exchange rates on that date. Management believes that the Company paid a lesser amount to Lane Industries for the delivery of the foreign currency than it would have paid in a comparable arms-length open market transaction. On February 26 and 27, 1998, the Company borrowed a total of $60 million from Lane Industries pursuant to the Bridge Loan. The proceeds of these borrowings were used to partially finance the Ibico Acquisition. The Bridge Loan provided, in pertinent part, that (i) the Company could borrow up to $100 million from Lane Industries at any time prior to April 30, 1998, (ii) that all borrowings were subordinated to any other indebtedness of the Company, (iii) that all borrowings accrued interest at a rate per annum that floated with the London Interbank Offered Rate for three month loans as published by The Wall Street Journal plus a 2% margin through May 26, 1998 and margins ranging from 4% to 8% thereafter, and (iv) that all borrowings, unless prepaid, would be due on April 14, 2002. The Company used $60 million of the net proceeds from the Initial Offering to repay all borrowings outstanding under the Bridge Loan. The Company believes that the costs to the Company in connection with the Bridge Loan were lower than those that would have been incurred in a comparable arms-length open market transaction. In June 1998, the Company purchased 5,062 shares of its Common Stock from Rudolph Grua, one of the Company's Directors, at a price of $33.625 per share. In January 1998, the Company purchased 4,500 shares of its Common Stock from Mr. Grua at a price of $30.5625 per share. In March 1997, the Company purchased 3,000 shares of its Common Stock from Mr. Grua's wife at a price of $32.875 per share. The price paid for all of these transactions was equal to the average price of the Company's Common Stock for trades reported on The NASDAQ Stock Market on the date the transaction took place. The shares of Common Stock purchased from Mr. and Mrs. Grua are held in treasury. DESCRIPTION OF CREDIT FACILITY The Issuer is a party to a credit agreement dated as of January 13, 1997, as amended (the "Credit Facility"), with Harris Trust and Savings Bank, as administrative agent, and certain other financial institutions (the "Banks"). The Credit Facility permits the Issuer and, with the Banks' consent, certain of its wholly-owned subsidiaries ("Borrowing Subsidiaries") to borrow under the Credit Facility. GBC Nederland B.V. became a Borrowing Subsidiary as of March 31, 1997. The Credit Facility provides the Issuer and the Borrowing Subsidiaries (collectively, the "Borrowers") with up to $475 million, subject to increase to $550 million under certain circumstances, of revolving loans and letters of credit, available in United States dollars or certain readily-available foreign currencies. The Credit Facility also includes swingline subfacilities denominated in United States dollars and certain foreign currencies. Loans under the Credit Facility are available, under certain conditions, on a competitive bid basis as well as a committed basis. Subject to certain restrictions, the Credit Facility may be used to finance 52 59 acquisitions, investments and capital expenditures and for ongoing working capital and general corporate purposes of the Company. Repayment. Extensions of credit pursuant to the Credit Facility may be borrowed, repaid and reborrowed, without premium or penalty, from time to time until January 13, 2002, subject to the satisfaction of certain conditions on the date of any such borrowing. Outstanding loans under the Credit Facility must be repaid, and all letters of credit issued thereunder ("Letters of Credit") retired or replaced, on January 13, 2002. In addition, the Credit Facility provides for mandatory repayments from time to time to the extent the United States dollar value of all loans and Letters of Credit outstanding under the Credit Facility exceeds the maximum amount permitted to be outstanding thereunder. Security. The Borrower's obligations under the Credit Facility are unsecured, but are guaranteed by the Issuer and each of the Issuer's now-existing and future material domestic subsidiaries. Interest. The interest rates per annum applicable to the committed loans under the Credit Facility are fluctuating rates of interest measured by reference to one or a combination (at the Issuer's election) of the following: (i) the Domestic Rate (as defined in the Credit Facility), plus the applicable borrowing margin; or (ii) the relevant LIBOR (as defined in the Credit Facility), plus the applicable borrowing margin. The applicable borrowing margins under the Credit Facility range from 0.00% to 0.50% for Domestic Rate-based borrowings and 0.375% to 1.375% for LIBOR-based borrowings, in each case based on the Issuer's Leverage Ratio (defined in the Credit Facility as the ratio of Consolidated Debt (as defined in the Credit Facility) to Consolidated EBITDA (as defined in the Credit Facility) for the most-recently-ended period of four fiscal quarters). At the Issuer's election, each competitive bid loan bears interest either at a fixed rate or at a margin over LIBOR, in each case as agreed (through the bid process) between the Issuer and the Bank making the applicable competitive bid loan. Fees. The Issuer has agreed to pay certain fees in connection with the Credit Facility, including (i) Letter of Credit fees, (ii) agency fees and (iii) facility fees. Facility fees are payable at a rate per annum ranging from 0.10% to 0.375% of the maximum amount of the Credit Facility based on the Issuer's Leverage Ratio (as defined in the Credit Facility). Covenants. The Credit Facility requires the Issuer to meet certain financial tests, including maximum senior and total leverage ratios, a minimum interest coverage ratio, a minimum current ratio and a minimum consolidated net worth. The Credit Facility also contains covenants which, among other things, restrict the ability of the Issuer and its Subsidiaries (subject to certain exceptions) to incur liens, enter into sale-leaseback transactions, transact business with affiliates, declare dividends or redeem or repurchase capital stock, make loans and investments, and engage in mergers, acquisitions or asset sales. The Credit Facility also requires the Issuer to satisfy certain customary affirmative covenants and to make certain customary indemnifications to the Banks and the agents under the Credit Facility. Events of Default. The Credit Facility contains customary events of default, including payment defaults, breach of representations or warranties, covenant defaults, certain events of bankruptcy and insolvency, ERISA violations, judgment defaults, cross-default to certain other indebtedness and a change in control of the Issuer. DESCRIPTION OF THE NOTES The Old Notes were and the Exchange Notes will be issued under an indenture (the "Indenture"), dated as of May 27, 1998 among the Company, the Subsidiary Guarantors and First Union National Bank, as Trustee (the "Trustee"). The form and terms of the Exchange Notes are the same as the form and terms of the Old Notes except that (i) the Exchange Notes will bear a different CUSIP Number from the Old Notes, (ii) the Exchange Notes have been registered under the Securities Act and, therefore, will not bear legends restricting the transfer thereof, and (iii) the holders of the Exchange Notes will not be entitled to certain rights under the Registration Rights Agreement, including the provisions providing for an increase in the interest rate on the Old Notes in certain circumstances relating to timing of the Exchange Offer, which rights will terminate when the Exchange Offer is consummated. The following summary of certain provisions of the 53 60 Indenture does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the Trust Indenture Act of 1939, as amended (the "TIA"), and to all of the provisions of the Indenture, including the definitions of certain terms therein and those terms made a part of the Indenture by reference to the TIA as in effect on the date of the Indenture. A copy of the Indenture may be obtained from the Company. The definitions of certain capitalized terms used in the following summary are set forth below under "-- Certain Definitions." For purposes of this section, references to the "Company" include only General Binding Corporation and not its Subsidiaries. The Notes will be unsecured obligations of the Company, ranking subordinate in right of payment to all Senior Indebtedness of the Company. The Notes will be issued in fully registered form only, without coupons, in denominations of $1,000 and integral multiples thereof. Initially, the Trustee will act as Paying Agent and Registrar for the Notes. The Notes may be presented for registration or transfer and exchange at the offices of the Registrar, which initially will be the Trustee's corporate trust office. The Company may change any Paying Agent and Registrar without notice to holders of the Notes (the "Holders"). The Company will pay principal (and premium, if any) on the Notes at the Trustee's corporate office in New York, New York. At the Company's option, interest may be paid at the Trustee's corporate trust office or by check mailed to the registered address of each Holder. Any Old Notes that remain outstanding after the completion of the Exchange Offer, together with the Exchange Notes issued in connection with the Exchange Offer, shall constitute a single class of securities under the Indenture. The Notes will not be entitled to the benefit of any mandatory sinking fund redemption prior to maturity. PRINCIPAL, MATURITY AND INTEREST The Notes are limited in aggregate principal amount to $225,000,000, of which $150,000,000 will be issued in the Offering, and will mature on June 1, 2008. Additional amounts may be issued in one or more series from time to time, subject to the limitations set forth under "Certain Covenants -- Limitation on Incurrence of Additional Indebtedness." Interest on the Notes will accrue at the rate of 9 3/8% per annum and will be payable semiannually in cash on each June 1 and December 1, commencing on December 1, 1998, to the persons who are registered Holders at the close of business on the May 15 and November 15 immediately preceding the applicable interest payment date. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including the date of issuance. REDEMPTION Optional Redemption. The Notes will be redeemable at the Company's option, in whole at any time or in part from time to time, on and after June 1, 2003, upon not less than 30 nor more than 60 days' notice, at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on June 1 of the year set forth below, plus, in each case, accrued interest thereon, if any, to the date of redemption:
YEAR PERCENTAGE ---- ---------- 2003........................................................ 104.688% 2004........................................................ 103.125% 2005........................................................ 101.563% 2006 and thereafter......................................... 100.00%
Optional Redemption upon Public Equity Offerings. At any time, or from time to time, on or prior to June 1, 2001, the Company may, at its option, redeem up to 35% of the aggregate principal amount of the Notes originally issued with the net cash proceeds of one or more Public Equity Offerings at a redemption price equal to 109.375% of the principal amount thereof plus accrued and unpaid interest to the date of redemption; provided, however, that at least 65% of the aggregate principal amount of the Notes originally issued remain outstanding immediately following such redemption. In order to effect the foregoing redemption 54 61 with the proceeds of any Public Equity Offering, the Company shall make such redemption not more than 120 days after the consummation of any such Public Equity Offering. SELECTION AND NOTICE OF REDEMPTION If less than all of the Notes are to be redeemed at any time, the Trustee shall select such Notes for redemption in compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed or, if such Notes are not then listed on a national securities exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided, however, that no Notes of a principal amount of $1,000 or less shall be redeemed in part; provided, further, that if a partial redemption is made with the proceeds of a Public Equity Offering, selection of the Notes or portions thereof for redemption shall be made by the Trustee only on a pro rata basis or on as nearly a pro rata basis as is practicable (subject to DTC procedures), unless such method is otherwise prohibited. Notices of redemption shall be mailed by first-class mail at least 30 but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at its registered address. If any Note is to be redeemed in part only, the notice of redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in a principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note. On and after the redemption date, interest will cease to accrue on Notes or portions thereof called for redemption as long as the Company has deposited with the Paying Agent funds in satisfaction of the applicable redemption price pursuant to the Indenture. SUBORDINATION The payment of all Obligations on the Notes is subordinated in right of payment to the prior payment and satisfaction in full in cash or Cash Instruments of all Obligations on Senior Indebtedness whether outstanding on the Issue Date or thereafter incurred, including, without limitation, the Company's obligations under the Credit Agreement. Upon any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any liquidation, dissolution, winding up, reorganization, assignment for the benefit of creditors or marshaling of assets of the Company or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding relating to the Company or its property, whether voluntary or involuntary, all Obligations due or to become due upon all Senior Indebtedness shall first be paid and satisfied in full in cash or Cash Instruments, or such payment duly provided for to the satisfaction of the holders of Senior Indebtedness, before any payment or distribution of any kind or character is made on account of any Obligations on the Notes, or for the acquisition of any of the Notes for cash or property or otherwise. No direct or indirect payment by or on behalf of the Company of Obligations on the Notes whether pursuant to the terms of the Notes or upon acceleration or otherwise shall be made if, at the time of such payment, there exists a default in the payment of all or any portion of principal of, premium, if any, or interest on, any Designated Senior Indebtedness (and the Trustee has received written notice thereof), and such default shall not have been cured or waived in writing or the benefits of this sentence waived in writing by or on behalf of the holders of such Designated Senior Indebtedness. In addition, if any other event of default occurs and is continuing with respect to any Designated Senior Indebtedness, as such event of default is defined in the instrument creating or evidencing such Designated Senior Indebtedness, permitting the holders of such Designated Senior Indebtedness then outstanding to accelerate the maturity thereof and if the Representative for the respective issue of Designated Senior Indebtedness gives written notice of the event of default to the Trustee (a "Default Notice"), then, unless and until all events of default have been cured or waived in writing or the Trustee receives notice from the Representative for the respective issue of Designated Senior Indebtedness terminating the Blockage Period (as defined below), during the 180 days after the delivery of such Default Notice (the "Blockage Period"), neither the Company nor any other Person on its behalf shall (x) make any payment of any kind or character with respect to any Obligations on the Notes or (y) acquire any of the Notes for cash or property or otherwise. Notwithstanding anything herein to the contrary, in no event will a Blockage Period extend beyond 180 days from the date the payment on the Notes was due and only one such Blockage Period may be commenced within any 360 consecutive days. No event of 55 62 default which existed or was continuing on the date of the commencement of any Blockage Period with respect to any Designated Senior Indebtedness shall be, or be made, the basis for commencement of a second Blockage Period by the Representative of such Designated Senior Indebtedness whether or not within a period of 360 consecutive days, unless such event of default shall have been cured or waived in writing for a period of not less than 90 consecutive days (it being acknowledged that any subsequent action, or any breach of any of the financial covenants for a new accounting period commencing after the date of such Blockage Period that, in either case, would give rise to an event of default pursuant to any provisions under which an event of default previously existed or was continuing shall constitute a new event of default for this purpose). By reason of such subordination, in the event of the insolvency of the Company, creditors of the Company who are not holders of Senior Indebtedness, including the Holders, may recover less, ratably, than holders of Senior Indebtedness. As of December 31, 1997, on a pro forma basis after giving effect to the Transactions, the aggregate amount of Senior Indebtedness and Guarantor Senior Indebtedness outstanding would have been approximately $289 million. GUARANTEES Each Subsidiary Guarantor will unconditionally guarantee, on a senior subordinated basis, jointly and severally, to each Holder and the Trustee, the full and prompt performance of the Company's obligations under the Indenture and the Notes, including the payment of principal of and interest on the Notes. The Guarantees will be subordinated to Guarantor Senior Indebtedness on the same basis as the Notes are subordinated to Senior Indebtedness. The obligations of each Subsidiary Guarantor will be limited to the maximum amount which, after giving effect to all other contingent and fixed liabilities of such Subsidiary Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under its Guarantee or pursuant to its contribution obligations under the Indenture, will result in the obligations of such Subsidiary Guarantor under its Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal, state or other applicable law. Each Subsidiary Guarantor that makes a payment or distribution under its Guarantee shall be entitled to a contribution from each other Subsidiary Guarantor in an amount pro rata, based on the net assets of each Subsidiary Guarantor, determined in accordance with GAAP. Each Subsidiary Guarantor may consolidate with or merge into or sell its assets to the Company or another Subsidiary Guarantor that is a Wholly-Owned Subsidiary without limitation, or with or to other Persons upon the terms and conditions set forth in the Indenture. See "-- Certain Covenants -- Merger, Consolidation and Sale of Assets." If all of the Capital Stock of a Subsidiary Guarantor is sold by the Company and/or one or more of its Subsidiaries and the sale complies with the provisions set forth in "-- Certain Covenants -- Limitation on Asset Sales," such Subsidiary Guarantor will be released from all of its obligations under its Guarantee. CHANGE OF CONTROL The Indenture will provide that upon the occurrence of a Change of Control, each Holder will have the right to require that the Company purchase all or a portion of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer"), at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of purchase. The Indenture will provide that, prior to the mailing of the notice referred to below, but in any event within 30 days following any Change of Control, the Company covenants to (i) repay in full all indebtedness, and terminate all commitments, under the Credit Agreement and all other Senior Indebtedness the terms of which require repayment upon a Change of Control or (ii) obtain the requisite consents under the Credit Agreement and all other Senior Indebtedness to permit the repurchase of the Notes as provided below. The Company shall first comply with the covenant in the immediately preceding sentence before it shall be 56 63 required to repurchase Notes pursuant to the provisions described below. The Company's failure to comply with the immediately preceding sentence shall be governed by clause (iii), and not clause (iv), of "Events of Default" below. Within 30 days following the date upon which a Change of Control occurs, the Company must send, by first class mail, a notice to each Holder, with a copy to the Trustee, which notice shall govern the terms of the Change of Control Offer. Such notice shall state, among other things, the purchase date, which must be no earlier than 30 days nor later than 45 days from the date such notice is mailed, other than as may be required by law (the "Change of Control Payment Date"). Holders electing to have a Note purchased pursuant to a Change of Control Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third business day prior to the Change of Control Payment Date. If a Change of Control Offer is made, there can be no assurance that the Company will have available funds sufficient to pay the Change of Control purchase price for all the Notes that might be delivered by Holders seeking to accept the Change of Control Offer. If the Company is required to purchase outstanding Notes pursuant to a Change of Control Offer, the Company expects that it would need to seek third party financing to the extent it does not have available funds to meet its purchase obligations. However, there can be no assurance that the Company would be able to obtain any such financing. Restrictions in the Indenture described herein on the ability of the Company and its Restricted Subsidiaries to incur additional Indebtedness, to grant liens on its property, to make Restricted Payments, to enter into Affiliate transactions and to make Asset Sales may make more difficult or discourage a takeover of the Company, whether favored or opposed by the management of the Company. While such restrictions cover a wide variety of arrangements which have traditionally been used to effect highly leveraged transactions, the Indenture may not afford the Holders protection in all circumstances from the adverse aspects of a highly leveraged transaction, reorganization, restructuring, merger or similar transaction. Additionally, in those circumstances where a transaction would require a repurchase of the Notes, there can be no assurance that the Company will have sufficient financial resources to effect the repurchase. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the "Change of Control" provisions of the Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the "Change of Control" provisions of the Indenture by virtue thereof. The definition of the term "Change of Control" includes a phrase relating to the sale, lease, exchange, transfer or other disposition of "all or substantially all" of the assets of the Company and its Restricted Subsidiaries taken as a whole. Although there is a developing body of case law interpreting the phrase "substantially all," there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder to require the Company to repurchase its Notes as a result of a sale, lease, exchange, transfer or other disposition of less than all of the assets of the Company and its Restricted Subsidiaries to another Person or Group may be uncertain. CERTAIN COVENANTS The Indenture will contain, among others, the following covenants: Limitation on Incurrence of Additional Indebtedness. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of (collectively, "incur"), any Indebtedness (including, without limitation, Acquired Indebtedness) other than Permitted Indebtedness. Notwithstanding the foregoing, if no Default or Event of Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of any such Indebtedness, the Company and its Restricted Subsidiaries which are Subsidiary Guarantors may incur Indebtedness (including, without 57 64 limitation, Acquired Indebtedness) if on the date of the incurrence of such Indebtedness, after giving effect to the incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the Company is greater than 2.25 to 1.0. No Indebtedness incurred in compliance with the preceding sentence shall thereafter be included in calculating any limitation set forth in the definition of Permitted Indebtedness even if such Indebtedness is of a type which constitutes, or may constitute, Permitted Indebtedness. Within 30 days after any incurrence of Indebtedness pursuant to the second sentence of the preceding paragraph (other than Permitted Indebtedness), the Company shall deliver to the Trustee an Officers' Certificate setting forth the calculations by which such incurrence was determined to be permitted. Limitation on Restricted Payments. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or make any distribution (other than dividends or distributions made to the Company or any Wholly-Owned Restricted Subsidiary of the Company and other than any dividend or distribution payable solely in Qualified Capital Stock of the Company) on or in respect of its Capital Stock to holders of such Capital Stock, (b) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company or any warrants, rights or options to purchase or acquire such Capital Stock (other than the exchange of such Capital Stock or any warrants, rights or options to acquire Capital Stock of the Company for Qualified Capital Stock of the Company), (c) make any principal payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment, any Indebtedness of the Company or a Subsidiary Guarantor that is subordinate or junior in right of payment to the Notes or such Subsidiary Guarantor's Guarantee or (d) make any Investment (other than Permitted Investments) (each of the foregoing actions set forth in clauses (a), (b), (c) and (d) being referred to as a "Restricted Payment"), if at the time of such Restricted Payment or immediately after giving effect thereto, (i) a Default or an Event of Default shall have occurred and be continuing, or (ii) the Company is not able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the "Limitation on Incurrence of Additional Indebtedness" covenant above, or (iii) the aggregate amount of all Restricted Payments (including such proposed Restricted Payment) made subsequent to the Issue Date (the amount expended for such purposes, if other than in cash, being the Fair Market Value of such property) shall exceed the sum of: (v) 50% of the cumulative Consolidated Net Income (or if cumulative Consolidated Net Income shall be a loss, minus 100% of such loss) of the Company earned during the period beginning on the first day of the fiscal quarter including the Issue Date and ending on the last day of the fiscal quarter ending at least 30 days prior to the date the Restricted Payment occurs (the "Reference Date") (treating such period as a single accounting period) plus (w) 100% of the aggregate net proceeds (including the Fair Market Value of any business or property other than cash) received by the Company from any Person (other than a Subsidiary of the Company) from the issuance and sale subsequent to the Issue Date of Qualified Capital Stock of the Company, including treasury stock; plus (x) without duplication of any amounts included in clause (iii)(w) above, 100% of the aggregate net cash proceeds of any equity contribution received by the Company from a holder of the Company's Capital Stock (excluding, in the case of clauses (iii) (w) and (x), any net cash proceeds from a Public Equity Offering to the extent used to redeem the Notes and any net cash proceeds received by the Company from the sale of Qualified Capital Stock of the Company or equity contribution which has been financed, directly or indirectly, using funds (1) borrowed from the Company or any of its Subsidiaries, unless and until and to the extent such borrowing is repaid or (2) contributed, extended, guaranteed or advanced by the Company or by any of its Subsidiaries); plus (y) an amount equal to the net reduction in Investments in Unrestricted Subsidiaries resulting from dividends, interest payments, repayments of loans or advances, or other transfers of cash, in each case, to the Company or to any Restricted Subsidiary of the Company from Unrestricted Subsidiaries (but without duplication of any such amount included in cumulative Consolidated Net Income of the Company), or from redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries (in each case valued as provided in "-- Limitation of Restricted and Unrestricted Subsidiaries" below), not to exceed, in the case of an Unrestricted Subsidiary, the amount of Investments previously made by the Company or any Restricted Subsidiary of the Company in such Unrestricted Subsidiary and which were treated as a Restricted Payment under the Indenture; plus (z) $40.0 million. 58 65 Notwithstanding the foregoing, the provisions set forth in the immediately preceding paragraph shall not prohibit: (1) the payment of any dividend or consummation of irrevocable redemption within 60 days after the date of declaration of such dividend or giving of irrevocable redemption notice if the dividend or redemption would have been permitted on the date of declaration or giving of irrevocable redemption notice; (2) if no Default or Event of Default shall have occurred and be continuing, the acquisition of any Capital Stock of the Company, either (i) solely in exchange for shares of Qualified Capital Stock of the Company or (ii) through the application of net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of the Company) of shares of Qualified Capital Stock of the Company; (3) if no Default or Event of Default shall have occurred and be continuing, the acquisition or repayment of any Indebtedness of the Company that is subordinate or junior in right of payment to the Notes either (i) solely in exchange for shares of Qualified Capital Stock of the Company, or (ii) through the application of net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of the Company) of (A) shares of Qualified Capital Stock of the Company or (B) Refinancing Indebtedness; (4) if no Default or Event of Default shall have occurred and be continuing, payments by the Company to repurchase Capital Stock or other securities of the Company from current or former directors, officers and other employees of the Company or any of its Subsidiaries; and (5) if no Default or Event of Default shall have occurred and be continuing, purchases of capital stock for use in connection with compensation arrangements for directors, officers and other employees of the Company and its Subsidiaries, provided that the aggregate amount of payments pursuant to clauses (4) and (5) shall not together exceed $5.0 million in any calendar year (net of the net cash proceeds received by the Company from the purchase by directors, officers and other employees of capital stock in connection with such compensation arrangements) plus any amount unused for the prior calendar year. In determining the aggregate amount of Restricted Payments made subsequent to the Issue Date in accordance with clause (iii) of the immediately preceding paragraph, amounts expended pursuant to clauses (1), (2)(ii), and (3)(ii)(A) shall be included in such calculation. Within 30 days after making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment complies with the Indenture and setting forth in reasonable detail the basis upon which the required calculations were computed, which calculations may be based upon the Company's latest available internal quarterly financial statements. Limitation on Restricted and Unrestricted Subsidiaries. The Board of Directors of the Company may, if no Default or Event of Default shall have occurred and be continuing or would arise therefrom, designate an Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that (i) any such redesignation shall be deemed to be an incurrence as of the date of such redesignation by the Company and its Restricted Subsidiaries of the Indebtedness (if any) of such redesignated Subsidiary for purposes of "-- Limitation on Incurrence of Additional Indebtedness" above, (ii) unless such redesignated Subsidiary shall not have any Indebtedness outstanding (other than Permitted Indebtedness), no such designation shall be permitted if immediately after giving effect to such redesignation and the incurrence of any such additional Indebtedness, the Company could not incur $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to "-- Limitation on Incurrence of Additional Indebtedness" above and (iii) such Subsidiary, if a Domestic Subsidiary, assumes by execution of a supplemental indenture all of the obligations of a Subsidiary Guarantor under a Guarantee. The Board of Directors of the Company also may, if no Default or Event of Default shall have occurred and be continuing or would arise therefrom, designate any Restricted Subsidiary (including any newly formed or acquired Subsidiary) to be an Unrestricted Subsidiary if (i) such designation is at that time permitted under "-- Limitation on Restricted Payments" above and (ii) immediately after giving effect to such designation, the Company could incur $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to "-- Limitation on Incurrence of Additional Indebtedness" above. Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by the filing with the Trustee of a Board Resolution of the Company giving effect to such designation or redesignation and an Officers' Certificate certifying that such designation or redesignation complied with the foregoing conditions and setting forth in reasonable detail the underlying calculations. If any Restricted Subsidiary is designated an Unrestricted 59 66 Subsidiary in accordance with this covenant, such Restricted Subsidiary's Guarantee will be automatically discharged and released. The Indenture will provide that for purposes of the covenant described under "-- Limitation on Restricted Payments" above, (i) an "Investment" shall be deemed to have been made at the time any Restricted Subsidiary of the Company is designated as an Unrestricted Subsidiary in an amount (proportionate to the Company's equity interest in such Subsidiary) equal to the net worth of such Restricted Subsidiary at the time that such Restricted Subsidiary is designated as an Unrestricted Subsidiary; (ii) at any date, the aggregate amount of all Restricted Payments made as Investments since the Issue Date shall exclude and be reduced by an amount (proportionate to the Company's equity interest in such Subsidiary) equal to the net worth of any Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is designated as a Restricted Subsidiary, not to exceed, in the case of any such redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the amount of Investments previously made by the Company and its Restricted Subsidiaries in such Unrestricted Subsidiary (in each case (i) and (ii), "net worth" to be calculated based upon the Fair Market Value of such Subsidiary as of any such date of designation); and (iii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer. The Indenture will provide that notwithstanding the foregoing, the Board of Directors of the Company may not designate any Restricted Subsidiary of the Company to be an Unrestricted Subsidiary if, after any such designation, such Subsidiary owns any Capital Stock of, or holds any Lien on any property of, the Company or any Restricted Subsidiary of the Company which is not a Subsidiary of the Subsidiary to be so designated. The Indenture will provide that Subsidiaries of the Company that are not designated by the Board of Directors of the Company as Restricted or Unrestricted Subsidiaries will be deemed to be Restricted Subsidiaries of the Company. Notwithstanding the foregoing, all Subsidiaries of an Unrestricted Subsidiary will be Unrestricted Subsidiaries. Limitation on Asset Sales. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company or the applicable Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets sold or otherwise disposed of; (ii) at least 75% of the consideration received by the Company or the Restricted Subsidiary, as the case may be, from such Asset Sale shall be in the form of cash or Cash Equivalents and is received at the time of such disposition; and (iii) upon the consummation of an Asset Sale, the Company shall apply, or cause such Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within 360 days of receipt thereof either (A) to prepay any Senior Indebtedness or Guarantor Senior Indebtedness and, in the case of any Senior Indebtedness or Guarantor Senior Indebtedness under any revolving credit facility, effect a permanent reduction in the commitment available under such revolving credit facility, (B) to make an investment in properties and assets that replace the properties and assets that were the subject of such Asset Sale or in properties and assets (including Capital Stock or other equity interests that satisfy the requirements of a Permitted Joint Venture or result in the Person becoming a Restricted Subsidiary) that will be used in the business of the Company and its Restricted Subsidiaries as existing on the Issue Date or in businesses reasonably related or complementary thereto (as determined in good faith by the Company's Board of Directors) ("Replacement Assets"), or (C) a combination of prepayment and investment permitted by the foregoing clauses (iii)(A) and (iii)(B). Pending final application, the Company or the applicable Restricted Subsidiary may temporarily reduce Indebtedness under any revolving credit facility or invest in cash or Cash Equivalents. On the 361st day after an Asset Sale or such earlier date, if any, as the Board of Directors of the Company or of such Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which have not been applied on or before such Net Proceeds Offer Trigger Date as permitted in clauses (iii)(A), (iii)(B) and (iii)(C) of the next preceding sentence (each, a "Net Proceeds Offer Amount") shall be applied by the Company or such Restricted Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not less than 30 nor more than 60 67 45 days following the applicable Net Proceeds Offer Trigger Date, from all Holders on a pro rata basis, that amount of Notes equal to the Net Proceeds Offer Amount at a price equal to 100% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest thereon, if any, to the date of purchase; provided, however, that if at any time any non-cash consideration received by the Company or any Restricted Subsidiary of the Company, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash or Cash Equivalents (other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be applied in accordance with this covenant. The Company or any such Restricted Subsidiary of the Company, as the case may be, may defer the Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer Amount equal to or in excess of $15.0 million resulting from one or more Asset Sales (at which time, the entire unutilized Net Proceeds Offer Amount, and not just the amount in excess of $15 million, shall be applied as required pursuant to this paragraph). Notwithstanding the immediately preceding paragraph, (1) the Company and its Restricted Subsidiaries will be permitted to consummate an Asset Sale without complying with such paragraph to the extent (i) at least 75% of the consideration for such Asset Sale constitutes Replacement Assets and/or Cash Equivalents and (ii) such Asset Sale is for Fair Market Value; provided, however, that any consideration not constituting Replacement Assets received by the Company or any of its Restricted Subsidiaries in connection with any Asset Sale permitted to be consummated under this paragraph shall constitute Net Cash Proceeds subject to the provisions of the preceding paragraph, and (2) the Company and its Restricted Subsidiaries will be permitted to consummate an Asset Sale without complying with the requirement that at least 75% of the consideration received by the Company or its Restricted Subsidiaries be in the form of cash or Cash Equivalents if any shortfall from such 75% requirement is deemed an Investment under clause (d) of the first paragraph under "-- Limitation on Restricted Payments." For the purposes of clause (1)(ii) above, in connection with any Asset Sale (or series of related Asset Sales) involving aggregate payments or other property with a Fair Market Value in excess of $15.0 million, the Company shall obtain a favorable opinion as to the fairness of such Asset Sale or series of related Asset Sales to the Company or the relevant Restricted Subsidiary, as the case may be, from a financial point of view, from an Independent Financial Advisor. Notice of each Net Proceeds Offer will be mailed to the record Holders as shown on the register of Holders within 25 days following the Net Proceeds Offer Trigger Date, with a copy to the Trustee, and shall comply with the procedures set forth in the Indenture. Upon receiving notice of the Net Proceeds Offer, Holders may elect to tender their Notes in whole or in part in integral multiples of $1,000 in exchange for cash. To the extent Holders properly tender Notes in an amount exceeding the Net Proceeds Offer Amount, Notes of tendering Holders will be purchased on a pro rata basis (based on amounts tendered). A Net Proceeds Offer shall remain open for a period of 20 business days or such longer period as may be required by law. To the extent the amount of Notes tendered is less than the offer amount, the Company may use the remaining Net Proceeds Offer Amount for general corporate purposes and such Net Proceeds Offer Amount shall be reset to zero. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with the "Asset Sale" provisions of the Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the "Asset Sale" provisions of the Indenture by virtue thereof. Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary of the Company to (a) pay dividends or make any other distributions on or in respect of its Capital Stock; (b) make loans or advances or to pay any Indebtedness or other obligation owed to the Company or any other Restricted Subsidiary of the Company; or (c) transfer any of its property or assets to the Company or any other Restricted Subsidiary of the Company, except for such encumbrances or restrictions existing under or by reason of: (1) applicable law; (2) the Indenture; (3) the Credit Agreement; 61 68 (4) non-assignment provisions of any contract or any lease governing a leasehold interest of any Restricted Subsidiary of the Company; (5) any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired; (6) agreements existing on the Issue Date to the extent and in the manner such agreements are in effect on the Issue Date; (7) Indebtedness or other contractual requirements of a Securitization Entity in connection with a Qualified Securitization Transaction; provided that such restrictions apply only to such Securitization Entity; or (8) an agreement governing Indebtedness incurred to Refinance the Indebtedness issued, assumed or incurred pursuant to an agreement referred to in clause (2), (3), (5) or (6) above; provided, however, that the provisions relating to such encumbrance or restriction contained in any such Indebtedness are no less favorable to the Company or to the Holders in any material respect as determined by the Board of Directors of the Company in its reasonable and good faith judgment than the provisions relating to such encumbrance or restriction contained in agreements referred to in such clause (2), (3), (5) or (6), respectively. Limitation on Preferred Stock of Restricted Subsidiaries. The Company will not permit any of its Restricted Subsidiaries which are not Subsidiary Guarantors to issue any Preferred Stock (other than to the Company or to a Wholly-Owned Restricted Subsidiary of the Company) or permit any Person (other than the Company or a Wholly-Owned Restricted Subsidiary of the Company) to own any Preferred Stock of any Restricted Subsidiary of the Company which is not a Subsidiary Guarantor. Limitation on Liens. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or permit or suffer to exist any Liens of any kind against or upon any property or assets of the Company or any of its Restricted Subsidiaries whether owned on the Issue Date or acquired after the Issue Date, or any proceeds therefrom, or assign or otherwise convey any right to receive income or profits therefrom unless (i) in the case of Liens securing Indebtedness that is expressly subordinate or junior in right of payment to the Notes or any Guarantee, the Notes and such Guarantee, as the case may be, are secured by a Lien on such property, assets or proceeds that is senior in priority to such Liens and (ii) in all other cases, the Notes and the Guarantees are equally and ratably secured for so long as such Lien exists, except for (A) Liens existing as of the Issue Date to the extent and in the manner such Liens are in effect on the Issue Date; (B) Liens securing Senior Indebtedness or Guarantor Senior Indebtedness; (C) Liens securing the Notes and the Guarantees; (D) Liens of the Company or a Wholly-Owned Restricted Subsidiary of the Company on assets of any Restricted Subsidiary of the Company; (E) Liens securing Refinancing Indebtedness which is incurred to Refinance any Indebtedness which has been secured by a Lien permitted under the Indenture and which has been incurred in accordance with the provisions of the Indenture; provided, however, that such Liens (1) are no less favorable to the Holders and are not more favorable to the lienholders with respect to such Liens than the Liens in respect of the Indebtedness being Refinanced and (2) do not extend to or cover any property or assets of the Company or any of its Subsidiaries not securing the Indebtedness so Refinanced (other than property or assets subject to Liens under clause (B) above); and (F) Permitted Liens. Prohibition on Incurrence of Senior Subordinated Debt. The Company will not incur or suffer to exist Indebtedness that by its terms is senior in right of payment to the Notes and subordinate in right of payment to any other Indebtedness of the Company. No Subsidiary Guarantor shall incur or suffer to exist Indebtedness that by its terms is senior in right of payment to the Guarantees and subordinate in right of payment to any other Indebtedness of such Subsidiary Guarantor. Merger, Consolidation and Sale of Assets. The Company will not, in a single transaction or series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the Company's assets (determined on a consolidated basis for the Company and its Restricted Subsidiaries) unless: (i) either (1) the Company shall be the surviving or continuing corporation or (2) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company and of the Company's Restricted Subsidiaries substantially as an entirety (the "Surviving Entity") (x) shall be a corporation 62 69 organized and validly existing under the laws of the United States or any State thereof or the District of Columbia and (y) shall expressly assume as primary obligor, by supplemental indenture (in form and substance satisfactory to the Trustee), executed and delivered to the Trustee, the due and punctual payment of the principal of, and premium, if any, and interest on all of the Notes and the performance of every covenant of the Notes, the Indenture and the Registration Rights Agreement on the part of the Company to be performed or observed, as the case may be; (ii) immediately after giving effect to such transaction and the assumption contemplated by clause (i)(2)(y) above (including giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction), the Company or such Surviving Entity, as the case may be, (1) shall have a Consolidated Net Worth equal to or greater than the Consolidated Net Worth of the Company immediately prior to such transaction and (2) shall be able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to the "-- Limitation on Incurrence of Additional Indebtedness" covenant; (iii) immediately before and immediately after giving effect to such transaction and the assumption contemplated by clause (i)(2)(y) above (including, without limitation, giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred and any Lien granted in connection with or in respect of the transaction), no Default or Event of Default shall have occurred or be continuing; and (iv) the Company or the Surviving Entity, as the case may be, shall have delivered to the Trustee an Officers' Certificate and an opinion of counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with the applicable provisions of the Indenture and that all conditions precedent in the Indenture relating to such transaction have been satisfied. For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries of the Company the Capital Stock of which constitute all or substantially all of the properties and assets of the Company shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. The Indenture will provide that upon any consolidation, combination or merger or any transfer of all or substantially all of the assets of the Company in accordance with the foregoing, in which the Company is not the continuing corporation, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture and the Notes with the same effect as if such surviving entity had been named as such. Each Subsidiary Guarantor (other than any Subsidiary Guarantor whose Guarantee is to be released in accordance with the terms of the Guarantee and the Indenture in connection with any transaction complying with the provisions of the Indenture described under "-- Limitation on Asset Sales") will not, and the Company will not cause or permit any Subsidiary Guarantor to, consolidate with or merge with or into any Person other than the Company or another Subsidiary Guarantor that is a Wholly-Owned Restricted Subsidiary unless: (a) the entity formed by or surviving any such consolidation or merger (if other than the Subsidiary Guarantor) or to which such sale, lease, conveyance or other disposition shall have been made is a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia; (b) such entity assumes by execution of a supplemental indenture all of the obligations of the Subsidiary Guarantor under its Guarantee; (c) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and (d) immediately after giving effect to such transaction and the use of any net proceeds therefrom on a pro forma basis, the Company could satisfy the provisions of clause (ii) of the first paragraph of this covenant. Any merger or consolidation of a Subsidiary Guarantor with and into the Company (with the Company being the surviving entity) or another Subsidiary Guarantor that is a Wholly-Owned Restricted Subsidiary need only comply with clause (iv) of the first paragraph of this covenant. Limitations on Transactions with Affiliates. (a) The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the 63 70 rendering of any service) with, or for the benefit of, any of its Affiliates (each an "Affiliate Transaction"), other than (x) Affiliate Transactions permitted under paragraph (b) below and (y) Affiliate Transactions on terms that are no less favorable than those that might reasonably have been obtained or are obtainable in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate of the Company or such Restricted Subsidiary. In connection with all Affiliate Transactions (and each series of related Affiliate Transactions which are similar or part of a common plan) involving aggregate payments or other property with a Fair Market Value in excess of $10.0 million, the Company shall either (i) obtain the approval of the Board of Directors of the Company or such Restricted Subsidiary, as the case may be, such approval to be evidenced by a Board Resolution stating that such Board of Directors has determined that such transaction complies with the foregoing provisions or (ii) obtain a favorable opinion as to the fairness of such transaction or series of related transactions to the Company or the relevant Restricted Subsidiary, as the case may be, from a financial point of view, from an Independent Financial Advisor and file the same with the Trustee. If the Company or any Restricted Subsidiary of the Company enters into an Affiliate Transaction (or a series of related Affiliate Transactions which are similar or part of a common plan) involving aggregate payments or other property with a Fair Market Value in excess of $25.0 million, the Company or such Restricted Subsidiary, as the case may be, shall, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such transaction or series of related transactions to the Company or the relevant Restricted Subsidiary, as the case may be, from a financial point of view, from an Independent Financial Advisor and file the same with the Trustee. (b) The restrictions set forth in clause (a) shall not apply to (i) reasonable fees and compensation paid to and indemnity provided on behalf of, officers, directors, employees, consultants or agents of the Company or any Restricted Subsidiary of the Company as determined in good faith by the Company's Board of Directors or senior management; (ii) transactions exclusively between or among the Company and any of its Restricted Subsidiaries or exclusively between or among such Restricted Subsidiaries, provided such transactions are not otherwise prohibited by the Indenture; (iii) transactions with distributors, suppliers or other purchasers of sales of goods or services, in each case in the ordinary course of business consistent with the Company's customary practices and otherwise in compliance with the terms of the Indenture, and which are fair to the Company or the Restricted Subsidiaries as applicable, in the reasonable determination of the Board of Directors of the Company or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; (iv) any agreement as in effect as of the Issue Date, including the Tax Sharing Agreement, or any amendment thereto or any transaction contemplated thereby (including pursuant to any amendment thereto) or in any replacement agreement thereto so long as any such amendment or replacement agreement is not more disadvantageous to the Holders than the original agreement as in effect on the Issue Date; (v) loans to the Company provided that the terms thereof which, when taken as a whole, are no less favorable to the Company than those available from a financing source that is not an Affiliate of the Company; and (vi) Restricted Payments permitted by the Indenture. Additional Subsidiary Guarantees. If the Company or any of its Restricted Subsidiaries transfers or causes to be transferred, in one transaction or a series of related transactions, any property having a Fair Market Value in excess of $2.5 million to any Restricted Subsidiary that is not a Subsidiary Guarantor, or if the Company or any of its Restricted Subsidiaries shall organize, acquire or otherwise invest in another Restricted Subsidiary that is not a Subsidiary Guarantor which has property with a Fair Market Value in excess of $2.5 million, then such transferee or acquired or other Subsidiary (other than, in any such case, a Foreign Subsidiary) shall (a) execute and deliver to the Trustee a supplemental indenture in form reasonably satisfactory to the Trustee pursuant to which such Subsidiary shall unconditionally guarantee all of the Company's obligations under the Notes and the Indenture on the terms set forth in the Indenture and (b) deliver to the Trustee an opinion of counsel that such supplemental indenture has been duly authorized, executed and delivered by such Subsidiary and constitutes a legal, valid, binding and enforceable obligation of such Subsidiary, subject to customary exceptions. After the execution and delivery of such supplemental indenture, such Subsidiary shall be a Subsidiary Guarantor for all purposes of the Indenture. 64 71 Limitation of Guarantees by Restricted Subsidiaries. The Company will not permit any of its Restricted Subsidiaries, directly or indirectly, by way of the pledge of any intercompany note or otherwise, to assume, guarantee or in any other manner become liable with respect to any Indebtedness of the Company or any other Restricted Subsidiary (other than any guarantee by a Foreign Restricted Subsidiary of Indebtedness of another Foreign Restricted Subsidiary permitted under "-- Limitation on Incurrence of Additional Indebtedness"), unless, in any such case (a) such Restricted Subsidiary, if it is not a Subsidiary Guarantor, executes and delivers a supplemental indenture to the Indenture, providing a Guarantee and (b) (x) if any such assumption, guarantee or other liability of such Restricted Subsidiary is provided in respect of Senior Indebtedness, the guarantee or other instrument provided by such Restricted Subsidiary in respect of such Senior Indebtedness may be superior to the Guarantee pursuant to subordination provisions which, taken as a whole, are no less favorable in any material respect to the Holders than those contained in the Indenture and (y) if such assumption, guarantee or other liability of such Restricted Subsidiary is provided in respect of Indebtedness that is expressly subordinated to the Notes, the guarantee or other instrument provided by such Restricted Subsidiary in respect of such subordinated Indebtedness shall be subordinated to the Guarantee pursuant to subordination provisions which, taken as a whole, are no less favorable in any material respect to the Holders than those contained in the Indenture. Notwithstanding the foregoing, any such Guarantee by a Restricted Subsidiary of the Notes pursuant to the foregoing paragraph shall provide by its terms that it shall be automatically and unconditionally released and discharged, without any further action required on the part of the Trustee or any Holder, upon: (i) the unconditional release of such Restricted Subsidiary from its liability in respect of the Indebtedness in connection with which such Guarantee was executed and delivered pursuant to the preceding paragraph; or (ii) any sale or other disposition (by merger or otherwise) to any Person which is not a Restricted Subsidiary of the Company of all of the Company's (or a Restricted Subsidiary of the Company's) Capital Stock in, or all or substantially all of the assets of, such Restricted Subsidiary or the parent of such Restricted Subsidiary; provided, that (a) such sale or disposition of such Capital Stock or assets is otherwise in compliance with the terms of the Indenture and (b) such assumption, guarantee or other liability of such Restricted Subsidiary has been released by the holders of the other Indebtedness so guaranteed or (iii) such Subsidiary Guarantor becoming an Unrestricted Subsidiary in accordance with the Indenture. Conduct of Business. The Company will not and will not cause or permit any of its Restricted Subsidiaries (other than a Securitization Entity) to engage in any businesses other than the businesses in which the Company is engaged on the Issue Date, and any businesses reasonably related or complementary thereto (as determined in good faith by the Company's Board of Directors). Reports to Holders. The Company will deliver to the Trustee within 15 days after the filing of the same with the Commission, copies of the quarterly and annual reports and of the information, documents and other reports, if any, which the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will file with the Commission, to the extent permitted, and provide the Trustee and the Holders with such annual reports and such information, documents and other reports specified in Sections 13 and 15(d) of the Exchange Act. The Company will also comply with the other provisions of Section 314(a) of the TIA. EVENTS OF DEFAULT The following events are defined in the Indenture as "Events of Default": (i) the failure to pay interest (including Additional Interest, if any) on any Notes when the same becomes due and payable and the default continues for a period of 30 days (whether or not such payment shall be prohibited by the subordination provisions of the Indenture); (ii) the failure to pay the principal on any Notes, when such principal becomes due and payable, at maturity, upon acceleration, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or a Net Proceeds Offer) (whether or not such payment shall be prohibited by the subordination provisions of the Indenture); 65 72 (iii) failure to perform or comply with the restrictive covenants in the Indenture described herein under "-- Certain Covenants -- Merger, Consolidation and Sale of Assets;" (iv) a default in the observance or performance of any other covenant or agreement contained in the Indenture which default continues for a period of 45 days after the Company receives written notice specifying the default (and demanding that such default be remedied) from the Trustee or the Holders of at least 25% of the outstanding principal amount of the Notes; (v) the failure to pay at final maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness of the Company or any Restricted Subsidiary of the Company, or the acceleration of the final stated maturity of any such Indebtedness, if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at final maturity or which has been accelerated, aggregates $15.0 million or more at any time; (vi) one or more judgments in an aggregate amount in excess of $15.0 million shall have been rendered against the Company or any of its Subsidiaries and such judgments remain undischarged, unpaid or unstayed for a period of 60 days after such judgment or judgments become final and non- appealable; (vii) certain events of bankruptcy of the Company or any of its Significant Subsidiaries; (viii) any of the Guarantees ceases to be in full force and effect or any of the Guarantees is declared to be null and void or any of the Guarantees is found to be invalid or unenforceable or any of the Subsidiary Guarantors denies or disaffirms its liability under its Guarantee (other than by reason of the release of a Subsidiary Guarantor in accordance with the terms of the Indenture). If an Event of Default (other than an Event of Default specified in clause (vii) above) shall occur and be continuing, the Trustee or the Holders of at least 25% in principal amount of outstanding Notes may declare the principal of and accrued interest on all the Notes to be due and payable by notice in writing to the Company and the Trustee specifying the respective Event of Default and that such notice is a "notice of acceleration" (the "Acceleration Notice"), and the same shall become immediately due and payable, provided that if there are any amounts outstanding under the Credit Agreement, such principal of and interest on the Notes shall become due and payable upon the first to occur of an acceleration under the Credit Agreement or five business days after receipt by the Company and the Representative under the Credit Agreement of such Acceleration Notice, unless the Event or Events of Default specified in such Acceleration Notice (other than any Event of Default in respect of non-payment of principal) shall have been cured or waived in writing. If an Event of Default specified in clause (vii) above occurs and is continuing, then all unpaid principal of, and premium, if any, and accrued and unpaid interest on all of the outstanding Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Indenture will provide that, at any time after a declaration of acceleration with respect to the Notes as described in the preceding paragraph, the Holders of a majority in principal amount of the Notes may rescind and cancel such declaration and its consequences (i) if the rescission would not conflict with any judgment or decree, (ii) if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration, (iii) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid, (iv) if the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee for its expenses, disbursements and advances and (v) in the event of the cure or waiver of an Event of Default of the type described in clause (vii) of the description above of Events of Default, the Trustee shall have received an Officers' Certificate and an opinion of counsel that such Event of Default has been cured or waived. No such rescission shall affect any subsequent Default or impair any right consequent thereto. 66 73 The Holders of a majority in principal amount of the Notes may waive any existing Default or Event of Default under the Indenture, and its consequences, except a default in the payment of the principal of or interest on any Notes. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture and under the TIA. Subject to the provisions of the Indenture relating to the duties of the Trustee, the Trustee is under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of any of the Holders, unless such Holders have offered to the Trustee reasonable indemnity. Subject to all provisions of the Indenture and applicable law, the Holders of a majority in aggregate principal amount of the then outstanding Notes have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. Under the Indenture, the Company is required to provide an Officers' Certificate to the Trustee promptly upon any officer obtaining knowledge of any Default or Event of Default (provided that officers of the Company shall provide such certification at least annually whether or not they know of any Default or Event of Default) that has occurred and, if applicable, describe such Default or Event of Default and the status thereof. LEGAL DEFEASANCE AND COVENANT DEFEASANCE The Company may, at its option and at any time, elect to have its obligations and the corresponding obligations of the Subsidiary Guarantors discharged with respect to the outstanding Notes ("Legal Defeasance"). Such Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the outstanding Notes, except for (i) the rights of Holders to receive payments, solely from the trust fund described below, in respect of the principal of, premium, if any, and interest on the Notes when such payments are due, (ii) the Company's obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payments, (iii) the rights, powers, trust, duties and immunities of the Trustee and the Company's obligations in connection therewith and (iv) the Legal Defeasance provisions of the Indenture. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company and its Restricted Subsidiaries released with respect to certain covenants that are described in the Indenture ("Covenant Defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Notes. If Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, reorganization and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the Notes. In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders cash in United States dollars, non-callable United States government obligations, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be; (ii) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that (w) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (x) since the date of the Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subjected to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; (v) such Legal 67 74 Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, the Indenture or any other material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (vi) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others; (vii) the Company shall have delivered to the Trustee an Officers' Certificate and an opinion of counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with; (viii) the Company shall have delivered to the Trustee an opinion of counsel to the effect that (A) the trust funds will not be subject to any rights of holders of Indebtedness of the Company other than the Notes and (B) after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; and (ix) certain other customary conditions precedent are satisfied. SATISFACTION AND DISCHARGE The Indenture will be discharged and will cease to be of further effect (except as to surviving rights or registration of transfer or exchange of the Notes, as expressly provided for in the Indenture) as to all outstanding Notes when (i) either (a) all the Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust) have been delivered to the Trustee for cancellation or (b) all Notes not theretofore delivered to the Trustee for cancellation have become due and payable and the Company has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on the Notes to the date of deposit together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be; (ii) the Company has paid all other sums payable under the Indenture by the Company; and (iii) the Company has delivered to the Trustee an Officers' Certificate and an opinion of counsel stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture have been complied with. MODIFICATION OF THE INDENTURE From time to time, the Company, the Subsidiary Guarantors and the Trustee, without the consent of the Holders, may amend the Indenture for certain specified purposes, including curing ambiguities, defects or inconsistencies, so long as such change does not, in the opinion of the Trustee, adversely affect the rights of any of the Holders in any material respect. In formulating its opinion on such matters, the Trustee will be entitled to rely on such evidence as it deems appropriate, including, without limitation, solely on an opinion of counsel. Other modifications, waivers and amendments of the Indenture may be made with the consent of the Holders of a majority in principal amount of the then outstanding Notes issued under the Indenture, except that, without the consent of each Holder affected thereby, no amendment or waiver may: (i) reduce the amount of Notes whose Holders must consent to an amendment; (ii) reduce the rate of or change or have the effect of changing the time for payment of interest, including defaulted interest, on any Notes; (iii) reduce the principal of or change or have the effect of changing the fixed maturity of any Notes, or change the date on which any Notes may be subject to redemption or repurchase, or reduce the redemption or repurchase price therefor; (iv) make any Notes payable in money other than that stated in the Notes; (v) make any change in provisions of the Indenture protecting the right of each Holder to receive payment of principal of and interest on such Note on or after the due date thereof or to bring suit to enforce such payment, or permitting Holders of a majority in principal amount of Notes to waive Defaults or Events of Default; (vi) amend, change or modify in any material respect the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control or make and consummate a Net Proceeds Offer with respect to any Asset Sale that has been consummated or modify any of the provisions or definitions with respect thereto; (vii) modify or change any provision of the Indenture or the related definitions affecting the subordination or ranking of the Notes or any Guarantee in a manner which adversely affects the Holders; or (viii) release any 68 75 Subsidiary Guarantor from any of its obligations under its Guarantee or the Indenture other than in accordance with the terms of the Indenture. GOVERNING LAW The Indenture will provide that it, the Notes and the Guarantees will be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby. THE TRUSTEE The Indenture will provide that, except during the continuance of an Event of Default, the Trustee will perform only such duties as are specifically set forth in the Indenture. During the existence of an Event of Default, the Trustee will exercise such rights and powers vested in it by the Indenture, and use the same degree of care and skill in its exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. The Indenture and the provisions of the TIA contain certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payments of claims in certain cases or to realize on certain property received in respect of any such claim as security or otherwise. Subject to the TIA, the Trustee will be permitted to engage in other transactions; provided, however, that if the Trustee acquires any conflicting interest as described in the TIA, it must eliminate such conflict or resign. CERTAIN DEFINITIONS Set forth below is a summary of certain of the defined terms used in the Indenture. Reference is made to the Indenture for the full definition of all such terms, as well as any other terms used herein for which no definition is provided. "Acquired Indebtedness" of a Person means Indebtedness of another Person or any of its Subsidiaries existing at the time such other Person becomes a Restricted Subsidiary of the referent Person or at the time it merges or consolidates with the referent Person or any of the referent Person's Restricted Subsidiaries or is assumed by the referent Person or any Restricted Subsidiary of the referent Person in connection with the acquisition of assets from such other Person and in each case not incurred by such other Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary of the referent Person or such acquisition, merger or consolidation. "Additional Interest" shall have the meaning set forth under "Exchange Offer -- Purpose and Effect of the Exchange Offer." "Affiliate" means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls or is controlled by, or is under common control with, such specified Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise (and the terms "controlling" and "controlled" have meanings correlative of the foregoing). "Asset Acquisition" means (a) an Investment by the Company or any Restricted Subsidiary of the Company in any other Person pursuant to which such Person shall become a Restricted Subsidiary of the Company or any Restricted Subsidiary of the Company, or shall be merged with or into the Company or any Restricted Subsidiary of the Company, or (b) the acquisition by the Company or any Restricted Subsidiary of the Company of the assets of any Person (other than a Restricted Subsidiary of the Company) which constitute all or substantially all of the assets of such Person or comprises any division or line of business of such Person, or any other properties or assets of such Persons other than in the ordinary course of business. "Asset Sale" means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business), assignment or other transfer for value by the Company 69 76 or any of its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to any Person other than the Company or a Wholly-Owned Restricted Subsidiary of the Company of (a) any Capital Stock of any Restricted Subsidiary of the Company; or (b) any other property or assets of the Company or any Restricted Subsidiary of the Company other than in the ordinary course of business; provided, however, that, notwithstanding the foregoing, the term "Asset Sale" shall not include (i) transactions (taken collectively) for which the Company or its Restricted Subsidiaries receive aggregate consideration of less than $15.0 million in any consecutive 12-month period, (ii) the sale, lease, conveyance, disposition or other transfer of all or substantially all of the assets of the Company as permitted under "-- Certain Covenants -- Merger, Consolidation and Sale of Assets," (iii) the sale, lease, conveyance, disposition or other transfer by the Company or any Restricted Subsidiary of assets or property to one or more Restricted Subsidiaries or Permitted Joint Ventures in connection with Investments permitted under the "Limitations on Restricted Payments" covenant, (iv) sales of Receivables of the type specified in the definition of "Qualified Securitization Transaction" to a Securitization Entity for the Fair Market Value thereof, and (v) the sale of the Company's ringbinder manufacturing business, including the assets of U.S. Ring Binder Corp., the interests in the Champion Stationery Manufacturing Company Limited and the Sun Kwong Metal Manufacturer Company Limited joint ventures, and the stock of GBC Metals Corp. "Board of Directors" means the board of directors, advisory committee, management committee or similar governing body or any authorized committee thereof responsible for the management of the business and affairs of any Person. "Board Resolution" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Capital Stock" means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock of such Person and (ii) with respect to any Person that is not a corporation, any and all partnership or other equity interests of such Person. "Capitalized Lease Obligation" means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP. "Cash Equivalents" means (i) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof; (ii) marketable direct obligations issued by (x) any State of the United States of America or any political subdivision of any such State or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either the Standard & Poor's Rating Group Division of McGraw Hill Incorporated ("S&P") or Moody's Investors Service, Inc. ("Moody's") or (y) the sovereign debt of any foreign government maturing within six months from the date of acquisition thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's (or equivalent long-term ratings) (provided that the aggregate face amount of all Investments pursuant to this clause (y) shall not at the time of each such new Investment exceed the greater of $3,000,000 (or the local currency equivalent thereof) or 10% of all Investments described in this definition); (iii) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's or the equivalent long-term rating by any other nationally recognized rating agency; (iv) certificates of deposit, time deposits or bankers' acceptances maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States of America, any State thereof or the District of Columbia, any foreign branch of such a bank, any foreign bank, or any U.S. or foreign branch of such a bank, in each case having at the date of acquisition thereof combined capital and surplus of not less than $250,000,000 (or the local currency equivalent thereof) and whose long-term unsecured debt has a rating of A or better or A2 or better from S&P 70 77 or Moody's, respectively, or the equivalent rating by any other nationally recognized rating agency; (v) repurchase obligations with a term of not more than one month for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause (iv) above; (vi) "Money Market" preferred stock maturing within six months after issuance thereof; (vii) bonds or notes maturing within six months from the date of acquisition thereof and at the time of acquisition having a rating of AA or better or Aa or better from either S&P or Moody's, respectively, or the equivalent rating by any other nationally recognized rating agency (provided that the principal amount of bonds or notes issued by any one issuer shall not at the time of each such new Investment exceed the greater of $3,000,000 or 10% of all Investments described in this definition); and (viii) investments in money market funds which invest substantially all their assets in securities of the types described in clauses (i) through (vii) above. "Cash Instruments" means (i) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof; (ii) marketable direct obligations issued by any State of the United States of America or any political subdivision of any such State or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody's; (iii) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's; and (iv) certificates of deposit, time deposits or bankers' acceptances maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States of America, any State thereof or the District of Columbia, in each case having at the date of acquisition thereof combined capital and surplus of not less than $250,000,000. "Change of Control" means the occurrence of one or more of the following events: (i) any sale, lease, exchange, transfer or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a "Group"), together with any Affiliates thereof (whether or not otherwise in compliance with the provisions of the Indenture); (ii) the approval by the holders of Capital Stock of the Company of any plan or proposal for the liquidation or dissolution of the Company (whether or not otherwise in compliance with the provisions of the Indenture); (iii) any Person or Group other than the Permitted Holders or a Group controlled by the Permitted Holders shall become the owner, directly or indirectly, beneficially or of record, of shares representing more than the aggregate ordinary voting power represented by the Capital Stock of the Company owned, directly or indirectly, by the Permitted Holders; (iv) the Permitted Holders shall own, directly or indirectly, less than 30.0% of the aggregate ordinary voting power of the Capital Stock of the Company or the Permitted Holders shall cease to be able to elect a majority of the members of the Board of Directors of the Company; or (v) the replacement of a majority of the Board of Directors of the Company from the directors who constituted the Board of Directors of the Company on the Issue Date, and such replacement shall not have been approved by a vote of at least a majority of the Board of Directors of the Company then still in office who either were members of such Board of Directors on the Issue Date or whose election as a member of such Board of Directors was previously so approved. "Commodity Agreements" means any commodity futures contracts, commodity options or other similar agreements or arrangements designed to protect the Company or any Restricted Subsidiary of the Company against fluctuations in the prices of commodities actually at that time used in the ordinary course of business of the Company or any Restricted Subsidiary of the Company. "Common Stock" of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person's common stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock. "Consolidated Cash Flow" means, with respect to any Person, for any period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to the extent Consolidated Net Income has been 71 78 reduced thereby, (A) all income taxes of such Person and its Restricted Subsidiaries paid or accrued in accordance with GAAP for such period (other than income taxes attributable to extraordinary, unusual or nonrecurring gains or losses or taxes attributable to sales or dispositions outside the ordinary course of business), (B) Consolidated Interest Expense and (C) Consolidated Non-cash Charges less any non-cash items increasing Consolidated Net Income for such period, all as determined on a consolidated basis for such Person and its Restricted Subsidiaries in accordance with GAAP. "Consolidated Fixed Charge Coverage Ratio" means, with respect to any Person, the ratio of Consolidated Cash Flow of such Person during the four full fiscal quarters (the "Four Quarter Period") ending on or prior to the date of the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of such Person for such Four Quarter Period. In addition to and without limitation of the foregoing, for purposes of this definition, "Consolidated Cash Flow" and "Consolidated Fixed Charges" shall be calculated after giving effect on a pro forma basis for the period of such calculation to (i) the incurrence or repayment of any Indebtedness of such Person or any of its Restricted Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such calculation and any incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to working capital facilities, occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period and (ii) any Asset Sales or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or one of its Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of the Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness and also including any Consolidated Cash Flow (including any pro forma expense and cost reductions calculated on a basis consistent with Regulation S-X under the Securities Act as in effect on the Issue Date) (provided that such Consolidated Cash Flow shall be included only to the extent includable pursuant to the definition of "Consolidated Net Income") attributable to the assets which are the subject of the Asset Acquisition or Asset Sale during the Four Quarter Period) occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition (including the incurrence, assumption or liability for any such Acquired Indebtedness) occurred on the first day of the Four Quarter Period. If such Person or any of its Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a Person other than the Company or a Restricted Subsidiary of the Company, the preceding sentence shall give effect to the incurrence of such guaranteed Indebtedness as if such Person or any Restricted Subsidiary of such Person had directly incurred or otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating "Consolidated Fixed Charges" for purposes of determining the denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1) interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date; (2) if interest on any Indebtedness actually incurred on the Transaction Date may optionally be determined at an interest rate based upon a prime or similar rate, a eurocurrency interbank offered rate, or other rates, then the interest rate in effect on the Transaction Date will be deemed to have been in effect during the Four Quarter Period; and (3) notwithstanding clause (1) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Interest Swap Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements. "Consolidated Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) Consolidated Interest Expense, plus (ii) the product of (x) the amount of all dividend payments on any series of Preferred Stock of such Person and its Restricted Subsidiaries (other than dividends paid in Qualified Capital Stock and other than dividends paid to such Person or a Restricted Subsidiary of such Person) paid, accrued or scheduled to be paid or accrued during such period times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local tax rate of such Person, expressed as a decimal. 72 79 "Consolidated Interest Expense" means, with respect to any Person for any period, the sum, without duplication of: (i) the aggregate of the interest expense of such Person and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, including without limitation, (a) any amortization of debt discount, (b) the net cost (which may be positive or negative) under Interest Swap Obligations, (c) all capitalized interest and (d) the interest portion of any deferred payment obligation; and (ii) the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such Person and its Restricted Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP; provided, that Consolidated Interest Expense with respect to any Person for any period shall not include any amortization or write off of deferred financing costs. "Consolidated Net Income" means, with respect to any Person, for any period, the aggregate net income (or loss) of such Person and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; provided, however, that there shall be excluded therefrom (a) gains (and losses) on an after-tax basis from asset sales or abandonments or reserves relating thereto, (b) items classified as extraordinary or nonrecurring gains or losses on an after-tax basis, (c) the net income or loss of any Person acquired in a "pooling of interests" transaction accrued prior to the date it becomes a Restricted Subsidiary of the referent Person or is merged or consolidated with the referent Person or any Restricted Subsidiary of the referent Person, (d) the net income (but not the loss for such period) of any Restricted Subsidiary of the referent Person which is not a Subsidiary Guarantor to the extent that the declaration of dividends or similar distributions by that Restricted Subsidiary to the referent Person or any Subsidiary thereof of that income is restricted, directly or indirectly, by operation of the terms of its charter or constituent documents or any agreement, instrument, judgment or decree, (e) the net income (but not the loss for such period) of any Restricted Subsidiary of the referent Person which is a Subsidiary Guarantor to the extent that the payment of amounts under the Guarantee by that Restricted Subsidiary is restricted, directly or indirectly, by operation of the terms of its charter or constituent documents or any agreement, instrument, judgment, decree, law, order, statute, rule, governmental regulation or for any other reason whatsoever, (f) the net income or loss of any other Person, other than a Restricted Subsidiary of the referent Person, except to the extent (in the case of net income) of cash dividends or distributions paid to the referent Person, or to a Wholly-Owned Restricted Subsidiary of the referent Person, by such other Person, (g) any restoration to income of any contingency reserve of an extraordinary, nonrecurring or unusual nature, except to the extent that provision for such reserve was made out of Consolidated Net Income accrued at any time following the Issue Date, (h) income or loss attributable to discontinued operations (including, without limitation, operations disposed of during such period whether or not such operations were classified as discontinued), and (i) in the case of a successor to the referent Person by consolidation or merger or as a transferee of the referent Person's assets, any earnings of the successor corporation prior to such consolidation, merger or transfer of assets. "Consolidated Net Worth" of any Person means the consolidated stockholders' equity of such Person, determined on a consolidated basis in accordance with GAAP, less (without duplication) amounts attributable to Disqualified Capital Stock of such Person. "Consolidated Non-cash Charges" means, with respect to any Person, for any period, the aggregate depreciation, amortization and other non-cash expenses of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charge which requires an accrual of or a reserve for cash charges for any future period). "Credit Agreement" means the Multicurrency Credit Agreement dated as of January 13, 1997, as amended, among the Company, each of the guarantors party thereto, the lenders party thereto in their capacities as lenders thereunder and Harris Trust & Savings Bank, as administrative agent, together with the related documents thereto (including, without limitation, any guarantee agreements), in each case as such agreements may be further amended (including any amendment and restatement thereof), supplemented or otherwise modified or replaced from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amount of available borrowings thereunder (provided, however, that such increase in borrowings is permitted by the "Limitation on Incurrence of Additional Indebtedness" covenant above) or adding Subsidiaries of the Company as additional 73 80 borrowers or guarantors thereunder) all or any portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders. "Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any Restricted Subsidiary of the Company against fluctuations in currency values. "Default" means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default. "Designated Senior Indebtedness" means (i) Indebtedness under or in respect of the Credit Agreement and (ii) any other Indebtedness constituting Senior Indebtedness or Guarantor Senior Indebtedness which, at the time of determination, has an aggregate principal amount of at least $10.0 million and is specifically designated in the instrument evidencing such Senior Indebtedness or Guarantor Senior Indebtedness as "Designated Senior Indebtedness" by the Company or the applicable Subsidiary Guarantor, as the case may be. "Disqualified Capital Stock" means that portion of any Capital Stock that, by its term (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the stated maturity of the Notes. "Domestic Restricted Subsidiary" of any Person means any Domestic Subsidiary that is also a Restricted Subsidiary of such Person. "Domestic Subsidiary" means any Subsidiary of the Company that is organized under the laws of any State of the United States, the District of Columbia or any territory or possession of the United States. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto. "Fair Market Value" means, with respect to any asset or property, the price which could be negotiated in an arm's-length transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value shall be determined by the Board of Directors of the Company acting in good faith and shall be evidenced by a Board Resolution of the Board of Directors of the Company. "Foreign Restricted Subsidiary" of any Person means any Foreign Subsidiary that is also a Restricted Subsidiary of such Person. "Foreign Subsidiary" means any Subsidiary of the Company other than a Domestic Subsidiary. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, which are in effect on the Issue Date. "Guarantees" means the guarantees of the Notes by the Subsidiary Guarantors. "Guarantor Senior Indebtedness" means, with respect to any Subsidiary Guarantor, the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of such Subsidiary Guarantor, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument or agreement creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Guarantee of such Subsidiary Guarantor. Without limiting the generality of the foregoing, "Guarantor Senior Indebtedness" shall also include the principal of, premium, if any, interest (including any interest accruing subsequent 74 81 to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of, (x) all monetary obligations of every nature of a Subsidiary Guarantor under the Credit Agreement, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities, (y) all Interest Swap Obligations and (z) all obligations under Currency Agreements and Commodity Agreements, in each case whether outstanding on the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Guarantor Senior Indebtedness" shall not include (i) any Indebtedness of such Subsidiary Guarantor to a Subsidiary of such Subsidiary Guarantor or any Affiliate of such Subsidiary Guarantor or any of such Affiliate's Subsidiaries, (ii) Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer or employee of the Company or any Subsidiary of the Company (including, without limitation, amounts owed for compensation), (iii) Indebtedness to trade creditors and other amounts incurred in connection with obtaining goods, materials or services, (iv) Indebtedness represented by Disqualified Capital Stock, (v) any liability for federal, state, local or other taxes owed or owing by a Subsidiary Guarantor, (vi) Indebtedness incurred in violation of the Indenture provisions set forth under "Limitation on Incurrence of Additional Indebtedness," (vii) Indebtedness which, when incurred and without respect to any election under Section 1111 (b) of Title 11, United States Code is without recourse to such Subsidiary Guarantor and (viii) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of a Subsidiary Guarantor. "Holder" means any holder of Notes. "Indebtedness" means with respect to any Person, without duplication, (i) all Obligations of such Person for borrowed money, (ii) all Obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all Capitalized Lease Obligations of such Person, (iv) all Obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all Obligations under any title retention agreement (but excluding trade accounts payable and other accrued liabilities arising in the ordinary course of business that are not overdue by 90 days or more or are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted), (v) all Obligations for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction, except to the extent secured by Cash and Cash Equivalents, (vi) guarantees and other contingent obligations in respect of Indebtedness referred to in clauses (i) through (v) above and clause (viii) below, (vii) all Obligations of any other Person of the type referred to in clauses (i) through (vi) above which are secured by any lien on any property or asset of such Person, the amount of such Obligation being deemed to be the lesser of the fair market value of such property or asset or the amount of the Obligation so secured, (viii) all Obligations under Currency Agreements, Commodity Agreements and Interest Swap Agreements of such Person (whether or not entered into for the purpose of protecting the Company or any Restricted Subsidiary of the Company from fluctuations in currency or commodity values or interest rates) and (ix) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any. For purposes hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock, such fair market value shall be determined in good faith by the Board of Directors of the issuer of such Disqualified Capital Stock. "Independent Financial Advisor" means a firm (i) which does not, and whose directors, officers and employees or Affiliates do not, have a direct or indirect financial interest in the Company and (ii) which, in the judgment of the Board of Directors of the Company, is otherwise independent and qualified to perform the task for which it is to be engaged. "Interest Swap Agreements" means any interest rate swap agreement, interest rate cap agreement, interest rate floor agreement, interest rate collar agreement, treasury rate-lock agreement or other similar 75 82 agreement or arrangement designed to protect the Company or any Restricted Subsidiary of the Company from fluctuations in interest rates. "Interest Swap Obligations" means the obligations of any Person pursuant to any Interest Swap Agreement with any other Person. "Investment" means, with respect to any Person, any direct or indirect loan or other extension of credit (including, without limitation, a guarantee) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any Person. "Investment" shall exclude extensions of trade credit by the Company and its Restricted Subsidiaries on commercially reasonable terms in accordance with normal trade practices of the Company or such Restricted Subsidiary, as the case may be. For the purposes of the "Limitation on Restricted Payments" covenant, the amount of any Investment shall be the original cost of such Investment plus the cost of all additional Investments by the Company or any of its Restricted Subsidiaries, without any adjustments for increases or decreases in value, or write-ups, write-downs or writeoffs with respect to such Investment, reduced by the payment of dividends or distributions in connection with such Investment or any other amounts received in respect of such Investment; provided, however, that no such payment of dividends or distributions or receipt of any such other amounts shall reduce the amount of any Investment if such payment of dividends or distributions or receipt of any such amounts would be included in Consolidated Net Income. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Common Stock of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, the Company no longer owns, directly or indirectly, greater than 50% of the outstanding Common Stock of such Restricted Subsidiary, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Common Stock of such former Restricted Subsidiary not sold or disposed of. "Issue Date" means May 27, 1998. "Lien" means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest). "Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (other than the portion of any such deferred payment constituting interest) received by the Company or any of its Restricted Subsidiaries from such Asset Sale net of (a) reasonable out-of-pocket expenses and fees relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales commissions), (b) taxes reasonably estimated to be paid or payable after taking into account any reduction in consolidated tax liability due to available tax credits or deductions and any tax sharing arrangements, to the extent the Company elects to apply such credits or deductions thereto, (c) repayment of Indebtedness that is required to be repaid in connection with such Asset Sale and (d) appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale. "Obligations" means, when used with reference to any Indebtedness, all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation evidencing or governing any such Indebtedness. "Officers' Certificate" means, with respect to any Person, a certificate signed by the Chairman, Chief Executive Officer, the President or any Vice President and the Chief Financial Officer, Controller or the Treasurer of such Person that shall comply with applicable provisions of the Indenture. 76 83 "Permitted Holders" means William N. Lane II, his children or other lineal descendants (whether adoptive or biological), the probate estate of any such individual, and any trust, so long as one or more of the foregoing individuals is, directly or indirectly, the beneficiary thereunder, and any other corporation, partnership or other entity, all of the shareholders, partners, members or owners of which are, directly or indirectly, any of the foregoing. "Permitted Indebtedness" means, without duplication, each of the following: (i) Indebtedness under the Notes issued on the Issue Date and the Guarantees outstanding on the Issue Date or entered into thereafter in accordance with the Indenture; (ii) Indebtedness of the Company or any of its Restricted Subsidiaries which are Subsidiary Guarantors incurred pursuant to the Credit Agreement in an aggregate principal amount at any time outstanding not to exceed $550.0 million in the aggregate reduced by any required permanent repayments pursuant to the provisions set forth under "Certain Covenants -- Limitation on Asset Sales" (which are accompanied by a corresponding permanent commitment reduction) thereunder (it being recognized that a reduction in any borrowing base in and of itself shall not be deemed a required permanent repayment); (iii) Interest Swap Obligations of the Company or any of its Restricted Subsidiaries which are Subsidiary Guarantors covering Indebtedness of the Company or any of its Restricted Subsidiaries; provided, however, that such Interest Swap Obligations are entered into to protect the Company and its Restricted Subsidiaries from fluctuations in interest rates on Indebtedness incurred in accordance with the Indenture and the notional principal amount of any such Interest Swap Obligation does not exceed the principal amount of the Indebtedness to which such Interest Swap Obligation relates; (iv) Indebtedness of the Company or any of its Restricted Subsidiaries which are Subsidiary Guarantors under Currency Agreements and Commodity Agreements; provided, however, that such Currency Agreements and Commodity Agreements do not increase the Indebtedness of the Company and its Restricted Subsidiaries outstanding other than as a result of fluctuations in foreign currency exchange rates or commodity prices, as the case may be, or by reason of fees, indemnities and compensation payable thereunder; (v) Indebtedness of a Restricted Subsidiary to the Company or to a Wholly-Owned Restricted Subsidiary of the Company for so long as such Indebtedness is held by the Company or a Wholly-Owned Restricted Subsidiary of the Company, in each case subject to no Liens held by any Person other than the Company or a Wholly-Owned Restricted Subsidiary of the Company; provided, however, that if as of any date any Person other than the Company or a Wholly-Owned Restricted Subsidiary of the Company owns or holds any such Indebtedness or holds a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness by the issuer of such Indebtedness; (vi) Indebtedness of the Company to a Restricted Subsidiary of the Company which is a Subsidiary Guarantor for so long as such Indebtedness is held by a Restricted Subsidiary of the Company which is a Subsidiary Guarantor, provided, however, that (a) any Indebtedness of the Company to any Restricted Subsidiary of the Company which is a Subsidiary Guarantor is unsecured and subordinated, pursuant to a written agreement, to the Company's obligations under the Indenture and the Notes and (b) if as of any date any Person other than a Restricted Subsidiary which is a Subsidiary Guarantor of the Company owns or holds any such Indebtedness or a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness by the Company; (vii) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within three business days of incurrence; (viii) Indebtedness of the Company or any of its Restricted Subsidiaries which are Subsidiary Guarantors represented by letters of credit for the account of the Company or such Restricted Subsidiary, 77 84 as the case may be, in order to provide security for workers' compensation claims, payment obligations in connection with self-insurance or other requirements in the ordinary course of business; (ix) Indebtedness represented by Capitalized Lease Obligations and Purchase Money Indebtedness of the Company or any of its Restricted Subsidiaries which are Subsidiary Guarantors or otherwise incurred to finance the lease or improvement of real or personal property or equipment in an aggregate principal amount not to exceed $10.0 million at any one time outstanding; (x) Indebtedness permitted by clause (x) of the definition of "Permitted Investments"; (xi) Indebtedness of Foreign Restricted Subsidiaries to the extent that the aggregate outstanding amount of Indebtedness incurred by all Foreign Restricted Subsidiaries to Persons other than Foreign Restricted Subsidiaries under this clause (xi) does not exceed at any one time the greater of (I) an amount equal to the sum of (A) 80% of the consolidated book value of the accounts receivable of all Foreign Restricted Subsidiaries and (B) 60% of the consolidated book value of the inventory of all Foreign Restricted Subsidiaries and (II) 2.25 multiplied by the Consolidated Net Worth of all Foreign Restricted Subsidiaries; provided, however, that for purposes of calculating Consolidated Net Worth for this clause (xi), Indebtedness owing to the Company or any of its Restricted Subsidiaries which are Subsidiary Guarantors shall be deemed a component of consolidated stockholders' equity; and, provided, further, that at the date of the incurrence of any such Indebtedness under this clause (xi), the Company is able to incur at least $1.0 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the covenant entitled "Limitation on Incurrence of Additional Indebtedness;" (xii) additional Indebtedness of the Company or any of its Restricted Subsidiaries in an aggregate principal amount not to exceed $25.0 million at any one time outstanding; (xiii) Indebtedness of the Company or any of its Restricted Subsidiaries which are Subsidiary Guarantors constituting commercial paper programs, money-market facilities, medium-term note programs or comparable Indebtedness; provided, that the aggregate principal amount of Indebtedness permitted to be outstanding under this clause (xiii) at any time should not, when added to the principal amount of Indebtedness then outstanding under clause (ii) hereof, exceed the aggregate amount of Indebtedness then permitted under clause (ii) hereof; (xiv) the incurrence by a Securitization Entity of Indebtedness of a Qualified Securitization Transaction that is not recourse to the Company or any Restricted Subsidiary of the Company (except for Standard Securitization Undertakings); and (xv) Refinancing Indebtedness. "Permitted Investments" means (i) Investments by the Company or any Restricted Subsidiary of the Company in any Person that is or will become immediately after such Investment a Restricted Subsidiary of the Company, or that will merge or consolidate into the Company or a Restricted Subsidiary of the Company; (ii) Investments in the Company by any Restricted Subsidiary of the Company; provided, however, that any Indebtedness evidencing such Investment by a Restricted Subsidiary is unsecured and subordinated, pursuant to a written agreement, to the Company's obligations under the Notes and the Indenture; (iii) Investments in cash and Cash Equivalents; (iv) loans to employees and officers of the Company and its Subsidiaries made in connection with such employees' and officers' participation in stock purchase plans or similar arrangements of the Company, and other loans and advances to employees and officers of the Company and its Subsidiaries in the ordinary course of business for bona fide business purposes, not to exceed $3.0 million in the aggregate at any one time outstanding; (v) Currency Agreements, Commodity Agreements and Interest Swap Obligations entered into in the ordinary course of the Company's or its Restricted Subsidiaries' businesses and otherwise in compliance with the Indenture; (vi) Investments in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers; (vii) Investments made by the Company or its Restricted Subsidiaries as a result of non-cash consideration received in connection with an Asset Sale made in compliance with the "Limitation on Asset Sales" covenant; (viii) Investments in Permitted Joint Ventures; (ix) any Investment by the Company or a Restricted Subsidiary of the Company in a Securitization Entity or any Investment by a Securitization 78 85 Entity in any other Person in connection with a Qualified Securitization Transaction; and (x) additional Investments in an amount outstanding at any one time not to exceed $20.0 million. "Permitted Joint Venture" means any joint venture arrangement (which may be structured as a corporation, partnership, trust, limited liability company or any other Person) if (a) such Person is engaged in the same or a similar line of business as the Company and its Restricted Subsidiaries were engaged in on the Issue Date or any business ancillary or related or complementary thereto or supportive thereof (as determined in good faith by the Company's Board of Directors), (b) the Company and/or any of its Restricted Subsidiaries at all times owns at least 25% of the total outstanding shares of Capital Stock of such Person entitled to participate in distributions in respect of the earnings, sale or liquidation of such Person but such Person does not constitute a Subsidiary of the Company, (c) immediately after giving effect to such Investment on a pro forma basis (to give effect to the contribution of any property or assets to such Person or Indebtedness incurred to fund such Investment or otherwise), the Company could incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to the "Limitation on Incurrence of Additional Indebtedness" covenant, and (d) no default with respect to any Indebtedness of such Person or any Subsidiary of such Person having a principal amount in excess of $1.0 million (including any right which the holders thereof may have to take enforcement action against such Person) would permit (upon notice, lapse of time or both) any holder of any Indebtedness of the Company or its Restricted Subsidiaries to declare a default on such Indebtedness or cause the payment thereof to be accelerated or payable prior to its final scheduled maturity. "Permitted Liens" means the following types of Liens: (i) Liens in favor of the Trustee in its capacity as trustee for the Holders; (ii) Liens securing Senior Indebtedness, including Senior Indebtedness outstanding under the Credit Agreement; (iii) Liens for taxes, assessments or governmental charges or claims either (a) not delinquent or (b) contested in good faith by appropriate proceedings and as to which the Company or its Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP; (iv) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof; (v) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, including any Lien securing letters of credit issued in the ordinary course of business consistent with past practice in connection therewith, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); (vi) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; (vii) survey exceptions or encumbrances, easements, rights-of-way, reservations, zoning restrictions and other similar charges or encumbrances in respect of real property not interfering in any material respect with the ordinary conduct of the business of the Company or any of its Subsidiaries; (viii) any interest or title of a lessor under any Capitalized Lease Obligation; provided, however, that such Liens do not extend to any property or assets which is not leased property subject to such Capitalized Lease Obligation; 79 86 (ix) Liens to secure Purchase Money Indebtedness of the Company or any Restricted Subsidiary; provided, however, that (A) the related Purchase Money Indebtedness is permitted to be incurred in accordance with the "Limitation on Incurrence of Additional Indebtedness" covenant, (B) the related Purchase Money Indebtedness shall not exceed the cost of such property or assets and shall not be secured by any property or assets of the Company or any Restricted Subsidiary of the Company other than the property and assets so acquired and (C) the Lien securing such Indebtedness shall be created within 120 days of such acquisition; (x) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off; (xi) Liens securing Interest Swap Obligations which Interest Swap Obligations relate to Indebtedness that is otherwise permitted under the Indenture; (xii) Liens securing Indebtedness under Currency Agreements and Commodity Agreements; (xiii) Liens securing Acquired Indebtedness incurred in accordance with the "Limitation on Incurrence of Additional Indebtedness" covenant; provided, however, that (A) such Liens secured such Acquired Indebtedness at the time of and prior to the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company and were not granted in connection with, or in anticipation of, the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company and (B) such Liens do not extend to or cover any property or assets of the Company or of any of its Restricted Subsidiaries other than the property or assets that secured the Acquired Indebtedness prior to the time such Indebtedness became Acquired Indebtedness of the Company or a Restricted Subsidiary of the Company and are no more favorable to the lienholders than those securing the Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company; (xiv) Liens securing Refinancing Indebtedness; provided that any such Lien does not extend to or cover any property or assets other than the property or assets securing the Indebtedness so refunded, refinanced or extended; (xv) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of bankers' acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods in the ordinary course of business; (xvi) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof; (xvii) Liens granted in connection with any Qualified Securitization Transaction; and (xviii) Other Liens securing Obligations which do not exceed $10 million in the aggregate at any one time outstanding. "Person" means an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof. "Preferred Stock" of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation. "Public Equity Offering" means an underwritten offering of Qualified Capital Stock of the Company pursuant to an effective registration statement filed under the Securities Act. "Purchase Money Indebtedness" means Indebtedness the net proceeds of which are used to finance the cost (including the cost of construction) of property or assets acquired in the normal course of business by the Person incurring such Indebtedness. 80 87 "Qualified Capital Stock" means any Capital Stock that is not Disqualified Capital Stock. "Qualified Securitization Transaction" means any transaction or series of transactions that may be entered into by the Company or any of its Restricted Subsidiaries pursuant to which the Company or any of its Restricted Subsidiaries may sell, convey or otherwise transfer pursuant to customary terms to (a) a Securitization Entity (in the case of a transfer by the Company or any of its Restricted Subsidiaries) and (b) any other Person (in the case of transfer by a Securitization Entity), or may grant a security interest in any Receivables (whether now existing or arising or acquired in the future) of the Company or any of its Restricted Subsidiaries. "Receivables" means any right to payment from or on behalf of any obligor, whether constituting an account, chattel paper, instrument, general intangible or otherwise, arising from the provision by the Company or any Restricted Subsidiary of the Company of merchandise, goods or services or otherwise evidencing the payment of a sum certain arising in the ordinary course of business, and monies due thereunder, all security therefor, whether in such merchandise, goods and services or otherwise, all guarantees, indemnities, warranties, insurance policies and financing statements and other agreements relating thereto, records related thereto, and the right to payment of any interest or finance charges and other obligations with respect thereto, proceeds from claims on insurance policies related thereto, any other proceeds related thereto, and any other related rights. "Refinance" means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have correlative meanings. "Refinancing Indebtedness" means any Refinancing by the Company or any Restricted Subsidiary of the Company of Indebtedness incurred in accordance with the "Limitation on Incurrence of Additional Indebtedness" covenant (provided that Refinancing Indebtedness shall not include Indebtedness described in clauses (ii) through (xiii) of the definition of Permitted Indebtedness), in each case that does not (1) result in an increase in the aggregate principal amount of Indebtedness of such Person as of the date of such proposed Refinancing (plus the amount of any premium required to be paid under the terms of the instrument governing such Indebtedness and plus the amount of reasonable expenses incurred by the Company or such Restricted Subsidiary, as the case may be, in connection with such Refinancing), except to the extent that any such increase in Indebtedness is otherwise permitted by the Indenture or (2) create Indebtedness with (A) a Weighted Average Life to Maturity that is less than the Weighted Average Life to Maturity of the Indebtedness being Refinanced or (B) a final maturity earlier than the final maturity of the Indebtedness being Refinanced; provided, however, that (y) if such Indebtedness being Refinanced is solely Indebtedness of the Company, then such Refinancing Indebtedness shall be Indebtedness solely of the Company and (z) if such Indebtedness being Refinanced is subordinate or junior to the Notes or the Guarantees, then such Refinancing Indebtedness shall be subordinate to the Notes or the Guarantees, as the case may be, at least to the same extent and in the same manner as the Indebtedness being Refinanced. "Registration Rights Agreement" means the Registration Rights Agreement dated the Issue Date among the Company, the Subsidiary Guarantors and the Initial Purchasers. "Representative" means the indenture trustee or other trustee, agent or representative in respect of any Designated Senior Indebtedness; provided, however, that if, and for so long as, any Designated Senior Indebtedness lacks such a representative, then the Representative for such Designated Senior Indebtedness shall at all times constitute the holders of the greater of a majority in outstanding principal amount of such Designated Senior Indebtedness or the holders thereof generally necessary to take action or approve amendments under the agreement governing such Designated Senior Indebtedness. "Restricted Subsidiary" of any Person means any Subsidiary of such Person which at the time of determination is not an Unrestricted Subsidiary. "Sale and Leaseback Transaction" means any direct or indirect arrangement with any Person or to which any such Person is a party, providing for the leasing to the Company or a Restricted Subsidiary of the Company of any property, whether owned by the Company or any Restricted Subsidiary of the Company at the Issue Date or later acquired, which has been or is to be sold or transferred by the Company or such 81 88 Restricted Subsidiary to such Person or to any other Person from whom funds have been or are to be advanced by such Person on the security of such property. "Securitization Entity" means a Restricted Subsidiary of the Company (or another Person in which the Company or any Subsidiary of the Company makes an Investment and to which the Company or any Subsidiary of the Company transfers Receivables) which engages in no activities other than in connection with the financing of Receivables and which is designated by the Board of Directors of the Company (as provided below) as a Securitization Entity (a) no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which (i) is guaranteed by the Company or any other Restricted Subsidiary of the Company (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates the Company or any Restricted Subsidiary of the Company (other than the Securitization Entity) in any way other than pursuant to Standard Securitization Undertakings or (iii) subjects any property or asset of the Company or any Restricted Subsidiary of the Company (other than the Securitization Entity), directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings, (b) with which neither the Company nor any Restricted Subsidiary of the Company has any material contract, agreement, arrangement or understanding other than on terms no less favorable to the Company or such Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Company, other than fees payable in the ordinary course of business in connection with servicing Receivables of such entity and Standard Securitization Undertakings and (c) to which neither the Company nor any Restricted Subsidiary of the Company has any obligation to maintain or preserve such entity's financial condition or cause such entity to achieve certain levels of operating results. Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a Board Resolution of the Company giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions. "Senior Indebtedness" means, the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all fees, indemnities, reimbursement obligations with respect to letters of credit and all other monetary obligations with respect to, any Indebtedness of the Company, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Notes. Without limiting the generality of the foregoing, "Senior Indebtedness" shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of, (x) all monetary obligations of every nature of the Company under the Credit Agreement, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities, (y) all Interest Swap Obligations and (z) all obligations under Currency Agreements and Commodity Agreements, in each case whether outstanding on the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Senior Indebtedness" shall not include (i) any Indebtedness of the Company to a Subsidiary of the Company or any Affiliate of the Company or any of such Affiliate's Subsidiaries, (ii) Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer or employee of the Company or any Subsidiary of the Company (including, without limitation, amounts owed for compensation), (iii) Indebtedness to trade creditors and other amounts incurred in connection with obtaining goods, materials or services, (iv) Indebtedness represented by Disqualified Capital Stock, (v) any liability for federal, state, local or other taxes owed or owing by the Company, (vi) Indebtedness incurred in violation of the Indenture provisions set forth under "Limitation on Incurrence of Additional Indebtedness," (vii) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code is without recourse to the Company and (viii) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of the Company. 82 89 "Significant Subsidiary" shall have the meaning set forth in Rule 1.02(w) of Regulation S-X under the Securities Act. "Standard Securitization Undertakings" means representations, warranties, covenants and indemnities entered into by the Company or any Restricted Subsidiary of the Company which are reasonably customary in a Receivables securitization transaction. "Subsidiary", with respect to any Person, means (i) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person or (ii) any other Person of which at least a majority of the outstanding voting interests under ordinary circumstances is at the time, directly or indirectly, owned by such Person. "Subsidiary Guarantor" means (a) each of the Company's Domestic Restricted Subsidiaries as of the Issue Date and (b) each of the Company's Restricted Subsidiaries that in the future executes a supplemental indenture in which such Subsidiary agrees to be bound by the terms of the Indenture as a Subsidiary Guarantor; provided, however, that any Person constituting a Subsidiary Guarantor as described above shall cease to constitute a Subsidiary Guarantor when its Guarantee is released in accordance with the terms of the Indenture. "Tax Sharing Agreement" means the Tax Allocation Agreement dated as of June 1, 1978 by and between Lane Industries and its subsidiaries and the Company and its United States subsidiaries, as amended as of January 1, 1991, and the State Tax Allocation Agreement dated as of May 31, 1985 by and between Lane Industries and its subsidiaries and the Company and its United States subsidiaries. "Unrestricted Subsidiary" of any Person means (i) any Subsidiary of such Person that at the time of determination shall be or continue to be designated as an Unrestricted Subsidiary by the Board of Directors of such Person in the manner provided for in "Certain Covenants -- Limitations on Restricted and Unrestricted Subsidiaries" and (ii) any Subsidiary of an Unrestricted Subsidiary. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the then outstanding aggregate principal amount of such Indebtedness into (b) the sum of the total of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment. "Wholly-Owned Subsidiary" of any Person means any Subsidiary of such Person of which all the outstanding voting securities (other than director qualifying shares or other de minimis third-party ownership interests required by law) normally entitled to vote in the election of the Board of Directors are owned by such Person or any Wholly-Owned Subsidiary of such Person. "Wholly-Owned Restricted Subsidiary" of any Person means any Wholly-Owned Subsidiary which is also a Restricted Subsidiary of such Person. 83 90 EXCHANGE OFFER PURPOSE AND EFFECT OF THE EXCHANGE OFFER The Old Notes were originally sold by the Issuer on May 27, 1998 to the Initial Purchasers pursuant to the terms of the Purchase Agreement. The Initial Purchasers subsequently resold the Old Notes to (i) qualified institutional buyers in reliance on Rule 144A under the Securities Act and (ii) qualified buyers outside of the United States in reliance on Regulation S under the Securities Act. As a condition to purchase of the Old Notes by the Initial Purchasers, the Issuer, the Subsidiary Guarantors and the Initial Purchasers entered into the Registration Rights Agreement as of the date of the Initial Offering (the "Issue Date"), pursuant to which each of the Issuer and the Subsidiary Guarantors agreed, for the benefit of holders of the Old Notes, that they would, at their expense (i) within 60 days after the Issue Date, file the Exchange Offer Registration Statement with the Commission with respect to a registered offer to exchange the Old Notes for notes of the Issuer, guaranteed by the Subsidiary Guarantors, which Exchange Notes would have terms identical to the Old Notes (except that the Exchange Notes would not contain terms with respect to the transfer restrictions) and (ii) cause the Exchange Offer Registration Statement to be declared effective under the Securities Act within 140 days after the Issue Date. Upon the Exchange Offer Registration Statement being declared effective, the Issuer and the Subsidiary Guarantors agreed to offer to all holders of the Old Notes an opportunity to exchange their securities for a like principal amount of the Exchange Notes (and the related Guarantees). The Issuer and the Subsidiary Guarantors will keep the Exchange Offer open for acceptance for not less than 20 business days (or longer if required by applicable law) after the date notice of the Exchange Offer is mailed to the Holders. For each Old Note surrendered to the Issuer for exchange pursuant to the Exchange Offer, the Holder of such Old Note will receive an Exchange Note having a principal amount at maturity equal to that of the surrendered Old Note. Interest on each Exchange Note will accrue (A) from the later of (i) last interest payment date on which interest was paid on the Old Note surrendered in exchange therefor or (ii) if the Old Note is surrendered for exchange on a date in a period which includes the record date for an interest payment date to occur on or after the date of such exchange and as to which interest will be paid, the date of such interest payment date or (B) if no interest has been paid on such Old Note, from the Issue Date. Under existing interpretations of the Commission contained in several no-action letters to third parties, the Exchange Notes (and the related Guarantees) will be freely transferable by holders thereof (other than affiliates of the Issuer) after the Exchange Offer without further registration under the Securities Act; provided, however, that each Holder that wishes to exchange its Old Notes for Exchange Notes will be required to represent (i) that any Exchange Notes to be received by it will be acquired in the ordinary course of its business, (ii) that at the time of the commencement of the Exchange Offer it has no arrangement or understanding with any person to participate in the distribution (within the meaning of Securities Act) of the Exchange Notes in violation of the Securities Act, (iii) that it is not an "affiliate" (as defined in Rule 405 promulgated under the Securities Act) of the Issuer, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of Exchange Notes and (v) if such Holder is a Participating Broker-Dealer that will receive Exchange Notes for its own account in exchange for Old Notes that were acquired as a result of market-making or other trading activities, that it will deliver a prospectus in connection with any resale of such Exchange Notes. The Commission has taken the position that Participating Broker-Dealers may fulfill their prospectus delivery requirements with respect to the Exchange Notes (other than a resale of an unsold allotment from the original sale of the Old Notes) with the prospectus contained in the Exchange Offer Registration Statement. The Issuer and the Subsidiary Guarantors will agree to make available, during the period required by the Securities Act, a prospectus meeting the requirements of the Securities Act for use by Participating Broker-Dealers and other persons, if any, with similar prospectus delivery requirements for use in connection with any resale of Exchange Notes. If, (i) because of any change in law or in currently prevailing interpretations of the staff of the Commission, the Issuer and the Subsidiary Guarantors are not permitted to effect an Exchange Offer, (ii) the Exchange Offer is not consummated within 185 days of the Issue Date, (iii) in certain circumstances, certain holders of unregistered Exchange Notes so request, or (iv) in the case of any Holder that participates in the 84 91 Exchange Offer, such Holder does not receive Exchange Notes on the date of the exchange that may be sold without restriction under state and federal securities laws (other than due solely to the status of such Holder as an affiliate of the Issuer or any Subsidiary Guarantor within the meaning of the Securities Act), then in each case, the Issuer and the Subsidiary Guarantors will (x) promptly deliver to the Holders and the Trustee written notice thereof and (y) at their sole expense, (a) as promptly as practicable, file a Shelf Registration Statement covering resales of the Old Notes and the Guarantees, (b) use their best efforts to cause the Shelf Registration Statement to be declared effective under the Securities Act and (c) use their best efforts to keep effective the Shelf Registration Statement until the earlier of two years after the Issue Date or such time as all of the applicable Old Notes have been sold thereunder. The Company will, in the event that a Shelf Registration Statement is filed, provide to each Holder copies of the prospectus that is a part of the Shelf Registration Statement, notify each such Holder when the Shelf Registration Statement for the Old Notes has become effective and take certain other actions as are required to permit unrestricted resales of the Old Notes. A Holder that sells Old Notes pursuant to the Shelf Registration Statement will be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the Registration Rights Agreement that are applicable to such Holder (including certain indemnification rights and obligations). If the Issuer or any Subsidiary Guarantor fails to comply with the above provision or if the Exchange Offer Registration Statement or the Shelf Registration Statement fails to become effective, then, as liquidated damages, additional interest (the "Additional Interest") shall become payable in respect of the Old Notes as follows: (i) if the Exchange Offer Registration Statement or any Shelf Registration Statement is not filed with the Commission on or prior to the Filing Date applicable thereto, Additional Interest shall accrue on the principal amount of the Old Notes at a rate of .50% per annum for the first 90 days immediately following such Filing Date, such Additional Interest rate increasing by an additional .50% per annum at the beginning of each subsequent 90-day period; (ii) if the Exchange Offer Registration Statement is not declared effective by the Commission within 140 days following the Issue Date or, whether or not the Issuer and the Subsidiary Guarantors have consummated or will consummate an Exchange Offer, the Issuer and the Subsidiary Guarantors are required to file a Shelf Registration Statement and such Shelf Registration Statement is not declared effective by the Commission on or prior to the 75th day following the applicable Filing Date with respect to such Shelf Registration Statement, then, commencing on the day after either such required effective date, Additional Interest shall accrue on the principal amount of the Old Notes at a rate of .50% per annum for the first 90 days immediately following such date, such Additional Interest rate increasing by an additional .50% per annum at the beginning of each subsequent 90-day period; or (iii) if (A) the Issuer and the Subsidiary Guarantors have not exchanged Exchange Notes for all Old Notes validly tendered in accordance with the terms of the Exchange Offer on or prior to the 45th day after the date on which the Exchange Offer Registration Statement was declared effective or (B) if applicable, the Shelf Registration Statement has been declared effective and such Shelf Registration Statement ceases to be effective at any time prior to the second anniversary of the Issue Date (other than after such time as all Old Notes have been disposed of thereunder), then Additional Interest shall accrue on the principal amount of the Old Notes at a rate of .50% per annum for the first 90 days commencing on (x) the 46th day after such effective date, in the case of (A) above, or (y) the day such Shelf Registration Statement ceases to be effective in the case of (B) above, such Additional Interest rate increasing by an additional .50% per annum at the beginning of each subsequent 90-day period; provided, however, that the Additional Interest rate on the Old Notes as a result of the provisions of clauses (i), (ii) and (iii) above may not exceed in the aggregate 1.5% per annum; provided, further, however, that (1) upon the filing of the Exchange Offer Registration Statement or a Shelf Registration Statement (in the case of clause (i) above), (2) upon the effectiveness of the Exchange Offer Registration or a Shelf Registration Statement (in the case of clause (ii) above), or (3) upon the exchange of Exchange Notes for all 85 92 Old Notes tendered (in the case of clause (iii)(A) above), or upon the effectiveness of the Shelf Registration Statement which had ceased to remain effective (in the case of clause (iii)(B) above), Additional Interest on the Old Notes as a result of such clause (or the relevant subclause thereof), as the case may be, shall cease to accrue. As used herein, "Filing Date" means (A) in the case of an Exchange Offer Registration Statement, the 60th day after the Issue Date; or (B) in the case of a Shelf Registration Statement (which may be applicable notwithstanding the consummation of the Exchange Offer), the 45th day after a notice regarding the obligation to file a Shelf Registration Statement is required to be delivered. Any amounts of Additional Interest due pursuant to clause (i), (ii) or (iii) above will be payable in cash on the same original interest payment dates as the Old Notes. The summary herein of certain provisions of the Registration Rights Agreement does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Registration Rights Agreement, a copy of which is available upon request to the Company. Following the consummation of the Exchange Offer, holders of the Old Notes who were eligible to participate in the Exchange Offer but who did not tender their Old Notes will not have any further registration rights and such Old Notes will continue to be subject to certain restrictions on transfer. Accordingly, the liquidity of the market for such Old Notes could be adversely affected. TERMS OF THE EXCHANGE OFFER Upon the terms and subject to the conditions set forth in this Prospectus and in the Letter of Transmittal, the Issuer will accept any and all Old Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date. The Issuer will issue $1,000 principal amount of Exchange Notes in exchange for each $1,000 principal amount of outstanding Old Notes accepted in the Exchange Offer. Holders may tender some or all of their Old Notes pursuant to the Exchange Offer. However, Old Notes may be tendered only in integral multiples of $1,000. The form and terms of the Exchange Notes are the same as the form and terms of the Old Notes except that (i) the Exchange Notes bear a different CUSIP Number from the Old Notes, (ii) the Exchange Notes have been registered under the Securities Act and hence will not bear legends restricting the transfer thereof and (iii) the holders of the Exchange Notes will not be entitled to certain rights under the Registration Rights Agreement, including the provisions providing for an increase in the interest rate on the Old Notes in certain circumstances relating to the timing of the exchange offer, all of which rights will terminate when the Exchange Offer is consummated. The Exchange Notes will evidence the same debt as the Old Notes and will be entitled to the benefits of the Indenture. As of the date of this Prospectus, $150,000,000 aggregate principal amount of Old Notes were outstanding. This Prospectus and the Letter of Transmittal are being mailed to persons who were holders of Old Notes on the close of business on the date of this Prospectus. Holders of Old Notes do not have any appraisal or dissenters' rights under the General Corporation Law of Delaware or the Indenture in connection with the Exchange Offer. The Issuer intends to conduct the Exchange Offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the Commission thereunder. The Issuer shall be deemed to have accepted validly tendered Old Notes when, as and if the Issuer has given oral or written notice thereof to the Exchange Agent. The Exchange Agent will act as agent for the tendering holders for the purpose of receiving the Exchange Notes from the Issuer. If any tendered Old Notes are not accepted for exchange because of an invalid tender, the occurrence of certain other events set forth herein or otherwise, the certificates for any such unaccepted Old Notes will be returned, without expense, to the tendering holder thereof as promptly as practicable after the Expiration Date. 86 93 Holders who tender Old Notes in the Exchange Offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of Old Notes pursuant to the Exchange Offer. The Issuer will pay all charges and expenses, other than transfer taxes in certain circumstances, in connection with the Exchange Offer. See "-- Fees and Expenses." EXPIRATION DATE; EXTENSIONS; AMENDMENTS The term "Expiration Date" shall mean 5:00 p.m., New York City time, on , 1998, unless the Issuer, in its sole discretion, extends the Exchange Offer, in which case the term "Expiration Date" shall mean the latest date and time to which the Exchange Offer is extended. In order to extend the Exchange Offer, the Issuer will notify the Exchange Agent of any extension by oral or written notice followed by a public announcement thereof, each prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. The Issuer reserves the right, in its sole discretion, (i) to delay accepting any Old Notes, to extend the Exchange Offer or to terminate the Exchange Offer if any of the conditions set forth below under "-- Conditions" shall not have been satisfied, by giving oral or written notice of such delay, extension or termination to the Exchange Agent or (ii) to amend the terms of the Exchange Offer in any manner. Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice thereof to the Exchange Agent and by making a public announcement thereof. INTEREST ON THE EXCHANGE NOTES The Exchange Notes will bear interest from their date of issuance. Holders of Old Notes that are accepted for exchange will receive, in cash, accrued interest thereon to, but not including, the date of issuance of the Exchange Notes. Such interest will be paid with the first interest payment on the Exchange Notes on December 1, 1998. Interest on the Old Notes accepted for exchange will cease to accrue upon issuance of the Exchange Notes. Interest on the Exchange Notes is payable semi-annually on each June 1 and December 1, commencing on December 1, 1998. PROCEDURES FOR TENDERING Only a holder of Old Notes may tender such Old Notes in the Exchange Offer. To tender in the Exchange Offer, a holder must complete, sign and date the Letter of Transmittal, or a facsimile thereof, have the signatures thereon guaranteed if required by the Letter of Transmittal, and mail or otherwise deliver such Letter of Transmittal or such facsimile, together with the Old Notes and any other required documents, to the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date. To be tendered effectively, the Old Notes, Letter of Transmittal and other required documents must be completed and received by the Exchange Agent at the address set forth below under "-- Exchange Agent" prior to 5:00 p.m., New York City time, on the Expiration Date. Delivery of the Old Notes may be made by book-entry transfer in accordance with the procedures described below. Confirmation of such book-entry transfer must be received by the Exchange Agent prior to the Expiration Date. By executing the Letter of Transmittal, each holder will make to the Issuer the representations set forth above in the second paragraph under the heading "-- Purpose and Effect of the Exchange Offer." The tender by a holder and the acceptance thereof by the Issuer will constitute agreement between such holder and the Issuer in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal. THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. 87 94 IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE ISSUER. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS. Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an Eligible Institution (as defined below) unless the Old Notes tendered pursuant thereto are tendered (i) by a registered holder who has not completed the box entitled "Special Registration Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. In the event that signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantee must be by a firm or other entity identified in Rule 17Ad-15 under the Exchange Act as an "eligible guarantor institution" (an "Eligible Institution"). If the Letter of Transmittal is signed by a person other than the registered holder of any Old Notes listed therein, such Old Notes must be endorsed or accompanied by a properly completed bond power, signed by such registered holder as such registered holder's name appears on such Old Notes with the signature thereon guaranteed by an Eligible Institution. If the Letter of Transmittal or any Old Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and evidence satisfactory to the Issuer of their authority to so act must be submitted with the Letter of Transmittal. The Issuer understands that the Exchange Agent will make a request promptly after the date of this Prospectus to establish accounts with respect to the Old Notes at the book-entry transfer facility, The Depository Trust Company ("DTC"), for the purpose of facilitating the Exchange Offer, and subject to the establishment thereof, any financial institution that is a participant in DTC's system may make book-entry delivery of Old Notes by causing DTC to transfer such Old Notes into the Exchange Agent's account with respect to the Old Notes in accordance with DTC's procedures for such transfer. Although delivery of the Old Notes may be effected through book-entry transfer into the Exchange Agent's account at DTC, an appropriate Letter of Transmittal properly completed and duly executed with any required signature guarantee and all other required documents must in each case be transmitted to and received or confirmed by the Exchange Agent at its address set forth below on or prior to the Expiration Date, or, if the guaranteed delivery procedures described below are complied with, within the time period provided under such procedures. Delivery of documents to DTC does not constitute delivery to the Exchange Agent. All questions as to the validity, form, eligibility (including time of receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes will be determined by the Issuer in its sole discretion, which determination will be final and binding. The Issuer reserves the absolute right to reject any and all Old Notes not properly tendered or any Old Notes the Issuer's acceptance of which would, in the opinion of counsel for the Issuer, be unlawful. The Issuer also reserves the right in its sole discretion to waive all defects, irregularities or conditions of tender as to particular Old Notes. The Issuer's interpretation of the terms and conditions of the Exchange Offer (including the instructions in the Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes must be cured within such time as the Issuer shall determine. Although the Issuer intends to notify holders of defects or irregularities with respect to tenders of Old Notes, neither the Issuer, the Exchange Agent nor any other person shall incur any liability for failure to give such notification. Tenders of Old Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Old Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holders, unless otherwise provided in the Letter of Transmittal, as soon as practicable following the Expiration Date. 88 95 GUARANTEED DELIVERY PROCEDURES Holders who wish to tender their Old Notes and (i) whose Old Notes are not immediately available, (ii) who cannot deliver their Old Notes, the Letter of Transmittal or any other required documents to the Exchange Agent or (iii) who cannot complete the procedures for book-entry transfer, prior to the Expiration Date, may effect a tender if: (a) the tender is made through an Eligible Institution; (b) prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the holder, the certificate number(s) of such Old Notes and the principal amount of Old Notes tendered, stating that the tender is being made thereby and guaranteeing that, within three New York Stock Exchange trading days after the Expiration Date, the Letter of Transmittal (or facsimile thereof) together with the certificate(s) representing the Old Notes (or a confirmation of book-entry transfer of such Notes into the Exchange Agent's account at the Book-Entry Transfer Facility), and any other documents required by the Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent; and (c) such properly completed and executed Letter of Transmittal (of facsimile thereof), as well as the certificate(s) representing all tendered Old Notes in proper form for transfer (or a confirmation of book-entry transfer of such Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility), and all other documents required by the Letter of Transmittal are received by the Exchange Agent within three New York Stock Exchange trading days after the Expiration Date. Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be provided to holders who wish to tender their Old Notes according to the guaranteed delivery procedures set forth above. WITHDRAWAL OF TENDERS Except as otherwise provided herein, tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. To withdraw a tender of Old Notes in the Exchange Offer, a telegram, telex, letter or facsimile transmission notice of withdrawal must be received by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be withdrawn (including the certificate number(s) and principal amount of such Old Notes, or, in the case of Old Notes transferred by book-entry transfer, the name and number of the account at DTC to be credited), (iii) be signed by the holder in the same manner as the original signature on the Letter of Transmittal by which such Old Notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Trustee with respect to the Old Notes register the transfer of such Old Notes into the name of the person withdrawing the tender and (iv) specify the name in which any such Old Notes are to be registered, if different from that of the Depositor. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Issuer, whose determination shall be final and binding on all parties. Any Old Notes so withdrawn will be deemed not to have been validly tendered for purposes of the Exchange Offer and no Exchange Notes will be issued with respect thereto unless the Old Notes so withdrawn are validly retendered. Any Old Notes which have been tendered but which are not accepted for exchange will be returned to the holder thereof without cost to such holder as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Old Notes may be retendered by following one of the procedures described above under "-- Procedures for Tendering" at any time prior to the Expiration Date. 89 96 CONDITIONS Notwithstanding any other term of the Exchange Offer, the Issuer shall not be required to accept for exchange, or exchange Exchange Notes for, any Old Notes, and may terminate or amend the Exchange Offer as provided herein before the acceptance of such Old Notes, if: (a) any action or proceeding is instituted or threatened in any court or by or before any governmental agency with respect to the Exchange Offer which, in the sole judgment of the Issuer, might materially impair the ability of the Issuer or the Subsidiary Guarantors to proceed with the Exchange Offer or any material adverse development has occurred in any existing action or proceeding with respect to the Issuer or the Subsidiary Guarantors; (b) any law, statute, rule, regulation or interpretation by the staff of the Commission, is adopted or enacted, which, in the sole judgment of the Issuer, would be violated if the Issuer and the Subsidiary Guarantors were to proceed with the Exchange Offer; or (c) any governmental approval has not been obtained, which approval the Issuer shall, in its sole discretion, deem necessary for the consummation of the Exchange Offer as contemplated hereby. If the Issuer determines in its sole discretion that any of the conditions are not satisfied, the Issuer may (i) refuse to accept any Old Notes and return all tendered Old Notes to the tendering holders, (ii) extend the Exchange Offer and retain all Old Notes tendered prior to the expiration of the Exchange Offer, subject, however, to the rights of holders to withdraw such Old Notes (see "-- Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with respect to the Exchange Offer and accept all properly tendered Old Notes which have not been withdrawn. EXCHANGE AGENT First Union National Bank has been appointed as Exchange Agent for the Exchange Offer. Questions and requests for assistance, requests for additional copies of this Prospectus or of the Letter of Transmittal and requests for a Notice of Guaranteed Delivery should be directed to the Exchange Agent addressed as follows: FIRST UNION NATIONAL BANK By Mail: By Overnight Courier: By Hand: First Union National Bank First Union National Bank First Union National Bank Corporate Trust Corporate Trust 40 Broad Street Reorganization Dept. Reorganization Dept. 5th Floor, Suite 550 1525 West W.T. Harris Blvd., 1525 West W.T. Harris Blvd., New York, New York 10004 3C3 3C3 Charlotte, North Carolina 28262 Charlotte, North Carolina 28288 Attn: Mike Klotz Attn: Mike Klotz By Facsimile Transmission (for Eligible Institutions only): (704) 590-7628 Confirm by Telephone (704) 590-7408
DELIVERY TO AN ADDRESS OTHER THAN SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. FEES AND EXPENSES The expenses of soliciting tenders will be borne by the Issuer. The principal solicitation is being made by mail; however; additional solicitations may be made by telegraph, telecopy, telephone or in person by officers and regular employees of the Issuer and its affiliates. 90 97 The Issuer has not retained any dealer-manager in connection with the Exchange Offer and will not make any payments to brokers, dealers or others to solicit acceptances of the Exchange Offer. The Issuer, however, will pay the Exchange Agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses in connection therewith. The cash expenses to be incurred in connection with the Exchange Offer will be paid by the Issuer. Such expenses will include, among others, fees and expenses of the Exchange Agent and Trustee, accounting and legal fees and printing costs. ACCOUNTING TREATMENT The Exchange Notes will be recorded at the same carrying value as the Old Notes, which is face value, as reflected in the Company's accounting records on the date of exchange. Accordingly, no gain or loss for accounting purposes will be recognized by the Company. The expenses of the Exchange Offer will be amortized over the term of the Exchange Notes. CONSEQUENCES OF FAILURE TO EXCHANGE The Old Notes that are not exchanged for Exchange Notes pursuant to the Exchange Offer will remain restricted securities. Accordingly, such Old Notes may be resold only (i) to the Issuer (upon redemption thereof or otherwise), (ii) so long as the Old Notes are eligible for resale pursuant to Rule 144A, to a person inside the United States whom the seller reasonably believes is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act in a transaction meeting the requirements of Rule 144A, in accordance with Rule 144 under the Securities Act, or pursuant to another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel reasonably acceptable to the Issuer), (iii) outside the United States to a foreign person in a transaction meeting the requirements of Rule 904 under the Securities Act, or (iv) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States. RESALE OF THE EXCHANGE NOTES With respect to resales of Exchange Notes, based on interpretations by the staff of the Commission set forth in no-action letters issued to third parties, the Issuer believes that a holder or other person who receives Exchange Notes, whether or not such person is the holder who receives Exchange Notes in exchange for Old Notes, in the ordinary course of business, who is not participating, does not intend to participate, and has no arrangement or understanding with any person to participate, in the distribution of the Exchange Notes and who is not an "affiliate" of the Issuer within the meaning of Rule 405 under the Securities Act, will be allowed to resell the Exchange Notes to the public without further registration under the Securities Act and without delivering to the purchasers of the Exchange Notes a prospectus that satisfies the requirements of Section 10 of the Securities Act. However, if any holder acquires Exchange Notes in the Exchange Offer for the purpose of distributing or participating in a distribution of the Exchange Notes, such holder cannot rely on the position of the staff of the Commission enunciated in such no-action letters or any similar interpretive letters, and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction, unless an exemption from registration is otherwise available. Further, each Participating Broker-Dealer that receives Exchange Notes for its own account in exchange for Old Notes, where such Old Notes were acquired by such Participating Broker-Dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. As contemplated by these no-action letters and the Registration Rights Agreement, each holder accepting the Exchange Offer is required to represent to the Issuer in the Letter of Transmittal that (i) the Exchange Notes are to be acquired by the holder or the person receiving such Exchange Notes, whether or not such person is the holder, in the ordinary course of business, (ii) the holder or any such other person (other than a broker-dealer referred to in the next sentence) is not engaging and does not intend to engage, in the distribution of the Exchange Notes, (iii) the holder or any such other person has no arrangement or 91 98 understanding with any person to participate in the distribution of the Exchange Notes, (iv) neither the holder nor any such other person is an "affiliate" of the Issuer within the meaning of Rule 405 under the Securities Act, and (v) the holder or any such other person acknowledges that if such holder or other person participates in the Exchange Offer for the purpose of distributing the Exchange Notes it must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the Exchange Notes and cannot rely on those no-action letters. As indicated above, each Participating Broker-Dealer that receives Notes for its own account in exchange for Old Notes must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. For a description of the procedures for such resales by Participating Broker-Dealers, see "Plan of Distribution." CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS The following discussion is a summary of certain United States federal tax consequences of the Exchange Offer and of the acquisition, ownership and disposition of the Exchange Notes by the beneficial owners thereof ("Holders"). The discussion is limited to initial Holders of Exchange Notes and does not address the tax consequences to subsequent purchasers of Exchange Notes. This summary does not purport to be a complete analysis of all the potential United States federal tax effects relating to the acquisition, ownership and disposition of the Exchange Notes. There can be no assurance that the Internal Revenue Service (the "IRS") will take a similar view of such consequences. Further, the discussion does not address all aspects of taxation that might be relevant to particular Holders in light of their individual circumstances (including the effect of any state, local, non-United States or other tax laws) or to certain types of Holders (including dealers in securities, insurance companies, financial institutions and tax-exempt entities) subject to special treatment under United States federal tax law. The discussion below is based on the Internal Revenue Code of 1986, as amended (the "Code"), administrative pronouncements, judicial decisions, existing, proposed and temporary United States Treasury Regulations, all in effect as of the date hereof, all of which are subject to change at anytime, and any such change may be applied retroactively. Because individual circumstances may differ, each Holder is strongly urged to consult its own tax advisor with respect to its particular tax situation and the particular tax effects of any state, local, non-United States or other tax laws and possible changes in the tax laws. The discussion below assumes that the Old Notes and the Exchange Notes are held as capital assets within the meaning of Section 1221 of the Code. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH REGARD TO THE APPLICATION OF THE UNITED STATES FEDERAL TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES TO THEM ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR NON-UNITED STATES TAXING JURISDICTION. TAX CONSEQUENCES OF THE EXCHANGE OFFER TO EXCHANGING AND NONEXCHANGING HOLDERS An exchange of Old Notes for Exchange Notes will not be treated as a sale, exchange or other taxable event for federal income tax purposes because the Exchange Notes will not be considered to differ materially in kind or extent from the Old Notes. As a result, no material federal income tax consequences will result from an exchange of Old Notes for Exchange Notes. For United States income tax purposes, (i) an Exchange Note received by a beneficial owner of an Old Note will be treated as a continuation of the Old Note in the hands of such owner, (ii) the holding period for an Exchange Note will include the holding period for the Old Note exchanged therefor, and (iii) the tax basis of such Exchange Note will be the same as the tax basis for such Old Note. The Exchange Offer will not result in any United States federal income tax consequences to a nonexchanging Holder. TAX CONSEQUENCES TO UNITED STATES HOLDERS OF HOLDING EXCHANGE NOTES As used herein, the term "United States Holder" means a Holder of an Exchange Note who or which is, for United States federal income tax purposes, (i) a citizen or resident of the United States, (ii) a corporation, 92 99 partnership or other entity created or organized in or under the laws of the United States or of any State thereof (including the District of Columbia) or (iii) an estate or trust described in Section 7701(a)(30) of the Code. The term also includes certain Holders who are former citizens or residents of the United States whose income and gain from the Exchange Notes will be subject to United States taxation. Payments of Interest. Interest paid on an Exchange Note will generally be taxable to a United States Holder as ordinary interest income at the time it accrues or is received in accordance with the United States Holder's method of accounting for United States federal income tax purposes. Sale, Exchange, Redemption or Retirement of the Exchange Notes. Upon the sale, exchange, redemption or retirement of an Exchange Note, a United States Holder will recognize taxable gain or loss equal to the difference between the amount realized on such sale, exchange, redemption or retirement (not including any amount attributable to accrued but unpaid interest) and such Holder's adjusted tax basis in the Exchange Note. To the extent attributable to accrued but unpaid interest, the amount recognized by the United States Holder will be treated as a payment of interest. See "-- Payments of Interest" above. A United States Holder's adjusted tax basis in an Exchange Note will equal such Holder's basis in the Old Note exchanged therefore, reduced by any principal payments received by such Holder. See "-- Tax Consequences of the Exchange Offer to Exchanging and Nonexchanging Holders," above. Gain or loss recognized on the sale, exchange, redemption or retirement of an Exchange Note will be capital gain or loss. For non-corporate taxpayers, capital gain recognized on the disposition of an asset (including an Exchange Note) held for more than one year is subject to United States federal income tax at a maximum rate of 20% and capital gain on the disposition of an asset (including an Exchange Note) held for not more than one year is taxed at the rates applicable to ordinary income (i.e., up to 39.6%). The holding period for an Exchange Note will include the holding period for the Old Note exchanged therefor. See "-- Tax Consequences of the Exchange Offer to Exchanging and Nonexchanging Holders," above. Regardless of the holding period, capital loss on the disposition of an asset is deductible by non-corporate taxpayers only to the extent of capital gains for the taxable year plus $3,000. Capital gains are subject to tax at the same rates as ordinary income for corporate taxpayers. Capital losses of corporate taxpayers are deductible only against capital gains. A Holder attempting to sell an Exchange Note in the secondary market should be aware that a subsequent Holder who purchases an Exchange Note at a discount might be subject to the "market discount" rules of the Code. A subsequent Holder who purchases an Exchange Note at a premium may elect to amortize and deduct the premium over the remaining term of the Exchange Note in accordance with rules set forth in Section 171 of the Code. TAX CONSEQUENCES TO UNITED STATES ALIEN HOLDERS OF HOLDING EXCHANGE NOTES Under present United States federal income and estate tax law, and subject to the discussion below concerning backup withholding: (a) payments of principal and interest on an Exchange Note by the Issuer or any paying agent to a beneficial owner of the Exchange Note that is not a United States Holder, as defined above (hereinafter, a "United States Alien Holder"), will not be subject to withholding of United States federal income tax, provided that, in the case of interest, (i) such Holder does not own, actually or constructively, 10 percent or more of the total combined voting power of all classes of stock of the Issuer entitled to vote, (ii) such Holder is not, for United States federal income tax purposes, a controlled foreign corporation related, directly or indirectly, to the Issuer through stock ownership, (iii) such Holder is not a bank receiving interest described in Section 881(c)(3)(A) of the Code, and (iv) the certification requirements under Section 871(h) or Section 881(c) of the Code and Treasury Regulations thereunder (summarized below) are met; (b) a United States Alien Holder of an Exchange Note will not be subject to United States federal income tax on gain recognized on the sale, exchange, redemption, retirement or other disposition of such Exchange Note, unless (i) such Holder is a non-resident alien individual who is present in the United 93 100 States for 183 days or more in the taxable year of disposition, and certain conditions are met or (ii) such gain is effectively connected with the conduct by such Holder of a trade or business in the United States; and (c) an Exchange Note held by an individual who is not a citizen or resident (as defined for United States federal estate tax purposes) of the United States at the time of his death will not be subject to United States federal estate tax as a result of such individual's death, provided that, at the time of such individual's death, (i) the individual does not own, actually or constructively, 10 percent or more of the total combined voting power of all classes of stock of the Issuer entitled to vote and (ii) payments with respect to such Exchange Note, if received at the time of the individual's death, would not have been effectively connected with the conduct by such individual of a trade or business in the United States. Sections 871(h) and 881(c) of the Code and United States Treasury Regulations thereunder require that, in order to obtain the exemption from withholding tax described in paragraph (a) above, either (A) the beneficial owner of an Exchange Note must certify, under penalties of perjury, to the Issuer or paying agent, as the case may be, that such owner is a United States Alien Holder and must provide such owner's name and address, or (B) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business (a "Financial Institution") and holds the Exchange Note on behalf of the beneficial owner thereof must certify, under penalties of perjury, to the Issuer or paying agent, as the case may be, that such certificate has been received from the beneficial owner by it or by a Financial Institution between it and the beneficial owner and must furnish the payor with a copy thereof. A certificate described in this paragraph is effective only with respect to payments of interest made to the certifying United States Alien Holder after issuance of the certificate in the calendar year of its issuance and the two immediately succeeding calendar years. Under temporary United States Treasury Regulations, the foregoing certification may be provided by the beneficial owner of a Note on IRS Form W-8. On October 14, 1997, the IRS published in the Federal Register final regulations (the "1997 Final Regulations") which affect the United States taxation of United States Alien Holders. As promulgated, the 1997 Final Regulations are effective for payments after December 31, 1998, regardless of the issue date of the instrument with respect to which such payments are made, subject to certain transition rules. The IRS subsequently announced its intention to amend the 1997 Final Regulations to extend this date to December 31, 1999, subject to certain transition rules. The discussion under this heading and under "Backup Withholding and Information Reporting," below, is not intended to be a complete discussion of the provisions of the 1997 Final Regulations or the recent IRS announcement, and Holders are urged to consult their tax advisors concerning the tax consequences of their acquiring, holding and disposing of the Exchange Notes in light of the 1997 Final Regulations. The 1997 Final Regulations provide documentation procedures designed to simplify compliance by withholding agents. The 1997 Final Regulations generally do not affect the documentation rules described above, but add other certification options. Under one such option, a withholding agent will be allowed to rely on an intermediary withholding certificate furnished by a "qualified intermediary" (as defined below) on behalf of one or more beneficial owners (or other intermediaries) without having to obtain the beneficial owner certificate described above. "Qualified intermediaries" include: (i) foreign financial institutions or foreign clearing organizations (other than a United States branch or United States office of such institution or organization) or (ii) foreign branches or offices of United States financial institutions or foreign branches or offices of United States clearing organizations, which, as to both (i) and (ii), have entered into withholding agreements with the IRS. In addition to certain other requirements, qualified intermediaries must obtain withholding certificates, such as revised IRS Form W-8 (see below), from each beneficial owner. Under another option, an authorized foreign agent of a United States withholding agent will be permitted to act on behalf of the United States withholding agent, provided certain conditions are met. For purposes of the certification requirements, the 1997 Final Regulations generally treat, as the beneficial owners of payments on a debt instrument, those persons that, under United States tax principles, are the taxpayers with respect to such payments, rather than persons such as nominees or agents legally entitled to such payments. In the case of payments to an entity classified as a foreign partnership under United States tax 94 101 principles, the partners, rather than the partnership, generally will be required to provide the required certifications to qualify for the withholding exemption described above. A payment to a United States partnership, however, is treated for these purposes as payment to a United States payee, even if the partnership has one or more foreign partners. The 1997 Final Regulations provide certain presumptions with respect to withholding for holders of debt instruments not furnishing the required certifications to qualify for the withholding exemption described above. In addition, the 1997 Final Regulations will replace a number of current tax certification forms (including IRS Form W-8 and IRS Form 4224, discussed below) with a single, revised IRS Form W-8 (which, in certain circumstances, requires information in addition to that previously required). Under the 1997 Final Regulations, this Form W-8 will remain valid until the last day of the third calendar year following the year in which the certificate is signed. The 1997 Final Regulations contained detailed rules, which might be changed in light of the IRS announcement that the effective date will be postponed, governing tax certifications during the transition period prior to and immediately following the effectiveness of the 1997 Final Regulations. If a United States Alien Holder of an Exchange Note is engaged in a trade or business in the United States, and if interest on the Exchange Note, or gain recognized on the sale, exchange, redemption, retirement or other disposition of the Exchange Note, is effectively connected with the conduct of such trade or business, the United States Alien Holder, although exempt from withholding of United States income tax, will generally be subject to regular United States income tax on such interest or gain in the same manner as if it were a United States Holder. See "Tax Consequences to United States Holders of Holding Exchange Notes," above. In lieu of the certificate described above, such a Holder must provide to the withholding agent a properly executed IRS Form 4224 (or successor form) in order to claim an exemption from withholding. In addition, if such United States Alien Holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% (or such lower rate provided by an applicable treaty) of its effectively connected earnings and profits for the taxable year, subject to certain adjustments. For purposes of the branch profits tax, interest on, and any gain recognized on the sale, exchange, redemption, retirement or other disposition of, an Exchange Note will be included in the effectively connected earnings and profits of such United States Alien Holder if such interest or gain is effectively connected with the conduct by the United States Alien Holder of a trade or business in the United States. BACKUP WITHHOLDING AND INFORMATION REPORTING Under current United States federal income tax law, a 31% backup withholding tax and information reporting requirements apply to certain payments of principal and interest made to, and to the proceeds of sale before maturity by, certain Holders of Exchange Notes. In the case of a non-corporate United States Holder, backup withholding will apply only if (i) such Holder fails to furnish its Taxpayer Identification Number ("TIN") (which, for an individual, is his Social Security number) to the payor in the manner required, (ii) such Holder furnishes an incorrect TIN and the payor is so notified by the IRS, (iii) the payor is notified by the IRS that such Holder has failed properly to report payments of interest or dividends or (iv) under certain circumstances, such Holder fails to certify, under penalties of perjury, that it has furnished a correct TIN and has not been notified by the IRS that it is subject to backup withholding for failure to report interest or dividend payments. Backup withholding does not apply with respect to payments made to certain exempt recipients, such as a corporation (within the meaning of Section 7701(a) of the Code) and tax-exempt organizations. United States Holders should consult their tax advisors regarding their qualification for exemption from backup withholding and the procedure for obtaining such an exemption if applicable. The amount of any backup withholding from a payment to a United States Holder will be allowed as a credit against such Holder's United States federal income tax liability and may entitle such Holder to a refund, provided that the required information is furnished to the IRS. In the case of a United States Alien Holder, under currently applicable United States Treasury Regulations, backup withholding and information reporting will not apply to payments of principal or interest made by the Issuer or any paying agent thereof on an Exchange Note (absent actual knowledge that the 95 102 Holder is a United States Holder) if such Holder has provided the required certification under penalties of perjury that it is not a United States Holder (as defined above) or has otherwise established an exemption. If such Holder does not provide the required certification, such Holder may nevertheless avoid backup withholding or information reporting in the circumstances described below, but might be subject to withholding of United States federal income tax as described above under "Tax Consequences to United States Alien Holders." Under currently applicable United States Treasury Regulations, if payments of principal or interest are collected outside the United States by a foreign office of a custodian, nominee or other agent acting on behalf of a beneficial owner of an Exchange Note, such custodian, nominee or other agent will not be required to apply backup withholding to such payments made to such beneficial owner, and generally will not be subject to information reporting requirements. However, if such custodian, nominee or other agent is a United States person, a controlled foreign corporation for United States tax purposes or a foreign person 50% or more of whose gross income is effectively connected with a United States trade or business for a specified three-year period, information reporting (but not backup withholding) will be required unless such custodian, nominee or other agent has in its records documentary evidence that the beneficial owner is not a United States Holder and certain other conditions are met or the beneficial owner otherwise establishes an exemption. Under currently applicable United States Treasury Regulations, payments on the sale, exchange, redemption, retirement or other disposition of an Exchange Note made to or through a foreign office of a broker generally will not be subject to backup withholding, and generally will not be subject to information reporting requirements. Such payments, however, will be subject to information reporting (but not backup withholding) if the broker is, for United States federal income tax purposes, a United States person, a controlled foreign corporation or a foreign person 50% or more of whose gross income is effectively connected with a United States trade or business for a specified three-year period, unless the broker has in its records documentary evidence that the beneficial owner is not a United States Holder and certain other conditions are met or the beneficial owner otherwise establishes an exemption. Payments made to or through the United States office of a broker will be subject to backup withholding and information reporting unless the United States Alien Holder certifies, under penalties of perjury, that it is not a United States person or otherwise establishes an exemption. In general, the 1997 Final Regulations do not significantly alter the substantive backup withholding and information reporting requirements described above. As under current law, backup withholding and information reporting will not apply to (i) payments to a United States Alien Holder of principal and interest and (ii) payments to a United States Alien Holder on the sale, exchange, redemption, retirement or other disposition of an Exchange Note, in each case if such United States Alien Holder provides the required certification to establish an exemption from the withholding of United States federal income tax or otherwise establishes an exemption. Similarly, even if a United States Alien Holder does not provide such certification or otherwise establish an exemption, unless the payor has actual knowledge that the payee is a United States Holder, backup withholding will not apply to (i) payments of interest made outside the United States to certain offshore accounts and (ii) payments on the sale, exchange, redemption, retirement or other disposition of an Exchange Note effected outside the United States. However, information reporting (but not backup withholding) will apply to (i) payments of interest made by a payor outside the United States and (ii) payments on the sale, exchange, redemption, retirement or other disposition of an Exchange Note effected outside the United States if payment is made by a broker that is, for United States federal income tax purposes, (a) a United States person, (b) a controlled foreign corporation, (c) a United States branch of a foreign bank or foreign insurance company, (d) a foreign partnership controlled by United States persons or engaged in a United States trade or business or (e) a foreign person 50% or more of whose gross income is effectively connected with the conduct of a United States trade or business for a specified three-year period, in each case unless such payor or broker has in its records documentary evidence that the beneficial owner is not a United States Holder and certain other conditions are met or the beneficial owner otherwise establishes an exemption (in which case neither information reporting nor backup withholding will apply). As noted above, the IRS has announced that the 1997 Final Regulations will be amended to be effective generally for payments after December 31, 1999, subject to certain transition rules. 96 103 United States Alien Holders of Exchange Notes should consult their tax advisors regarding the application of information reporting and backup withholding in their particular situations, the availability of an exemption therefrom, and the procedure for obtaining such an exemption, if available. Any amounts withheld from a payment to a United States Alien Holder under the backup withholding rules will be allowed as a credit against such Holder's United States federal income tax liability and may entitle such Holder to a refund, provided that the required information is furnished to the IRS. THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR SITUATION. PROSPECTIVE HOLDERS OF THE EXCHANGE NOTES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE EXCHANGE NOTES, INCLUDING THE TAX CONSEQUENCES UNDER FEDERAL, STATE, LOCAL, NONUNITED STATES AND OTHER TAX LAWS AND THE EFFECTS OF CHANGES IN SUCH LAWS. BOOK-ENTRY; DELIVERY AND FORM Except as described in the next paragraph, the Exchange Notes issued in exchange for Old Notes currently represented by one or more fully registered global notes will be represented by one or more permanent global certificates in definitive, fully registered form (the "Global Notes"). The Global Notes will be deposited upon issuance thereof with, or on behalf of, DTC and registered in the name of a nominee of DTC. Exchange Notes issued in exchange for Old Notes (i) originally purchased by or transferred to "foreign purchasers" (as defined in "Transfer Restrictions") or (ii) held by QIBs or Accredited Investors who are not QIBs, in each case who elect to take physical delivery of their certificates instead of holding their interests through global notes (and which are thus ineligible to trade through DTC) (collectively referred to herein as the "Non-Global Purchasers") will be issued in registered form (the "Certificated Security"). Upon the transfer to a QIB of any Certificated Security initially issued to a Non-Global Purchaser, such Certified Security will, unless the transferee requests otherwise or the Global Note has previously been exchanged in whole for Certified Securities, be exchanged for an interest in the Global Notes. The Global Notes. The Issuer expects that pursuant to procedures established by DTC (i) upon the issuance of the Global Notes, DTC or its custodian will credit, on its internal system, the principal amount of Notes of the individual beneficial interests represented by such Global Notes to the respective accounts of persons who have accounts with such depositary and (ii) ownership of beneficial interests in the Global Notes will be shown on, and the transfer of such ownership will be effected only through, records maintained by DTC or its nominee (with respect to interests of participants) and the records of participants (with respect to interests of persons other than participants). Such accounts initially will be designated by or on behalf of the Initial Purchasers and ownership of beneficial interests in the Global Notes will be limited to persons who have accounts with DTC ("participants") or persons who hold interests through participants. QIBs may hold their interests in the Global Notes directly through DTC if they are participants in such system, or indirectly through organizations which are participants in such system. So long as DTC, or its nominee, is the registered owner or holder of the Notes, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by such Global Notes for all purposes under the Indenture. No beneficial owner of an interest in the Global Notes will be able to transfer that interest except in accordance with DTC's procedures, in addition to those provided for under the Indenture with respect to the Notes. Payments of the principal of, premium (if any), and interest on, the Global Notes will be made to DTC or its nominee, as the case may be, as the registered owner thereof. None of the Issuer, the Trustee or any Paying Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interest. 97 104 The Issuer expects that DTC or its nominee, upon receipt of any payment of principal, premium, if any, and interest on the Global Notes, will credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the Global Notes as shown on the records of DTC or its nominee. The Issuer also expects that payments by participants to owners of beneficial interests in the Global Notes held through such participants will be governed by standing instructions and customary practice, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such participants. Transfers between participants in DTC will be effected in the ordinary way through DTC's same-day funds system in accordance with DTC rules and will be settled in same day funds. If a holder requires physical delivery of a Certificated Security for any reason, including to sell Notes to persons in states which require physical delivery of the Notes, or to pledge such securities, such holder must transfer its interest in a Global Note, in accordance with the normal procedures of DTC and with the procedures set forth in the Indenture. DTC has advised the Issuer that it will take any action permitted to be taken by a holder of Notes (including the presentation of Notes for exchange as described below) only at the direction of one or more participants to whose account the DTC interests in the Global Notes are credited and only in respect of such portion of the aggregate principal amount of Notes as to which such participant or participants has or have given such direction. However, if there is an Event of Default under the Indenture, DTC will exchange the Global Notes for Certificated Securities, which it will distribute to its participants. DTC has advised the Issuer as follows: DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code and a "Clearing Agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and certain other organizations. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly ("indirect participants"). Although DTC has agreed to the foregoing procedures in order to facilitate transfers of interests in the Global Notes among participants of DTC, it is under no obligation to perform such procedures, and such procedures may be discontinued at any time. Neither the Issuer nor the Trustee will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations. Certificated Securities. If DTC is at any time unwilling or unable to continue as a depositary for the Global Notes and a successor depositary is not appointed by the Issuer within 90 days, Certificated Securities will be issued in exchange for the Global Notes. PLAN OF DISTRIBUTION Each Participating Broker-Dealer that receives Exchange Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by a Participating Broker-Dealer in connection with resales of Exchange Notes received in exchange for Old Notes where such Old Notes were acquired as a result of market-making activities or other trading activities. The Issuer and the Subsidiary Guarantors have agreed that for a period of 180 days after the Expiration Date, they will make this Prospectus, as amended or supplemented, available to any Participating Broker-Dealer for use in connection with any such resale. The Issuer will not receive any proceeds from any sales of the Exchange Notes by Participating Broker-Dealers. Exchange Notes received by Participating Broker-Dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in 98 105 negotiated transactions, through the writing of options on the Exchange Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such Participating Broker-Dealer and/or the purchasers of any such Exchange Notes. Any Participating Broker-Dealer that resells the Exchange Notes that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a Participating Broker-Dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The Issuer has agreed to pay all expenses incident to the performance by it and the Subsidiary Guarantors of, or compliance with, the Registration Rights Agreement and will indemnify the holders of Old Notes (including any broker-dealers), and certain parties related to such holders, against certain liabilities, including liabilities under the Securities Act. LEGAL MATTERS Certain legal matters as to the validity of the Exchange Notes offered hereby will be passed upon for the Company by Steven Rubin, Vice President, Secretary and General Counsel of the Company. EXPERTS The financial statements of GBC and Subsidiaries as of December 31, 1997 and 1996 and for each of the three years in the period ended December 31, 1997 included in this Prospectus have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said reports. The financial statements of Ibico AG and its subsidiaries as of and for the year ended December 31, 1997 included in this Prospectus have been audited by KPMG Fides Peat, independent auditors, as stated in their report appearing herein. 99 106 INDEX TO FINANCIAL STATEMENTS
PAGE ---- GBC and Subsidiaries -- Audited Consolidated Financial Statements Report of Independent Public Accountants.................... F-2 Consolidated Statements of Income for the years ended December 31, 1997, 1996 and 1995.......................... F-3 Consolidated Balance Sheets as of December 31, 1997 and 1996...................................................... F-4 Consolidated Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995.......................... F-5 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1997, 1996 and 1995.............. F-6 Notes to Consolidated Financial Statements.................. F-7 GBC and Subsidiaries -- Unaudited Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets as of March 31, 1998 and December 31, 1997..................................... F-33 Condensed Consolidated Statements of Income for the Three Months ended March 31, 1998 and 1997...................... F-34 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1998 and 1997................ F-35 Notes to Condensed Consolidated Financial Statements........ F-36 Ibico AG and Subsidiaries Independent Auditors' Report................................ F-42 Consolidated Balance Sheet as of December 31, 1997.......... F-43 Consolidated Statement of Income for the year ended December 31, 1997.................................................. F-45 Consolidated Statement of Cash Flows for the year ended December 31, 1997......................................... F-46 Notes to the Consolidated Financial Statements.............. F-47
F-1 107 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Stockholders of General Binding Corporation: We have audited the accompanying consolidated balance sheets of General Binding Corporation (a Delaware corporation) and Subsidiaries as of December 31, 1997 and 1996, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1997. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of General Binding Corporation and Subsidiaries as of December 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. Arthur Andersen LLP Chicago, Illinois January 30, 1998 (except with respect to the Ibico acquisition as discussed in Note 14, as to which the date is February 27, 1998, and except with respect to the sale of the U.S. RingBinder business, the issuance of Senior Subordinated Notes and the condensed consolidating financial information as discussed in Notes 14 and 15, as to which the date is July 21, 1998) F-2 108 GBC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31 ------------------------------------ 1997 1996 1995 ---- ---- ---- (000 OMITTED EXCEPT PER SHARE DATA) Domestic sales.............................................. $543,361 $349,809 $293,188 International sales......................................... 226,640 187,027 165,203 -------- -------- -------- Total sales............................................ 770,001 536,836 458,391 Cost of sales, including development and engineering........ 440,625 315,949 263,706 Selling, service and administrative......................... 247,185 171,473 153,690 Amortization of goodwill and related intangibles............ 7,859 1,699 901 -------- -------- -------- Operating income....................................... 74,332 47,715 40,094 Interest.................................................... 24,577 6,172 4,259 Other (income) expense, net................................. 1,575 (1,011) 2 -------- -------- -------- Income before taxes.................................... 48,180 42,554 35,833 Income taxes................................................ 19,513 17,341 14,333 -------- -------- -------- Net income............................................. $ 28,667 $ 25,213 $ 21,500 ======== ======== ======== Net income per common share: Basic..................................................... $ 1.82 $ 1.60 $ 1.37 Diluted................................................... $ 1.80 $ 1.59 $ 1.36 Dividends per common share.................................. $ .440 $ .430 $ .420 Weighted average number of common shares outstanding........ 15,760 15,743 15,740
The accompanying notes to consolidated financial statements are an integral part of these statements. F-3 109 GBC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
DECEMBER 31, ----------------------- 1997 1996 ---- ---- (000 OMITTED EXCEPT SHARE DATA) ASSETS Current Assets: Cash and cash equivalents................................. $ 3,753 $ 6,721 Receivables, less allowances for doubtful accounts and sales returns: 1997 -- $8,821, 1996 -- $6,424.......... 160,787 115,865 Inventories, at lower of cost or market................... 143,569 96,734 Deferred tax assets....................................... 9,323 11,453 Other..................................................... 10,313 6,441 -------- -------- Total current assets................................... 327,745 237,214 -------- -------- Property, plant and equipment, at cost: Land and land improvements................................ 6,744 4,837 Buildings and leasehold improvements...................... 49,798 28,806 Machinery and equipment................................... 133,899 107,308 -------- -------- Total property, plant and equipment, at cost........... 190,441 140,951 Less -- accumulated depreciation............................ (77,020) (71,940) -------- -------- Net property, plant and equipment........................... 113,421 69,011 -------- -------- Cost in excess of fair value of assets of acquired companies, net of amortization............................ 204,543 43,510 Other....................................................... 47,205 43,971 -------- -------- Total assets........................................... $692,914 $393,706 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable............................................. $ 40,247 $ 31,700 Current maturities of long-term debt...................... 722 483 Accounts payable.......................................... 42,979 28,506 Accrued liabilities: Salaries, wages and profit sharing contributions.......... 14,213 14,425 Taxes, other than income taxes............................ 3,761 3,036 Deferred income on maintenance agreements................. 9,810 9,620 Other..................................................... 40,370 24,359 -------- -------- Total current liabilities.............................. 152,102 112,129 -------- -------- Long-term debt, less current maturities..................... 324,070 87,029 Other long-term liabilities................................. 11,368 10,229 Deferred tax liabilities.................................... 14,331 12,187 -------- -------- Stockholders' equity: Common stock, $.125 par value, shares authorized 40,000,000; shares issued 15,693,747 in 1997 and 1996................................................... 1,962 1,962 Class B common stock, $.125 par value; shares authorized 4,796,550; shares issued 2,398,275 in 1997 and 1996.... 300 300 Additional paid-in-capital................................ 9,708 8,564 Cumulative translation adjustments........................ (6,108) (3,035) Retained earnings......................................... 208,394 186,663 Treasury stock -- 2,325,266 shares in 1997 and 2,342,143 shares in 1996......................................... (23,213) (22,322) -------- -------- Total stockholders' equity............................. 191,043 172,132 -------- -------- Total liabilities and stockholders' equity........... $692,914 $393,706 ======== ========
The accompanying notes to consolidated financial statements are an integral part of these statements. F-4 110 GBC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, ----------------------------------- 1997 1996 1995 ---- ---- ---- (000 OMITTED) OPERATING ACTIVITIES: Net income................................................. $ 28,667 $ 25,213 $ 21,500 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization............................ 27,208 15,018 12,814 Increase in non-current deferred taxes................... 2,285 5,029 240 Provision for doubtful accounts.......................... 2,248 2,334 1,584 (Increase) in other long-term assets..................... (5,336) (3,890) (4,209) Other.................................................... 316 (2,379) 878 Changes in current assets and liabilities: (Increase) in receivables................................ (27,746) (36,500) (8,074) (Increase) in inventories................................ (23,615) (10,536) (4,154) (Increase) decrease in other current assets.............. (3,256) (2,314) 2,501 (Increase) decrease in deferred tax assets............... 2,381 (1,052) (1,681) Increase in accounts payable and accrued liabilities..... 16,807 9,982 5,585 Increase in taxes on income.............................. 758 1,375 -- --------- --------- --------- Net cash provided by operating activities.................. 20,717 2,280 26,984 --------- --------- --------- INVESTING ACTIVITIES: Capital expenditures....................................... (29,619) (27,778) (15,046) Payments for acquisitions and investments (net of cash acquired)................................................ (241,230) (28,881) (1,458) Proceeds from sale of plant and equipment.................. 4,702 3,676 2,380 Government training subsidy from new plant investment...... -- -- 746 --------- --------- --------- Net cash (used in) investing activities.................... (266,147) (52,983) (13,378) --------- --------- --------- FINANCING ACTIVITIES: Increase (reduction) in notes payable...................... 4,341 14,192 (6,429) Increase in long-term debt................................. 246,528 43,733 2,147 (Repayment) of long-term debt.............................. (502) (150) (535) (Reduction) increase in current portion of long-term debt..................................................... 80 (358) (196) Dividends paid............................................. (6,935) (6,769) (6,611) Purchases of treasury stock................................ (1,011) (1,645) (1,141) Proceeds from the exercise of stock options................ 942 1,463 624 --------- --------- --------- Net cash provided by (used in) financing activities........ 243,443 50,466 (12,141) --------- --------- --------- Effect of exchange rates on cash........................... (981) 94 (170) NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS......... (2,968) (143) 1,295 Cash and cash equivalents at beginning of the year......... 6,721 6,864 5,569 --------- --------- --------- Cash and cash equivalents at end of the year............... $ 3,753 $ 6,721 $ 6,864 ========= ========= =========
The accompanying notes to consolidated financial statements are an integral part of these statements. F-5 111 GBC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
COMMON STOCK TREASURY STOCK ADDITIONAL CUMULATIVE ------------------- --------------------- PAID-IN TRANSLATION RETAINED SHARES AMOUNT SHARES AMOUNT CAPITAL ADJUSTMENTS EARNINGS TOTAL ------ ------ ------ ------ ---------- ----------- -------- ----- (000 OMITTED EXCEPT NUMBER OF SHARES AND PER SHARE DATA) Balance at December 31, 1994...................... 18,092,022 $2,262 (2,344,235) $(19,861) $6,562 $(1,204) $153,330 $141,089 1995 translation adjustment................ -- -- -- -- -- (1,519) -- (1,519) Exercise of stock options... -- -- 49,722 118 705 -- -- 823 Purchase of treasury stock..................... -- -- (63,397) (1,141) -- -- -- (1,141) Net income in 1995.......... -- -- -- -- -- -- 21,500 21,500 Dividends paid ($.42 per share).......... -- -- -- -- -- -- (6,611) (6,611) ---------- ------ ---------- -------- ------ ------- -------- -------- Balance at December 31, 1995...................... 18,092,022 $2,262 (2,357,910) $(20,884) $7,267 $(2,723) $168,219 $154,141 1996 translation adjustment................ -- -- -- -- -- (312) -- (312) Exercise of stock options... -- -- 87,644 207 1,297 -- -- 1,504 Purchase of treasury stock..................... -- -- (71,877) (1,645) -- -- -- (1,645) Net income in 1996.......... -- -- -- -- -- -- 25,213 25,213 Dividends paid ($.43 per share).......... -- -- -- -- -- -- (6,769) (6,769) ---------- ------ ---------- -------- ------ ------- -------- -------- Balance at December 31, 1996...................... 18,092,022 $2,262 (2,342,143) $(22,322) $8,564 $(3,035) $186,663 $172,132 1997 translation adjustment................ -- -- -- -- -- (3,073) -- (3,073) Exercise of stock options... -- -- 50,581 120 1,144 -- -- 1,264 Purchase of treasury stock..................... -- -- (33,704) (1,011) -- -- -- (1,011) Net income in 1997.......... -- -- -- -- -- -- 28,667 28,667 Dividends paid ($.44 per share).......... -- -- -- -- -- -- (6,936) (6,936) ---------- ------ ---------- -------- ------ ------- -------- -------- Balance at December 31, 1997...................... 18,092,022 $2,262 (2,325,266) $(23,213) $9,708 $(6,108) $208,394 $191,043 ========== ====== ========== ======== ====== ======= ======== ========
* Includes Class B Common Stock -- Shares 2,398,275, Amount $300,000. F-6 112 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation The consolidated financial statements include the accounts of the Company and its domestic and international subsidiaries. All international subsidiaries have November 30 fiscal year ends, with the exception of Canada and Mexico which have December 31 fiscal year ends. Intercompany accounts and transactions have been eliminated in consolidation. Investments in significant companies which are 20% to 50% owned are treated as equity investments and the Company's share of earnings is included in income. Cash and Cash Equivalents Temporary cash investments with original maturities of three months or less are classified as cash equivalents. Inventory Valuation Inventories are valued at the lower of cost or market on a first-in, first-out basis. Inventory costs include labor, material and overhead. Depreciation of Plant and Equipment Depreciation of plant and equipment for financial reporting is computed principally using the straight-line method over the following estimated lives: Buildings................................................... 30-35 years Machinery and equipment..................................... 3-20 years Leasehold improvements...................................... Term of lease
Goodwill and Other Intangible Assets For financial reporting purposes, goodwill and other intangibles are generally amortized using the straight-line method over their estimated useful lives, not exceeding 40 years. Accumulated amortization of goodwill amounted to $13,936,000 in 1997 and $6,693,000 in 1996. Income Taxes Since 1986, the Company's policy has been to provide appropriate income taxes on the earnings of its international subsidiaries that are expected to be distributed to the Company. Current earnings of all international subsidiaries other than Canada and Mexico are considered remitted to the United States for the purpose of determining income tax expense for the year. In addition, in 1988, the Company implemented a balance sheet hedging strategy for its international operations and, as a result, provided income taxes on approximately $4,449,000 of pre-1996 earnings of its international subsidiaries. Approximately $1,835,000 of these earnings were remitted in the years 1988 through 1997, and the balance is expected to be remitted in future years. As of December 31, 1997, the cumulative amount of undistributed earnings of international subsidiaries upon which income taxes have not been provided was approximately $15.6 million. In the opinion of management, this amount remains indefinitely reinvested by the international subsidiaries. Stock Option Compensation Stock option compensation cost applicable to the non-qualified restricted plans is valued at the date of the grant and recorded as compensation expense as the options become exercisable. Deferred Service Income Income from service maintenance agreements is deferred and recognized over the term (generally 1 to 3 years) of the agreements primarily on a straight-line basis. F-7 113 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires the use of certain estimates by management in determining the entity's assets, liabilities, revenues and expenses. Actual results could differ from those estimates. Financial Instruments Many of the Company's financial instruments (including cash and cash equivalents, accounts and notes receivable, notes payable, and other accrued liabilities) carry short-term maturities. As such instruments have short-term maturities, their fair values approximate the carrying values. Substantially all of the Company's long-term obligations, including current maturities of long-term obligations, have floating interest rates. The fair value of these instruments approximates the carrying value. Amounts currently due to or due from interest rate swap counterparties are recorded in interest expense in the period in which they accrue. Premiums paid to purchase interest rate caps are capitalized and amortized over the life of the agreements. Gains and losses on hedging firm foreign currency commitments are deferred and included as a component of the related transaction. 2. FOREIGN CURRENCY EXCHANGE AND TRANSLATION Foreign currency translation adjustments have been excluded from the Consolidated Statements of Income and are recorded in a cumulative translation adjustment account as a separate component of stockholders' equity. The accompanying Consolidated Statements of Income include net gains and losses on foreign currency transactions. Such amounts are reported as other expense and are summarized as follows (000 omitted):
FOREIGN CURRENCY YEAR ENDED TRANSACTION DECEMBER 31 GAIN/(LOSS)(a) - ----------- ---------------- 1997 ....................................................... $(425) 1996 ....................................................... 668 1995 ....................................................... (612)
- ------------------------- (a) Foreign currency transaction gains/losses are subject to income taxes at the respective country's effective tax rate. 3. INVENTORIES Inventories are summarized as follows (000 omitted):
FINISHED WORK IN RAW DECEMBER 31 TOTAL GOODS PROCESS MATERIALS - ----------- ----- -------- ------- --------- 1997 ................................. $143,569 $53,082 $12,693 $77,794 1996 ................................. 96,734 68,126 7,410 21,198
4. RETIREMENT PLANS As of January 1, 1996, the Company converted its defined contribution profit-sharing plan to a 401(k) plan. The participants of the 401(k) plan may contribute from 1% to 15% of their eligible compensation on a pretax basis. The Company makes annual contributions that match 100% of pre-tax contributions up to 4.5% of eligible compensation. Substantially all eligible full-time domestic employees can participate in the 401(k) plan. The Company's contribution to the plan was $2,276,000 in 1997 and $2,057,000 in 1996. F-8 114 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Prior to January 1, 1996, all eligible full-time domestic employees could participate in a defined contribution profit-sharing plan. The Company was required to make annual contributions, as defined, to a trust fund for employees participating in the plan. Contributions charged to expense were $2,147,000 in 1995. The Company has one active domestic defined benefit pension plan which covers employees that are not eligible to participate in the 401(k) plan. The plan provides benefits based upon the participants' years of credited service. Further, the Company has one frozen defined benefit pension plan that provides benefits to certain participants of the former defined contribution profit sharing plan and certain other employees. The Company's international subsidiaries have adopted a variety of defined benefit and defined contribution plans. These plans provide benefits that are based upon the employee's years of credited service. The benefits payable under these plans, for the most part, are provided by the establishment of trust funds or the purchase of insurance annuity contracts. Net periodic pension expense for the Company's defined benefit pension plans for the years 1997, 1996, and 1995 was as follows (000 omitted):
1997 1996 1995 ---- ---- ---- Domestic pension plans.................................. $119 $(584) $ 117 International subsidiary pension plans.................. 590 887 1,194 ---- ----- ------ Total expense...................................... $709 $ 303 $1,311 ==== ===== ======
The following rates were used in determining the actuarial present value of accumulated plan benefits for the Company's defined benefit pension plans:
1997 1996 ------------------------- ------------------------- DOMESTIC INTERNATIONAL DOMESTIC INTERNATIONAL -------- ------------- -------- ------------- Discount rate........................ 8.0% 2.5%-7.5% 8.0% 3.0%-8.0% Weighted-average investment return rate............................... 9.5% 4.5%-9.0% 9.5% 4.5%-9.0% Salary increase rate................. 5.0% 3.5%-5.0% 5.0% 4.0%-6.0%
Net periodic pension expense/(income) for 1997, 1996, and 1995 includes the following components (000 omitted):
1997 1996 1995 ------------------------- ------------------------- ------------------------- DOMESTIC INTERNATIONAL DOMESTIC INTERNATIONAL DOMESTIC INTERNATIONAL -------- ------------- -------- ------------- -------- ------------- Service cost-benefits earned during the period............ $ 7 $ 857 $ 56 $ 969 $ 237 $ 1,102 Interest cost on projected benefit obligations.......... 245 871 263 866 281 940 Actual return on assets........ (372) (2,376) (182) (1,417) (288) (1,173) Net amortization and deferral..................... 239 1,238 (77) 469 (113) 325 Curtailment gain(a)............ -- -- (644) -- -- -- ----- ------- ----- ------- ----- ------- Net periodic pension expense... $ 119 $ 590 $(584) $ 887 $ 117 $ 1,194 ===== ======= ===== ======= ===== =======
- ------------------------- (a) Included in the net periodic pension expense in 1996 is a gain resulting from the curtailment of the Guaranteed Retirement Income Plan. F-9 115 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table sets forth the plans' funded status at December 31, 1997 and 1996 respectively (000 omitted):
DECEMBER 31, 1997 DECEMBER 31, 1996 ---------------------------------------- ---------------------------------------- PROJECTED PROJECTED BENEFIT BENEFIT ASSETS EXCEED OBLIGATIONS ASSETS EXCEED OBLIGATIONS PROJECTED BENEFIT EXCEED PROJECTED BENEFIT EXCEED OBLIGATIONS ASSETS OBLIGATIONS ASSETS ------------------------ ------------- ------------------------ ------------- DOMESTIC INTERNATIONAL INTERNATIONAL DOMESTIC INTERNATIONAL INTERNATIONAL -------- ------------- ------------- -------- ------------- ------------- Actuarial present value of benefit obligations: Vested benefits............ $3,228 $ 8,378 $ 2,920 $3,023 $ 7,663 $ 2,815 Non-vested benefits........ 34 386 163 35 348 146 Accumulated benefit obligations................ 3,262 8,764 3,083 3,058 8,011 2,961 Effect of projected future compensation levels........ -- 3,328 1,132 -- 3,214 905 ------ ------- ------- ------ ------- ------- Projected benefit obligations................ 3,262 12,092 4,215 3,058 11,225 3,866 Plan assets at fair value.... 3,602 16,523 1,240 3,360 13,883 1,187 ------ ------- ------- ------ ------- ------- Plan assets in excess of (less than) projected benefit obligations........ 340 4,431 (2,975) 302 2,658 (2,679) Unrecognized net (gain) loss due to past experience different from assumptions................ 636 (1,839) 1,174 702 (506) 776 Unrecognized prior service cost....................... 88 397 -- 99 429 -- Adjustment to recognize minimum liability.......... (428) -- (343) (764) -- (236) Unrecognized net (asset) obligation at October 1, 1986 to be amortized over average remaining service of participants............ -- (768) 1 -- (873) 2 ------ ------- ------- ------ ------- ------- (Accrued) prepaid pension cost....................... $ 636 $ 2,221 $(2,143) $ 339 $ 1,708 $(2,137) ====== ======= ======= ====== ======= =======
5. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS The Company currently provides certain health care benefits for eligible domestic retired employees. Employees may become eligible for those benefits if they have fulfilled specific age and service requirements. Net periodic postretirement benefit expense consisted of the following components (000 omitted):
1997 1996 1995 ---- ---- ---- Service cost.............................................. $170 $141 $123 Interest cost............................................. 239 219 $158 Net amortization of initial transition obligation......... 95 95 95 Amortization of unrecognized net loss..................... 19 13 -- Net periodic postretirement benefit costs................. $523 $468 $376
F-10 116 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The projected liabilities which are not funded are as follows (000 omitted):
1997 1996 ---- ---- Accumulated postretirement benefit obligations: Retired participants and beneficiaries..................... $ 2,210 $ 1,868 Active participants eligible for retirement................ 293 346 Other active participants.................................. 1,552 923 ------- ------- Total benefit obligation................................. $ 4,055 $ 3,137 Experience (loss).......................................... (1,687) (843) Unrecognized transition obligation......................... (1,429) (1,524) ------- ------- Accrued postretirement benefit cost...................... $ 939 $ 770
The following assumptions used in determining the expense and obligation are listed below:
1997 1996 ---- ---- Discount rate............................................... 8% 8% Health care cost increase................................... 9% 9%
The rate of increase in the per capita cost of covered health benefits was assumed to be 9% in 1997, decreasing gradually to 6% by the year 2000, and remaining at that level thereafter. The effect of a 1% increase in the medical trend assumption would increase the accumulated postretirement benefit obligation as of December 31, 1997 by approximately $222,000 and increase the net periodic cost by approximately $52,000. The Company monitors the cost of the plan, and has, from time to time, changed the benefits provided under this plan. The Company reserves the right to make additional changes or terminate these benefits in the future. Any changes in the plan or revisions of the assumptions affecting expected future benefits may have a significant effect on the amount of the obligation and annual expense. 6. DEBT AND CREDIT ARRANGEMENTS Currently, the Company has various short-term, variable-rate credit arrangements totaling $67.0 million. Outstanding borrowings under these arrangements totaled $40.2 million at December 31, 1997. Interest rates on these arrangements are primarily based on the lenders' costs of funds plus applicable margins. None of the banks under these credit arrangements are committed to continue to extend credit after the maturities of outstanding borrowings or to extend the maturities of any borrowings. F-11 117 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Information regarding short-term debt for the three years ended December 31, 1997, 1996 and 1995 is as follows (000 omitted):
MAXIMUM AVERAGE AMOUNT BALANCE AT WEIGHTED AVERAGE MONTH-END BALANCE OUTSTANDING WEIGHTED AVERAGE END OF INTEREST RATE AT OUTSTANDING DURING THE INTEREST RATE YEAR END OF YEAR DURING THE YEAR YEAR DURING THE YEAR (A) (B) (C) (D) (E) ---------- ---------------- ----------------- -------------- ---------------- 1997 Notes payable to banks... $40,247 6.0% $63,161 $42,893 7.2% 1996 Notes payable to banks... 31,700 8.3% 41,757 31,272 7.1% 1995 Notes payable to banks... 17,428 7.8% 19,012 17,045 8.5%
- ------------------------- (A) Notes payable by the Company's foreign subsidiaries were $24,566,000 in 1997, $13,160,000 in 1996 and $9,588,000 in 1995. (B) The weighted average interest rate is computed by dividing the annualized interest expense for the short-term debt outstanding by the short-term debt outstanding at December 31. (C) The composition of the Company's short-term debt will vary by category at any point in time during the year. (D) Average amount outstanding during the year is computed by dividing the total daily outstanding principal balances by 365 days in 1997 and 1995 and by 366 days in 1996. (E) The weighted average interest rate during the year is computed by dividing the actual short-term interest expense by the average short-term debt outstanding. The Company's current multicurrency revolving credit facility (the "Revolving Credit Facility") with a group of international banks provides for up to $475 million of unsecured revolving credit borrowings through January 2002. The Company has the option, subject to the extension of additional credit by new or existing banks, of increasing the size of the facility by an additional $75 million. Outstanding borrowings under the Revolving Credit Facility totaled $307.1 million at December 31, 1997. Interest and facility fees are payable at varying rates as specified in the loan agreement, and as of December 31, 1997, the applicable facility fee was 0.30% per annum. Amounts outstanding under the Revolving Credit Facility are classified as long-term debt on the Company's balance sheet. The Revolving Credit Facility contains, among other things, certain restrictive covenants which change from time to time as specified in the loan agreement. Under the most restrictive of the covenants applicable as of December 31, 1997, the Company must maintain a consolidated current ratio of not less than 1.25 to 1.00, an interest coverage ratio of not less than 2.5 to 1.0, a leverage ratio for senior debt to earnings before income taxes, depreciation and amortization of not more than 4.25 to 1.00, and a leverage ratio for total debt of not more than 5.25 to 1.00. The Company was in compliance with these covenants as of December 31, 1997. F-12 118 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Long-term debt consists of the following at December 31, 1997 and 1996 -- outstanding borrowings denominated in foreign currencies have been converted to U.S. dollars (000 omitted):
DECEMBER 31 ------------------ 1997 1996 ---- ---- REVOLVING CREDIT FACILITY U.S. Dollar Borrowings (floating interest rate -- 6.61% at December 31, 1997 and 6.08% at December 31, 1996)............................ $302,400 $70,700 Dutch Guilder Borrowings (floating interest rate -- 4.22% at December 31, 1997).... 4,728 -- INTERNATIONAL CREDIT AGREEMENT Australian Dollar Borrowings (floating interest rate -- 6.68% at December 31, 1997 and 7.85% at December 31, 1996)............................ 2,722 3,468 INDUSTRIAL REVENUE/DEVELOPMENT BONDS ("IRB" OR "IDB") IDB, due March 2026 (floating interest rate -- 3.95% at December 31, 1997 and 4.30% at December 31, 1996)............................ 7,511 5,724 IRB, due annually from July 1994 to July 2008 (floating interest rate -- 4.60% at December 31, 1997 and 4.0% at December 31, 1996)............................. 1,900 2,050 IRB, due annually from June 2002 to June 2006 (floating interest rate -- 4.20% at December 31, 1997 and 4.35% at December 31, 1996)............................ 1,050 1,050 IRB, due semi-annually from October 1997 to October 1999 (floating interest rate -- 6.88% at December 31, 1997).... 400 -- IRB, Irish Punt Borrowing, due monthly from September 1997 to September 2000 (interest rate -- 6.75% at December 31, 1997)............. 233 -- NOTES PAYABLE Note payable, Dutch Guilder Borrowing, due monthly November 1994 to October 2004 (interest rate -- 8.85% at December 31, 1997 and 1996).... 2,000 2,637 Note payable, Dutch Guilder Borrowing, due June 2000 (interest rate -- 7.05% at December 31, 1997 and 1996) 1,634 1,883 Note payable, Irish Punt Borrowing, due monthly from February 1997 to February 2002 (interest rate -- 25.41% at December 31, 1997).............. 214 -- -------- ------- 324,792 87,512 Less -- current maturities.................................. 722 483 -------- ------- Total long-term debt........................................ $324,070 $87,029 ======== =======
F-13 119 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The scheduled maturities of long-term debt for each of the five years subsequent to December 31, 1997, are as follows (000 omitted):
YEAR ENDING DECEMBER 31 AMOUNT - ----------- ------ 1998 ............................................................ $ 722 1999 ............................................................ 772 2000 ............................................................ 2,176 2001 ............................................................ 484 2002 ............................................................ 656
Interest paid by the Company was $23,626,000, $6,638,000, and $4,180,000 in 1997, 1996, and 1995, respectively. 7. FINANCIAL INSTRUMENTS Interest Rate Swaps, Treasury Rate-Lock and Caps The Company enters into interest rate swap, treasury rate-lock and interest rate cap agreements to hedge its interest rate exposures. Under interest rate swap agreements, the Company agrees with other parties to exchange, at specified intervals, the differences between fixed-rate and floating-rate interest amounts calculated by reference to an agreed-upon notional principal amount. The fair value of the interest rate swap agreements is estimated using quotes from brokers and represents the cash requirement if the existing agreements had been settled at year end. Selected information related to the Company's interest rate swap agreement is as follows (amounts in millions):
DECEMBER 31, ------------------ 1997 1996 ---- ---- Notional amount............................................. $165.0 $90.0 Fair value.................................................. 166.3 89.7 ------ ----- Net unrecognized gain (loss).............................. $ (1.3) $ 0.3 ====== =====
The Company entered into treasury rate-lock agreements to hedge interest rates on a portion of its long-term debt. At December 31, 1997 the agreements, which had a total notional principal amount of $100.0 million, had a fair value of $101.5 million. The Company has entered into interest rate cap agreements with commercial banks, which require the Company to pay a one-time fee based upon a notional principal amount. Interest rate cap agreements entitle the Company to receive the amounts, if any, by which floating interest rates exceed the fixed rates stated in the agreements. The agreements had a total notional principal of $25.0 million and $15.0 million at December 31, 1997 and 1996. At December 31, 1997 and 1996, the fair market value of the interest rate caps was not materially different than the notional principal amounts. The Company is exposed to potential losses in the event of nonperformance by the counterparties to the interest rate swap, treasury rate-lock and cap agreements. Letters of Credit The Company is contingently liable for performance under letters of credit in the normal course of business. At December 31, 1997 and 1996, letters of credit outstanding totaled $15.6 million and $16.0 million, respectively. Of these letters of credit, (i) $10.5 million and $8.8 million are used to support outstanding Industrial Revenue/Development Bonds of the Company as of 1997 and 1996, respectively, and (ii) an additional $2.0 million and $3.8 million in 1997 and 1996, respectively, were supported by high-quality, short-term investments held by a trustee in accordance with the terms of certain of the Company's Industrial Revenue/Development Bonds. In the Company's past experience, virtually no claims have been made against F-14 120 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) these financial instruments, and no material losses are expected to occur in the foreseeable future. Therefore, the face value of these letters of credit is estimated to approximate their fair value. Foreign Exchange Contracts The Company enters into foreign exchange contracts to hedge foreign currency risks. These contracts hedge firmly committed transactions such as inventory purchases, royalties and management fees. The hedged transactions are recorded based upon the nature of the transaction (e.g., costs related to inventory purchases are recorded to inventory and recognized in cost of sales). At December 31, 1997, the Company had foreign exchange contracts with various maturities through December 31, 1998, to purchase $1.6 million of foreign currencies and $117.5 million of U.S. dollars. The fair market value of the contracts at the 1997 year-end spot rates was approximately $1.6 million greater than the contracted amount. At December 31, 1996, the Company had foreign exchange contracts with various maturities through December 31, 1997 to purchase $4.7 million of foreign currencies and $38.7 million of U.S. dollars. The fair market value of the contracts at the 1996 year-end spot rates was approximately $0.6 million less than the contracted amount. 8. RENTS AND LEASES Future minimum rental payments and guaranteed residual payments required for all noncancelable lease terms in excess of one year as of December 31, 1997 are as follows (000 omitted):
OPERATING DECEMBER 31 LEASES ----------- --------- 1998........................................................ $11,071 1999........................................................ 9,212 2000........................................................ 7,674 2001........................................................ 4,430 2002........................................................ 12,013 Future years................................................ 22,660 ------- Total minimum lease payments.............................. $67,060 =======
Total rental expense for the years ended December 31, 1997, 1996 and 1995 was $9,356,000, $8,253,000 and $8,235,000, respectively. 9. COMMON STOCK AND STOCK OPTIONS The Company's Certificate of Incorporation provides for 40,000,000 authorized shares of common stock, $.125 par value per share and 4,796,550 shares of Class B common stock, $.125 par value per share. Each Class B share is entitled to 15 votes and is to be automatically converted into one share of common stock upon transfer thereof. All of the Class B shares are owned by Lane Industries, Inc., the Company's majority stockholder. F-15 121 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) As of December 31, 1997, the Company adopted SFAS 128, "Earnings Per Share", which requires the presentation of basic and diluted earnings per share. The following table illustrates the computation of basic and diluted earnings per share (000 omitted):
YEAR ENDED DECEMBER 31 1997 1996 1995 ---------------------- ---- ---- ---- Numerator: Net Income................................................ $28,667 $25,213 $21,500 Denominator: Denominator for basic earnings per share -- weighted average shares......................................... 15,760 15,743 15,740 Effect of dilutive securities: Employee stock options.................................... 130 66 57 ------- ------- ------- Denominator for diluted earnings per share -- adjusted weighted-average shares and assumed conversions........... 15,890 15,809 15,797 ------- ------- ------- Earnings per share -- basic................................. $1.82 $1.60 $1.37 ------- ------- ------- Earnings per share -- diluted............................... $1.80 $1.59 $1.36 ======= ======= =======
The Company has a non-qualified stock option plan for officers, including officers who are directors and other key employees of the Company. Options may be granted during a ten-year period at a purchase price of not less than 85% of the fair market value on the date of the grant. Options granted may be exercised in four equal parts over a period not to exceed eight years from the date of grant, except that no part of an option may be exercised until at least one year from the date of grant has elapsed. The Company accounts for this plan under APB Opinion No. 25, "Accounting for Stock Issued to Employees", under which no compensation cost has been recognized. Had compensation cost for this plan been determined as defined as FASB Statement No. 123, "Accounting for Stock-Based Compensation", the Company's net income and earnings per share would have been reduced to the following pro forma amounts (000 omitted, except per share data):
YEAR ENDED DECEMBER 31 1997 1996(A) ---------------------- ---- ------- Net Income: As Reported........................................... $28,667 $25,213 Pro Forma............................................. $28,200 $23,783 Earnings per share -- basic: As Reported........................................... $ 1.82 $ 1.60 Pro Forma............................................. $ 1.79 $ 1.51 Earnings per share -- diluted: As Reported........................................... $ 1.80 $ 1.59 Pro Forma............................................. $ 1.77 $ 1.50
- ------------------------- (a) 1996 Earnings Per Share data has been restated for the adoption of SFAS No. 128, "Earnings Per Share." F-16 122 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) A summary of the stock option activity is as follows (000 omitted):
1997 1996 WTD. AVG. WTD. AVG. EXERCISE EXERCISE -------------- -------------- YEAR ENDED DECEMBER 31 SHARES PRICE SHARES PRICE ---------------------- ------ ----- ------ ----- Shares under option at beginning of year........... 435 $20 300 $17 Options granted.................................... 84 30 236 23 Options exercised.................................. (51) 18 (88) 16 Options expired/canceled........................... (6) 20 (13) 17 --- --- --- --- Shares under option at end of year................. 462 $22 435 $20 --- --- --- --- Options exercisable................................ 48 $18 51 $17 --- --- --- --- Weighted average fair value of options granted..... $13.72 $10.23 ====== ======
The 462,183 options outstanding at December 31, 1997 have exercise prices between $14.50 and $30.50 per share, with a weighted average exercise price of $22.09 per share and a weighted average remaining contractual life of 4.1 years. The fair value of each option granted is estimated on the grant date using the Black-Scholes option pricing model. The following assumptions were made in estimating fair value:
1997 1996 ASSUMPTION WTD. AVG. WTD. AVG. ---------- --------- --------- Dividend yield............................................. 1.51% 1.83% Risk-free interest rate.................................... 6.50% 6.33% Expected life.............................................. 8 years 8 years Expected volatility........................................ 37.17% 38.24%
10. INCOME TAXES Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax benefits, such as net operating loss carryforwards, are recognized to the extent that realization of such benefits is more likely than not. The provision for income taxes was as follows (000 omitted):
1997 1996 1995 ---- ---- ---- Currently payable: Federal.......................................... $11,000 $ 7,988 $10,449 State............................................ 2,759 1,672 1,576 Foreign.......................................... 3,927 5,250 3,671 ------- ------- ------- Total current................................. 17,686 14,910 15,696 ------- ------- ------- Deferred payable: Federal.......................................... 2,797 1,918 (1,672) Foreign.......................................... (970) 513 309 ------- ------- ------- Total deferred................................ 1,827 2,431 (1,363) ------- ------- ------- Total provision............................... $19,513 $17,341 $14,333 ======= ======= =======
F-17 123 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company's effective income tax rate varies from the statutory Federal income tax rate as a result of the following factors:
1997 1996 1995 ---- ---- ---- U.S. Statutory rate......................................... 35.0% 35.0% 35.0% Tax allocation (benefit) charge*............................ (0.5) 0.5 -- State income taxes, net of Federal income tax benefit....... 3.7 2.6 2.9 Net effect of international subsidiaries' foreign tax rates after balance sheet translation gains and losses.......... 5.2 (0.3) 0.3 Net effect of remission of foreign earnings................. (2.0) 0.3 1.1 Non-tax deductible items, principally goodwill.............. 0.6 0.6 0.7 Other, net.................................................. (1.5) 2.1 -- ---- ---- ---- Effective tax rate.......................................... 40.5% 40.8% 40.0% ==== ==== ====
- ------------------------- * The (benefit) charge results from a tax allocation agreement between the Company and Lane Industries, Inc. entered into in 1978. Under the terms of the agreement, Lane Industries, Inc. has agreed to share with the Company a portion of the Federal income tax savings or additional costs, if any, resulting from filing consolidated income tax returns. Lane Industries, Inc. is the Company's majority stockholder. Income before taxes was as follows (000 omitted):
1997 1996 1995 ---- ---- ---- United States................................. $46,897 $26,489 $24,542 Foreign....................................... 1,283 16,065 11,291 ------- ------- ------- Total income before taxes..................... $48,180 $42,554 $35,833 ======= ======= =======
F-18 124 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows (000 omitted):
YEAR ENDED DECEMBER 31, ----------------------- 1997 1996 ---- ---- Deferred tax assets: Inventory............................................. $ 2,353 $ 2,548 Foreign............................................... 2,806 1,457 Worker's compensation................................. 813 820 Restructuring reserves................................ 1,053 2,770 Vacation pay.......................................... 840 857 Other................................................. 1,458 3,001 Foreign tax credits................................... 4,872 4,187 Capital loss carryovers............................... 313 313 Net operating loss carryovers......................... 3,139 1,419 ------- ------- Gross deferred tax assets............................... 17,647 17,372 ------- ------- Valuation allowance..................................... (8,324) (5,919) ------- ------- Total deferred tax assets............................... 9,323 11,453 ------- ------- Deferred tax liabilities: Depreciation.......................................... 3,310 3,492 Amortization.......................................... 6,114 4,306 Foreign............................................... 3,438 3,062 Withholding taxes..................................... 1,253 1,179 Other................................................. 216 148 ------- ------- Total deferred tax liabilities.......................... 14,331 12,187 ------- ------- Net deferred tax liabilities............................ $(5,008) $ (734) ======= =======
A valuation allowance is provided to reduce the deferred tax assets to a level which, more likely than not, will be realized. The net deferred tax assets reflects management's estimate of the amount which will be realized from future profitability which can be predicted with reasonable accuracy. The Company provides U.S. income taxes on the earnings expected to be distributed by its foreign subsidiaries. Under the current remitter concept, the Company has excess foreign tax credits available to reduce Federal income taxes in future years. The Company has established a valuation allowance for the foreign tax credits that the Company anticipates will expire unutilized five years after cash dividends are actually paid. At December 31, 1997, the Company has $3,139,000 of net operating loss carryforwards available to reduce future taxable income of certain international subsidiaries. These loss carryforwards expire in the years 1998 through 2003 or have an unlimited carryover period. A valuation allowance has been provided for a portion of the deferred tax assets related to those loss carryforwards which may expire unutilized. Income taxes paid were $13,526,000, $11,730,000 and $13,240,000 in 1997, 1996 and 1995, respectively. F-19 125 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 11. BUSINESS SEGMENTS AND FOREIGN OPERATIONS The Company is engaged predominantly in one line of business, namely the design, manufacture and distribution of branded office equipment, related supplies and thermal laminating films. The Company's major products include (i) binding supplies and equipment, (ii) laminating equipment and supplies, (iii) visual communication products (such as marker boards, bulletin boards, easels and flip charts), (iv) paper shredders and (v) thermal laminating films (used primarily to encapsulate or protect documents, book covers and other school-related supplies). These products are either manufactured in one of the Company's twenty-two plants located throughout the world or sourced from third parties. GBC products are sold through a network of direct sales and telemarketing personnel, office product superstores, wholesalers, contract/commercial stationers, and other retail dealers. The Company provides maintenance repairs on certain machines it sells through a trained field service organization and through trained dealers. The Company's products are sold primarily in North America, Europe, Japan and Australia to users in the business, education, commercial/professional and government markets. The Company has a large base of customers and is not dependent on any single customer for a significant portion of its business. Financial information for the three years ended December 31, 1997, 1996 and 1995, by geographical area is summarized on the following page. Sales between geographic areas are made at market value less allowances for additional manufacturing, marketing and administrative costs to be incurred by the affiliated company. Export sales to foreign customers ($19,763,000 in 1997, $14,781,000 in 1996 and $15,039,000 in 1995) have been classified in the following tables as part of the United States sales. F-20 126 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
UNITED OTHER YEAR ENDED DECEMBER 31, 1997 TOTAL ELIMINATIONS STATES EUROPE INTERNATIONAL ---------------------------- ----- ------------ ------ ------ ------------- (000 OMITTED) Sales: Unaffiliated customers................ $770,001 $ -- $563,127 $103,231 $103,643 Between geographic areas.............. -- (43,908) 41,287 844 1,777 -------- -------- -------- -------- -------- Total Sales $770,001 $(43,908) $604,414 $104,075 $105,420 ======== ======== ======== ======== ======== Operating income........................ $ 74,332 $ 347 $ 60,378 $ 9,456 $ 4,151 Other income (expense)*................. (1,575) (10,333) 17,224 (5,379) (3,087) Interest (expense)...................... (24,577) -- (21,535) (1,821) (1,221) -------- -------- -------- -------- -------- Income before taxes..................... $ 48,180 $ (9,986) $ 56,067 $ 2,256 $ (157) ======== ======== ======== ======== ======== Assets.................................. $692,914 $(50,385) $610,866 $ 69,000 $ 63,433 -------- -------- -------- -------- -------- Depreciation and amortization........... $ 27,208 $ -- $ 23,572 $ 2,059 $ 1,577 -------- -------- -------- -------- -------- Capital expenditures.................... $ 29,619 $ -- $ 23,585 $ 3,673 $ 2,361 -------- -------- -------- -------- --------
UNITED OTHER YEAR ENDED DECEMBER 31, 1996 TOTAL ELIMINATIONS STATES EUROPE INTERNATIONAL ---------------------------- ----- ------------ ------ ------ ------------- (000 OMITTED) Sales: Unaffiliated customers................. $536,836 $ -- $364,581 $92,622 $79,633 Between geographic areas............... -- (40,907) 35,897 1,287 3,723 -------- -------- -------- ------- ------- $536,836 $(40,907) $400,478 $93,909 $83,356 ======== ======== ======== ======= ======= Operating income......................... $ 47,715 $ (912) $ 30,692 $13,064 $ 4,871 Other income (expense)*.................. 1,011 (2,653) 1,904 (1,867) 3,627 Interest (expense)....................... (6,172) 837 (4,303) (781) (1,925) -------- -------- -------- ------- ------- Income before taxes...................... $ 42,554 $ (2,728) $ 28,293 $10,416 $ 6,573 ======== ======== ======== ======= ======= Assets................................... $393,706 $(37,907) $316,162 $57,899 $57,552 -------- -------- -------- ------- ------- Depreciation and amortization............ $ 15,018 $ -- $ 12,012 $ 1,991 $ 1,015 -------- -------- -------- ------- ------- Capital expenditures..................... $ 27,778 $ -- $ 23,205 $ 3,952 $ 621 -------- -------- -------- ------- -------
UNITED OTHER YEAR ENDED DECEMBER 31, 1995 TOTAL ELIMINATIONS STATES EUROPE INTERNATIONAL ---------------------------- ----- ------------ ------ ------ ------------- (000 OMITTED) Sales: Unaffiliated customers................. $458,391 $ -- $308,220 $87,202 $62,969 Between geographic areas............... -- (42,485) 37,983 1,639 2,863 -------- -------- -------- ------- ------- $458,391 $(42,485) $346,203 $88,841 $65,832 ======== ======== ======== ======= ======= Operating income......................... $ 40,094 $ 603 $ 24,881 $ 9,902 $ 4,708 Other income (expense)*.................. (2) (2,446) 4,555 (1,715) (396) Interest (expense)....................... (4,259) 203 (3,385) (808) (269) -------- -------- -------- ------- ------- Income before taxes...................... $ 35,833 $ (1,640) $ 26,051 $ 7,379 $ 4,043 ======== ======== ======== ======= ======= Assets................................... $298,872 $(21,532) $239,152 $44,801 $36,451 -------- -------- -------- ------- ------- Depreciation and amortization............ $ 12,814 $ -- $ 10,300 $ 1,981 $ 533 -------- -------- -------- ------- ------- Capital expenditures..................... $ 15,046 $ -- $ 13,591 $ 1,077 $ 378 -------- -------- -------- ------- -------
- ------------------------- * Other income (expense) is comprised principally of foreign currency transaction gains and losses, interest income, dividend and royalty income, gains and losses on the disposal of capital assets, amortization of patents and other transactions. F-21 127 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 12. QUARTERLY FINANCIAL DATA (UNAUDITED) Summarized quarterly financial data for 1997 and 1996 was as follows (000 omitted except per share data):
THREE MONTHS ENDED ------------------------------------------------ MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 -------- ------- ------------ ----------- 1997 Sales............................................ $180,505 $187,436 $196,613 $205,447 Gross profit..................................... 75,936 81,147 84,155 88,138 Income before taxes.............................. 11,286 12,018 12,038 12,838 Net income....................................... 6,772 7,211 6,855 7,829 Net income per common share: Basic.......................................... $.43 $.46 $.44 $.50 Diluted........................................ $.43 $.45 $.43 $.50
THREE MONTHS ENDED ------------------------------------------------ MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 -------- ------- ------------ ----------- 1996 Sales............................................ $126,346 $135,338 $132,996 $142,156 Gross profit..................................... 50,669 55,572 55,105 59,541 Income before taxes.............................. 10,179 11,070 10,066 11,239 Net income....................................... 6,006 6,531 5,939 6,737 Net income per common share: Basic.......................................... $.38 $.41 $.38 $.43 Diluted........................................ $.38 $.41 $.38 $.42
13. ACQUISITIONS Effective January 1, 1997, the Company completed the purchase of the assets and business of Quartet Manufacturing Company. Located in Skokie, Illinois, Quartet manufactures and distributes visual communications products including marker boards, bulletin boards, and easels. The total consideration paid for Quartet was approximately $216.0 million. The following unaudited pro forma consolidated results of operations have been prepared as if the acquisition of Quartet had occurred as of the beginning of fiscal 1996 (000 omitted):
YEAR ENDING DECEMBER 31, 1996 ------------ Net sales................................................... $685,862 Net income.................................................. 27,686 Earnings per common share: Basic..................................................... 1.76 Diluted................................................... 1.75
Adjustments to the statements of earnings include additional depreciation and interest charges, goodwill amortization, the reduction of certain other expenses and income tax effects. The pro forma information is provided for illustrative purposes only and is not necessarily reflective of the results of operations that would have actually occurred had the transaction been in effect for the period presented. F-22 128 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) On April 23, 1997, the Company completed the purchase of all of the capital stock of Baker School Specialty, a manufacturer of presentation boards. The total purchase price for Baker, including assumption of debt, was $19.2 million. During 1997, the Company made several smaller acquisitions acquiring the assets of Visucom, Danka Datakey, Jenrite and Printing Wire Supplies. These companies enhance and expand GBC's product offerings and services in Australia, New Zealand and Europe. Total consideration paid for these acquisitions was approximately $5.3 million. On October 10, 1996, the Company entered into an agreement with GMP Co., Ltd. of South Korea to jointly develop and market lamination equipment and supplies. With the agreement, the Company became a 33% equity shareholder in GMP, a leading worldwide supplier of laminating systems. The total consideration paid for the investment in GMP was $9.9 million. On January 19, 1996, the Company acquired the business and certain assets of the T.A.C. Group, which operated under the name of Fordigraph. The business, located in Australia, is a distributor of paper shredders, mail room equipment, laminating machines, presentation products, binding systems and supplies. The total consideration paid for Fordigraph was $12.1 million. On December 21, 1995, the Company acquired Pro-Tech Engineering Co., Inc., headquartered in Madison, Wisconsin. Pro-Tech manufactures lamination equipment and distributes supplies used in the digital printing market. The consideration paid for Pro-Tech was $7.3 million. Additional consideration may also be paid contingent upon the achievement of specified levels of earnings through December 31, 1998. All acquisitions have been accounted for as purchase transactions, with the results of operations included in the financial statements since the date of the acquisition. The excess of the purchase price over the net assets acquired is estimated to be approximately $169.0 million in 1997, $8.0 million in 1996 and $6.0 million in 1995. 14. SUBSEQUENT EVENTS Allfax Acquisition On January 22, 1998, the Company acquired the Allfax group of companies, a privately-held office products manufacturer and marketer headquartered in Peterborough, England. Ibico Acquisition On February 27, 1998, the Company acquired Ibico AG, which is headquartered in Zurich, Switzerland. Ibico manufactures and markets binding and laminating machines and related supplies. Cash consideration paid and debt assumed approximates $130.0 million and is subject to adjustment based upon Ibico's final 1997 results and working capital. The unallocated purchase cost exceeds the estimated net assets of Ibico by approximately $75 million. The purchase price will be allocated to the assets and liabilities of Ibico based upon fair market values. Valuations and studies to determine the fair market value of assets are currently in process. Intangible assets related to the Ibico acquisition will be amortized over their estimated lives on a straight-line basis. The results of operations of Ibico will be included with the results of the Company from March 1, 1998 and will be accounted for as a purchase. F-23 129 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) To fund the Ibico acquisition, the Company borrowed a total of $60.0 million from Lane Industries, Inc. ("LII"). The borrowing was pursuant to a Note Purchase Agreement entered into with LII which provides, in pertinent part, that (i) the Company may borrow up to $100.0 million from LII at any time prior to April 30, 1998; (ii) that all borrowings are subordinated to any other indebtedness of the Company; (iii) that all borrowings shall bear interest at a rate per annum that floats with LIBOR for three month loans as published by The Wall Street Journal plus a 2% margin through May 26, 1998 and margins ranging from 4% to 8% thereafter; and, (iv) that all borrowings, unless prepaid, would be due on April 14, 2002. There are certain covenants made by the Company in connection with the loan which, in the aggregate, are less restrictive than those covenants made to its existing senior lenders. Sale of Subsidiary Effective June 30, 1998, the Company completed the sale of substantially all of the assets of its U.S. RingBinder business. This transaction represents the Company's exit from the business of manufacturing and distributing metal ring elements which are used in looseleaf binders and similar products, and demonstrates a continuation of the Company's ongoing strategy to concentrate its investments and efforts in its core businesses. A one-time pre-tax charge related to the sale ranging from $2.9 million to $3.5 million, or $0.11-$0.13 net per diluted share, will be recorded in the Company's earnings for the second quarter ended June 30, 1998. Senior Subordinated Notes On May 27, 1998, the Company issued $150 million of 9 3/8% Senior Subordinated Notes due 2008. The Notes are unconditionally guaranteed by the Company's direct and indirect domestic restricted subsidiaries. The Notes will be effectively subordinated in right of payment to all obligations of any subsidiary that is not a guarantor. F-24 130 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 15. CONDENSED CONSOLIDATING FINANCIAL INFORMATION The following tables present condensed consolidating financial information for: Parent (General Binding Corporation, including domestic operations); Guarantors (domestic restricted subsidiaries); and Non-Guarantors (international subsidiaries). Each of the Guarantors is a direct or indirect wholly owned subsidiary of the Parent. The Guarantors have jointly and severally and fully and unconditionally guaranteed the Senior Subordinated Notes (see note 14) of the Company. The Company has determined that separate financial statements and other disclosures concerning the Guarantors are not material to investors. The following condensed consolidating financial information presents the results of operations, financial position and cash flows of the Parent, Guarantors, and Non-Guarantors (in each case carrying investments under the equity method), and the eliminations necessary to arrive at the information for the Company on a consolidated basis. CONSOLIDATING BALANCE SHEETS (000 OMITTED)
DECEMBER 31, 1997 ------------------------------------------------------------------- NON- PARENT GUARANTORS(a) GUARANTORS ELIMINATIONS CONSOLIDATED -------- ------------- ---------- ------------ ------------ ASSETS Current assets: Cash and cash equivalents.................. $ 1,098 $ (26) $ 2,681 $ -- $ 3,753 Receivables, net........................... 100,939 9,224 50,624 -- 160,787 Inventories, at lower of cost or market.... 86,418 17,875 39,276 -- 143,569 Deferred tax assets........................ 5,889 855 2,806 (227) 9,323 Other...................................... 5,689 1,311 3,313 -- 10,313 Due from affiliates........................ 31,181 140,614 2,856 (174,651) -- -------- -------- -------- --------- -------- Total current assets..................... 231,214 169,853 101,556 (174,878) 327,745 Net property, plant and equipment............ 85,319 10,598 17,504 -- 113,421 Cost in excess of fair value of assets of acquired companies, net of amortization.... 163,564 32,425 8,554 -- 204,543 Other........................................ 45,716 4,472 3,525 (6,508) 47,205 Investment in subsidiaries................... 194,295 27,062 -- (221,357) -- -------- -------- -------- --------- -------- Total assets............................. $720,108 $244,410 $131,139 $(402,743) $692,914 ======== ======== ======== ========= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable.............................. $ 14,968 -- $ 25,279 -- $ 40,247 Current maturities of long-term debt....... 350 -- 372 -- 722 Accounts payable........................... 28,139 5,727 9,113 -- 42,979 Accrued liabilities: Salaries, wages and profit sharing contributions............................ 9,850 921 3,442 -- 14,213 Taxes, other than income................... 1,923 410 1,428 -- 3,761 Deferred income on maintenance agreements............................... 6,249 433 3,128 -- 9,810 Other...................................... 28,007 3,245 9,118 -- 40,370 Due to affiliates.......................... 113,467 39,515 26,450 (179,432) -- -------- -------- -------- --------- -------- Total current liabilities................ 202,953 50,251 78,330 (179,432) 152,102 Long-term debt -- affiliated................. -- -- 6,558 (6,558) -- Long-term debt, less current maturities...... 311,860 1,050 11,160 -- 324,070 Other long-term liabilities.................. 6,710 338 4,320 -- 11,368 Deferred tax liabilities..................... 7,542 3,351 3,438 -- 14,331 Stockholders' equity: Common stock............................... 1,962 26 5,164 (5,190) 1,962 Class B common stock....................... 300 -- -- -- 300 Additional paid-in capital................. 9,708 67,024 8,105 (75,129) 9,708 Cumulative translation adjustments......... (6,108) (3,630) (6,031) 9,661 (6,108) Retained earnings.......................... 208,394 126,000 20,095 (146,095) 208,394 Treasury stock............................. (23,213) -- -- -- (23,213) -------- -------- -------- --------- -------- Total stockholders' equity............... 191,043 189,420 27,333 (216,753) 191,043 -------- -------- -------- --------- -------- Total liabilities and stockholders' equity............................. $720,108 $244,410 $131,139 $(402,743) $692,914 ======== ======== ======== ========= ========
- ------------------------- (a) Effective June 30, 1998, the Company sold its US RingBinder business (USRB). As of December 31, 1997, USRB had stockholder's equity of $11.8 million. F-25 131 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATING BALANCE SHEETS (000 OMITTED)
DECEMBER 31, 1996 ------------------------------------------------------------------- NON- PARENT GUARANTORS(a) GUARANTORS ELIMINATIONS CONSOLIDATED -------- ------------- ---------- ------------ ------------ ASSETS Current Assets: Cash and cash equivalents.............. $ 1,899 $ (1,005) $ 5,827 $ -- $ 6,721 Receivables, net....................... 62,915 10,926 42,024 -- 115,865 Inventories, at lower of cost or market............................... 41,980 18,116 36,638 -- 96,734 Deferred tax assets.................... 8,231 1,753 1,457 12 11,453 Other.................................. 2,816 1,354 2,271 -- 6,441 Due from affiliates.................... 29,011 115,018 735 (144,764) -- -------- -------- -------- --------- -------- Total current assets................. 146,852 146,162 88,952 (144,752) 237,214 Net property, plant and equipment........ 43,783 10,047 15,181 -- 69,011 Cost in excess of fair value of assets of acquired companies, net of amortization........................... 2,556 33,493 7,461 -- 43,510 Other.................................... 44,007 6,008 3,305 (9,349) 43,971 Investment in subsidiaries............... 209,986 30,323 -- (240,309) -- -------- -------- -------- --------- -------- Total assets......................... $447,184 $226,033 $114,899 $(394,410) $393,706 ======== ======== ======== ========= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable.......................... $ 18,540 -- $ 13,160 -- $ 31,700 Current maturities of long-term debt... 150 -- 333 -- 483 Accounts payable....................... 15,333 5,730 7,443 -- 28,506 Accrued liabilities: Salaries, wages and profit sharing contributions........................ 8,942 1,519 3,964 -- 14,425 Taxes, other than income............... 1,694 141 1,201 -- 3,036 Deferred income on maintenance agreements........................... 6,228 261 3,131 -- 9,620 Other.................................. 13,221 4,964 6,174 -- 24,359 Due to affiliates...................... 120,964 1,425 22,342 (144,731) -- -------- -------- -------- --------- -------- Total current liabilities............ 185,072 14,040 57,748 (144,731) 112,129 Long-term debt -- affiliated............. -- -- 9,349 (9,349) -- Long-term debt, less current maturities............................. 78,324 1,050 7,655 -- 87,029 Other long-term liabilities.............. 5,929 339 3,961 -- 10,229 Deferred tax liabilities................. 5,727 3,398 3,062 -- 12,187 Stockholders' equity: Common stock........................... 1,962 26 5,008 (5,034) 1,962 Class B common stock................... 300 -- -- -- 300 Additional paid-in capital............. 8,564 83,446 -- (83,446) 8,564 Cumulative translation adjustments..... (3,035) (688) (2,999) 3,687 (3,035) Retained earnings...................... 186,663 124,422 31,115 (155,537) 186,663 Treasury stock......................... (22,322) -- -- -- (22,322) -------- -------- -------- --------- -------- Total stockholders' equity........... 172,132 207,206 33,124 (240,330) 172,132 -------- -------- -------- --------- -------- Total liabilities and stockholders' equity.......... $447,184 $226,033 $114,899 $(394,410) $393,706 ======== ======== ======== ========= ========
- ------------------------- (a) Effective June 30, 1998, the Company sold its US RingBinder business (USRB). As of December 31, 1996, USRB had stockholder's equity of $11.2 million. F-26 132 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATING INCOME STATEMENTS (000 OMITTED)
YEAR ENDED DECEMBER 31, 1997 ------------------------------------------------------------------- NON- PARENT GUARANTORS(a) GUARANTORS ELIMINATIONS CONSOLIDATED -------- ------------- ---------- ------------ ------------ Unaffiliated sales................. $517,143 $ 45,983 $206,875 $ -- $770,001 Affiliated sales................... 33,657 27,377 6,256 (67,290) -- -------- -------- -------- -------- -------- Total sales................... 550,800 73,360 213,131 (67,290) 770,001 Cost of sales, including development and engineering...... 317,364 62,316 128,556 (67,611) 440,625 Selling, service and administrative................... 167,229 9,561 70,395 -- 247,185 Amortization of goodwill and related intangibles.............. 6,180 1,290 389 -- 7,859 -------- -------- -------- -------- -------- Operating income.............. 60,027 193 13,791 321 74,332 Interest........................... 32,564 1,392 3,042 (12,421) 24,577 Other (income) expense, net........ (14,993) (14,812) 8,800 22,580 1,575 -------- -------- -------- -------- -------- Income before taxes and undistributed earnings of wholly-owned subsidiaries... 42,456 13,613 1,949 (9,838) 48,180 Income taxes....................... 13,203 3,369 2,810 131 19,513 Income before undistributed earnings of wholly-owned subsidiaries................ 29,253 10,244 (861) (9,969) 28,667 Undistributed earnings (loss) of wholly-owned subsidiaries........ (586) (8,471) -- 9,057 -- -------- -------- -------- -------- -------- Net income.................... $ 28,667 $ 1,773 $ (861) $ (912) $ 28,667 ======== ======== ======== ======== ========
- ------------------------- (a) Effective June 30, 1998, the Company sold its US RingBinder business (USRB). For the year ended December 31, 1997, USRB had net income of $590,000. F-27 133 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATING INCOME STATEMENTS (000 OMITTED)
YEAR ENDED DECEMBER 31, 1996 ------------------------------------------------------------------- NON- PARENT GUARANTORS(a) GUARANTORS ELIMINATIONS CONSOLIDATED -------- ------------- ---------- ------------ ------------ Unaffiliated sales................. $307,453 $ 57,138 $172,245 $ -- $536,836 Affiliated sales................... 47,763 11,296 3,696 (62,755) -- -------- -------- -------- -------- -------- Total sales................... 355,216 68,434 175,941 (62,755) 536,836 Cost of sales, including development and engineering...... 225,509 52,707 99,770 (62,037) 315,949 Selling, service and administrative................... 103,220 10,191 58,062 -- 171,473 Amortization of goodwill and related intangibles.............. 95 1,295 309 -- 1,699 -------- -------- -------- -------- -------- Operating income.............. 26,392 4,241 17,800 (718) 47,715 Interest........................... 13,967 1,401 2,705 (11,901) 6,172 Other (income) expense, net........ (4,031) (10,225) (1,774) 15,019 (1,011) -------- -------- -------- -------- -------- Income before taxes and undistributed earnings of wholly-owned subsidiaries... 16,456 13,065 16,869 (3,836) 42,554 Income taxes....................... 8,033 3,736 5,859 (287) 17,341 Income before undistributed earnings of wholly-owned subsidiaries................ 8,423 9,329 11,010 (3,549) 25,213 Undistributed earnings of wholly-owned subsidiaries........ 16,788 7,301 -- (24,089) -- -------- -------- -------- -------- -------- Net income.................... $ 25,211 $ 16,630 $ 11,010 $(27,638) $ 25,213 ======== ======== ======== ======== ========
- ------------------------- (a) Effective June 30, 1998, the Company sold its US RingBinder business (USRB). For the year ended December 31, 1996, USRB had net income of $1.3 million. F-28 134 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATING INCOME STATEMENTS (000 OMITTED)
YEAR ENDED DECEMBER 31, 1995 ------------------------------------------------------------------- NON- PARENT GUARANTORS(a) GUARANTORS ELIMINATIONS CONSOLIDATED -------- ------------- ---------- ------------ ------------ Unaffiliated sales................. $272,225 $ 36,002 $150,164 $ -- $458,391 Affiliated sales................... 49,133 4,442 2,419 (55,994) -- -------- -------- -------- -------- -------- Total sales................... 321,358 40,444 152,583 (55,994) 458,391 Cost of sales, including development and engineering...... 201,999 31,074 87,545 (56,912) 263,706 Selling, service and administrative................... 95,731 6,879 51,080 -- 153,690 Amortization of goodwill and related intangibles.............. 117 784 -- -- 901 -------- -------- -------- -------- -------- Operating income.............. 23,511 1,707 13,958 918 40,094 Interest........................... 11,188 1,141 1,077 (9,147) 4,259 Other (income) expense, net........ (3,583) (9,911) 1,902 11,594 2 -------- -------- -------- -------- -------- Income before taxes and undistributed earnings of wholly-owned subsidiaries... 15,906 10,477 10,979 (1,529) 35,833 Income taxes....................... 6,363 3,633 3,970 367 14,333 Income before undistributed earnings of wholly-owned subsidiaries................ 9,543 6,844 7,009 (1,896) 21,500 Undistributed earnings of wholly-owned subsidiaries........ 11,957 6,922 -- (18,879) -- -------- -------- -------- -------- -------- Net income.................... $ 21,500 $ 13,766 $ 7,009 $(20,775) $ 21,500 ======== ======== ======== ======== ========
- ------------------------- (a) Effective June 30, 1998, the Company sold its US RingBinder business (USRB). For the year ended December 31, 1995, USRB had net income of $1.0 million. F-29 135 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATING STATEMENT OF CASH FLOWS (000 OMITTED)
YEAR ENDED DECEMBER 31, 1997 --------------------------------------------------------------------- NON- PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED --------- ---------- ---------- ------------ ------------ NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES................. $ 30,686 $ 6,119 $ (3,136) $(12,951) $ 20,718 --------- ------- -------- -------- --------- INVESTING ACTIVITIES: Capital expenditures................... (20,502) (4,035) (5,082) -- (29,619) Proceeds from sale of plant and equipment............................ 3,402 606 694 -- 4,702 Payments for acquisitions and investments, net of cash acquired.... (238,762) (1,710) (757) -- (241,230) --------- ------- -------- -------- --------- Net cash used in investing activities........................... (255,862) (5,140) (5,145) -- (266,147) --------- ------- -------- -------- --------- FINANCING ACTIVITIES: Increase (reduction) in notes payable.............................. (9,571) -- 13,912 -- 4,341 (Repayment) of long-term debt.......... -- -- (502) -- (502) Increase in long-term debt............. 240,950 -- 2,786 2,792 246,528 (Reduction) increase in current portion of long-term debt.................... -- -- 80 -- 80 Dividends paid......................... (6,935) -- (10,159) 10,159 (6,935) Purchases of treasury stock............ (1,011) -- -- -- (1,011) Proceeds from the exercise of stock options.............................. 942 -- -- -- 942 --------- ------- -------- -------- --------- Net cash provided by financing activities........................... 224,375 -- 6,117 12,951 243,443 --------- ------- -------- -------- --------- Effect of exchange rates on cash....... -- -- (982) -- (982) --------- ------- -------- -------- --------- NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS.......................... (801) 979 (3,146) -- (2,968) Cash and cash equivalents at the beginning of year.................... 1,899 (1,005) 5,827 -- 6,721 --------- ------- -------- -------- --------- Cash and cash equivalents at the end of the period........................... $ 1,098 $ (26) $ 2,681 $ -- $ 3,753 ========= ======= ======== ======== =========
F-30 136 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATED STATEMENTS OF CASH FLOWS (000 OMITTED)
YEAR ENDED DECEMBER 31, 1996 -------------------------------------------------------------------- NON- PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED -------- ---------- ---------- ------------ ------------ NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES............................ 395 868 4,136 (3,119) 2,280 -------- -------- -------- -------- -------- INVESTING ACTIVITIES: Capital expenditures.................... (21,639) (1,576) (4,563) -- (27,778) Proceeds from sale of plant and equipment............................. -- -- 3,676 -- 3,676 Payments for acquisitions and investments, net of cash acquired..... (17,097) -- (11,784) -- (28,881) -------- -------- -------- -------- -------- Net cash used in investing activities... (38,736) (1,576) (12,671) -- (52,983) -------- -------- -------- -------- -------- FINANCING ACTIVITIES: Increase (reduction) in notes payable... 10,700 -- 3,492 -- 14,192 (Repayment) of long-term debt........... -- -- -- -- Increase in long-term debt.............. 32,874 -- 10,709 -- 43,583 (Reduction) increase in current portion of long-term debt..................... -- -- (358) -- (358) Dividends paid.......................... (6,769) -- (3,119) 3,119 (6,769) Purchases of treasury stock............. (1,645) -- -- -- (1,645) Proceeds from the exercise of stock options............................... 1,463 -- -- -- 1,463 -------- -------- -------- -------- -------- Net cash provided by financing activities............................ 36,623 -- 10,724 3,119 50,466 -------- -------- -------- -------- -------- Effect of exchange rates on cash........ -- -- 94 -- 94 -------- -------- -------- -------- -------- NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS........................... (1,718) (708) 2,283 -- (143) Cash and cash equivalents at the beginning of year..................... 3,617 (297) 3,544 -- 6,864 -------- -------- -------- -------- -------- Cash and cash equivalents at the end of the period............................ $ 1,899 $ (1,005) $ 5,827 $ -- $ 6,721 ======== ======== ======== ======== ========
F-31 137 GBC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CONSOLIDATING STATEMENT OF CASH FLOWS (000 OMITTED)
YEAR ENDED DECEMBER 31, 1995 ---------------------------------------------------------------- NON- PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED -------- ---------- ---------- ------------ ------------ NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES.............................. $ 24,589 1,974 917 (496) 26,984 -------- ------ ------ ------ -------- INVESTING ACTIVITIES: Capital expenditures...................... (12,612) (1,030) (1,404) -- (15,046) Proceeds from sale of plant and equipment............................... 312 269 1,799 -- 2,380 Government training subsidy from new plant investment.............................. -- -- 746 -- 746 Payments for acquisitions and investments, net of cash acquired.................... -- (1,458) -- -- (1,458) -------- ------ ------ ------ -------- Net cash used in investing activities..... (12,300) (2,219) 1,141 -- (13,378) -------- ------ ------ ------ -------- FINANCING ACTIVITIES: Increase (reduction) in notes payable..... (6,532) -- 103 -- (6,429) Increase (decrease) in long-term debt..... 1,800 141 1,621 (1,950) 1,612 (Reduction) increase in current portion of long-term debt.......................... (190) -- (6) -- (196) Dividends paid............................ (6,611) -- (2,446) 2,446 (6,611) Purchases of treasury stock............... (1,141) -- -- -- (1,141) Proceeds from the exercise of stock options................................. 624 -- -- -- 624 -------- ------ ------ ------ -------- Net cash provided by (used in) financing activities.............................. (12,050) 141 (728) 496 (12,141) -------- ------ ------ ------ -------- Effect of exchange rates on cash.......... -- -- (170) -- (170) NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS............................. 239 (104) 1,160 -- 1,295 Cash and cash equivalents at the beginning of year................................. 3,378 (193) 2,384 -- 5,569 -------- ------ ------ ------ -------- Cash and cash equivalents at the end of the period.............................. $ 3,617 (297) 3,544 -- $ 6,864 ======== ====== ====== ====== ========
F-32 138 GENERAL BINDING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (000'S OMITTED)
MARCH 31, DECEMBER 31, 1998 1997 ----------- ------------ (UNAUDITED) ASSETS Current Assets Cash and cash equivalents................................. $ 13,347 $ 3,753 Receivables, net.......................................... 184,499 160,787 Inventories -- Raw materials.......................................... 46,858 53,082 Work in process........................................ 10,357 12,693 Finished goods......................................... 111,478 77,794 -------- -------- Total inventories................................. 168,693 143,569 Deferred tax assets....................................... 7,737 9,323 Other..................................................... 17,963 10,313 -------- -------- Total current assets.............................. 392,239 327,745 Property, plant and equipment............................... 205,110 190,441 Less -- accumulated depreciation............................ (78,991) (77,020) -------- -------- Net property, plant and equipment......................... 126,119 113,421 Other long-term assets: Cost in excess of fair value of assets of acquired companies, net of amortization......................... 298,006 204,543 Other..................................................... 53,025 47,205 -------- -------- Total assets................................................ $869,389 $692,914 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Notes payable............................................. $ 70,271 $ 40,247 Current maturities of long-term debt...................... 691 722 Accounts payable.......................................... 57,028 42,979 Accrued liabilities....................................... 71,446 68,154 -------- -------- Total current liabilities......................... 199,436 152,102 -------- -------- Long-term debt.............................................. 450,023 324,070 Other long-term liabilities................................. 12,398 11,368 Deferred tax liabilities.................................... 14,161 14,331 Stockholders' Equity Common stock.............................................. 1,962 1,962 Class B common stock...................................... 300 300 Additional paid-in capital................................ 10,148 9,708 Cumulative translation adjustment......................... (7,046) (6,108) Retained earnings......................................... 213,754 208,394 Treasury stock............................................ (25,747) (23,213) -------- -------- Total stockholders' equity........................ 193,371 191,043 -------- -------- Total liabilities and stockholders' equity.................. $869,389 $692,914 ======== ========
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. F-33 139 GENERAL BINDING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (000'S OMITTED, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED MARCH 31, -------------------- 1998 1997 -------- -------- Net Sales................................................... $213,944 $180,505 Cost of sales, including development and engineering........ 122,004 104,569 Selling, service and administrative......................... 69,664 57,333 Amortization of goodwill and related intangibles............ 2,470 1,629 -------- -------- Operating income.......................................... 19,806 16,974 Interest expense............................................ 7,472 5,228 Other expense, net.......................................... 509 460 -------- -------- Income before taxes....................................... 11,825 11,286 Income taxes................................................ 4,730 4,514 -------- -------- Net income................................................ $ 7,095 $ 6,772 ======== ======== Net income per common share Basic..................................................... $ 0.45 $ 0.43 Diluted................................................... 0.45 0.43 Weighted average number of common shares outstanding Basic..................................................... 15,761 15,761 Diluted................................................... 15,878 15,927
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. F-34 140 GENERAL BINDING CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (000'S OMITTED)
THREE MONTHS ENDED ---------------------- MARCH 31, MARCH 31, 1998 1997 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income.................................................. $ 7,095 $ 6,772 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization............................. 8,021 7,016 (Decrease) increase in non-current deferred taxes......... (170) (77) Provision for doubtful accounts........................... 392 601 (Increase) in other long term assets...................... (3,466) (1,334) Other.................................................. 357 215 Changes in current assets and liabilities: (Increase) in receivables................................. (4,033) (10,264) (Increase) decrease in inventories........................ 4,001 (4,349) (Increase) in other current assets........................ (5,039) (5,162) (Increase) decrease in deferred tax assets................ 1,558 (415) Increase (decrease) in accounts payable and accrued expenses............................................... (5,602) (2,369) Increase in taxes on income............................... 1,365 1,792 Increase in deferred income on service agreements......... 168 236 --------- --------- Net cash provided by (used in) operating activities......... 4,647 (7,338) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures...................................... (6,385) (6,219) Proceeds from sale of plant and equipment................. 42 -- Payments for acquisitions, net of cash acquired........... (137,983) (214,999) --------- --------- Net cash (used in ) investing activities.................... (144,326) (221,218) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase (decrease) in notes payable...................... 30,274 19,159 Payments of long-term debt................................ (104) -- Long term borrowings...................................... 122,888 212,000 Increase (decrease) in current portion of long-term obligations............................................ (1) 88 Dividends paid............................................ (1,736) (1,735) Purchases of treasury stock............................... (2,601) (517) Proceeds from the exercise of stock options............... 509 539 --------- --------- Net cash provided by financing activities................... 149,229 229,534 --------- --------- Effect of exchange rates on cash............................ 44 (255) --------- --------- NET INCREASE IN CASH & CASH EQUIVALENTS..................... 9,594 723 Cash and cash equivalents at the beginning of year.......... 3,753 6,721 --------- --------- Cash and cash equivalents at the end of the period.......... $ 13,347 $ 7,444 ========= ========= Supplemental Disclosure of Cash Flow Information Cash Paid During the Period for: Interest............................................... $ 6,891 $ 2,952 Income taxes, net of refunds........................... 4,239 4,123
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. F-35 141 GENERAL BINDING CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) BASIS OF PRESENTATION The condensed consolidated financial statements include the accounts of General Binding Corporation and its subsidiaries ("GBC" or the "Company"). These financial statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures included in these condensed consolidated financial statements are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's 1997 Annual Report on Form 10-K. In the opinion of the Company, all adjustments necessary to present fairly the financial position of GBC and Subsidiaries as of March 31, 1998 and December 31, 1997, and the results of their operations for the three months ended March 31, 1998 and 1997 have been included. Operating results for any interim period are not necessarily indicative of results that may be expected for the full year. (2) LONG-TERM DEBT Long-term debt consists of the following at March 31, 1998 and December 31, 1997 -- outstanding borrowings denominated in foreign currencies have been converted to U.S. Dollars (000 omitted):
MARCH 31, DECEMBER 31, 1998 1997 --------- ------------ REVOLVING CREDIT FACILITY Classified as long-term on the basis of the Company's intention to refinance these borrowings U.S. dollar borrowings -- (weighted average floating interest rate 6.43% at March 31, 1998 and 6.61% at December 31, 1997)........................................ $351,000 $302,400 British pounds borrowings -- (floating interest rate 8.25% at March 31, 1998)........................................ 13,648 -- Dutch guilder borrowings -- (floating interest rate 4.20% at March 31, 1998 and 4.22% at December 31, 1997)............ 5,570 4,728 INTERNATIONAL CREDIT AGREEMENT Australian dollar borrowings -- due July 2000 (floating interest rate 6.30% at March 31, 1998 and 6.68% at December 31, 1997)........................................ 2,715 2,722 INDUSTRIAL REVENUE/DEVELOPMENT BONDS Industrial Revenue Bond -- due annually from July 1994 to July 2008 (floating interest rate 3.95% at March 31, 1998 and 4.60% at December 31, 1997)........................... 1,750 1,750 Industrial Revenue Bond -- due annually from June 2002 to June 2006 (floating interest rate 3.80% at March 31, 1998 and 4.20% at December 31, 1997)........................... 1,056 1,050 Industrial Development Bond -- due March 2026 (floating interest rate 3.80% at March 31, 1998 and 3.95% at December 31, 1997)........................................ 7,510 7,510 Industrial Revenue Bond -- due semiannually October 1997 to October 1999 (floating interest rate 6.88% at March 31, 1998 and December 31, 1997)............................... 200 200 Industrial Revenue Bond -- Irish punt borrowing, due September 2000 (floating interest rate 6.75% at March 31, 1998 and December 31, 1997)............................... 304 365
F-36 142
MARCH 31, DECEMBER 31, 1998 1997 --------- ------------ NOTES PAYABLES Note Payable -- Lane Industries, Inc. due April 2002 (floating interest rate of 7.78% at March 31, 1998)....... $ 60,000 -- Note Payable, Dutch guilder borrowing -- due monthly from November 1994 to October 2004 (fixed interest rate 8.85% at March 31, 1998 and December 31, 1997).................. 1,593 $ 1,711 Note Payable, Dutch guilder borrowing -- due June 2000 (fixed interest rate of 7.05% at March 31, 1998 and at December 31, 1997)........................................ 1,588 1,634 Notes Payables -- various maturities (weighted average floating interest rate 10.9% at March 31, 1998)........... 3,089 -- -------- -------- Total Long-Term Debt........................................ $450,023 $324,070 ======== ========
(3) COMPREHENSIVE INCOME Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income" was adopted during the first quarter 1998. This statement established guidelines for the reporting and display of comprehensive income and its components in financial statements. The currency translation adjustment is the Company's only item which will be classified as comprehensive income. Companies are required to report total comprehensive income for interim periods beginning the first quarter of 1998. Comprehensive income was $6,157,000 and $4,662,000 for the first quarter of 1998 and 1997, respectively. (4) NEW ACCOUNTING STANDARDS The Company will adopt SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information" effective with year-end reporting. This statement will require the Company to present information in the notes to the financial statements regarding reportable operating segments using the same basis as is used for internally evaluating segment performance and deciding how to allocate resources to segments. The Company is currently evaluating the requirements of this standard and, upon adoption, may disclose more than one reportable segment. F-37 143 (5) EARNINGS PER SHARE SFAS No. 128 "Earnings Per Share" was adopted by the Company in the fourth quarter of 1997 and supersedes the Company's previous standards for computing net income per share under APB Opinion No. 15. The new standard requires dual presentation of net income per common share and net income per common share, assuming dilution, on the face of the income statement. All prior year per share data for 1997 has been restated in accordance with the new standard. In accordance with SFAS No. 128, net income per common share was computed as follows (000 omitted, except per share amounts):
FOR THE THREE MONTHS ENDING ---------------------- MARCH 31, MARCH 31, 1998 1997 --------- --------- (A) Net income available to common shareholders............. $7,095 $6,772 ====== ====== (B) Weighted average number of common shares outstanding.... 15,761 15,761 Additional common shares issuable under employee stock options using the treasury stock method................ 117 166 ------ ------ (C) Weighted average number of common shares outstanding assuming the exercise of stock options.................. 15,878 15,927 ====== ====== Net income per common share (A)/(B)......................... $ 0.45 $ 0.43 ====== ====== Net income per common share, assuming dilution (A)/(C)...... $ 0.45 $ 0.43 ====== ======
F-38 144 (6) CONDENSED CONSOLIDATING FINANCIAL INFORMATION CONSOLIDATING BALANCE SHEETS (UNAUDITED) (000 OMITTED)
MARCH 31, 1998 ------------------------------------------------------------------- NON- PARENT GUARANTORS(A) GUARANTORS ELIMINATIONS CONSOLIDATED -------- ------------- ---------- ------------ ------------ ASSETS Current assets: Cash and cash equivalents................... $ 2,756 $ 373 $ 10,218 $ -- $ 13,347 Receivables, net............................ 103,480 16,949 64,070 -- 184,499 Inventories, at lower of cost or market..... 73,880 32,623 62,190 -- 168,693 Deferred tax assets......................... 6,049 855 1,263 (430) 7,737 Other....................................... 7,478 3,042 7,443 -- 17,963 Due from affiliates......................... 29,265 25,721 2,495 (57,481) -- -------- -------- -------- --------- -------- Total current assets...................... 222,908 79,563 147,679 (57,911) 392,239 Net property, plant and equipment............. 85,768 15,926 24,425 -- 126,119 Cost in excess of fair value of assets of acquired companies, net of amortization..... 164,717 50,956 82,333 -- 298,006 Other......................................... 46,342 5,126 8,157 (6,600) 53,025 Investment in subsidiaries.................... 212,523 165,517 -- (378,040) -- -------- -------- -------- --------- -------- Total assets.............................. $732,258 $317,088 $262,594 $(442,551) $869,389 ======== ======== ======== ========= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable............................... $ 16,352 $ 4,804 $ 49,115 $ -- $ 70,271 Current maturities of long-term debt........ 350 -- 341 -- 691 Accounts payable............................ 31,265 9,118 16,645 -- 57,028 Accrued liabilities: Salaries, wages and profit sharing contributions............................. 17,235 718 3,079 -- 21,032 Taxes, other than income.................... 1,470 (28) 1,322 -- 2,764 Deferred income on maintenance agreements................................ 6,436 -- 3,181 -- 9,617 Other....................................... 16,054 8,363 13,391 225 38,033 Due to affiliates........................... 958 50,308 42,106 (93,372) -- -------- -------- -------- --------- -------- Total current liabilities................. 90,120 73,283 129,180 (93,147) 199,436 Long-term debt -- affiliated.................. -- -- 6,558 (6,558) -- Long-term debt, less current maturities....... 434,108 2,392 13,523 -- 450,023 Other long-term liabilities................... 7,245 334 4,669 150 12,398 Deferred tax liabilities...................... 7,414 3,350 3,397 -- 14,161 Stockholders' equity: Common stock................................ 1,962 4,026 2,531 (6,557) 1,962 Class B common stock........................ 300 -- -- -- 300 Additional paid-in capital.................. 10,148 111,838 87,641 (199,479) 10,148 Cumulative translation adjustments.......... (7,047) (4,408) (6,889) 11,298 (7,046) Retained earnings........................... 213,755 126,273 21,984 (148,258) 213,755 Treasury stock.............................. (25,747) -- -- -- (25,747) -------- -------- -------- --------- -------- Total stockholders' equity................ 193,371 237,729 105,267 (342,996) 193,371 -------- -------- -------- --------- -------- Total liabilities and stockholders' equity.............................. $732,258 $317,088 $262,594 $(442,551) $869,389 ======== ======== ======== ========= ========
- ------------------------- (a) Effective June 30, 1998, the Company sold its US RingBinder business (USRB). As of March 31, 1998, USRB had stockholder's equity of $12.1 million. F-39 145 CONSOLIDATING INCOME STATEMENTS (UNAUDITED) (000 OMITTED)
THREE MONTHS ENDED MARCH 31, 1998 ------------------------------------------------------------------- NON- PARENT GUARANTORS(A) GUARANTORS ELIMINATIONS CONSOLIDATED -------- ------------- ---------- ------------ ------------ Unaffiliated sales................. $140,580 $ 7,318 $66,046 $ -- $213,944 Affiliated sales................... 15,739 3,739 3,795 (23,273) -- -------- ------- ------- -------- -------- Total sales................... 156,319 11,057 69,841 (23,273) 213,944 Cost of sales, including development and engineering...... 90,865 11,277 43,612 (23,750) 122,004 Selling, service and administrative................... 46,732 1,602 21,330 -- 69,664 Amortization of goodwill and related intangibles.............. 1,878 321 271 -- 2,470 -------- ------- ------- -------- -------- Operating income.............. 16,844 (2,143) 4,628 477 19,806 Interest........................... 9,220 332 1,033 (3,113) 7,472 Other (income) expense, net........ (604) (2,435) 435 3,113 508 -------- ------- ------- -------- -------- Income before taxes and undistributed earnings of wholly-owned subsidiaries... 8,228 (40) 3,160 477 11,825 Income taxes....................... 3,069 186 1,282 193 4,730 -------- ------- ------- -------- -------- Income (loss) before undistributed earnings of wholly-owned subsidiaries... 5,159 (226) 1,878 284 7,095 Undistributed earnings (loss) of wholly-owned subsidiaries........ 1,936 685 -- (2,621) -- -------- ------- ------- -------- -------- Net income.................... $ 7,095 $ 459 $ 1,878 $ (2,337) $ 7,095 ======== ======= ======= ======== ========
- ------------------------- (a) Effective June 30, 1998, the Company sold its US RingBinder business (USRB). For the three months ended March 31, 1998, USRB had net income of $302,000. F-40 146 CONSOLIDATING STATEMENT OF CASH FLOWS (UNAUDITED) (000 OMITTED)
THREE MONTHS ENDED MARCH 31, 1998 ----------------------------------------------------------------- NON- PARENT GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED --------- ---------- ---------- ------------ ------------ NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES(A).............. $(103,379) $ 124,756 $ (16,880) $ 150 $ 4,647 --------- --------- --------- --------- --------- INVESTING ACTIVITIES: Capital expenditures................... (3,972) (1,437) (976) -- (6,385) Proceeds from sale of plant and equipment............................ -- 7 35 -- 42 Capital contributions to subsidiaries......................... (15,045) 15,045 -- -- -- Payments for acquisitions and investments, net of cash acquired.... -- (137,983) -- -- (137,983) --------- --------- --------- --------- --------- Net cash used in investing activities........................... (19,017) (124,368) (941) -- (144,326) --------- --------- --------- --------- --------- FINANCING ACTIVITIES: Increase (reduction) in notes payable.............................. 6,166 -- 24,108 -- 30,274 Increase (decrease) in long-term debt................................. 121,716 11 1,207 (150) 122,784 (Reduction) increase in current portion of long-term debt.................... -- -- (1) -- (1) Dividends paid......................... (1,736) -- -- -- (1,736) Purchases of treasury stock............ (2,601) -- -- -- (2,601) Proceeds from the exercise of stock options.............................. 509 -- -- -- 509 --------- --------- --------- --------- --------- Net cash provided by (used in) financing activities................. 124,054 11 25,314 (150) 149,229 --------- --------- --------- --------- --------- Effect of exchange rates on cash....... -- -- 44 -- 44 NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS.......................... 1,658 399 7,537 -- 9,594 Cash and cash equivalents at the beginning of year.................... 1,098 (26) 2,681 -- 3,753 --------- --------- --------- --------- --------- Cash and cash equivalents at the end of the period........................... 2,756 373 10,218 -- 13,347 ========= ========= ========= ========= =========
- ------------------------- (a) During the three months ended March 31, 1998, the Parent repaid an intercompany balance due to GBC International, Inc. in the amount of $114,935. This amount was then used to purchase Ibico AG. F-41 147 INDEPENDENT AUDITORS' REPORT The Board of Directors and Stockholders Ibico AG and its subsidiaries We have audited the accompanying consolidated balance sheet of Ibico AG and its subsidiaries as of December 31, 1997, and the related consolidated statements of income and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ibico AG and its subsidiaries as of December 31, 1997 and the results of its operations and its cash flows for the year then ended, in conformity with International Accounting Standards. International Accounting Standards vary in certain significant respects from accounting principles generally accepted in the United States. Application of accounting principles generally accepted in the United States would have affected results of operations for the year ended December 31, 1997 and stockholders' equity as of December 31, 1997, to the extent summarized in Note 23 to the consolidated financial statements. KPMG Fides Peat Zurich, Switzerland May 4, 1998 F-42 148 IBICO AG AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997 ----------------- (IN THOUSAND CHF AND USD) CHF USD(1) ASSETS Current assets: Liquid assets............................................. 9,594 6,565 Customer discounted drafts................................ 789 540 Securities................................................ 94 64 Trade receivables: From third parties..................................... 24,140 16,519 From unconsolidated affiliates......................... 3,773 2,582 Reserve for doubtful accounts.......................... (1,516) (1,037) Other receivables third parties........................... 3,120 2,135 Inventories............................................... 39,515 27,040 Other receivables, prepaid expenses and accrued income.... 5,511 3,771 ------- ------ Total current assets................................. 85,020 58,179 ------- ------ Property, plant and equipment, net: Land...................................................... 300 205 Buildings and installations............................... 6,476 4,432 Leasehold improvements.................................... 591 404 Machinery and equipment................................... 6,847 4,685 Equipment, vehicles and tools............................. 3,022 2,068 Computer equipment........................................ 726 497 ------- ------ Total property, plant and equipment.................. 17,962 12,291 ------- ------ Other long-term assets: Long-term receivables..................................... 2,171 1,486 Unconsolidated investments................................ 209 143 Intangible assets, net.................................... 5,042 3,450 ------- ------ Total other long-term assets......................... 7,422 5,079 ------- ------ Total assets......................................... 110,404 75,549 ======= ======
- ------------------------- (1) See Note 1(j) to the Consolidated Financial Statements for an explanation of the convenience translation. The unaudited U.S. dollar (USD) convenience translation is not covered by the report of independent accountants. See accompanying notes to the Consolidated Financial Statements. F-43 149 IBICO AG AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (CONTINUED)
DECEMBER 31, 1997 ----------------- (IN THOUSAND CHF AND USD) CHF USD(1) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Bank loans and overdrafts................................. 36,839 25,209 Trade payables to third parties........................... 12,451 8,520 Other liabilities to third parties........................ 2,087 1,428 Liabilities from short-term financing..................... 1,604 1,098 Current portion of long-term liabilities.................. 700 479 Accrued expenses.......................................... 10,903 7,460 ------- ------ Total current liabilities............................ 64,584 44,194 ------- ------ Long-term liabilities: Long-term debts........................................... 23,778 16,271 Provisions................................................ 2,325 1,591 ------- ------ Total long-term liabilities.......................... 26,103 17,862 ------- ------ Minority interest........................................... 578 396 ------- ------ Stockholders' equity: Share capital............................................. 2,000 1,369 Consolidated reserves..................................... 18,464 12,648 Net loss for the year..................................... (1,325) (920) ------- ------ Total stockholders' equity........................... 19,139 13,097 ------- ------ Total liabilities and stockholders' equity........... 110,404 75,549 ======= ======
- ------------------------- (1) See Note 1(j) to the Consolidated Financial Statements for an explanation of the convenience translation. The unaudited USD convenience translation is not covered by the report of independent accountants. See accompanying notes to the Consolidated Financial Statements. F-44 150 IBICO AG AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997 ------------------ (IN THOUSAND CHF AND USD) CHF USD(1) Total revenues.............................................. 163,424 113,498 Costs and expenses: Cost of sales............................................... 109,108 75,776 Selling, general and administrative......................... 48,722 33,837 Restructuring expense....................................... 1,700 1,181 ------- ------- Operating income.......................................... 3,894 2,704 Interest expense............................................ 5,127 3,561 Other income, net........................................... (812) (564) ------- ------- Loss before taxes......................................... (421) (293) Income taxes................................................ 616 428 ------- ------- Loss before minority interest............................. (1,037) (721) Minority interest........................................... (288) (200) ------- ------- Net loss.................................................. (1,325) (921) ======= =======
- ------------------------- (1) See Note 1(j) to the Consolidated Financial Statements for an explanation of the convenience translation. The unaudited USD convenience translation is not covered by the report of independent accountants. See accompanying notes to the Consolidated Financial Statements. F-45 151 IBICO AG AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997 -------------------- (IN THOUSAND CHF AND USD) CHF USD(1) CASH PROVIDED BY OPERATING ACTIVITIES: Net loss before minority interests.......................... (1,037) (721) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization............................. 4,056 2,817 Release of provisions..................................... (2,123) (1,474) Other non-cash income, net................................ (205) (141) ------ ------- Movement in net working capital: Decrease in customer discounted drafts.................... 167 116 (Increase) in securities.................................. (43) (30) (Increase) in trade receivables........................... (2,728) (1,895) Decrease in inventories................................... 5,307 3,685 (Increase) in other receivables........................... (303) (210) Increase in trade payables................................ 111 77 Increase in other liabilities............................. 4,641 3,223 ------ ------- NET CASH PROVIDED BY OPERATING ACTIVITIES................... 7,843 5,447 ------ ------- CASH USED IN INVESTING ACTIVITIES: (Increase) in investments in tangible/intangible fixed assets.................................................... (7,538) (5,235) (Increase) in financial fixed assets........................ (2,036) (1,414) Decrease in unconsolidated investments...................... 177 123 Decrease in fixed assets.................................... 141 98 ------ ------- NET CASH USED IN INVESTING ACTIVITIES....................... (9,256) (6,428) ------ ------- CASH PROVIDED BY FINANCING ACTIVITIES: Increase in current portion of long-term liabilities........ 700 486 Increase in long term debts................................. 8,359 5,805 (Decrease) in bank loans and overdrafts..................... (576) (400) ------ ------- NET CASH PROVIDED BY FINANCING ACTIVITIES................... 8,483 5,891 ------ ------- (Decrease) due to currency translation...................... (296) (636) ------ ------- NET INCREASE IN CASH AND CASH EQUIVALENTS................... 6,774 4,274 Cash and cash equivalents at beginning of period............ 2,820 2,291 ------ ------- Cash and cash equivalents at end of period.................. 9,594 6,565 ====== ======= SUPPLEMENTARY CASH FLOW INFORMATION: Cash paid -- taxes.......................................... 890 618 Cash paid -- interest....................................... 4,871 3,383 Cash received -- interest................................... 365 253
- ------------------------- (1) See Note 1(j) to the Consolidated Financial Statements for an explanation of the convenience translation. The unaudited USD convenience translation is not covered by the report of independent accountants. See accompanying notes to the Consolidated Financial Statements. F-46 152 IBICO AG AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSAND CHF) 1. SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies adopted in the preparation of the Group's consolidated financial statements are set out below. (A) Basis of Preparation The consolidated financial statements of Ibico AG and its subsidiaries have been prepared in accordance with the accounting standards issued by the International Accounting Standards Committee (IASC) and the requirements of Swiss Law. They have been prepared on a historical cost basis and do not take into account increases in the market value of assets, except where stated. (B) Principles of Consolidation The consolidated financial statements include all subsidiaries that are controlled by the parent company, other than those excluded because control is assumed to be temporary or due to long term restrictions significantly impairing a subsidiary's ability to transfer funds to the parent company. Control is presumed to exist where more than one half of a subsidiary's voting power is controlled by the parent company or the parent company is able to govern the financial and operating policies of a subsidiary, or control the removal or appointment of a majority of a subsidiary's board of directors. All intercompany balances and transactions, such as intercompany profits included in inventories of goods produced in the Group have been eliminated. (C) Intangible Assets Intangible assets represent capitalized research and development costs and a patent. The patent is amortized over its estimated useful life of 5 years. Expenses on research and development for products which can be launched on the market within a period of two years are capitalized and depreciated over three years. (D) Foreign Currency Transactions. Transactions in currencies other than the parent company's operating currency are converted at the rate of exchange at the transaction date. At the balance sheet date, foreign currency and monetary assets and liabilities, other than those covered by forward exchange contracts, are converted at the rate of exchange ruling at that date. Resulting exchange differences are recognized in the income for the period. Translation of Financial Statements. The subsidiaries of the Group are considered foreign entities. Accordingly, assets and liabilities of foreign enterprises are translated at rates applicable at the balance sheet date, while items of income and expense are translated at average exchange rates. Resulting exchange differences are recorded directly against consolidated reserves, through a foreign currency translation reserve. (E) Taxation The Group adopts the liability method of tax accounting, whereby deferred tax balances are calculated at the rate at which it is estimated that tax will be paid (or recovered) when timing differences reverse. Tax expense is calculated on net income, adjusted for permanent differences between taxable and accounting income. Taxes on timing differences arising from items being brought to account in different periods for tax and accounting purposes, are carried in the balance sheet as deferred tax assets or liabilities. F-47 153 IBICO AG AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Deferred tax assets arising from tax losses yet to be recovered, are only carried forward if there is assurance beyond any reasonable doubt that future taxable income will be sufficient to allow the benefit of the tax loss to be realized. (F) Inventories Inventories are valued at lower of cost or market. Cost is calculated using the first-in, first-out method and includes expenditures incurred in acquiring the inventories and bringing them to their existing condition and location. (G) Tangible Fixed Assets Property, plant and equipment are stated at historical cost and are depreciated using the straight-line method over their estimated useful lives. Land is not depreciated. Assets are depreciated over the following periods: Buildings................................................... 30 years Machinery and equipment..................................... 10 years Computer hardware and software.............................. 3 years Furniture and office machines............................... 10 years Vehicles.................................................... 4 years Leasehold improvements...................................... rental contract
(H) Government Grants Government grants related to fixed assets are accounted for as deferred income and are recognized in the profit and loss account, on a straight-line basis over the estimated useful life of the assets. (I) Revenue Recognition Revenue is recognized when products are delivered. (J) Convenience Translation (unaudited) The consolidated financial statements presented herein are expressed in Swiss francs (CHF). However, solely for the convenience of the reader, the consolidated financial statements as of and for the year ended December 31, 1997, have been translated into United States dollars an average rate of approximately 1.44 CHF=US$1.00 and year-end rate of approximately 1.46 CHF=US$1.00. Such rates were computed and derived from exchange rates published in the Wall Street Journal. This translation should not be construed as a representation that the amounts shown could be converted into U.S. dollars. 2. ACTIVITIES The activities of the group are comprised of manufacturing and sales of office products (machinery and equipment). 3. RESTATEMENT It was determined during 1997 that the Company's provision for slow-moving, excess and obsolete inventory was understated. The correction for the understatement of the accrual balance at December 31, 1996 is reflected as an adjustment to opening consolidated reserves at January 1, 1997 as it is not practical to restate 1996 earnings for the impact of this error. The impact of this adjustment is to reduce consolidated reserves at January 1, 1997 by CHF 1,641 (net of CHF 961 tax). F-48 154 IBICO AG AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 4. TRADE RECEIVABLES -- THIRD PARTIES
DECEMBER 31, 1997 ----------------- (IN THOUSAND CHF) Trade receivables -- third parties.......................... 24,140 Less: reserve for doubtful accounts -- third parties........ (1,366) ------ Net trade receivables -- third parties...................... 22,774 ======
Trade receivables are presented at their net realizable values after deduction of reserve for doubtful accounts -- third parties. These reserves cover both specific debts and a general allowance which covers the general credit risk in trade receivables -- third parties. 5. INVENTORIES
DECEMBER 31, 1997 ----------------- (IN THOUSAND CHF) Spare parts, raw material, semi-finished goods and packaging................................................. 20,310 Finished goods.............................................. 22,890 Goods in transit............................................ 1,872 Inventory reserve........................................... (5,557) ------ Total inventories........................................... 39,515 ======
F-49 155 IBICO AG AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 6. MOVEMENT OF PROPERTY, PLANT AND EQUIPMENT
EQUIPMENT, BUILDINGS, LEASEHOLD MACHINERY, VEHICLES, COMPUTER LAND INSTALLATIONS IMPROVEMENTS EQUIPMENT TOOLS EQUIPMENT TOTAL ---- ------------- ------------ ---------- ---------- --------- ----- CHF CHF CHF CHF CHF CHF CHF COST: Balance at January 1, 1997.................... 297 7,772 936 15,981 8,004 3,002 35,992 Additions................. 3 -- 411 1,831 426 860 3,531 Disposals................. -- -- (11) (386) (353) (123) (873) Reclassifications......... -- -- -- (5) -- -- (5) Currency translation adjustments............. -- 51 8 (454) (287) 19 (663) --- ----- ----- ------ ----- ----- ------ Balance at December 31, 1997.................... 300 7,823 1,344 16,967 7,790 3,758 37,982 --- ----- ----- ------ ----- ----- ------ DEPRECIATION: Balance at January 1, 1997.................... -- 1,083 671 9,211 4,475 2,453 17,893 Additions................. -- 261 96 1,390 728 700 3,175 Disposals................. -- -- (11) (272) (326) (123) (732) Currency translation adjustments............. -- 3 (3) (209) (109) 2 (316) --- ----- ----- ------ ----- ----- ------ Balance at December 31, 1997.................... -- 1,347 753 10,120 4,768 3,032 20,020 --- ----- ----- ------ ----- ----- ------ Net book value January 1, 1997.................... 297 6,689 265 6,770 3,529 549 18,099 === ===== ===== ====== ===== ===== ====== Net book value December 31, 1997................ 300 6,476 591 6,847 3,022 726 17,962 === ===== ===== ====== ===== ===== ======
Net book value of fixed assets held under government grants at December 31, 1997 was CHF 1,302. Net book value of fixed assets held under finance lease at December 31, 1997 was CHF 1,228. F-50 156 IBICO AG AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 7. INTANGIBLE ASSETS
RESEARCH & POLYCOMB DEVELOPMENT PATENT TOTAL ----------- -------- ----- CHF CHF CHF COST: Balance at January 1, 1997.................................. 3,976 -- 3,976 Additions................................................... 1,585 2,422 4,007 Disposals................................................... (16) -- (16) Currency translation adjustments............................ 18 -- 18 ----- ----- ----- Balance at December 31, 1997................................ 5,563 2,422 7,985 ----- ----- ----- DEPRECIATION: Balance at January 1, 1997.................................. 2,048 -- 2,048 Additions................................................... 881 -- 881 Disposals................................................... (16) -- (16) Currency translation adjustments............................ 30 -- 30 ----- ----- ----- Balance at December 31, 1997................................ 2,943 -- 2,943 ----- ----- ----- Net book value January 1, 1997.............................. 1,928 -- 1,928 ===== ===== ===== Net book value December 31, 1997............................ 2,620 2,422 5,042 ===== ===== =====
8. RELATED PARTY TRANSACTIONS Amounts due from related parties of the previous shareholder (refer to Note 21):
DECEMBER 31, 1997 ------------------ (IN THOUSAND CHF) Trade receivables.......................................... 339 Other receivables.......................................... 548 ----- 887 ===== Rent expense to related parties............................ 657 =====
9. ASSETS PLEDGED
DECEMBER 31, 1997 ------------------ (IN THOUSAND CHF) Trade receivables -- third parties....................... 19,540 Land and buildings....................................... 2,745 Patent................................................... 2,422 ------ 24,707 ======
10. BANK LOANS SECURED
DECEMBER 31, 1997 ----------------- (IN THOUSAND CHF) Short-term bank loans (secured by assets pledged)........... 20,374 ======
F-51 157 IBICO AG AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 11. ACCRUED EXPENSES
DECEMBER 31, 1997 ----------------- (IN THOUSAND CHF) Accrued taxes............................................. 1,458 Accrued expenses.......................................... 9,445 ------ 10,903 ======
12. LONG-TERM DEBTS
DECEMBER 31, 1997 ----------------- (IN THOUSAND CHF) Long-term financing........................................ 22,735 Leasing liabilities -- long-term portion................... 1,043 ------ 23,778 ======
An amount of CHF 20,000 of the long-term financing as of December 31, 1997 is due in 1999 and owed to a related party of the new shareholder (refer to Note 21). The interest rate ranges from 6.0% to 7.0%. 13. PROVISIONS
DECEMBER 31, 1997 ----------------- (IN THOUSAND CHF) Other accruals............................................. 760 Deferred tax liability..................................... 1,565 ------ 2,325 ======
Refer to Note 16 for income tax. 14. STOCKHOLDERS' EQUITY
SHARE CONSOLIDATED CAPITAL RESERVES NET LOSS TOTAL ------- ------------ -------- ----- CHF CHF CHF CHF Balance at January 1, 1997 before restatement......................... 2,000 20,785 -- 22,785 Restatement (see Note 3).............. -- (1,642) -- (1,642) ----- ------ ------ ------ Balance at January 1, 1997 after restatement......................... 2,000 19,143 -- 21,143 Currency translation adjustment....... -- (679) -- (679) Net loss.............................. -- -- (1,325) (1,325) ----- ------ ------ ------ Balance at December 31, 1997.......... 2,000 18,464 (1,325) 19,139 ===== ====== ====== ======
The capital stock is divided into 400 fully paid bearer shares of CHF 5,000 each. F-52 158 IBICO AG AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 15. OPERATING LEASE AND LONG-TERM RENTAL COMMITMENTS
DECEMBER 31, 1997 ----------------- (IN THOUSAND CHF) Operating lease and long-term rental commitments due: Between one and two years................................. 4,410 Between two and three years............................... 541 Between three and four years.............................. 546 Between four and five years............................... 164 Later than five years..................................... 289 ------ 5,950 ======
16. INCOME TAX
DECEMBER 31, 1997 ----------------- (IN THOUSAND CHF) Income tax expense: Current tax............................................... 2,831 Deferred tax.............................................. (2,215) ------ 616 ======
Tax Loss Carry Forwards: At December 31, 1997, the subsidiaries of the Group had taxable losses amounting to approximately CHF 928 which are available to be offset against future taxable income of these subsidiaries. Thereof taxable losses in the amount of CHF 190 have been recognized as a deferred tax asset of CHF 67; CHF 738 have not been recognized, as their recovery is not assured beyond any reasonable doubt. Deferred tax assets: Due to temporary differences, deferred tax assets of CHF 2,504 are included in prepaid expenses at December 31, 1997. 17. UNUSUAL EXPENSE
DECEMBER 31, 1997 ----------------- (IN THOUSAND CHF) Restructuring expense..................................... 1,700 Other unusual expenses.................................... 101 ------ Unusual expenses.......................................... 1,801 ======
18. RESEARCH AND DEVELOPMENT Research and development costs expensed as incurred in 1997 amounted to CHF 204 (refer to Note 7 for capitalized research and development costs). F-53 159 IBICO AG AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 19. CONTINGENT LIABILITIES The Group is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Group's consolidated financial position, results of operations and liquidity. 20. RETIREMENT BENEFIT COSTS IBICO INC., USA The Company has a defined contribution 401(k) plan and a 10% money purchase pension for the benefit of substantially all of its U.S. employees. Contributions for the year ended December 31, 1997 amounted to CHF 309. The 401(k) plan provides for both discretionary and matching contributions on the part of the Company. IBICO AG, ZURICH Ibico AG is required by Swiss law to provide a Defined Contribution Plan for all its employees. An additional Ibico-Vorsorgestiftung pension plan (also a Defined Contribution Plan) is available for management only. Under the terms of this Defined Contribution Plan, which is voluntary and covers managers only, a contribution from the employer of 4% is made based upon the participant's salary. The company's expense for the contribution was approximately CHF 40 for 1997. Defined Contribution Plans provide in addition to pension cost, against disability and, in case of a sudden death, for the dependents of the deceased. ALL OTHER IBICO EMPLOYEE BENEFIT PLANS Total employer cost in 1997 for defined contribution plans amount to CHF 163. 21. SUBSEQUENT EVENT (UNAUDITED) On February 27, 1998 pursuant to the terms of a Stock Purchase Agreement dated October 17, 1997, the shareholder sold 100% of the share capital of Ibico AG to General Binding Corporation (GBC). Following the purchase, the legal form of Ibico AG was changed to Ibico GmbH. F-54 160 IBICO AG AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 22. THE GROUP'S CONSOLIDATED SUBSIDIARIES
COMPANY SHARE CAPITAL COUNTRY CURRENCY AMOUNT FUNCTION HOLDINGS ------- -------- ------------- -------- -------- Ibico AG......................................... CHF 2,000,000 HG 100% Zurich/CH (Parent Company) Ibico Deutschland GmbH........................... DEM 100,000 SA 100% Lottstetten/D Interbinding GmbH................................ DEM 100,000 PR 100% Lottstetten/D Ibico Portugesa Lda.............................. PTE 390,000,000 PR 100% Porto/P Ibico Nederland B.V.............................. NLG 40,000 SA 100% Waalwyk/NL S.A. Ibico France................................ FRF 10,000,000 SA 100% Paris/F Ibico Ltd........................................ GBP 10,000 SA 100% London/GB Ibico Italia Srl................................. ITL 22,750,000 SA 100% Milano/I Ibico Iberia SA.................................. ESP 10,000,000 SA 100% Madrid/E Ibico Scandinavia AB............................. SEK 500,000 SA 75% Helsingborg/S Ibico Inc........................................ USD 4,000,000 HG/SA 100% Chicago/USA with subsidiaries -- Ibico Canada Inc............................ CND 197,000 SA -- Anillos Plasticos de Mexico SA.............. MXN 4,525,500 PR Ibico Chile SA................................... CLP 18,361,000 SA 100% Santiago/Chile Ibico Holding Singapore Pte. Ltd. Singapore with subsidiary..................................... SGD 3,000,000 HG 100% -- Ibico Singapore Pte. Ltd. .................. SA
- ------------------------- FUNCTION: HG Holding PR Production SA Sales F-55 161 IBICO AG AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 23. SIGNIFICANT DIFFERENCES BETWEEN INTERNATIONAL ACCOUNTING STANDARDS (IAS) AND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES The consolidated financial statements have been prepared in accordance with IAS which differs in certain significant respects from Generally Accepted Accounting Principles in the United States ("US GAAP") as set forth below: (a) Research and development -- expenses on research and development for products which can be launched in the market within a period of two years are capitalized and depreciated over three years for IAS purposes. Under US GAAP, such costs are expensed as incurred. (b) General accruals -- under US GAAP, an accrual for a loss contingency is recorded by a charge to income if it is both probable than an asset has been impaired or a liability has been incurred and the minimum amount of loss can be reasonably estimated. Unspecified liability reserves for future losses, costs or risks do not meet the conditions for accrual. According to IAS, accruals or provisions may be recorded for uncertain liabilities and loss contingencies. Application of IAS may also lead to higher accrual balances and reserves for possible risks than are allowed under US GAAP. Application of US GAAP would have had the following approximate effect on the Company's net loss and stockholders' equity for the year ended December 31, 1997:
FOR THE YEAR ENDED DECEMBER 31, 1997 --------------------- CHF USD ------ ------ Net loss as reported under IAS.............................. (1,325) (921) Increase (decrease) for: Research and development............................... (692) (481) General accruals....................................... (28) (19) Deferred tax impact.................................... 191 133 ------ ------ Approximate net loss under US GAAP..................... (1,854) (1,288) ====== ====== Stockholders' equity under IAS.............................. 19,139 13,097 Increase (decrease) for: Research and development............................... (2,620) (1,793) General accruals....................................... 93 64 Deferred tax impact.................................... 702 480 ------ ------ Approximate stockholders' equity under US GAAP......... 17,314 11,848 ====== ======
F-56 162 - ------------------------------------------------------ - ------------------------------------------------------ NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. ------------------ TABLE OF CONTENTS
PAGE ---- Available Information........................... i Incorporation of Certain Documents By Reference..................................... ii Prospectus Summary.............................. 1 Risk Factors.................................... 14 Use of Proceeds................................. 20 Capitalization.................................. 21 Selected Historical Consolidated Financial Data.......................................... 22 Unaudited Combined Pro Forma Condensed Financial Data.......................................... 23 Unaudited Combined Pro Forma Condensed Statement of Operations and Other Financial Data........ 24 Unaudited Combined Pro Forma Condensed Balance Sheet......................................... 26 Management's Discussion and Analysis of Financial Condition and Results of Operations.................................... 28 Business........................................ 33 Management...................................... 43 Principal Stockholders.......................... 50 Certain Relationships and Related Transactions.................................. 51 Description of Credit Facility.................. 52 Description of the Notes........................ 53 Exchange Offer.................................. 84 Certain United States Federal Tax Considerations................................ 92 Book-Entry; Delivery and Form................... 97 Plan of Distribution............................ 98 Legal Matters................................... 99 Experts......................................... 99 Index to Financial Statements................... F-1
- ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ ----------------------------------------- PROSPECTUS ----------------------------------------- [GENERAL BINDING CORPORATION LOGO] GENERAL BINDING CORPORATION OFFER TO EXCHANGE 9 3/8% SENIOR SUBORDINATED NOTES DUE 2008 FOR ANY AND ALL OUTSTANDING 9 3/8% SENIOR SUBORDINATED NOTES DUE 2008 , 1998 - ------------------------------------------------------ - ------------------------------------------------------ 163 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS (a) The Issuer and VeloBind, Incorporated ("VeloBind") are incorporated under the laws of the State of Delaware. The Issuer's Restated Certificate of Incorporation, as amended (the "GBC Charter"), provides that the Issuer shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative by reason of the fact that such person is or was a director, officer, employee or agent of the Issuer, or was serving at the request of the Issuer as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney's fees), judgments, fees and amounts paid in settlement actually and reasonably incurred by such person in connection with such proceeding if such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Issuer, and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. The GBC Charter provides that, in the case of a suit by or in the right of the Issuer, no indemnification shall be provided in respect of any claim, issue or matter as to which the person to be indemnified shall have been adjudged to be liable for negligence or misconduct in the performance of such person's duty to the Issuer, unless the Court of Chancery of the State of Delaware, or the court in which the action or suit was brought, shall determine that, despite such negligence or misconduct, such person is fairly and reasonably entitled to be indemnified for such expenses as such court shall deem proper. The By-laws of VeloBind provide for indemnification of each person who was or is a party or is threatened to be made a party to or involved (as a party, witness or otherwise) in any threatened, pending or completed proceeding by reason of the fact that such person is or was a director, officer, employee or agent of VeloBind or is or was serving at the request of VeloBind as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, against all expenses, liability and loss (including attorneys' fees and other liabilities) incurred in connection with investigating, defending, being a witness in, or participating in or preparing for any proceedings, to the fullest extent authorized by the Delaware General Corporation Law ("DGCL"). The GBC Charter provides that the Issuer may advance the expenses incurred in defending a proceeding prior to the final disposition of such proceeding upon receipt of an undertaking by the person to be indemnified to repay such amounts if it is ultimately determined that the person receiving such advancement of expenses is not entitled to be indemnified by the Issuer. VeloBind's By-laws provide for mandatory advancement of expenses incurred by an officer or director subject to receipt of an undertaking to repay such expenses if such person is ultimately determined not to be entitled to indemnification. VeloBind's By-laws provides that VeloBind may advance expenses to other agents upon terms and conditions deemed appropriate by its board of directors. The GBC Charter provides that no director shall be liable for monetary damages for breach of fiduciary duty for any act or omission except with respect to (i) any breach of the director's duty of loyalty to the Issuer or its stockholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) any transaction from which the director derived an improper personal benefit. The Certificate of Incorporation of VeloBind provides that, to the fullest extent permitted by Delaware law, no director of VeloBind shall be personally liable to VeloBind or its stockholders for monetary damages for breach of fiduciary duty as a director. Section 145 of the DGCL authorizes indemnification by the Issuer and VeloBind of officers and directors and others under the circumstances provided in the GBC Charter and VeloBind's By-laws described above, and requires such indemnification for expenses actually and reasonably incurred to the extent a director or officer is successful in the defense of any proceeding, or any claim, issue or matter therein. The GBC Charter permits the Issuer to, and the Issuer has, purchased insurance on behalf of the officers and directors of the Issuer and its subsidiaries, including the Subsidiary Guarantors, which purports to insure II-1 164 such persons against certain liabilities incurred by them in the discharge of their function as such officers and directors. In addition, the Issuer has purchased insurance which purports to insure the Issuer against certain costs of indemnification which may be incurred by it pursuant to the provisions of the GBC Charter. (b) Ibico Inc. ("Ibico") is incorporated under the laws of the State of Illinois. Ibico's By-laws provide that, to the fullest extent permitted by Section 8.75 of the Illinois Business Corporation Act (the "IBCA"), the board of directors of Ibico is authorized to indemnify any person made a party to any proceeding by reason of the fact that such person is or was a director, officer, employee or agent of Ibico or is or was serving at the request of Ibico as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, if such person acted in good faith and in a manner such person reasonably believed to be in, or not opposed to the best interests of Ibico, and with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. Section 8.75 of the IBCA permits indemnification by Ibico in the case of any threatened, pending or completed proceeding. Pursuant to Section 8.75 of the IBCA, no indemnification shall be provided with respect to a proceeding by or in the right of the corporation in connection with which the person to be indemnified has been adjudged to have been liable to the corporation, unless the court in which such proceeding was brought shall determine that, despite such adjudication of liability, such person is fairly and reasonably entitled to indemnity for such expenses as the court shall deem proper. Section 8.75 of the IBCA provides that, to the extent that a director, officer, employee or agent of a corporation has been successful in the defense of any proceeding, such person shall be indemnified against expenses (including attorney's fees) actually and reasonably incurred by such person in connection therewith. Section 8.75 of the IBCA also provides that expenses incurred in defending a proceeding may be paid by the corporation in advance of final disposition of such proceeding upon receipt of an undertaking by or on behalf of the person receiving such payment to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation. (c) GBC Business Equipment, Inc. ("GBC Business") is incorporated under the laws of the State of Florida. GBC Business's Articles of Incorporation provide for indemnification of persons who may be indemnified pursuant to the Florida Business Corporation Act ("FBCA") to the fullest extent permitted by the FBCA. Section 607.0850 of the FBCA provides that a corporation may indemnify any person who was or is a party to any proceeding by reason of the fact that such person is or was a director, officer, employee, or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise against liabilities incurred in connection with such proceeding, including any appeal thereof, if such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. Section 607.0850 of the FBCA also provides that, in the case of a proceeding by or in the right of the corporation, a corporation may provide indemnification against actual and reasonable expenses and amounts paid in defense of or settlement of such proceeding, not exceeding in the case of indemnification for settlement amounts, in the judgment of the board of directors, the estimated expense of litigating the proceeding to its conclusion. Subsection 607.0850(3) of the FBCA imposes a mandatory obligation on the corporation to indemnify a director, officer, employee or agent of the corporation who is successful in such person's defense of any proceeding against such person by reason of his or her position with the corporation for the reasonable and actual expenses incurred by such person in connection with such defense. Pursuant to the FBCA, the corporation may advance expenses incurred by an officer or director in defending a proceeding upon receipt of an undertaking from such person to repay such advancement if such person is ultimately found not to be entitled to indemnification under the FBCA. The FBCA prohibits indemnification or advancement of expenses to any director, officer, employee or agent, if a judgment or other final adjudication establishes that such person's actions (or omissions to act) were material and (i) a violation of the criminal law, unless such person had reasonable cause to believe his or her conduct was lawful or had no reasonable cause to believe his or her conduct was unlawful, (ii) a transaction from which such person derived an improper personal benefit, (iii) in the case of a director, a circumstance involving liability for unlawful II-2 165 distributions to shareholders of the corporation under Section 607.0834 of the FBCA, or (iv) constitute willful misconduct or a conscious disregard for the best interests of the corporation. (d) Baker Specialty School Co., Inc. ("Baker") and U.S. Ring Binder Corp. ("Ring Binder") are incorporated under the laws of the Commonwealth of Massachusetts. Ring Binder's Articles of Organization provide for indemnification of current and former directors, officers, employees and agents of Ring Binder and any organization of which Ring Binder is a creditor or in which it owns shares for costs and expenses incurred in connection with any proceeding in which such person may be involved by reason of holding such position. Ring Binder's Articles of Organization, provide that Ring Binder shall not indemnify any person with respect to any matter as to which such person shall have been adjudicated not to have acted in good faith in the reasonable belief that his or her action was in best interests of Ring Binder. Pursuant to its Articles of Organization, Ring Binder may pay expenses incurred in defending a proceeding in advance of the final disposition of such proceeding, upon receipt of an undertaking by the person to be indemnified to repay such amount if such person shall be adjudicated to be not entitled to indemnification. Section 67 of the Massachusetts Business Corporation Act (the "MBCA") authorizes indemnification under the circumstances provided in the Articles of Organization of Ring Binder described above. In the absence of an express provision regarding indemnification in the articles of organization or by-laws, as is the case with Baker, Section 67 of the MBCA provides that a corporation's board of directors may authorize indemnification of the corporation's officers, employees and other agents. Pursuant to the MBCA, no indemnification shall be provided for any person with respect to any matter as to which such person shall have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his action was in the best interest of the corporation. Section 67 of the MBCA also provides for advancement of expenses incurred in defending any proceeding upon receipt of an undertaking by the person to be indemnified to repay such amount if such person shall be adjudicated to be not entitled to indemnification under such section of the MBCA. (e) Sickinger Company ("Sickinger") is incorporated under the laws of the State of Michigan. The Michigan Business Corporation Act (the "Michigan Act") provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed proceeding by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys' fees, penalties, judgments and amounts paid in settlement, incurred in connection with such proceeding if the person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation or its shareholders, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was unlawful. In the case of a proceeding by or in the right of the corporation, no indemnification shall be provided for a claim, matter or issue in which the person to be indemnified has been found liable to the corporation, except to the extent the court conducting such proceeding determines that such person is fairly and reasonably entitled to indemnification despite the fact that such person was adjudged liable to the corporation. Under the Michigan Act, a corporation may pay or reimburse expenses in advance of the final disposition of a proceeding if the person to be indemnified furnishes the corporation a written affirmation of such person's good faith belief that such person has met the applicable standard of conduct for indemnification set forth in the Michigan Act and such person furnishes the corporation the written undertaking to repay the amount advanced if it is ultimately determined that such person did not meet the standard of conduct necessary for indemnification under the Michigan Act. In addition, the Michigan Act provides that, to the extent a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in the defense of a proceeding, such person shall be indemnified against actual and reasonable expenses, including attorneys' fees, incurred in connection with such proceeding. (f) Pro-Tech Engineering Co., Inc. ("Pro-Tech") is incorporated under the laws of the State of Wisconsin. Section 180.0851 of the Wisconsin Business Corporation Law ("WBCL") imposes a mandatory obligation on a corporation to indemnify each director and officer against reasonable expenses incurred in connection with any threatened, pending or completed proceeding to the extent such officer or director has II-3 166 been successful in the defense of such proceeding. Where the director or officer has been unsuccessful in the defense of any such proceeding, the corporation shall provide indemnification against liabilities incurred by such officer or director, unless it is determined the director or officer breached or failed to perform his or her duties to the corporation and such breach or failure constituted (i) a willful failure to deal fairly with the corporation or its shareholders in connection with a matter in which the director or officer had a material conflict of interest, (ii) a violation of criminal law, unless the director or officer had reasonable cause to believe his or her conduct was lawful or had no reasonable cause to believe his or her conduct was unlawful, (iii) a transaction from which the director or officer derived an improper personal profit, or (iv) willful misconduct. Section 180.0853 of the WBCL provides that, upon written request by a director or officer who is a party to a proceeding, a corporation may pay or reimburse such person's reasonable expenses as incurred if such person provides the corporation a written affirmation of such person's good faith belief that such person has not breached or failed to perform his or her duties to the corporation and a written undertaking to repay the allowance and, if required, to pay reasonable interest on the allowance to the extent that it is ultimately determined that indemnification is not required under the WBCL and indemnification is not ordered by a court pursuant to the WBCL. The WBCL permits a corporation to limit, in its articles of incorporation, its indemnification obligations under Section 180.0851 of the WBCL. Pro-Tech's Articles of Incorporation contain no such limitation, consequently, Pro-Tech is subject to the mandatory indemnification provisions of the WBCL. (g) GBC India Holdings Inc. ("GBC India"), GBC International, Inc. ("GBC International") and GBC Metals Corp. ("GBC Metals") are each incorporated under the laws of the State of Nevada. The Articles of Incorporation of GBC Metals provide for indemnification of persons who may be indemnified pursuant to the Nevada General Corporation Law ("NGCL") to the fullest extent permitted by the NGCL. The Articles of Incorporation and By-laws of GBC India and GBC International do not contain provisions relating to indemnification. Section 78.7502 of the NGCL provides that a corporation may indemnify any person who was or is a party to any threatened, pending or completed proceeding by reason of the fact that such person is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including attorney's fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such proceeding if such person acted in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. With respect to proceedings by or in the name of the corporation, Section 78.7502 of the NGCL provides that indemnification may not be provided for any claim, issue or matter as to which the person to be indemnified has been adjudged by a court of competent jurisdiction to be liable to the corporation or for amounts paid in settlement to the corporation, unless the court in which the action or suit was brought, or another court of competent jurisdiction, determines that the person to be indemnified is fairly and reasonably entitled to indemnity for such expenses as the court deems proper. Section 78.7502(3) of the NGCL imposes a mandatory obligation on the corporation to indemnify a director, officer, employee or agent of the corporation who is successful in such person's defense of any proceeding against such person by reason of his or her position with the corporation with respect to reasonable and actual expenses, including attorney's fees, incurred by such person in connection with such person's defense. Subsection 78.751(3)(a) of the NGCL prohibits indemnification of any director or officer if the final adjudication establishes that such person's actions (or omissions to act) involved intentional misconduct, fraud or a knowing violation of the law and were material to the cause of action in question. II-4 167 ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) The following is a list of Exhibits included as part of this Registration Statement. The registrant agrees to furnish supplementally a copy of any omitted schedule to the Commission upon request. Items marked with an asterisk are filed herewith: *3.1 -- Restated Certificate of Incorporation of the Issuer, as amended. *3.2 -- Amended and Restated By-laws of the Issuer, as amended. *3.3 -- Articles of Organization of Baker School Specialty Co., Inc. *3.4 -- By-laws of Baker School Specialty Co., Inc. *3.5 -- Articles of Incorporation of GBC Business Equipment, Inc., as amended. *3.6 -- By-laws of GBC Business Equipment, Inc. *3.7 -- Articles of Incorporation of GBC India Holdings Inc., as amended. *3.8 -- By-laws of GBC India Holdings Inc. *3.9 -- Articles of Incorporation of GBC International, Inc. *3.10 -- By-laws of GBC International, Inc. *3.11 -- Articles of Incorporation of GBC Metals Corp. *3.12 -- By-laws of GBC Metals Corp. *3.13 -- Articles of Incorporation of Ibico Inc., as amended. *3.14 -- By-laws of Ibico Inc., as amended. *3.15 -- Restated Articles of Incorporation of Pro-Tech Engineering Co., Inc. *3.16 -- By-laws of Pro-Tech Engineering Co., Inc. *3.17 -- Articles of Incorporation of Sickinger Company, as amended. *3.18 -- By-laws of Sickinger Company, as amended. *3.19 -- Articles of Organization of U.S. Ring Binder Corp., as amended. *3.20 -- By-laws of U.S. Ring Binder Corp. *3.21 -- Certificate of Incorporation of VeloBind, Incorporated, as amended. *3.22 -- By-laws of VeloBind, Incorporated, as amended. *4.1 -- Indenture dated as of May 27, 1998 among the Issuer, the Subsidiary Guarantors and First Union National Bank, as trustee. 4.2 -- Form of Exchange Notes (contained in Exhibit 4.1 as Exhibit B thereto). 4.3 -- Form of Guarantees (contained in Exhibit 4.1 as Exhibit F thereto). *4.4 -- Registration Rights Agreement dated as of May 27, 1998 among the Issuer, the Subsidiary Guarantors and BT Alex. Brown Incorporated, CIBC Oppenheimer Corp., ABN AMRO Incorporated, First Chicago Capital Markets, Inc. and Nesbitt Burns Securities Inc. 4.5 -- Certain instruments defining rights of holders of long-term debt of the Issuer and its subsidiaries are omitted pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. The Issuer hereby agrees to furnish copies of these instruments to the Commission upon request. *5.1 -- Opinion of Steven Rubin, Vice President, Secretary and General Counsel of the Issuer, as to the legality of the securities being registered. *8.1 -- Opinion of Sidley & Austin as to certain federal income tax matters. *10.1 -- Multicurrency Credit Agreement dated as of January 13, 1997 among the Issuer, each of the guarantors party thereto, the lenders party thereto in their capacities as lenders thereunder and Harris Trust & Savings Bank, as administrative agent.
II-5 168 *10.2 -- First Amendment to Multicurrency Credit Agreement, dated as of December 19, 1997, among the Issuer, each of the guarantors party thereto, the lenders party thereto in their capacities as lenders thereunder and Harris Trust & Savings Bank, as administrative agent. *10.3 -- Second Amendment to Multicurrency Credit Agreement, dated as of May 27, 1998, among the Issuer, each of the guarantors party thereto, the lenders party thereto in their capacities as lenders thereunder and Harris Trust & Savings Bank, as administrative agent. *10.4 -- Stock Purchase Agreement dated as of October 17, 1997 between the Issuer and Dr. Ueli Wolfensberger, as amended. *10.5 -- General Binding Corporation 1989 Stock Option Plan, as amended and restated. *10.6 -- General Binding Corporation Supplemental Deferred Compensation Plan. *10.7 -- General Binding Corporation Phantom Stock Plan for Directors. *12.1 -- Statement Re Computation of Ratio of Earnings to Fixed Charges. *21.1 -- Subsidiaries of the Issuer. *23.1 -- Consent of Arthur Andersen LLP. *23.2 -- Consent of KPMG Fides Peat. 23.3 -- Consent of Steven Rubin (included in Exhibit 5.1). 23.4 -- Consent of Sidley & Austin (included in Exhibit 8.1). *24.1 -- Powers of Attorney of Directors and Officers of the Issuer and each Subsidiary Guarantor. *25.1 -- Statement of Eligibility of Trustee on Form T-1. *99.1 -- Form of Letter of Transmittal. *99.2 -- Form of Notice of Guaranteed Delivery. *99.3 -- Form of Tender Instructions.
ITEM 22. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities II-6 169 offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered, therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (d) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (e) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-7 170 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, General Binding Corporation has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Northbrook, State of Illinois, on July 24, 1998. GENERAL BINDING CORPORATION By: /s/ GOVI C. REDDY ---------------------------------- Govi C. Reddy President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE --------- -------- ---- * Chairman and Director July 24, 1998 - ----------------------------------------------------- William N. Lane III /s/ GOVI C. REDDY President, Chief Executive Officer July 24, 1998 - ----------------------------------------------------- and Director (Principal Govi C. Reddy Executive Officer) * Vice President and Chief Financial July 24, 1998 - ----------------------------------------------------- Officer (Principal Financial and William R. Chambers, Jr. Accounting Officer) * Director July 24, 1998 - ----------------------------------------------------- Richard U. De Schutter * Director July 24, 1998 - ----------------------------------------------------- Theodore Dimitriou * Director July 24, 1998 - ----------------------------------------------------- Rudolph Grua * Director July 24, 1998 - ----------------------------------------------------- Thomas V. Kalebic * Director July 24, 1998 - ----------------------------------------------------- James A. Miller
II-8 171
SIGNATURE CAPACITY DATE --------- -------- ---- * Director July 24, 1998 - ----------------------------------------------------- Arthur C. Nielsen, Jr. * Director July 24, 1998 - ----------------------------------------------------- Warren R. Rothwell * Director July 24, 1998 - ----------------------------------------------------- Robert J. Stucker *By: /s/ GOVI C. REDDY ------------------------------------------------ Govi C. Reddy As Attorney-in-Fact
II-9 172 Pursuant to the requirements of the Securities Act of 1933, as amended, Baker School Specialty Co., Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Northbrook, State of Illinois, on July 24, 1998. BAKER SCHOOL SPECIALTY CO., INC. By: /s/ GOVI C. REDDY ---------------------------------- Govi C. Reddy President Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE --------- -------- ---- /s/ GOVI C. REDDY President and Director July 24, 1998 - ----------------------------------------------------- (Principal Executive Officer) Govi C. Reddy * Vice President July 24, 1998 - ----------------------------------------------------- (Principal Financial and William R. Chambers, Jr. Accounting Officer) * Director July 24, 1998 - ----------------------------------------------------- William N. Lane III /s/ STEVEN RUBIN Director July 24, 1998 - ----------------------------------------------------- Steven Rubin *By: /s/ GOVI C. REDDY ------------------------------------------------ Govi C. Reddy As Attorney-in-Fact
II-10 173 Pursuant to the requirements of the Securities Act of 1933, as amended, GBC Business Equipment, Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Northbrook, State of Illinois, on July 24, 1998. GBC BUSINESS EQUIPMENT, INC. By: /s/ GOVI C. REDDY ---------------------------------- Govi C. Reddy President Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE --------- -------- ---- /s/ GOVI C. REDDY President and Director July 24, 1998 - ----------------------------------------------------- (Principal Executive Officer) Govi C. Reddy * Vice President July 24, 1998 - ----------------------------------------------------- (Principal Financial and William R. Chambers, Jr. Accounting Officer) * Director July 24, 1998 - ----------------------------------------------------- William N. Lane III /s/ STEVEN RUBIN Director July 24, 1998 - ----------------------------------------------------- Steven Rubin *By: /s/ GOVI C. REDDY ------------------------------------------------ Govi C. Reddy As Attorney-in-Fact
II-11 174 Pursuant to the requirements of the Securities Act of 1933, as amended, GBC India Holdings Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Northbrook, State of Illinois, on July 24, 1998. GBC INDIA HOLDINGS INC. By: /s/ GOVI C. REDDY ---------------------------------- Govi C. Reddy President Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE --------- -------- ---- /s/ GOVI C. REDDY President and Director July 24, 1998 - ----------------------------------------------------- (Principal Executive Officer) Govi C. Reddy * Vice President July 24, 1998 - ----------------------------------------------------- (Principal Financial and William R. Chambers, Jr. Accounting Officer) * Director July 24, 1998 - ----------------------------------------------------- William N. Lane III /s/ STEVEN RUBIN Director July 24, 1998 - ----------------------------------------------------- Steven Rubin *By: /s/ GOVI C. REDDY ------------------------------------------------ Govi C. Reddy As Attorney-in-Fact
II-12 175 Pursuant to the requirements of the Securities Act of 1933, as amended, GBC International, Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Northbrook, State of Illinois, on July 24, 1998. GBC INTERNATIONAL, INC. By: /s/ GOVI C. REDDY ---------------------------------- Govi C. Reddy President Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE --------- -------- ---- /s/ GOVI C. REDDY President and Director July 24, 1998 - ----------------------------------------------------- (Principal Executive Officer) Govi C. Reddy * Vice President July 24, 1998 - ----------------------------------------------------- (Principal Financial and William R. Chambers, Jr. Accounting Officer) * Director July 24, 1998 - ----------------------------------------------------- William N. Lane III /s/ STEVEN RUBIN Director July 24, 1998 - ----------------------------------------------------- Steven Rubin *By: /s/ GOVI C. REDDY ------------------------------------------------ Govi C. Reddy As Attorney-in-Fact
II-13 176 Pursuant to the requirements of the Securities Act of 1933, as amended, GBC Metals Corp. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Northbrook, State of Illinois, on July 24, 1998. GBC METALS CORP. By: /s/ GOVI C. REDDY ---------------------------------- Govi C. Reddy President Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE --------- -------- ---- /s/ GOVI C. REDDY President and Director July 24, 1998 - ----------------------------------------------------- (Principal Executive Officer) Govi C. Reddy * Vice President July 24, 1998 - ----------------------------------------------------- (Principal Financial and William R. Chambers, Jr. Accounting Officer) * Director July 24, 1998 - ----------------------------------------------------- William N. Lane III /s/ STEVEN RUBIN Director July 24, 1998 - ----------------------------------------------------- Steven Rubin *By: /s/ GOVI C. REDDY ------------------------------------------------ Govi C. Reddy As Attorney-in-Fact
II-14 177 Pursuant to the requirements of the Securities Act of 1933, as amended, Ibico Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Northbrook, State of Illinois, on July 24, 1998. IBICO INC. By: /s/ GOVI C. REDDY ---------------------------------- Govi C. Reddy President Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE --------- -------- ---- /s/ GOVI C. REDDY President and Director July 24, 1998 - ----------------------------------------------------- (Principal Executive Officer) Govi C. Reddy * Vice President July 24, 1998 - ----------------------------------------------------- (Principal Financial and William R. Chambers, Jr. Accounting Officer) * Director July 24, 1998 - ----------------------------------------------------- William N. Lane III /s/ STEVEN RUBIN Director July 24, 1998 - ----------------------------------------------------- Steven Rubin *By: /s/ GOVI C. REDDY ------------------------------------------------ Govi C. Reddy As Attorney-in-Fact
II-15 178 Pursuant to the requirements of the Securities Act of 1933, as amended, Pro-Tech Engineering Co., Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Northbrook, State of Illinois, on July 24, 1998. PRO-TECH ENGINEERING CO., INC. By: /s/ GOVI C. REDDY ---------------------------------- Govi C. Reddy President Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE --------- -------- ---- /s/ GOVI C. REDDY President and Director July 24, 1998 - ----------------------------------------------------- (Principal Executive Officer) Govi C. Reddy * Vice President July 24, 1998 - ----------------------------------------------------- (Principal Financial and William R. Chambers, Jr. Accounting Officer) * Director July 24, 1998 - ----------------------------------------------------- William N. Lane III /s/ STEVEN RUBIN Director July 24, 1998 - ----------------------------------------------------- Steven Rubin *By: /s/ GOVI C. REDDY ------------------------------------------------ Govi C. Reddy As Attorney-in-Fact
II-16 179 Pursuant to the requirements of the Securities Act of 1933, as amended, Sickinger Company has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Northbrook, State of Illinois, on July 24, 1998. SICKINGER COMPANY By: /s/ GOVI C. REDDY ---------------------------------- Govi C. Reddy President Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE --------- -------- ---- /s/ GOVI C. REDDY President and Director July 24, 1998 - ----------------------------------------------------- (Principal Executive Officer) Govi C. Reddy * Vice President July 24, 1998 - ----------------------------------------------------- (Principal Financial and William R. Chambers, Jr. Accounting Officer) * Director July 24, 1998 - ----------------------------------------------------- William N. Lane III /s/ STEVEN RUBIN Director July 24, 1998 - ----------------------------------------------------- Steven Rubin *By: /s/ GOVI C. REDDY ------------------------------------------------ Govi C. Reddy As Attorney-in-Fact
II-17 180 Pursuant to the requirements of the Securities Act of 1933, as amended, U.S. Ring Binder Corp. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Northbrook, State of Illinois, on July 24, 1998. U.S. RING BINDER CORP By: /s/ GOVI C. REDDY ---------------------------------- Govi C. Reddy President Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE --------- -------- ---- /s/ GOVI C. REDDY President and Director July 24, 1998 - ----------------------------------------------------- (Principal Executive Officer) Govi C. Reddy * Vice President July 24, 1998 - ----------------------------------------------------- (Principal Financial and William R. Chambers, Jr. Accounting Officer) * Director July 24, 1998 - ----------------------------------------------------- William N. Lane III /s/ STEVEN RUBIN Director July 24, 1998 - ----------------------------------------------------- Steven Rubin *By: /s/ GOVI C. REDDY ------------------------------------------------ Govi C. Reddy As Attorney-in-Fact
II-18 181 Pursuant to the requirements of the Securities Act of 1933, as amended, VeloBind, Incorporated has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Northbrook, State of Illinois, on July 24, 1998. VELOBIND, INCORPORATED By: /s/ GOVI C. REDDY ---------------------------------- Govi C. Reddy President Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE --------- -------- ---- /s/ GOVI C. REDDY President and Director July 24, 1998 - ----------------------------------------------------- (Principal Executive Officer) Govi C. Reddy * Vice President July 24, 1998 - ----------------------------------------------------- (Principal Financial and William R. Chambers, Jr. Accounting Officer) * Director July 24, 1998 - ----------------------------------------------------- William N. Lane III /s/ STEVEN RUBIN Director July 24, 1998 - ----------------------------------------------------- Steven Rubin *By: /s/ GOVI C. REDDY ------------------------------------------------ Govi C. Reddy As Attorney-in-Fact
II-19 182 EXHIBIT INDEX
EXHIBIT NO. EXHIBIT ----------- ------- *3.1 -- Restated Certificate of Incorporation of the Issuer, as amended. *3.2 -- Amended and Restated By-laws of the Issuer, as amended. *3.3 -- Articles of Organization of Baker School Specialty Co., Inc., as amended. *3.4 -- By-laws of Baker School Specialty Co., Inc. *3.5 -- Articles of Incorporation of GBC Business Equipment, Inc., as amended. *3.6 -- By-laws of GBC Business Equipment, Inc. *3.7 -- Articles of Incorporation of GBC India Holdings Inc., as amended. *3.8 -- By-laws of GBC India Holdings Inc. *3.9 -- Articles of Incorporation of GBC International, Inc. *3.10 -- By-laws of GBC International, Inc. *3.11 -- Articles of Incorporation of GBC Metals Corp. *3.12 -- By-laws of GBC Metals Corp. *3.13 -- Articles of Incorporation of Ibico Inc., as amended. *3.14 -- By-laws of Ibico Inc., as amended. *3.15 -- Restated Articles of Incorporation of Pro-Tech Engineering Co., Inc. *3.16 -- By-laws of Pro-Tech Engineering Co., Inc. *3.17 -- Articles of Incorporation of Sickinger Company, as amended. *3.18 -- By-laws of Sickinger Company, as amended. *3.19 -- Articles of Organization of U.S. Ring Binder Corp., as amended. *3.20 -- By-laws of U.S. Ring Binder Corp. *3.21 -- Certificate of Incorporation of VeloBind, Incorporated, as amended. *3.22 -- By-laws of VeloBind, Incorporated, as amended. *4.1 -- Indenture dated as of May 27, 1998 among the Issuer, the Subsidiary Guarantors and First Union National Bank, as trustee. 4.2 -- Form of Exchange Notes (contained in Exhibit 4.1 as Exhibit B thereto). 4.3 -- Form of Guarantees (contained in Exhibit 4.1 as Exhibit F thereto). *4.4 -- Registration Rights Agreement dated as of May 27, 1998 among the Issuer, the Subsidiary Guarantors and BT Alex. Brown Incorporated, CIBC Oppenheimer Corp., ABN AMRO Incorporated, First Chicago Capital Markets, Inc. and Nesbitt Burns Securities Inc. 4.5 -- Certain instruments defining rights of holders of long-term debt of the Issuer and its subsidiaries are omitted pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. The Issuer hereby agrees to furnish copies of these instruments to the Commission upon request. *5.1 -- Opinion of Steven Rubin, Vice President, Secretary and General Counsel of the Issuer, as to the legality of the securities being registered. *8.1 -- Opinion of Sidley & Austin as to certain federal income tax matters. *10.1 -- Multicurrency Credit Agreement dated as of January 13, 1997 among the Issuer, each of the guarantors party thereto, the lenders party thereto in their capacities as lenders thereunder and Harris Trust & Savings Bank, as administrative agent.
183
EXHIBIT NO. EXHIBIT ----------- ------- *10.2 -- First Amendment to Multicurrency Credit Agreement, dated as of December 19, 1997, among the Issuer, each of the guarantors party thereto, the lenders party thereto in their capacities as lenders thereunder and Harris Trust & Savings Bank, as administrative agent. *10.3 -- Second Amendment to Multicurrency Credit Agreement, dated as of May 27, 1998, among the Issuer, each of the guarantors party thereto, the lenders party thereto in their capacities as lenders thereunder and Harris Trust & Savings Bank, as administrative agent. *10.4 -- Stock Purchase Agreement dated as of October 17, 1997 between the Issuer and Dr. Ueli Wolfensberger, as amended. *10.5 -- General Binding Corporation 1989 Stock Option Plan, as amended and restated. *10.6 -- General Binding Corporation Supplemental Deferred Compensation Plan. *10.7 -- General Binding Corporation Phantom Stock Plan for Directors. *12.1 -- Statement Re Computation of Ratio of Earnings to Fixed Charges. *21.1 -- Subsidiaries of the Issuer. *23.1 -- Consent of Arthur Andersen LLP. *23.2 -- Consent of KPMG Fides Peat. 23.3 -- Consent of Steven Rubin (included in Exhibit 5.1). 23.4 -- Consent of Sidley & Austin (included in Exhibit 8.1). *24.1 -- Powers of Attorney of Directors and Officers of the Issuer and each Subsidiary Guarantor. *25.1 -- Statement of Eligibility of Trustee on Form T-1. *99.1 -- Form of Letter of Transmittal. *99.2 -- Form of Notice of Guaranteed Delivery. *99.3 -- Form of Tender Instructions.
- ------------------------- * Filed herewith. EX-3.1 2 RESTATED CERTIFICATE OF INCORPORATION OF ISSUER 1 EXHIBIT 3.1 RESTATED CERTIFICATE OF INCORPORATION OF GENERAL BINDING CORPORATION It is hereby certified that: 1. (a) The present name of the corporation (hereinafter called the "corporation") is GENERAL BINDING CORPORATION. (b) The name under which the corporation was originally incorporated is GENERAL BINDING CORPORATION; and the date of filing the original Certificate of Incorporation of the corporation with the Secretary of State of the State of Delaware is March 7, 1996. 2. The provisions of the Certificate of Incorporation of the corporation as heretofore amended and/or supplemented, are hereby restated and integrated into the single instrument which is hereinafter set forth, and which is entitled Restated Certificate of Incorporation of GENERAL BINDING CORPORATION, without further amendment and without any discrepancy between the provisions of the Certificate of Incorporation as heretofore amended and supplemented and the provisions of the said single instrument hereinafter set forth. 3. The Board of Directors of the corporation has duly adopted this Restated Certificate of Incorporation pursuant to the provisions of Section 245 of the General Corporation Law of the State of Delaware in the form set forth on the following page: 2 RESTATED CERTIFICATE OF INCORPORATION OF GENERAL BINDING CORPORATION FIRST: The name of the corporation is GENERAL BINDING CORPORATION. SECOND: Its registered office in the state of Delaware is located at No. 229 S. State Street, in the City of Dover, County of Kent. The name and address of its registered agent is The Prentice-Hall Corporation System, Inc., 229 S. State St., Dover, Delaware 19901. THIRD: The nature of the business, or objects or purposes to be transacted, promoted or carried on are: To manufacture, construct, compound and deal in machinery, appliances and plastic, metal, wood, chemical and other products of every nature, kind and description, and to do any and all things and perform all services connected with and incidental to all of the foregoing. To manufacture, purchase or otherwise acquire, invest in, own, mortgage, pledge, sell, lease, assign and transfer or otherwise dispose of, trade, deal in and deal with goods, wares and merchandise and personal property of every class and description; To acquire, and pay for in cash, stock or bonds of this corporation or otherwise, the good will, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, firm, association or corporation; To acquire, hold, use, sell, assign, lease, grant licenses, in respect of, mortgage or otherwise dispose of letters, patents of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trademarks and trade names, relating to or useful in connection with any business of this corporation; To acquire by purchase, subscription or otherwise, and to receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise dispose of or deal in and with any of the shares of the capital stock, or any voting trust certificates in respect of the shares of capital stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and other securities, obligations, chooses in action and evidences of indebtedness or interest issued or created by any corporations, joint stock companies, syndicates, associations, firms, trusts or persons, public or private, or by the government of the United States of America, or by any foreign government, or by any state, territory, province, municipality or other political subdivision or by any governmental agency, and as owner thereof to possess and exercise all the rights, powers and privileges of ownership, including the right to execute consents and vote thereon, and to do any and all acts and things necessary or advisable for the preservation, protection, improvement and enhancement in value thereof; 3 To enter into, make and perform contracts of every kind and description with any person, firm, association, corporation, municipality, county, state, body politic or government or colony or dependency thereof; To borrow or raise moneys for any of the purposes of the corporation and, from time to time without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable or non-negotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon or pledge, conveyance, or assignment in trust of the whole or any part of the property of the corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the corporation for its corporate purposes; To loan to any person, firm or corporation any of its surplus funds, either with or without security; To purchase, hold, sell and transfer the shares of its own capital stock; provided it shall not use its funds or property for the purchase of its own shares of capital stock when such use would cause any impairment of its capital except as otherwise permitted by law, and provided further that shares of its own capital stock belonging to it shall not be voted directly or indirectly; To have one or more offices, to carry on all or any of its operations and business and without restriction or limit as to amount to purchase or otherwise acquire, hold, own, mortgage, sell, convey or otherwise dispose of, real and personal property of every class and description in any of the states, districts, territories or colonies of the United States, and in any and all foreign countries, subject to the laws of such state, district, territory, colony or country; and In general, to carry on any other business in connection with the foregoing, and to have and exercise all the powers conferred by the laws of Delaware upon corporations formed under the General Corporation Law of the State of Delaware, and to do any or all of the things hereinbefore set forth to the same extent as natural persons might or could do. The objects and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in nowise limited or restricted by reference to, or inference from, the terms of any other clause in this certificate of incorporation, but the objects and purposes specified in each of the foregoing clauses of this article shall be regarded as independent objects and purposes. FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is 7,710,600 consisting of 7,000,000 shares of Common Stock, twelve and one- 2 4 half cents per share par value, and 710,600 shares of Class B Common Stock, twelve and one-half cents per share par value. Voting Rights Each share of Common Stock and Class B Common Stock shall entitle the holder thereof to one vote and fifteen votes, respectively, per share on all matters submitted to a vote of stockholders. Conversion Shares of Class B Common Stock shall be automatically converted into fully-paid and non-assessable shares of Common Stock at the rate of one share of Common Stock for each share of Class B Common Stock upon the presentation to the transfer agent for transfer of a certificate for shares of Class B Common Stock duly endorsed to a person or persons other than (i) the record holder of such shares or (ii) the surviving corporation or new corporation in a statutory merger or consolidation, respectively, in which the record holder of such shares was a constituent corporation if the transfer agent is advised of the statutory merger or consolidation by being furnished at the time of transfer with a copy of the agreement of merger or consolidation certified by the secretary of state of such record holder's state of incorporation, in which event the shares of Class B Common Stock shall be transferred to (a) the record holder of such shares or (b) the surviving corporation or new corporation, as the case may be. The expense of any required stock transfer stamps or taxes shall be borne by the transferring record holder under arrangements satisfactory to the transfer agent. As promptly as practicable after such conversion, the Corporation's transfer agent shall deliver to the transferee of the Class B Common Stock so presented a certificate representing the number of fully paid and non-assessable shares of Common Stock of the Corporation into which such Class B Common Stock was converted. Such conversion all be deemed to have been made at the close of business on the date that such Class B Common Stock shall have been duly presented for transfer, so that the rights of the holder of such Class B Common Stock as a stockholder shall cease at such time and the person or persons entitled to receive Common Stock upon conversion of such Class B Common Stock shall be treated for all purposes as having become the record holder or holders of such Common Stock at such time; provided, however, that no such presentation on any date when the stock transfer books of the Corporation shall be closed shall be effective to constitute as the record holder or holders thereof on such date the person or persons entitled to receive Common Stock on such date, but such surrender shall be effective to constitute the person or persons entitled to receive such Common Stock as the record holder or holders hereof for all purposes at the close of business on the next succeeding day on which such stock transfer books are open. 3 5 All shares of Class B Common Stock that are converted into shares of Common Stock shall be canceled and retired and shall not be reissued. The Corporation shall at all times reserve and keep available, solely for the purpose of issuance upon conversion of Class B Common Stock as herein provided, such number of shares of Common Stock as shall be issuable upon the conversion of all outstanding Class B Common Stock. Dividends and Liquidation Except as above provided, the rights of holders of Common Stock and Class B Common Stock shall be identical. The holders of all shares of Common Stock and Class B Common Stock shall be entitled to (i) participate, on a share-for-share basis, in such dividends (payable in cash, common stock or otherwise) as may be declared and paid by the Corporation from time to time out of funds legally available therefor and (ii) share ratably in the assets of the Corporation in the event of any liquidation, dissolution, or winding up of the affairs of the Corporation. All distributions of stock of the Corporation in respect of any stock dividends, stock-splits or rights to subscribe for and purchase such stock shall be made in Common Stock to the holders of Common Stock and in Class B Common Stock to the holders of Class B Common Stock. Issuance of Stock Subject to the provisions of this Certificate of Incorporation and except as otherwise provided by law, the shares of stock of the Corporation, regardless of class, may be issued for such consideration, not less than the par value of stock with par value, and for such corporate purposes as the Board of Directors may from time to time determine. The Board of Directors may issue shares of the Corporation to the stockholders of the Corporation pro rata in the form of stock dividends and/or stock-splitups which stock dividends and/or stock splitups may or may not affect, in the discretion of the Board of Directors, the capital account of the Corporation, except that the capital account, after any such issuance of shares, shall not be less than the aggregate par value of all issued shares having a par value. Preemptive Rights No stockholder of this Corporation shall by reason of his holding shares of any class have any preemptive or preferential right to purchase or subscribe to any shares of any class of this Corporation, not or hereafter to be authorized, or any notes, debentures, bonds, or other securities convertible into or carrying options or warrants to purchase shares of any class, now or hereafter to be authorized, whether or not the issuance of any such shares or notes, debentures, bonds or other securities, would adversely affect the dividend or voting rights of such stockholders, other than the preemptive or preferential rights, if any, as the Board of Directors, in its discretion from time to time may grant, and at such price as the Board 4 6 of Directors in its discretion may fix; and the Board of Directors may issue shares of any class of this Corporation, or any notes, debentures, bonds, or other securities convertible into or carrying options or warrants to purchase shares of any class, without offering any such shares of any class, either in whole or in part, to the existing stockholders of any class. FIFTH: The minimum amount of capital with which the corporation will commence business is One Thousand Dollars ($1,000.00). SIXTH: The names and places of residence of the incorporators are as follows:
Names Residences ----- ---------- A.D. Grier Wilmington, Delaware S.H. Livesay Wilmington, Delaware F.J. Obara, Jr. Wilmington, Delaware
SEVENTH: The corporation is to have perpetual existence. EIGHTH: The private property of the stockholders shall not be subject to the payment of corporate debts to any extent whatever. NINTH: In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized: From time to time, (a) to issue, sell and dispose of shares of the authorized and previously unissued Common Stock of the corporation and shares of its outstanding Common Stock held in its treasury; (b) to issue, sell and dispose of the bonds, debentures, notes and other obligations or evidences of indebtedness of the corporation, including bonds, debentures, notes and other obligations or evidences of indebtedness of the corporation convertible into capital stock of the corporation of any class; and (c) to authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation; To declare and pay dividends on the capital stock as permitted by law; To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created; By resolution passed by a majority of the whole board, to designate one or more committees, each committee to consist of two or more of the directors of the corporation, which, 5 7 to the extent provided in the resolution or in the by-laws of the corporation, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be stated in the by-laws of the corporation or as may be determined from time to time by resolution adopted by the board of directors. When and as authorized by the affirmative vote of the holders of a majority of the stock issued and outstanding having voting power given at a stockholders' meeting duly called for that purpose, or when authorized by the written consent of the holders of a majority of the voting stock issued and outstanding, to sell, lease or exchange all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may be in whole or in part shares of stock in, and/or other securities of, any other corporation or corporations, as the board of directors shall deem expedient and for the best interests of the corporation. The corporation may in its by-laws confer powers upon its board of directors in addition to the foregoing, and in addition to the powers and authorities expressly conferred upon it by statute. TENTH: Section 1. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or its or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceedings, had reasonable cause to believe that his conduct was unlawful. Section 2. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and 6 8 reasonable incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnify for such expenses which the Court of Chancery of such other court shall deem proper. Section 3. To the extent that a director, officer, employee or agent of the Corporation has been successful in the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1 and 2 or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. Section 4. Any indemnification under Sections 1 and 2 (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections 1 and 2. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directors, by independent legal counsel in a written opinion, or (3) by the stockholders. Section 5. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors in the specific case upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized in this Article. Section 6. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any By-Law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Section 7. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability 7 9 asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such a liability under the provisions of this Article. ELEVENTH: Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court or equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for this corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or any receiver or receivers appointed for this corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequences of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, but binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation. TWELFTH: Meetings of stockholders may be held outside the State of Delaware, if the by-laws so provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. Elections of directors need not be by ballot unless the by-laws of the corporation shall so provide. THIRTEENTH: The corporation reserves the right to amend, alter, change or repeal any provisions contained in this certificate of incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to his reservation. Signed and attested to on November 5, 1979. /s/ FRANK J. LENAHAN -------------------- Vice President and Treasurer Attest: /s/ STEVEN RUBIN - ---------------- Secretary 8 10 STATE OF ILLINOIS ) ) SS.: COUNTY OF LAKE ) BE IT REMEMBERED that, on November 5, 1979, before me, a Notary Public duly authorized by law to take acknowledgment of deeds, personally came Frank J. Lenahan, Vice President & Treasurer of General Binding Corporation, who duly signed the foregoing instrument before me and acknowledged that such signing is his act and deed, that such instrument as executed is the act and deed of said corporation, and that the facts stated therein are true. GIVEN under my hand on November 5, 1979. /s/ ANN M. VOGEL [NOTARIAL SEAL] ------------------ Notary Public My Commission Expires June 21, 1981. * * * * * * CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION OF GENERAL BINDING CORPORATION GENERAL BINDING CORPORATION, a corporation and existing under any by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That at a meeting of the Board of Directors of General Binding Corporation on March 20, 1987, resolutions were duly adopted setting forth proposed amendments to the Restated Certificate of Incorporation of said corporation, and declaring said amendments to be advisable and directing that the amendments be considered at the next annual meeting of the stockholders. The resolution setting forth the proposed amendments are as follows: RESOLVED, that the first paragraph of Articles FOURTH of the Company's Restated Certificate of Incorporation be amended to increase the number of authorized shares of Common Stock, par value $.125 per share to 10,500,000 shares from 7,000,000 shares and to increase the number of authorized shares of Class B Common Stock to 1,065,000 shares from 710,600 shares and that said Paragraph shall be and read as follows: "FOURTH, The total number of shares of stock which the Corporation shall have authority to issue is 11,565,900 consisting of 10,500,000 share of Common Stock, twelve and on-half cents per share par value, and 1,065,000 shares of Class B Common Stock, twelve and one-half cents per share par value." FURTHER RESOLVED, that a new Section be added as an amendment to Article TENTH of the Corporation's Restated Certificate of Incorporation and that such amendment shall be in compliance with Section 102(b)(7) of the Delaware General Corporation Law and that said Section shall be and read as follows: "ARTICLE TENTH. Section 8. No director shall be personally liable to the Corporation or its stockholders for monetary damage for breach of fiduciary duty as a director for any act or omission occurring subsequent to the date when this provision becomes effective except that he may be liable (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts of omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law of any amendment thereto or successor provision thereto or (iv) for any transaction from which the director derived an improper personal benefit." FURTHER RESOLVED, the except as amended in the preceding Resolutions the Corporation's Restated Certificate of Incorporation shall continue and remain in full force and effect. SECOND: That thereafter, pursuant to resolution of its Board of Directors, an annual meeting of the stockholders of said corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of shares as required by statute were voted in favor of the amendments. THIRD: That said amendments were duly adopted in accordance with the provision of Section 242 of the General Corporation Law of the State of Delaware. FOURTH: That the capital of said corporation will not be reduced under or by reason of said amendment. IN WITNESS WHEREOF, said General Binding Corporation has caused its corporate seal to be hereunto affixed and this certificate to be signed by Rudolph Grua, its President, and attested by Steven Rubin, its Vice President and Secretary this 13th day of May, 1987. GENERAL BINDING CORPORATION By /s/ RUDOLPH GRUA ------------------------- President [CORPORATE SEAL] /s/ STEVEN RUBIN - ---------------------------- Vice President & Secretary * * * * * * CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION GENERAL BINDING CORPORATION, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That a meeting of the Board of Directors of General Binding Corporation on March 18, 1988 a resolution was duly adopted setting forth a proposed amendment to the Restated Certificate of Incorporation of said corporation, and declaring said amendment to be advisable and directing that the amendment be considered at the next annual meeting of the stockholders. The resolution setting forth the proposed amendment is as follows: RESOLVED, that the first paragraph of Article FOURTH of the Company's Restated Certificate of Incorporation be amended to increase the number of authorized shares of Common Stock, par value $.125 per share to 20,000,000 shares from 10,500,000 shares and to increase the number of authorized shares of Class B Common Stock to 2,398,275 shares from 1,065,000 shares and that said Paragraph shall be and read as follows: "FOURTH. The total number of shares of stock which the Corporation shall have authority to issue 22,398,275 consisting on 20,000,000 shares of Common Stock, twelve and one-half cents per share par value, and 2,398,275 shares to Class B Common Stock, twelve and one-half per share par value." 9 11 FURTHER RESOLVED, that except as amended in the preceding Resolution the Corporation's Restated Certificate of Incorporation shall continue and remain in full force and effect. SECOND: That thereafter, pursuant to resolution of its Board of Directors, an annual meeting of the stockholders of said corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of shares as required by statute were voted in favor of the amendment. THIRD: That said amendment was duly adopted in accordance with the provisions of Sections 242 of the General Corporation Law of the State of Delaware. FOURTH: That the capital of said corporation will not be reduced under or by reason of said amendment. IN WITNESS WHEREOF, said General Binding Corporation has caused its corporate seal to be hereunto affixed and this certificate to be signed by Rudolph Grua, its President, and attested by Steven Rubin, its Vice President and Secretary this 10th day of May, 1988. GENERAL BINDING CORPORATION By /s/ RUDOLPH GRUA ------------------------- President ATTEST: /s/ STEVEN RUBIN - ---------------------- Vice President & Secretary STATE OF ILLINOIS ) ) SS. COUNTY OF COOK ) BE IT REMEMBERED that on this 10th day of May, 1988, personally came before me, a Notary Public in and for the County and State aforesaid, Rudolph Grua, President of General Binding Corporation, a Corporation of the State of Delaware, and he duly executed said certificate before me and acknowledged said certificate to be his act and deed and the act and deed of said Corporation and the facts stated therein are true; and that the seal affixed to said certificate and attested by the Vice President and Secretary of said Corporation is the common or corporate seal of said corporation. 10 12 IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the day and year aforesaid. /s/ Mark E. Dapier ------------------ Notary Public 11 13 * * * * * * CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION GENERAL BINDING CORPORATION, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That a meeting of the Board of Directors of General Binding Corporation on March 19, 1997 a resolution was duly adopted setting forth a proposed amendment to the Restated Certificate of Incorporation of said corporation, and declaring said amendment to be advisable and directing that the amendment be considered at the next annual meeting of the stockholders. The resolution setting forth the proposed amendment is as follows: RESOLVED, that the first paragraph of Article FOURTH of the Company's Restated Certificate of Incorporation be amended so that it reads as follows: "FOURTH. The total number of shares of stock which the Corporation shall have authority to issue 44,796,550 consisting on 40,000,000 shares of Common Stock, twelve and one-half cents per share par value, and 4,796,550 shares to Class B Common Stock, twelve and one-half per share par value." FURTHER RESOLVED, that the proposal to amend Article Fourth of the Corporation's Certificate of Incorporation be submitted to the stockholders of the Corporation for ratification at the annual meeting of stockholders to be held on May 6, 1997 and that the Secretary of the Corporation include appropriate provision with respect thereto in the notice to the stockholders of said annual meeting and in the proxy statement and the form of proxy, and that the proxy statement and form of proxy, respectively state that the Board of Directors favors a vote for the proposal and that if no specific direction is given, the proxy will be voted for such proposal. SECOND: That thereafter, pursuant to resolution of its Board of Directors, an annual meeting of the stockholders of said corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of shares as required by statute were voted in favor of the amendment. THIRD: That said amendment was duly adopted in accordance with the provisions of Sections 242 of the General Corporation Law of the State of Delaware. FOURTH: That the capital of said corporation will not be reduced under or by reason of said amendment. IN WITNESS WHEREOF, said General Binding Corporation has caused its corporate seal to be hereunto affixed and this certificate to be signed by Govi Reddy, its President, and attested by Steven Rubin, its Vice President, Secretary and General Counsel this 8th day of May, 1997. GENERAL BINDING CORPORATION By /s/ GOVI REDDY ---------------------------------- Govi Reddy, President and Chief Executive Officer [ATTEST] /s/ STEVEN RUBIN - ----------------------------- Steven Rubin, Vice President, Secretary & General Counsel STATE OF ILLINOIS ) ) SS. COUNTY OF COOK ) BE IT REMEMBERED that on this 8th day of May, 1997, personally came before me, a Notary Public in and for the County and State aforesaid, Govi Reddy, President and Chief Executive Officer of General Binding Corporation, a Corporation of the State of Delaware, and he duly executed said certificate before me and acknowledged said certificate to be his act and deed and the act and deed of said Corporation and the facts stated therein are true; and that the seal affixed to said certificate and attested by the Vice President and Secretary of said Corporation is the common or corporate seal of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the day and year aforesaid. /s/ JEAN INCERTO --------------------------- Notary Public 12 EX-3.2 3 AMENDED AND RESTATED BY-LAWS OF ISSUER 1 EXHIBIT 3.2 GENERAL BINDING CORPORATION BY-LAWS ARTICLE I OFFICES Section 1. Principal Office and Agent. The principal office shall be in the City of Dover, County of Kent, State of Delaware, and the name of the registered agent in charge thereof is The Prentice-Hall Corporation System, Inc. (Amended March 10, 1975) Section 2. Other Offices. The corporation may also have offices at such other places as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II Meetings of Stockholders Section 1. Place of Meetings. All meetings of the stockholders for the election of directors shall be held in the Village of Northbrook, State of Illinois, at such place within such Village as may be fixed by the Board of Directors; at least ten days' notice shall be given to the stockholders of the place so fixed. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware as shall be stated in the notice of the meeting or in a 2 duly executed waiver of notice thereof. (Amended February 7, 1978) Section 2. Annual Meeting. An annual meeting of stockholders, commencing with the year 1975 shall be held at the hour of 10:30 a.m. on the second Tuesday of May in each year provided that if that day is a legal holiday, then such meeting shall be held on the next succeeding business day, at which meeting the stockholders shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. If the election of directors shall not be held on the day designated herein for any annual meeting, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the stockholders as soon thereafter as may be convenient. (Amended March 10, 1975) Section 3. Notice of Annual Meeting. Written notice of the annual meeting shall be served upon or mailed to each stockholder entitled to vote thereat at such address as appears on the books of the corporation, at least ten (10) days prior to the meeting. Section 4. List of Stockholders Entitled to Vote at Election of Directors. At least ten (10) days before every election of directors, a complete list of the stockholders -2- 3 entitled to vote at said election, arranged in alphabetical order, with the address of each and the number of voting shares held by each, shall be prepared by the secretary. Such list shall be open, during ordinary business hours at the place where the election is to be held for said ten (10) days, to the examination of any stockholder, and shall be produced and kept at the time and place of election during the whole time thereof, and subject to the inspection of any stockholder who may be present. Section 5. Transfers of Stock Within Twenty (20) Days Preceding Election of Directors. Except where the transfer books of the corporation shall have been closed or a date shall have been fixed as a record date for the determination of its stockholders entitled to vote, no share of stock shall be voted on at any election of directors which shall have been transferred on the books of the corporation within twenty (20) days next preceding such election of directors. Section 6. Special Meetings of Stockholders. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by the president and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of a stockholder or stockholders holding at least twenty per cent -3- 4 (20%) of the common stock of the corporation at the time issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 7. Notice of Special Meetings of Stockholders. Written notice of a special meeting of stockholders, stating the time and place and object thereof, shall be served upon or mailed to each stockholder entitled to vote thereat at such address as appears on the books of the corporation, at least ten (10) days before such meeting. Section 8. Business at Special Meeting. Business transacted at all special meetings shall be confined to the objects stated in the call. Section 9. Quorum. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall be requisite, and shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by statute, by the certificate of incorporation or by these by-laws. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum -4- 5 shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. Section 10. Majority Vote. When a quorom is present at any meeting, the vote of the holders of a majority of the stock having power present in person or represented by proxy shall decide any questions brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation or of these by-laws, a different vote is required, in which case such express provision shall govern and control the decision of such question. Section 11. Proxies and Voting of Shares. At any meeting of the stockholders every stockholder having the right to vote shall be entitled to vote in person, or by proxy executed in writing by the stockholder or by his duly authorized attorney in fact and bearing a date not more than three (3) years prior to said meeting, unless said instrument provides for a longer period. Each stockholder shall have one vote for each share of stock having voting power, registered in his name on the books of the corporation. Section 12. Setting Record Date for Closing of Transfer Books. The board of directors shall have power to close the -5- 6 stock transfer books of the corporation for a period not exceeding sixty (60) days preceding the date of any meeting of stockholders or the date for payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect or for a period of not exceeding sixty (60) days in connection with obtaining the consent of stockholders for any purpose; provided, however, that in lieu of closing the stock transfer books as aforesaid, the board of directors may fix in advance a date, not exceeding sixty (60) days preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date of the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining such consent, as a record date for the determination of the stockholders entitled. to notice of and to vote at, any such meeting, and any adjournment thereof or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, or to give such consent, and in such case such stockholders and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting and any adjournment thereof, or to receive payment of such dividend, or to receive such allotment -6- 7 of rights, or to exercise such rights, or to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of the corporation after any such record date fixed as aforesaid. Section 13. Written Consent of Stockholders. Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken in connection with any corporate action by any provisions of the statutes or of the certificate of incorporation or of these by-laws, the meeting and vote of stockholders may be dispensed with, if all the stockholders who would have been entitled to vote upon the action if such meeting were held, shall consent in writing to such corporate action being taken. ARTICLE III BOARD OF DIRECTORS Section 1. General Powers. The business and affairs of the corporation shall be managed by its board of directors. Section 2. Number, Tenure and Qualifications. The number of Directors, which shall constitute the whole Board shall be ten. The number may be increased or diminished from time to time by amendment of these By-Laws, but shall not be diminished to less than three. Directors need not be stockholders of the -7- 8 Corporation or residents of Delaware. Each Director shall hold office until the next annual meeting of the stockholders or until his successor shall have been elected and qualified. (Amended August 9, 1977) Section 3. Resignations. Any director of the corporation may resign at any time by giving written notice to the Board of Directors, the President, or the Secretary of the Corporation. Such resignation shall take effect at the time specified therein; and, unless tendered to take effect upon acceptance thereof, the acceptance of such resignation shall not be necessary to make it effective. Section 4. Vacancies. Vacancies occurring in the board of directors by reason of death, resignation, retirement, disqualification or removal from office of any director, or otherwise, and newly created directorships resulting from any increase in the authorized number of directors, may be filled by a majority of the directors then in office, though less than a quorum, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and qualified, unless sooner displaced. Section 5. Place of Meetings. The directors may hold their meetings and keep the books of the corporation, except the original or duplicate stock ledger, outside of Delaware, at such -8- 9 places as they may from time to time determine. Section 6. First Meeting of New Board. The first meeting of each newly elected board shall be held at such time and place either within or without the State of Delaware as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting provided a quorum shall be present, or they may meet at such place and time as shall be fixed by the consent in writing of all the directors. Section 7. Regular Meetings. Regular meetings of the board may be held without notice at such time and place either within or without the State of Delaware as shall from time to time be determined by the board. Section 8. Special Meetings. Special meetings of the board may be called by the President; special meetings shall be called by the President or Secretary on the written request of two directors. The person or persons authorized to call special meetings of the Board may fix any place, either within or without the State of Delaware, as the place for holding any special meetings of the Board called by them. Notice of any special meeting shall be given at least five days previously thereto. Any director may waive notice of any meeting. Attendance of a -9- 10 director at any meeting shall constitute a waiver of notice of such meeting except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at nor the purpose of any meeting of the board of directors need be specified in the notice or waiver of notice of such meeting. Section 9. Quorum. At all meetings of the board the presence of a majority of the directors shall be necessary and sufficient to constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation or by these by-laws. If a quorum shall not be present at any meeting of directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 10. Informal Action. Any action which is required by law or by these by-laws to be taken at a meeting of the board of directors or of any committee thereof, or any other action which may be taken at such a meeting, may be taken without a meeting if prior to such action a consent in writing, setting -10- 11 forth the action so taken, shall be signed by all of the directors entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote of all directors concerned if such written consent is filed with the minutes of proceedings of the board or committee. Section 11. Compensation. Directors shall not receive any stated salary for their services as directors, but, by resolution of the board, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the board; provided, that nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. Section 12. Presumption of Assent. A director of the corporation who is present at a meeting of the board of directors at which action on any corporate matter is taken shall be conclusively presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered -11- 12 mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. ARTICLE IV Committees Section 1. Appointment and Powers. The board of directors may, by resolution or resolutions passed by a majority of the whole board, designate one or more committees, each committee to consist of two or more of the directors of the corporation which, to the extent provided in said resolution or resolutions, shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, and may have power to authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Section 2. Members' Absence or Disqualification. In the absence or disqualification of any member of any committees created under this Article, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. -12- 13 Section 3. Record of Proceedings. The committees shall keep regular minutes of their proceedings and report the same to the board when required. ARTICLE VI OFFICERS Section 1. Number and Title. The officers of the Corporation shall be a Chairman of the Board, a President, one or more Vice Presidents (the number thereof to be determined by the Board of Directors and if more than one Vice President is elected, the Board of Directors may at the time of such election designate one of them as Executive Vice President), a Treasurer and a Secretary, and such Assistant Treasurers and Assistant Secretaries as may be elected or appointed by the Board of Directors. Any two or more offices except the offices of President and Secretary may be held by the same person. (Amended January 11, 1971) Section 2. Election and Qualifications. The officers of the corporation shall be elected annually by the board of directors at the first meeting of the board of directors held after each meeting of stockholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as may be convenient. -13- 14 Section 3. Appointment of Additional Officers. The board may appoint such other officers and agents as it shall deem necessary, who shall hold their officers for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. Compensation. The compensation of the officers shall be fixed from time to time by the board of directors, and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the corporation. All officers and agents of the corporation, other than directors, shall be entitled to reasonable compensation for services rendered to the corporation, including the performance of their official duties, unless the board of directors by resolution shall provide that no compensation shall be paid therefor. Election or appointment of an officer shall not of itself create contract rights. Section 5. Term of Office, Removal, Vacancies. Each officer of the corporation shall hold office until his successor is chosen and qualified in his stead or until his death, resignation, or removal, as hereinafter provided. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the whole board of directors. If the office of any officer becomes vacant for -14- 15 any reason, the vacancy shall be filled by the board of directors. Section 6. Resignations. Any officer may resign at any time by giving written notice to the board of directors or to the president or the secretary of the corporation. Any such resignation shall take effect at the time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 7. The President. The president shall be the chief executive officer of the corporation; he shall preside at all meetings of the stockholders and directors, shall be ex officio a member of all standing committees, shall have general and active management of the business of the corporation, and shall see that all orders and resolutions of the board are carried into effect. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. Section 8. Vice-Presidents. In the absence of the president or in the event of his inability to act, the executive vice-president, and in the event of his absence or inability to -15- 16 act, the vice-president (or in the event there be more than one vice-president, the vice-presidents in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-president or vice- presidents shall perform such other duties as from time to time may be assigned to him or them by the president or by the board of directors. Section 9. The Secretary. The secretary shall attend all sessions of the board and all meetings of the stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president. The secretary shall keep in safe custody the seal of the corporation and, when authorized by the board, affix the same to any instrument requiring it and, when so affixed, it shall be attested by the secretary's signature or by the signature of the treasurer or an assistant secretary. Section 10. Assistant Secretaries. In the absence or -16- 17 inability to act of the secretary, the assistant secretary (or in the event there be more than one assistant secretary, the assistant secretaries in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the secretary. The assistant secretary or secretaries shall perform such other duties as from time to time may be assigned by the board of directors. Section 11. The Treasurer. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. He shall disburse the funds of the corporation as may be ordered by the board, taking proper vouchers for such disbursements, and shall render to the president and directors, at the regular meetings of the board, or whenever they may require it, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 12. Assistant Treasurers. In the absence or inability to act of the treasurer, the assistant treasurer (or in -17- 18 the event there be more than one assistant treasurer, the assistant treasurers in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the treasurer. The assistant treasurer shall perform such other duties as from time to time may be assigned to him by the board of directors. Section 13. Bond. If required by the board of directors, the treasurer and any assistant treasurer shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the board for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The Chairman of the Board. The Chairman of the Board shall be the chief executive officer of the corporation and shall preside at all meetings of shareholders and the Board of Directors. Except where, by law, signature of the President is required, the Chairman of the Board shall possess -18- 19 the same power as the President to sign all certificates, contracts, deeds, mortgages, bonds and other instruments of the corporation which may be authorized by the Board of Directors. (Added January 11, 1971) Section 15. Corporate Controller. The Corporate Controller shall perform the basic function of directing the establishment of accounting principles, practices and procedures; and, maintaining all accounting records and being responsible for the development, analysis, and interpretation of statistical and accounting information to appraise operating results in terms of costs, budgets, policies of operations, trends and increased profit possibilities. (Added March 9, 1976) ARTICLE VII Certificates of Stock and Their Transfer Section 1. Certificates. The certificates of stock of the corporation shall be numbered and shall be entered in the books of the corporation as they are issued. They shall (a) exhibit the holder's name and number of shares, (b) be signed by the president or a vice-president and the treasurer or an assistant treasurer or the secretary or an assistant secretary, (c) be sealed with the seal of the corporation, which may be facsimile. If any stock certificate is signed (1) by a transfer -19- 20 agent or an assistant transfer agent or (2) by a transfer clerk acting on behalf of the corporation and a registrar, the signature of any such president, vice-president, treasurer, assistant treasurer, secretary or assistant secretary may be facsimile. Section 2. Lost Certificates. The board of directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed. Section 3. Transfers of Stock. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper -20- 21 evidence of successions, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Section 4. Registered Stockholders. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claims to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VIII GENERAL PROVISIONS Section 1. Dividends. The board of directors may from time to time declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and its articles of incorporation. Section 2. Reserves. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, -21- 22 or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. Section 3. Contracts. The board of directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation and such authority may be general or confined to specific instances. Section 4. Loans. No loans shall be contracted on the behalf of the corporation and no evidence of indebtedness shall be issued in its name unless authorized by a resolution of the board of directors. Such authority may be general or confined to specific instances. No loans shall be made by the corporation to any director or officer or secured by its shares. Section 5. Checks, Drafts, Etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the board of directors. Section 6. Deposits. All funds of the corporation not -22- 23 otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as the board of directors may select. Section 7. Fiscal Year. The fiscal year of the corporation, unless otherwise provided by resolution of the board of directors, shall begin on the first day of January in each year and end on the 31st day of December in each year. Section 8. Seal. The board of directors shall provide a corporate seal which shall be in the form of a circle and shall have inscribed thereon the name of the corporation and the words, "Corporate Seal, Delaware". Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Section 9. Certificate of Incorporation. The term "certificate of incorporation" as used in these by-laws shall have the same meaning as said term is given by Section 102(c) of the Delaware Corporation Law, and shall include any agreement of consolidation or merger filed pursuant to said law. ARTICLE IX AMENDMENT Section 1. How Amended. These by-laws may be altered, amended or repealed and new by-laws may be adopted at any meeting -23- 24 of the board of directors of the corporation by a majority vote of the directors present at the meeting. -24- 25 * * * * * * GENERAL BINDING CORPORATION BY-LAWS AMENDMENT SECTION 14 AMENDMENT TO ARTICLE VI September 27, 1978 Section 14. The Chairman of the Board. The Chairman of the Board shall preside at all meetings of shareholders and the Board of Directors. Except where, by law, signature of the President is required, the Chairman of the Board shall possess the same power as the President to sign all certificates, contracts, deeds, mortgages, bonds and other instruments of the corporation which may be authorized by the Board of Directors. * * * * * * GENERAL BINDING CORPORATION BY-LAWS AMENDMENT Effective May 5, 1998 Article III, Section 2 is amended to read: Section 2. Number, Tenure and Qualifications. The number of Directors, which shall constitute the whole Board, shall not be more than twelve. The number may be increased or diminished from time to time by amendment of these By-Laws, but shall not be diminished to less than three. Directors need not be stockholders of the Corporation or residents of Delaware. Each Director shall hold office until the next annual meeting of the stockholders or until his successor shall have been elected and qualified. -25- EX-3.3 4 ARTICLES OF ORGANIZATION OF BAKER SCHOOL 1 EXHIBIT 3.3 THE COMMONWEALTH OF MASSACHUSETTS KEVIN H. WHITE Secretary of the Commonwealth STATE HOUSE BOSTON, MASS. ARTICLES OF ORGANIZATION (Under G.L. Ch. 156B)
NAME ---- (including given name in full) POST OFFICE ADDRESS We, Arthur R. McLaren, 12 Poplar St., Belmont Helen B. McLaren 12 Poplar St., Belmont George McBride 105 Watson Rd., Belmont Albert M. Rudman 25 Century St., W. Medford
do hereby associate ourselves as incorporators with the intention of forming a corporation under the provisions of General Laws, Chapter 156B. 1. The name by which the corporation shall be know is: BAKER SCHOOL SPECIALTY CO., INC. 2. The purposes for which the corporation is formed are as follows: To manufacture, buy, sell, deal in, and to engage in, conduct, and carry on the business of manufacturing, buying, selling and dealing in goods, wares and merchandise of every class and description; to acquire, own, use, convey, mortgage and otherwise dispose of real estate or any interest therein used in connection with the business or incidental thereto. 2A. Any stockholder, including the heirs, assigns, executors or administrators of a deceased stockholder, desiring to sell or transfer such stock owned by him or them, shall first offer it to the corporation through the Board of Directors, in the manner following: He shall notify the directors of his desire to sell or transfer by notice in writing, which notice shall contain the price at which he is willing to sell or transfer and the name of one arbitrator. The directors shall within thirty days thereafter either accept the offer, or by notice to him in writing name a second arbitrator and these two shall name a third. It shall then be the duty of the arbitrators to ascertain the value of the stock, and if any arbitrator shall neglect or refuse to appear at any meeting appointed by the arbitrators, a majority may act in the absence of such arbitrator. After the acceptance of the offer, or the report of the arbitrators as to the value of the stock, the directors shall have thirty days within which to purchase the same at such valuation, but if at the expiration of thirty days, the corporation shall not have exercised the right so to purchase, the owner of the stock shall be at liberty to dispose of the same in any manner he may see fit. 2 No shares of stock shall be sold or transferred on the books of the corporation until these provisions have been complied with, but the Board of Directors may in any particular instance waive the requirement. 3. The total number of shares and the par value, if any, of each class of stock which the corporation is authorized to issue is as follows:
- --------------------------------------------------------------------------------------------------------------- CLASS OF STOCK WITHOUT PAR VALUE WITH PAR VALUE - --------------------------------------------------------------------------------------------------------------- NUMBER OF SHARES NUMBER OF SHARES PAR VALUE - --------------------------------------------------------------------------------------------------------------- Preferred -- -- -- - --------------------------------------------------------------------------------------------------------------- Common 300 -- -- - ---------------------------------------------------------------------------------------------------------------
4. If more than one class is authorized, a description of each of the different classes of stock with, if any, the preferences, voting powers, qualifications, special or relative rights or privileges as to each class thereof and any series now established: None 5. The restrictions, if any, imposed by the Articles of Organization upon the transfer of shares of stock of any class are as follows: See 2A. 6. Other lawful provisions, if any, for the conduct and regulation of the business and affairs of the corporation, for its voluntary dissolution, or for limiting, defining, or regulating the powers of the corporation, or of its directors or stockholders, or of any class of stockholders: None 7. The first meeting of the incorporators was duly held on the SEVENTH day of March, 1967 at which by-laws of the corporation were duly adopted and at which the initial directors, president, treasurer and clerk, whose names are set out below were duly elected. 8. The following information shall not for any purpose be treated as a permanent part of the Articles of Organization of the corporation. a. The post office address of the initial principal office of the corporation in Massachusetts is: 17 Craig Road, Acton, Massachusetts b. The name, residence, and post office address of each of the initial directors and following officers of the corporation elected at the first meeting are as follows: 3
NAME RESIDENCE POST OFFICE ADDRESS President: Arthur R. McLaren 12 Poplar St. same Belmont, Mass. Treasurer: Helen B. McLaren 12 Poplar St. same Belmont, Mass. Clerk: George McBride 105 Watson Rd. same Belmont, Mass. Directors: Arthur R. McLaren 12 Poplar St. same Belmont, Mass. Helen B. McLaren 12 Poplar St. same Belmont, Mass. George McBride 105 Watson Rd. same Belmont, Mass.
c. The date initially adopted on which the corporation's fiscal year ends is: December 31 d. The date initially fixed in the by-laws for the annual meeting of stockholders of the corporation is: Second Monday of February e. The name and business address of the registered agent, if any, of the corporation are: None IN WITNESS WHEREOF, and under the penalties of perjury, we, the above-named INCORPORATORS, hereto sign our names, this seventh day of March, 1967. /s/ ARTHUR R. McLAREN ------------------------- /s/ HELEN B. McLAREN ------------------------- /s/ GEORGE McBRIDE ------------------------- /s/ ALBERT M. RUDMAN ------------------------- * * * * * * THE COMMONWEALTH OF MASSACHUSETTS Office of the Massachusetts Secretary of State Michael J. Connolly, Secretary One Ashburton Place, Boston, Massachusetts 02108 ARTICLES OF AMENDMENT General Laws, Chapter 156B, Section 72 Federal Identification No. 04-2431217 We, George McBride, President, and Vinalrae McBride, Clerk, of BAKER SCHOOL SPECIALTY CO., Inc., located at Box 236, Governor Dukakis Drive, Orange, MA 01364 do hereby certify that these Articles of Amendment affecting Articles Numbered 3 of the Articles of Organization were duly adopted at a meeting 4 held on February 16, 1990 by vote of 15 shares of common out of 15 shares outstanding, being at least a majority of each type, class or series outstanding and entitled to vote thereon. To CHANGE the number of shares and the par value (if any) of type, class or series of stock which the corporation is authorized to issue, fill in the following: The total presently authorized is:
- -------------------------------------------------------------------------------------------------------------- WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS - -------------------------------------------------------------------------------------------------------------- TYPE NUMBER OF TYPE NUMBER OF PAR SHARES SHARES VALUE - -------------------------------------------------------------------------------------------------------------- COMMON 300 COMMON None None - -------------------------------------------------------------------------------------------------------------- PREFERRED None PREFERRED -- -- - --------------------------------------------------------------------------------------------------------------
CHANGE the total authorized to:
- -------------------------------------------------------------------------------------------------------------- WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS - -------------------------------------------------------------------------------------------------------------- TYPE NUMBER OF TYPE NUMBER OF PAR SHARES SHARES VALUE - -------------------------------------------------------------------------------------------------------------- COMMON 100,000 COMMON None None - -------------------------------------------------------------------------------------------------------------- PREFERRED None PREFERRED -- -- - --------------------------------------------------------------------------------------------------------------
The foregoing amendment will become effective when these articles of amendment are filed in accordance with Chapter 156B, Section 6 of The General Laws unless these articles specify, in accordance with the vote adopting the amendment, a later effective date not more than thirty days after such filing, in which event the amendment will become effective on such later date. EFFECTIVE DATE: Upon Filing IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereunto signed our names this 27th day of February, in the year 1990. /s/ GEORGE McBRIDE, President - ----------------------------------- George McBride /s/ VINALRAE McBRIDE, Clerk - ----------------------------------- Vinalrae McBride EX-3.4 5 BYLAWS OF BAKER SCHOOL 1 EXHIBIT 3.4 BY LAWS OF BAKER SCHOOL SPECIALTY CO., INC. ARTICLE I NAME AND PURPOSE The name, location of principal office and purposes of the corporation shall be as set forth in the Agreement of Association and these By- Laws, the powers of the corporation and of its directors and stockholders and all matters pertaining to the conduct and regulations of the business of the corporation shall be subject to such provisions in regard thereto, if any, as are set forth in the Agreement of Association and the By-Laws. ` All reference herein to the Agreement of Association shall be construed to mean the Agreement of Association of the corporation as from time to time amended. ARTICLE II MEETINGS Sec. 1. The annual meeting of the stockholders shall be held at the principal office of the corporation on the second Monday of February. Sec. 2. The Clerk shall send notice of such meeting to each stockholder either by mail, postage prepaid, or by leaving such notice at his last known residence or place of business at least seven days prior to the date of such meeting. In case of the absence of the Clerk, 2 for any cause, or in case the Clerk, for any cause, at any time or times shall refuse or neglect to send any such notices, the same may be sent by any member of the organization. Sec. 3. Special meetings of the stockholders may be called by the President, or by a majority of the directors, and shall be called by the Clerk upon the written application of one or more stockholders who are entitled to vote and who hold at least one-tenth part in interest of the outstanding capital stock, stating the time, place, hour and purpose of the meeting. Sec. 4. Notice of the time, place and purpose of any regular or special meeting of the stockholders shall not be required if every stockholder, or his attorney thereunto authorized by writing, which is filed with the records of the meetings, waives such notice. Sec. 5. Two-thirds of all stock issued and outstanding and entitled to vote shall constitute a quorum for the transaction of any business. Though less than a quorum be present, any meeting, annual or special, may without further notice, be adjourned to a subsequent date or until a quorum be had. Sec. 6. Stockholders who are entitled to vote shall have one vote for each share owned by them respectively. Stockholders may vote either in person or by proxy. No proxy which is dated more than six months before the meeting named -2- 3 therein shall be accepted and no such proxy shall be valid after the final adjournment of such meeting. ARTICLE III OFFICERS Sec. 1. The officers of the corporation shall be a Board of three directors, a President, Treasurer and Clerk, and such other officers as the Board of Directors may from time to time determine. The President may also hold the office of Treasurer. Sec. 2. The Board of Directors shall be elected by the stockholders at the annual meeting. Directors may or may not be stockholders. The President shall be elected by the Board of Directors at the first meeting thereof following the annual meeting. Sec. 3. All officers shall hold office for one year or until their successors are chosen and qualified. Sec. 4. Vacancies in any office shall be filled by the Board of Directors. Vacancies in the Board of Directors shall be filled at a special meeting of the stockholders to be called for that purpose. -3- 4 ARTICLE IV BOARD OF DIRECTORS Sec. 1. The Board of Directors shall meet as often as the needs of the corporation may require. They may fix the time and manner of giving notice of the meeting and may determine the form and contents of the notice to be given. Any meeting of the Board of Directors shall be a legal meeting if each director, by a writing which is filed with the records of the meetings, waives such notice. Unless otherwise specified in the notice, any and all business may be transacted at any meeting of the Board. Sec. 2. Two Directors shall constitute a quorum. Though less than a quorum be present, any meeting may, without further notice, be adjourned to a subsequent date or until a quorum be had. Sec. 3. The Directors shall have all the powers usually vested in a Board of Directors of a business corporation. They shall have the general direction, control and management of the property and business of the corporation. They shall have the authority to issue the whole or any part of the unissued balance of the authorized Capital Stock, shall have full power to purchase and to lease, pledge and sell, all such personal property, make promissory notes, and to make all such contracts, and agreements in behalf of the corporation as they may deem needful or convenient for the successful prosecution of its -4- 5 business and operations. They shall employ and at their pleasure remove all such persons and agents as they may deem necessary or proper for conducting the business of the corporation, and shall determine the compensation and the duties (in addition to those fixed by the By-Laws) of all the officers, agents, clerks and servants of the corporation and generally, do all such lawful acts and adopt all such lawful measures, consistent with the By-Laws of the corporation, as they shall deem best calculated to promote to the fullest extent the interest of the stockholders. ARTICLE V PRESIDENT AND VICE-PRESIDENT Sec. 1. The President shall have the powers and duties usual to his office subject to the provisions of these By-Laws and subject to the direction of the Board of Directors. Sec. 2. In the absence of the president, the vice-president, if any, shall exercise all the powers of the president while such absence continues; and, in the absence of both the president and vice-president, the senior director in age shall exercise all the powers of the president or vice- president while such absence continues. -5- 6 ARTICLE VI TREASURER Sec. 1. The Treasurer shall have the powers and duties usual to his office and also powers concurrent with the President, subject to such conditions and restrictions as may be made by the directors and to any provisions contained elsewhere in these By-Laws concerning his powers and duties. He shall give a bond, if required by the Directors, in such sum and with such sureties as they may require, for the faithful performance of his duties. He shall keep accurate books of account which shall always be open to inspection by the Directors at his office during business hours, and he shall render to them at the annual meetings of the Board, or whenever the Directors may require, a brief statement of the financial condition of the corporation and he shall also present to the stockholders at their annual meeting a report giving the receipts and disbursements of the preceding fiscal year and the then financial condition of the corporation. All checks, notes, drafts or bills of exchange shall not be valid unless endorsed by the President, Treasurer or Clerk. Sec. 2. The Treasurer, in his capacity, shall have the power to execute and deliver on behalf of the corporation all such instruments under its corporate seal as may be ordered by the stockholders or directors unless their execution and delivery is otherwise provided by vote or by these By-Laws, and affix the -6- 7 corporate seal to all certificates of stock issued by the corporation, and shall perform such other duties as the Directors may from time to time require. ARTICLE VII CLERK Sec. 1. The Clerk shall be sworn each year to the faithful discharge of his duties and a record of the oath with the evidence thereof shall be made on the records of the corporation. He shall attend the meetings of the stockholders and of the Directors and shall record the proceedings thereof. He shall notify the stockholders and directors of their respective meetings in accordance with the By-Laws of the corporation, and shall perform such other duties as the Board of Directors from time to time may prescribe. Sec. 2. In the absence of the Clerk at a meeting, a Clerk pro tempore may be chosen, who shall be duly sworn. ARTICLE VIII FISCAL YEAR Sec. 1. The fiscal year of the corporation shall commence January first and terminate December thirty-first. -7- 8 ARTICLE IX AMENDMENTS Sec. l. These By-Laws may be amended at any meeting of the stockholders in any manner by the concurring vote of the holders of 66 2/3 percent of the shares of stock issued and outstanding provided, however, that no such action shall be taken at any meeting, annual or special, unless notice of the proposed amendment or amendments is contained in the notice and call of the meeting, unless such action is taken at a meeting when all of the stockholders are present. ARTICLE X STOCK AND STOCK CERTIFICATES Sec. 1. Each stockholder shall be entitled to a certificate of stock showing the number of shares of which he is the owner, which certificates shall be signed by the President and by the Treasurer of the corporation, and shall be sealed with the corporate seal. Sec. 2. In case of the loss or destruction of a certificate, another may be issued in its place upon proof of such loss or destruction and the giving of a bond of indemnity or other security satisfactory to the Board of Directors but not to exceed double the market value of the stock. Sec. 3. The stock transfer books may be closed for meetings of stockholders and for the payment of dividends during -8- 9 such periods as from time to time may be fixed by the Board of Directors. During such periods, no stock shall be transferable. Sec. 4. Any stockholder, including the heirs, assigns, executors, or administrators of a deceased stockholder, desiring to sell or transfer such stock owned by him or them, shall first offer it to the corporation through the Board of Directors, in the following manner: He shall notify the Directors of his desire to sell or transfer by notice in writing, which notice shall contain the price at which he is willing to sell or transfer and the name of one arbitrator. The Directors shall within thirty days thereafter either accept the offer, or by notice to him in writing name a second arbitrator, and these two shall name a third. It shall then be the duty of the arbitrators to ascertain the value of the stock, and if any arbitrator shall neglect or refuse to appear at any meeting appointed by the arbitrators, a majority may act in the absence of such arbitrator. After the acceptance of the offer, or the report of the arbitrators an to the value of the stock, the Directors shall have thirty days within which to purchase the same at such valuation, but if at the expiration of thirty days the corporation shall not have exercised the right so to purchase, the owner of the stock shall be at liberty to dispose of the same in any manner he may see fit. -9- 10 No shares of stock shall be sold or transferred on the books of the corporation until these provisions have been complied with, but the Board of Directors may in any particular instance waive the requirement. -10- EX-3.5 6 ARTICLES OF INCORPORATION OF GBC BUSINESS 1 EXHIBIT 3.5 ARTICLES OF INCORPORATION OF GBC BUSINESS EQUIPMENT, INC. The undersigned, being a natural person, does hereby act as incorporator in adopting the following Articles of Incorporation for the purpose of organizing a business corporation pursuant to the provisions of the Florida General Corporation Act. FIRST: The name of the corporation (hereinafter called the corporation) is GBC BUSINESS EQUIPMENT, INC. SECOND: The duration of the corporation shall be perpetual. THIRD: The purposes for which the corporation is initially organized, which shall continue to be the purposes of the corporation until and if the same shall be amended pursuant to the provisions of the Florida General Corporation Act, and which shall include the authority of the corporation to transact any lawful business for which corporations may be incorporated under the Florida General Corporation Act, are as follows: To invent, devise, produce, develop, manufacture, make, contract with others for the manufacture of, construct, assemble, service, salvage, overhaul, renovate, conduct research on, recondition, alter, repair, purchase or otherwise acquire, install, use, own, operate, sell, lease, license the use of, maintain, exchange, rent, or otherwise dispose of, distribute and generally deal in and with, as principal, agent, factor, jobber, or otherwise, at wholesale and retail graphic arts industry, products and supplies, photo lithographic film and other equipment and supplies of a similar or like nature that may be merchandised by the corporation; to furnish any and all services to the graphic arts industry and to act as consultants and advisory on any problem of the industry. To do a general brokerage, commission merchants' and selling agents' business; to make and enter into all manner and kinds of contracts, agreements and obligations by or with any person or persons, corporation or corporations, for the purchasing, acquiring, manufacturing and selling of any articles of personal property of any kind or nature whatsoever. To carry on a general mercantile, industrial, investing, and trading business in all its branches; to devise, invent, manufacture, fabricate, assemble, install, service, maintain, alter, buy, sell, import, export, license as licensor or licensee, lease as lessor or lessee, distribute, job, enter into, negotiate, execute, acquire, and assign contracts in respect of, acquire, receive, grant, and assign licensing arrangements, options, franchises, and other rights in respect of, and generally deal in and with, at wholesale and retail, as principal, and as sales, business, special, or general agent, representative, broker, factor, merchant, distributor, jobber, advisor, 2 and in any other lawful capacity, goods, wares, merchandise, commodities, and unimproved, improved, finished, processed, and other real, personal, and mixed property of any and all kinds, together with components, resultants, and by-products thereof; to acquire by purchase or otherwise own, hold, lease, mortgage, sell, or otherwise dispose of, erect, construct, make, alter, enlarge, improve, and to aid or subscribe toward the construction, acquisition or improvement of any factories, shops, storehouses, buildings, and commercial and retail establishments of every character, including all equipment, fixtures, machinery, implements and supplies necessary, or incidental to, or connected with, any of the purposes or business of the corporation; and generally to perform any and all acts connected therewith or arising therefrom or incidental thereto, and all acts proper or necessary for the purpose of the business. To engage generally in the real estate business as principal, agent, broker, and in any lawful capacity, and generally to take, lease, purchase, or otherwise acquire, and to own, use, hold, sell, convey, exchange, lease, mortgage, work, clear, improve, develop, divide, and otherwise handle, manage, operate, deal in and dispose of real estate, real property, lands, multiple-dwelling structures, houses, buildings and other works and any interest or right therein; to take, lease, purchase or otherwise acquire, and to own, use, hold, sell, convey, exchange, hire, lease, pledge, mortgage, and otherwise handle, and deal in and dispose of, as principal, agent, broker, and in any lawful capacity, such personal property, chattels, chattels real, rights, easements, privileges, choses in action, notes, bonds, mortgages, and securities as may lawfully be acquired, held, or disposed of; and to acquire, purchase, sell, assign, transfer, dispose of, and generally deal in and with, as principal, agent, broker, and in any lawful capacity, mortgages and other interests in real, personal, and mixed properties; to carry on a general construction, contracting, building, and realty management business as principal, agent, representative, contractor, subcontractor, and in any other lawful capacity. To apply for, register, obtain, purchase, lease, take licenses in respect of or otherwise acquire, and to hold, own, use, operate, develop, enjoy, turn to account, grant licenses and immunities in respect of, manufacture under and to introduce, sell, assign, mortgage, pledge or otherwise dispose of, and, in any manner deal with and contract with reference to: (a) inventions, devices, formulae, processes and any improvements and modifications thereof; (b) letters patent, patent rights, patented processes, copyrights, designs, and similar rights, trade-marks, trade symbols and other indications of origin and ownership granted by or recognized under the laws of the United States of America or of any state or subdivision thereof, -2- 3 or of any foreign country or subdivision thereof, and all rights connected therewith or appertaining thereunto; (c) franchises, licenses, grants and concessions. To have all of the powers conferred upon corporations organized under the Florida General Corporation Act. FOURTH: The aggregate number of shares which the corporation shall have authority to issue is Sixty (60), all of which are without par value and are of the same class and are to be Common shares. FIFTH: The address of the initial registered office of the corporation in the State of Florida is 300 East Park Avenue, c/o The Prentice-Hall Corporation System, Inc., City of Tallahassee 32301, County of Leon; and the name of the initial registered agent of the corporation at such address is The Prentice-Hall Corporation System, Inc. SIXTH: The number of directors constituting the initial Board of Directors of the corporation is three. The name and the address of each person who is to serve as a member of the initial Board of Directors of the corporation are as follows:
NAME ADDRESS ---- ------- John E. Preschlack 1 GBC Plaza, Northbrook, Illinois 60062 Warren R. Rothwell 1 GBC Plaza, Northbrook, Illinois 60062 William N. Lane, 3rd 1 GBC Plaza, Northbrook, Illinois 60062
SEVENTH: The name and address of the incorporator are as follows:
NAME ADDRESS ---- ------- R. G. Dickerson 229 South State Street, Dover, Delaware 19901
EIGHTH: 1. Whenever the corporation shall be engaged in the business of exploiting natural resources or other wasting assets, dividends may be declared and paid in cash out of the depletion or similar reserves at the discretion of the Board of Directors and in conformity with the provisions of the Florida General Corporation Act. 2. The corporation shall, to the fullest extent permitted by the provisions of the Florida Corporation Act, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said provisions from -3- 4 * * * * * * and against any and all of the expenses, liabilities or other matters referred to in or covered by said provisions, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any By-Law, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director or officer, and shall inure to the benefit of the heirs, executors and administrators of such a person. Signed on December 28, 1979. /s/ R. G. DICKERSON ------------------------------ R. G. Dickerson, Incorporator * * * * * * ARTICLES OF AMENDMENT OF ARTICLES OF INCORPORATION OF GBC BUSINESS EQUIPMENT, INC. To the Department of State State of Florida Pursuant to the provisions of the Florida General Corporation Act, the corporation hereinafter named does hereby adopt the following Articles of Amendment. 1. The name of the corporation is GBC BUSINESS EQUIPMENT, INC. 2. The following is an amendment to the Articles of Incorporation of the Corporation which has been adopted. Article Four (4) thereof, which relates to the authorized shares of the corporation is amended so as to read as follows: "FOURTH: The aggregate number of shares which the corporation shall have authority to issue is One Hundred (100) all of which are without par value and are of the same class and are to be Common Shares." 3. All of the directors and all of the shareholders entitled to vote of the corporation adopted the foregoing amendment by signing a written statement manifesting their intention to adopt the same. This amendment was adopted by the shareholders on 3/27/80. Executed on March 27, 1980. GBC BUSINESS EQUIPMENT, INC. By /s/ FRANK J. LENAHAN -------------------------- Vice President & Treasurer Attest /s/ STEVEN RUBIN ---------------------- Secretary * * * * * * 5 ARTICLES OF AMENDMENT OF ARTICLES OF INCORPORATION OF GBC BUSINESS EQUIPMENT, INC. To the Department of State State of Florida Pursuant to the provisions of the Florida General Corporation Act, the corporation hereinafter named does hereby adopt the following Articles of Amendment. 1. The name of the corporation is GBC Business Equipment, Inc. 2. The following is an amendment to the Articles of Incorporation of the corporation which have been adopted. Article first thereof, which relates to the name of the corporation, is amended so as to read as follows: "The name of the corporation is Webtron Corp." 3. The foregoing amendment was adopted by the sole shareholder entitled to vote thereon by its signed written consent on July 1, 1982 in accordance with the provisions of Section 607.394 of the Florida General Corporation Act. Executed on July 13, 1982 GBC BUSINESS EQUIPMENT, INC. By /s/ FRANK J. LENAHAN ------------------------------ Its Vice President & Treasurer Attest /s/ STEVEN RUBIN ---------------------------------- By Steven Rubin Its Secretary * * * * * * ARTICLES OF AMENDMENT OF WEBTRON CORP. [GBC BUSINESS EQUIPMENT, INC.] SHAREHOLDER CONSENT [as filed with the Secretary of State of Florida] The undersigned, being the sole shareholder of Webtron Corp., a Florida corporation, in accordance with the By-Laws of said Corporation and in accordance with the Florida General Corporation Act does hereby adopt the following resolution and agrees that adoption of said resolution shall be valid and with the same 6 effect as though such resolution had been adopted at a regular meeting of shareholders duly called and held: WHEREAS, the Directors of the corporation have adopted the following resolution and have submitted it for shareholder approval, and WHEREAS, certain provisions of the Florida General Corporation Act require the shareholder of the corporation to concur and adopt said resolution, BE IT THEREFORE RESOLVED, that the First Article of the Articles of Incorporation of the Corporation is hereby amended as follows: First: The name of the Corporation is GBC Business Equipment, Inc. BE IT FURTHER RESOLVED, that the respective officers of the Corporation are hereby authorized, empowered and directed to take any action deemed necessary or appropriate to effect said amendment to the Articles of Incorporation. Dated September 28, 1987 GENERAL BINDING CORPORATION By /s/ EDWARD McNULTY ---------------------------- Its Vice President & Treasurer Attest /s/ STEVEN RUBIN ------------------------ Its Secretary EX-3.6 7 BY-LAWS OF GBC BUSINESS EQUIPMENT 1 EXHIBIT 3.6 BY - LAWS OF GBC BUSINESS EQUIPMENT, INC. (A Florida Corporation) ------ ARTICLE I SHAREHOLDERS 1. SHARE CERTIFICATES. The shares of the corporation shall be represented by certificates which shall set forth thereon the statements prescribed by Sections 607.044, 607.067, and 607.107 of the Florida General Corporation Act ("General Corporation Act") and by any other applicable provision of law, and which shall be signed by the President or a Vice President and the Secretary or an Assistant Secretary of the corporation and may be sealed with the seal of the corporation or a facsimile thereof. The signatures of the President or a Vice President and the Secretary or an Assistant Secretary upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent or a registrar, other than the corporation itself or an employee of the corporation. In case any officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of its issuance. No certificate shall be issued for any share until such share is fully paid. 2. FRACTIONAL SHARE INTERESTS OR SCRIP. The corporation may, when necessary or desirable in order to effect share transfers, share distributions or reclassifications, mergers, consolidations or reorganizations, issue a fraction of a share, make arrangements or provide reasonable opportunity for any person entitled to a fractional interest in a share to sell such fractional interest or to purchase such additional fractional interests as may be necessary to acquire a full share, pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or issue scrip in registered or bearer form, over the manual or facsimile signature of an officer of the corporation or its agent, which shall entitle the holder to receive a certificate for a full share upon the surrender of such scrip aggregating a full share. A certificate for a fractional share shall, but scrip shall not unless otherwise provided therein, entitle the holder to exercise voting rights, to receive dividends thereon and to participate in any of the assets of the corporation in the event of liquidation. The Board of Directors may cause scrip to be issued subject to the condition that it shall become void if not exchanged for certificates representing full shares before a specified date, or subject to the condition that the shares for which scrip is exchangeable may be sold by the corporation and the proceeds thereof distributed to the holders of scrip, or subject to any other conditions which the Board of Directors may deem advisable. Such conditions shall be stated or fairly summarized on the face of the certificate. 2 3. SHARE TRANSFERS. Upon compliance with any provisions restricting the transferability of shares that may be set forth in the Articles of Incorporation, these By-Laws, or any written agreement in respect thereof, transfers of shares of the corporation shall be made only on the books of the corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the corporation, or with a transfer agent or a registrar and on surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes thereon, if any. Except as may be otherwise provided by law, the person in whose name shares stand on the books of the corporation shall be deemed the owner thereof for all purposes as regards the corporation; provided that whenever any transfer of shares shall be made for collateral security, and not absolutely, such fact, if known to the Secretary of the corporation, shall be so expressed in the entry of transfer. 4. RECORD DATE FOR SHAREHOLDERS. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other purpose, the Board of Directors of the corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, sixty days. If the stock transfer books shall be closed for the purpose of determining the shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than sixty days and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action, requiring such determination of shareholders, entitled to notice or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for the determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, the determination shall apply to any adjournment thereof, unless the Board of Directors fixes a new record date under this section for the adjourned meeting. 5. MEANING OF CERTAIN TERMS. As used herein in respect of the right to notice of a meeting of shareholders or a waiver thereof or to participate or vote thereat or to consent or dissent in writing in lieu of a meeting, as the case may be, the term "share" or "shares" or "shareholder" or "shareholders" refers to an outstanding share or shares and to a holder or holders of record of outstanding shares when the corporation is authorized to issue only one class of shares, and said reference is also intended to include any outstanding share or shares and any holder or holders of record of outstanding shares of any class upon which or upon whom the Articles of Incorporation confer such rights where there are two or more classes or series of shares or upon which or upon whom the General Corporation Act confers such rights 2 3 notwithstanding that the Articles of Incorporation may provide for more than one class or series of shares, one or more of which are limited or denied such rights thereunder. 6. SHAREHOLDER MEETING. - TIME. The annual meeting shall be held on the second Tuesday in the month of May at 5:00 o'clock P.M., or on such other date as may from time to time be fixed by the directors. A special meeting shall be held on the date fixed from time to time by the directors except when the General Corporation Act confers the right to call a special meeting upon the shareholders. - PLACE. Annual meetings and special meetings shall be held at One GBC Plaza, in Northbrook, Illinois 60062 or at such place within or without the State of Florida as shall be stated in the notice of any such meeting. - CALL. Annual meetings may be called by the directors or the President or the Secretary or by any officer instructed by the directors or the President to call the meeting. Special meetings may be called in like manner or by the holders of at least one-tenth of the shares. - NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER OF NOTICE. Written notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten days (or not less than any such other minimum period of days as may be prescribed by the General Corporation Act) nor more than sixty days before the date of the meeting, either personally or by first class mail, by or at the direction of the President, the Secretary, or the officer or persons calling the meeting to each shareholder. The notice of any annual or special meeting shall also include, or be accompanied by, any additional statements, information, or documents prescribed by the General Corporation Act. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at his address as it appears on the stock transfer books of the corporation, with postage thereon prepaid. When a meeting is adjourned to another time or place, it shall not be necessary to give any notice of the adjourned meeting if the time and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken, and at the adjourned meeting any business may be transacted that might have been transacted on the original date of the meeting. If, however, the Board of Directors shall fix a new record date for the adjourned meeting, notice of the adjourned meeting shall be given each shareholder of record on the new record date. Whenever any notice is required to be given to any shareholder, a waiver thereof in writing signed by him, whether before or after the time stated therein, shall be the equivalent to the giving of such notice. Attendance of a shareholder at a meeting shall constitute a waiver of notice of the meeting, except where the shareholder attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. 3 4 - VOTING LIST. The officer or agent having charge of the stock transfer books for shares of the corporation shall make, at least ten days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting or any adjournment thereof, with the address of and the number and class and series, if any, of shares held by, each. Such list, for a period of ten days prior to such meeting, shall be kept on file at the registered office of the corporation in the State of Florida, at the principal place of business of the corporation or at the office of the transfer agent or registrar of the corporation and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder at any time during the meeting. The original stock transfer books shall be prima facie evidence as to who are the shareholders entitled to examine such list or transfer books or to vote at any meeting of shareholders. - CONDUCT OF MEETING. Meetings of the shareholders shall be presided over by one of the following officers in the order of seniority and if present and acting - the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, the President, a Vice President, or, if none of the foregoing is in office and present and acting, by a chairman to be chosen by the shareholders. The Secretary of the corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting, but, if neither the Secretary nor an Assistant Secretary is present, the Chairman of the meeting shall appoint a secretary of the meeting. - PROXY REPRESENTATION. Every shareholder or his duly authorized attorney-in-fact may authorize another person or persons to act for him by proxy in all matters in which a shareholder is entitled to participate, whether for the purposes of determining his presence at a meeting, or whether by waiving notice of any meeting, voting or participating at a meeting, or expressing consent or dissent without a meeting, or otherwise. Every proxy shall be signed by the shareholder or by his duly authorized attorney-in-fact, and filed with the Secretary of the corporation. No proxy shall be valid after eleven months from the date thereof, unless otherwise provided in the proxy. Except as may otherwise be provided by the General Corporation Act, any proxy may be revoked. - QUORUM. A majority of the shares shall constitute a quorum. - VOTING. Except as the General Corporation Act, the Articles of Incorporation, or these By-Laws shall otherwise provide, the affirmative vote of the majority of the shares represented at the meeting, a quorum being present, shall be the act of the shareholders. After a quorum has been established at a shareholders' meeting, the subsequent withdrawal of shareholders, so as to reduce the number of shareholders at the meeting below the number required for a quorum, shall not affect the validity of any action taken at the meeting or any adjournment thereof. 7. WRITTEN ACTION. Any action required to be taken or which may be taken at a meeting of the shareholders may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by all of 4 5 the shareholders and shall be filed with the Secretary of the corporation. Less than all shareholders may act in like manner upon compliance with the provisions of Section 607.394 of the General Corporation Act. ARTICLE II BOARD OF DIRECTORS 1. FUNCTIONS GENERALLY -- COMPENSATION. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation shall be managed under the direction of its Board of Directors. The Board may fix the compensation of directors. 2. QUALIFICATIONS AND NUMBER. Each director shall be a natural person of full age. A director need not be a shareholder, a citizen of the United States, or a resident of the State of Florida. The initial Board of Directors shall consist of three persons, which is the number of directors fixed in the Articles of Incorporation, and which shall be the fixed number of directors until changed. The number of directors may be increased or decreased by an amendment of these By-Laws or by the directors or shareholders, but no decrease in the number of directors shall have the effect of shortening the term of any incumbent director. The number of directors shall never be less than one. The full Board of Directors shall consist of the number of directors fixed herein. 3. ELECTION AND TERM. The initial Board of Directors shall consist of the directors named in the Articles of Incorporation, each of whom shall hold office until the first annual meeting of shareholders and until his successor has been elected and qualified or until his earlier resignation, removal from office or death. Thereafter, each director who is elected at an annual meeting of shareholders, and any director who is elected in the interim to fill a vacancy or a newly created directorship, shall hold office until the next succeeding annual meeting of shareholders and until his successor has been elected and qualified or until his earlier resignation, removal from office or death. In the interim between annual meetings of shareholders or of special meetings of shareholders called for the election of directors, any vacancies in the Board of Directors, including vacancies created by reason of an increase n the number of directors, and including vacancies resulting from the removal of directors by the shareholders which have not been filled by said shareholders, may be filled by the affirmative vote of a majority of the remaining directors, although less than a quorum exists. 5 6 4. MEETINGS. - TIME. Meetings shall be held at such time as the Board shall fix, except that the first meeting of a newly elected Board shall be held as soon after its election as the directors may conveniently assemble. - PLACE. Meetings shall be held at such place within or without the State of Florida as shall be fixed by the Board. - CALL. No call shall be required for regular meetings for which the time and place have been fixed. Special meetings may be called by the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, of the President, or by any two directors. - NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for regular meetings for which the time and place have been fixed. Written, oral, or any other mode of notice of the time and place shall be given for special meetings in sufficient time for the convenient assembly of the directors thereat. The notice or waiver of notice of any meetings need not specify the business to be transacted or the purpose of the meeting. Any requirement of furnishing a notice shall be waived by the director who signs a waiver of notice before or after the meeting. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting and a waiver of any and all objections to the place of the meeting, the time of the meeting, or the manner in which it has been called or convened, except when a director states, at the beginning of the meeting, any objection to the transaction of business because the meeting is not lawfully called or convened. - QUORUM AND ACTION. A majority of the full Board of Directors shall constitute a quorum except as may be otherwise provided in the Articles of Incorporation. Except as herein otherwise provided, and except as may be otherwise provided by the General Corporation Act or the Articles of Incorporation, the act of the Board shall be the act of a majority of the directors present at a meeting at which a quorum is present. Members of the Board of Directors may participate in a meeting of said Board by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time, and participation by such means shall be deemed to constitute presence in person at a meeting. A majority of the directors present, whether or not a quorum exists, may adjourn any meeting of the Board of Directors to another time and place. Notice of any such adjourned meeting shall be given to the directors who were not present at the time of the adjourning and, unless the time and place of the adjourned meeting are announced at the time of the adjournment, to the other directors. 6 7 - CHAIRMAN OF THE MEETING. Meetings of the Board of Directors shall be presided over by the following directors in the order of seniority and if present and acting - the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, the President, or any other director chosen by the Board. 5. REMOVAL OF DIRECTORS. At a meeting of shareholders called expressly for that purpose, the entire Board of Directors or any individual director may be removed from office with or without cause by the vote of the shareholders holding at least a majority of the shares. In case the entire Board or any one or more directors be so removed, new directors may be elected at the same meeting. 6. COMMITTEES. Whenever the number of directors shall consist of three or more, the Board of Directors, may, by resolution adopted by a majority of the full Board, designate from among its members an Executive Committee and one or more other committees, each of which, to the extent provided in the resolution, shall have and may exercise all of the authority of the Board of Directors except such authority as may not be delegated under the General Corporation Act. 7. WRITTEN ACTION. Any action required to be taken at a meeting of directors, or any action which may be taken at a meeting of directors or of a committee thereof, if any, may be taken without a meeting if a consent in writing, setting forth the action so to be taken, shall be signed by all of the directors or all of the members of the committee, as the case may be. ARTICLE III OFFICERS The corporation shall have a President, a Secretary, and a Treasurer, each of whom shall be elected by the directors from time to time, and may have one or more Vice Presidents and such other officers and assistant officers and agents as may be deemed necessary, each or any of whom may be elected or appointed by the directors or may be chosen in such manner as the directors shall determine. Any two or more offices may be held by the same person. Unless otherwise provided in the resolution of election or appointment, each officer shall hold office until the meeting of the Board of Directors following the next annual meeting of shareholders and until his successor has been elected and qualified. The officers and agents of the corporation shall have the authority and perform the duties in the management of the corporation as determined by the resolution electing or appointing them, as the case may be. 7 8 The Board of Directors may remove any officer or agent whenever in its judgment the best interests of the corporation will be served thereby. ARTICLE IV REGISTERED OFFICE AND AGENT - SHAREHOLDERS RECORD The address of the registered office of the corporation is 300 East Park Avenue, c/o The Prentice-Hall Corporation System, Inc., City of Tallahassee 32301, County of Leon; and the name of the registered agent of the corporation is The Prentice-Hall Corporation System, Inc. whose address is the same as that of the registered office. The corporation shall keep at its registered office in the State of Florida or at its principal place of business, or at the office of its transfer agent or registrar, a record of its shareholders, giving the names and addresses of all shareholders and the number, class and series, if any, of the shares held by each shareholder and shall keep on file at said registered office the voting list of shareholders for a period of at least ten days prior to any meeting of shareholders. ARTICLE V CORPORATE SEAL The corporate seal shall have inscribed thereon the name of the corporation and shall be in such form and contain such other words and/or figures as the Board of Directors shall determine or the law require. ARTICLE VI FISCAL YEAR The fiscal year of the corporation shall be fixed, and shall be subject to change, by the Board of Directors. ARTICLE VII CONTROL OVER BY-LAWS The Board of Directors shall have power to adopt, alter, amend or repeal the By-Laws. Any provisions of the classification of directors for staggered terms shall be authorized by the Articles of Incorporation or by specific provisions of a By-Law adopted by the shareholders. By-Laws adopted by the Board of Directors or by the shareholders may be repealed or changed and new By-Laws may be adopted by the shareholders. The shareholders may prescribe in any 8 9 By-Law made by them that such By-law shall not be altered, amended or repealed by the Board of Directors. 9 EX-3.7 8 ARTICLES OF INCORPORATION OF GBC INDIA 1 EXHIBIT 3.7 ARTICLES OF INCORPORATION OF GBC INDIA HOLDINGS INC. (f/k/a GBC Export Sales Corp.) KNOW ALL MEN BY THESE PRESENTS: That we, the undersigned, have this day voluntarily associated ourselves together for the purpose of forming a corporation under the General Corporation Law of the State of Nevada as approved March 21, 1925, and all acts amendatory thereof or in addition thereto, and to that end we do hereby certify that: 1st. The name of the Corporation is GBC EXPORT SALES CORP. 2nd. The location of the principal office of the Corporation within the State of Nevada is 502 East John Street, Carson City, Nevada, and the resident agent in charge of said office is United States Corporation Company. 3rd. The Corporation may engage in any lawful activity, without limitation. In furtherance of this purpose, and without limiting the scope of generality thereof, in any way, it is hereby provided that the nature of the business, or the objects or purposes proposed to be transacted, promoted or carried on by the Corporation are: To export plastic bindings, covers, binders, indexes, binding equipment, laminating equipment, laminating film, printing presses, graphic art equipment, photo identification security systems, educational materials and shredding machines. 4th. The total authorized capital stock of the Corporation shall be Two Thousand Five Hundred (2,500), all of which are classified as Common Stock with a par value of One Dollar ($1.00). 5th. The members of the governing board of the Corporation shall be styled "directors" and the number of its first Board of Directors shall be five (5); provided, however, that the Board of Directors may, at any meeting by resolution, increase the number of such directors or decrease their number in such manner as shall be provided by the By-Laws of this Corporation. 2 The names and Addresses of the Directors are as follows:
DIRECTORS POST OFFICE ADDRESS --------- ------------------- JOHN E. PRESCHLACK One GBC Plaza Northbrook, Illinois 60062 STEPHEN P. HAYES One GBC Plaza Northbrook, Illinois 60062 FRANK J. LENAHAN One GBC Plaza Northbrook, Illinois 60062 VICTOR L. LEWIS One GBC Plaza Northbrook, Illinois 60062 STEVE RUBIN One GBC Plaza Northbrook, Illinois 60062
6th. The capital stock and the holders thereof, after the amount of the subscription price has been paid in, shall not be subject to any assessment to pay the debts of the Corporation or for any other purpose. 7th. The names and post office address of the incorporators signing these Articles of Incorporation are as follows:
INCORPORATORS POST OFFICE ADDRESS ------------- ------------------- D. S. NUTER 33 North LaSalle Street Chicago, Illinois 60602 D. E. HOWARTH 33 North LaSalle Street Chicago, Illinois 60602 S. M. PREVOST 33 North LaSalle Street Chicago, Illinois 60602
8th. The Corporation is to have perpetual existence. 9th. In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized: To make, alter, amend and rescind the By-Laws of the Corporation, to fix the amount to be reserved as working capital, to fix the times for the declaration and payment of dividends, and to authorize and cause to be executed mortgages and liens upon the real and personal property of the Corporation. 2 3 With the consent in writing or pursuant to the affirmative vote of the holders of at least a majority of the stock issued and outstanding, at a stockholders' meeting duly called for that purpose, to sell, assign, transfer or otherwise dispose of the property of the Corporation as an entirety. In order to promote the interest of the Corporation and to encourage the utilization of the Corporation's lands and other property, to sell, assign, transfer, lease and in any lawful manner dispose of such portions of said property as the Board of Directors shall deem advisable, and to use and apply the funds received in payment therefor to the surplus account for the benefit of the Corporation, or to the payment of dividends, or otherwise; provided that a majority of the whole Board concur therein, and further provided that the capital stock shall not be decreased except in accordance with the laws of Nevada. 10th. The corporation reserves the right to amend, alter, or repeal any provisions contained in these Articles of Incorporation in the manner now or hereafter prescribed by statute, and all rights conferred on stockholders or directors herein are granted subject to this reservation. IN WITNESS WHEREOF, we have hereunto set our hands and seals this 24th day of March, 1980. /s/ D. S. NUTER --------------- D. S. NUTER, Incorporator /s/ D. E. HOWARTH ----------------- D. E. HOWARTH, Incorporator /s/ S. M. PREVOST ----------------- S. M. PREVOST, Incorporator STATE OF ILLINOIS ) ) SS. COUNTY OF COOK ) BE IT REMEMBERED, that on this 24th day of March, 1980, personally appeared before me, a notary public in and for the State of Illinois and County of Cook, D. S. NUTER, D. E. HOWARTH and S. M. PREVOST, described in and who executed the foregoing instrument, who acknowledged to me that they executed the same freely and voluntarily and for the uses and purposes therein mentioned. /s/ BERNADETTE M. FAHY ---------------------- Bernadette M. Fahy, Notary Public 3 4 * * * * * * PLAN AND AGREEMENT OF MERGER dated as of the 31st day of December, 1981, by and between Gebco International Corporation (hereinafter referred to as "Gebco") and GBC Export Sales Corp. (hereinafter referred to as "GBC Export") W I T N E S S E T H: WHEREAS, GBC Export and Gebco desire to merge into a single corporation in accordance with the provisions of the Nevada Revised Statutes and under the laws of the State of Delaware; and WHEREAS, GBC Export was incorporated under the laws of the State of Nevada by Articles of Incorporation filed with the Secretary of State on March 28, 1980; and has an authorized capital before this merger consisting of 2500 shares, One Class Common, each share with $1.00 par value. WHEREAS, Gebco was incorporated under the laws of the State of Delaware by Articles of Incorporation filed with the Secretary of State on March 23, 1973; and has an authorized capital stock consisting of 2500 shares, One Class Common, each share with a $1.00 par value. WHEREAS, the respective Boards of Directors have determined that it is desirable that Gebco be merged with and into GBC Export in accordance with the applicable statutes of the State of Nevada and the State of Delaware, all upon the terms and conditions hereinafter set forth; NOW, THEREFORE, the parties to this Agreement, in consideration of the mutual covenants, agreements and provisions hereinafter contained do hereby prescribe the terms and conditions of said merger and mode of carrying the same into effect as follows: 5 ARTICLE I 1.1 Merger Pursuant to the provisions of the Nevada Revised Statutes and the laws of the State of Delaware, GBC Export hereby merges into itself Gebco, and said Gebco shall be and hereby is merged into GBC Export, from and after the effective date of the merger, to wit December 31, 1981. 1.2 Certificate of Incorporation of Surviving Corporation The Articles of Incorporation of GBC Export, as herein amended and as in effect from and after the effective date of the merger, shall continue in full force and effect as the Articles of Incorporation of GBC Export. 1.3 By-Laws after Merger The By-laws of GBC Export as they shall exist on the effective date of the merger shall be and remain the By-laws of GBC Export until the same shall be altered or repealed as provided therein. 1.4 Directors and Officers after Merger The directors and officers of GBC Export shall continue in office until the next annual meeting of stockholders and until their successors shall have been elected and qualified. ARTICLE II Terms of Merger The terms and conditions of the merger shall be as follows: 2.1 Effective Date of Merger This Agreement shall be adopted, approved, signed and acknowledged in accordance with the requirements of applicable law and, upon the filing of this Agreement and any required certificate pursuant to the Nevada Revised Statutes and the laws of the State of Delaware the merger shall become effective on the date when all such procedures have been completed, however, for purposes of accounting, the merger shall deem to be effective as of 11:59 P.M. Central Standard Time December 31, 1981, such time being deemed to be "the effective date of the merger" for purposes of this Agreement. 2 6 2.2 Gebco to be Merged into GBC Export On the effective date of the merger, Gebco shall be merged into GBC Export, and the separate existence of Gebco shall cease. Upon the merger becoming effective, all and singular, the rights, capacity, privileges, powers, franchises and authority as well as of a public or of a private nature of each of Gebco and GBC Export, and all property, real, personal and mixed, and all debts, obligations and liabilities, due to each of such corporations on whatever account, as well as for subscriptions for shares as for all other things, belonging to each of them shall be vested in GBC Export; and all such property, rights, capacity, privileges, powers, franchises, authority and immunities and all and every other interest shall be thereafter as fully and effectively and property of GBC Export as they were of Gebco and GBC Export, respectively, and shall not revert or be in any way impaired by reason of the merger; provided, however, that all rights of the creditors of such corporations shall be preserved unimpaired and all debts, liabilities (including liability, if any, to dissenting shareholders) and duties of Gebco and GBC Export, respectively, shall thenceforth be attached to GBC Export and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by GBC Export. Gebco hereby agrees from time to time, as and when requested by GBC Export or by its successors or assigns to execute and deliver or cause to be executed and delivered all such deeds and instruments and to take or cause to be taken such further other action as GBC Export may deem necessary or desirable in order to vest in and confirm to GBC Export title to and possession of any property of Gebco acquired or to be acquired by reason of or as a result of the merger herein provided for and otherwise to carry out the intent and purposes hereof and the proper officers and directors of GBC Export are fully authorized in the name of Gebco or otherwise to take any and all such action. 2.3 Amendment of Article of Incorporation, Conversion of Shares The articles of incorporation of GBC Export are hereby amended as follows: 4th. The total authorized capital stock of the Corporation shall be five thousand (5000), all of which are classified as Common Stock with a par value of One Dollar ($1.00). 3 7 The manner of converting, on the effective date of the merger, the outstanding shares of the capital stock of Gebco into the shares or rights to acquire shares of GBC Export shall be as follows: Each issued share of Gebco shall, upon the effective date of the merger, represent one (1) share of GBC Export. The issued shares of GBC Export shall not be converted in any manner, but each said share which issued as of the effective date of the merger shall continue to represent one issued share of GBC Export. IN WITNESS WHEREOF, the parties to this Agreement, have caused these presents to be executed in the manner required by law, and the respective corporate seals to be hereunto affixed. /s/ JOHN E. PRESCHLACK --------------------------- John E. Preschlack /s/ FRANK J. LENAHAN --------------------------- Frank J. Lenahan /s/ STEVEN RUBIN --------------------------- Steven Rubin A majority of the directors of GBC EXPORT SALES CORP., a Nevada corporation GEBCO INTERNATIONAL CORPORATION By: /s/ FRANK J. LENAHAN -------------------- Frank J. Lenahan Attest: /s/ STEVEN RUBIN - ---------------- Secretary * * * * * * CERTIFICATE [as filed with the Nevada Secretary of State] The undersigned, Steven Rubin, and Rudolph Grua, Secretary and President respectively of GBC Export Sales Corp. (the "Corporation"), a Nevada corporation do hereby certify that the following resolution was adopted by Board of Directors of the Corporation at a special meeting thereof held in accordance with the By-Laws of the Corporation and further that the sole 4 8 shareholder of the Corporation, GBC International Inc., has agreed to and adopted said resolution at a special shareholder's meeting held on February 24, 1988 pursuant to the By-Laws of the Corporation to wit: RESOLVED, that it is in the best interest of the Corporation to amend the Articles of Incorporation for the purpose of changing the name of the Corporation. BE IT THEREFORE, that the First Article of the Articles of Incorporation of the Corporation be, and it hereby is, amended as follows: First: the name of the Corporation is GBC INDIA HOLDINGS INC. February 24, 1988 /s/ STEVEN RUBIN ---------------- Steven Rubin, Secretary /s/ RUDOLPH GRUA ---------------- Rudolph Grua, President State of Illinois County of Cook Before me in person appeared Steven Rubin and Rudolph Grua who declared themselves to be the Secretary and President of GBC Export Sales Inc. respectively and who further declared that they have signed this certificate on behalf of GBC Export Sales Inc. in their capacities as Secretary and President. /s/ MARK E. DAPIER ------------------ Mark E. Dapier, Notary Public My commission expires: December 17, 1988 5 EX-3.8 9 BY-LAWS OF GBC INDIA 1 EXHIBIT 3.8 B Y - L A WS OF GBC INDIA HOLDINGS INC. * * * ARTICLE I STOCKHOLDERS Section 1. PLACE OF HOLDING ANNUAL MEETINGS.--Annual meetings of the stockholders shall be held at the office of the corporation in the City of [INTENTIONALLY BLANK], or at such other place or places within or without the State of Nevada as the directors shall from time to time determine. Section 2. ANNUAL ELECTION OF DIRECTORS.--The annual meeting of stockholders for the election of directors and the transaction of other business shall be held on the first Monday of March in each year, commencing in 1981. If this date shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day. At each annual meeting, the stockholders entitled to vote shall, by plurality vote, elect a Board of Directors, and they may transact such other corporate business as shall be stated in the notice of the meeting. At least one-fourth in number of the directors shall be elected annually. No change of the time or place of a meeting for the election of directors, as fixed by the By-Laws, shall be made within sixty (60) days next before the day on which such election is to be held. In case of any change in such time or place for such election of directors, notice thereof shall be given to each stockholder entitled to vote, in person or by letter mailed to his last known post office address, ten (10) days before the election is held. Section 3. VOTING.--Each stockholder entitled to vote in accordance with the terms of the Articles of Incorporation and in accordance with the provisions of these By-Laws shall be entitled to one (1) vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after six (6) months from its date unless such proxy provides for a longer period which in no case shall exceed seven (7) years. After the first election of directors, except where the transfer books of the corporation shall have been closed or a date shall have been fixed as the record date for the determination of its stockholders entitled to vote, as hereinafter provided in Section 4 of Article VI, no share of stock shall be voted on at any election for directors which shall have been transferred on the books of the corporation within twenty (20) days next preceding such election. Upon the demand of any stockholder, the vote for directors and the vote upon any question before the meeting shall be by - 1 - 2 ballot. All elections shall be had and all questions decided by plurality vote except as otherwise provided by the Articles of Incorporation and/or by the laws of the State of Nevada. Section 4. QUORUM.--The presence in person or by proxy of the holders of a majority of the shares entitled to vote at any meeting shall constitute a quorum for the transaction of business. Section 5. ACTION WHICH MAY BE TAKEN WITHOUT MEETING.--Any action, except the election of directors, which may be taken at a meeting of the shareholders may be taken without a meeting if authorized by a writing signed by all of the holders of shares who would be entitled to vote at a meeting for such purpose, and filed with the Secretary of the corporation. Section 6. ADJOURNMENT OF MEETINGS.--If less than a quorum shall be in attendance at any time for which the meeting shall have been called, the meeting may, after a lapse of at least half an hour, be adjourned from time to time by a majority of the stockholders present or represented and entitled to vote thereat. If notice of such adjourned meeting is sent to the stockholders entitled to receive the same, such notice also containing a statement of the purpose of the meeting and that the previous meeting failed for lack of a quorum, and that under the provisions of this Section it is proposed to hold the adjourned meeting with a quorum of those present then any number of stockholders, in person or by proxy, shall constitute a quorum at such meeting unless otherwise provided by statute. Section 7. SPECIAL MEETINGS: HOW CALLED.--Special meetings of the stockholders for any purpose or purposes may be called by the President or Secretary, and shall be called upon a requisition in writing therefor, stating the purpose or purposes thereof, delivered to the President or Secretary, signed by a majority of the directors or by fifty-one percent (51%) in interest of the stockholders entitled to vote, or by resolution of the directors. Section 8. NOTICE OF STOCKHOLDERS' MEETINGS.--Written or printed notice, stating the place and time of the meeting, and the general nature of the business to be considered, shall be given by the Secretary to each stockholder entitled to vote thereat at his last known post office address, at least ten (10) days before the meeting in the case of a special meeting. ARTICLE II DIRECTORS Section 1. NUMBER: TERM.--The number of directors shall be three (3). The directors shall be elected at the annual meeting of the stockholders and each director shall be elected to serve until his successor shall be elected and shall qualify; provided that in the event of - 2 - 3 failure to hold such meeting or to hold such election at such meeting, it may be held at any special meeting of the stockholders called for that purpose. Directors need not be stockholders. Section 2. QUORUM.--A majority of the directors shall constitute a quorum for the transaction of business. If at any meeting of the board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at said meeting which shall be so adjourned. Section 3. FIRST MEETING.--The newly elected directors may hold their first meeting for the purpose of organization and the transaction of business, if a quorum be present, immediately after the annual meeting of the stockholders; or the time and place of such meeting may be fixed by consent in writing of a majority of the directors. Section 4. ELECTION OF OFFICERS.--At the first meeting or at any subsequent meeting called for the purpose, the directors shall elect a President a Treasurer, a Secretary and such other officers as may be deemed necessary, who need not be directors. Such officers shall hold office until the next annual election of officers and until their successors are elected and qualify. Section 5. REGULAR MEETINGS.--Regular meetings of the directors may be held without notice at such places and times as shall be determined from time to time by resolution of the directors. Section 6. SPECIAL MEETINGS: HOW CALLED: NOTICE.--Special meetings of the board may be called by the President or by the Secretary or by any two (2) directors, on two (2) days' notice to each director. Section 7. PLACE OF MEETING.--The directors may hold their meetings and have one or more offices, and keep the books of the corporation, outside the State of Nevada, at any office or offices of the corporation or at any other place as they may from time to time by resolution determine. Section 8. GENERAL POWERS OF DIRECTORS.--The Board of Directors shall have the management of the business of the corporation, and, subject to the restrictions imposed by law, by the Articles of Incorporation, or by these By-Laws, may exercise all the powers of the corporation. Section 9. SPECIFIC POWERS OF DIRECTORS.--Without prejudice to such general powers it is hereby expressly declared that the directors shall have the following powers, to wit: (l) To adopt and alter a common seal of the corporation. - 3 - 4 (2) To make and change regulations, not inconsistent with these By-Laws, for the management of the corporation's business and affairs. (3) To purchase or otherwise acquire for the corporation any property, rights, or privileges which the corporation is authorized to acquire. (4) To pay for any property purchased for the corporation either wholly or partly in money, stock, bonds, debentures, or other securities of the corporation. (5) To borrow money and to make and issue notes, bonds, and other negotiable and transferable instruments, mortgages, deeds of trust, and trust agreements, and to do every act and thing necessary to effectuate the same. (6) To remove any officer for cause, or any officer other than the President summarily without cause, and in their discretion from time to time, to devolve the powers and duties of any officer upon any other person for the time being. (7) To appoint and remove or suspend such subordinate officers, agents or factors as they may deem necessary and to determine their duties and fix, and from time to time change their salaries or remuneration and to require security as and when they think fit. (8) To confer upon any officer of the corporation the power to appoint, remove and suspend subordinate officers, agents and factors. (9) To determine who shall be authorized on the corporation's behalf to make and sign bills, notes, acceptances, endorsement, checks, releases, receipts, contracts and other instruments. (10) To determine who shall be entitled to vote in the name and behalf of the corporation upon,or to assign and transfer, any shares of stock, bonds, or other securities of other corporations held by this corporation. (11) To delegate any of the powers of the board in relation to the ordinary business of the corporation to any standing or special committee, or to any officer or agent (with power to sub- delegate), upon such terms as they think fit. (12) To call special meetings of the stockholders for any purpose or purposes. Section 10. COMPENSATION OF DIRECTORS.--Directors shall not receive any stated salary for their service as directors, but by resolution of the board a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained - 4 - 5 shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent or otherwise and receiving compensation therefor. ARTICLE III COMMITTEES Section 1. The Board of Directors may, by resolution or resolutions passed by a majority of the whole board, designate one or more committees, each committee to consist of two or more of the directors of the corporation, which to the extent provided in said resolution or resolutions or in these By-Laws shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation any may have power to authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be stated in these By-Laws or as may be determined from time to time by resolution adopted by the Board of Directors. Section 2. The committees shall keep regular minutes of their proceedings and report the same to the board when required. ARTICLE IV OFFICERS Section 1. The officers of the corporation, in addition to the directors, shall be a President, a Secretary, a Treasurer and such other officers as may from time to time be elected or appointed by the Board of Directors. Any person may hold two or more offices. Section 2. PRESIDENT.--The President shall when present preside at all meetings of the directors and act as temporary chairman at, and call to order, all meetings of the stockholders; and he shall have power to call special meetings of the stockholders and directors for any purpose or purposes, appoint and discharge employees and agents of the corporation, and fix their compensation, make and sign contracts and agreements in the name and behalf of the corporation, and, while the directors and/or committees are not in session, he shall have general management and control of the business and affairs of the corporation; he shall see that the books, reports, statements and certificates required by the statute under which this corporation is organized or any other laws applicable thereto are properly kept, made, and filed according to law; and he shall generally do and perform all acts incident to the office of President or which are authorized or required by law. Section 3. VICE-PRESIDENT.--Vice-President, if any be appointed, shall have such powers and shall perform such duties as shall be assigned to him by the directors. - 5 - 6 Section 4. SECRETARY.--The Secretary shall give, or cause to be given, notice of all meetings of stockholders and directors and all other notices required by law or by these By-Laws, and, in case of his absence or refusal or neglect so to do, any such notice may be given by a person thereunto directed by the President, or by the directors, or stockholders, upon whose requisition the meeting is called as provided in these By-Laws. He shall record all the proceedings of the meetings of the corporation and of the directors in a book to be kept for that purpose and shall perform such other duties as may be assigned to him by the directors or the President. He shall have the custody of the seal of the corporation and shall affix the same to all instruments requiring it, when authorized by the directors or the President, and attest the same. Section 5. TREASURER.--The Treasurer shall have the custody of all funds, securities, evidences of indebtedness and other valuable documents of the corporation; he shall receive and give or cause to be given receipts and acquittances for moneys paid in on account of the corporation and shall pay out of the funds on hand all just debts of the corporation of whatever nature upon maturity of the same; he shall enter or cause to be entered in books of the corporation to be kept for that purpose full and accurate accounts of all moneys received and paid out on account of the corporation, and, whenever required by the President or the directors, he shall render a statement of his cash accounts; he shall keep or cause to be kept such other books as will show a true record of the expenses, losses, gains, assets and liabilities of the corporation; he shall, unless otherwise determined by the directors, have charge of the original stock books, transfer books, and stock ledgers and act as transfer agent in respect to the stock and securities of the corporation; and he shall perform all of the other duties incident to the office of Treasurer. ARTICLE V RESIGNATIONS: FILLING OF VACANCIES: INCREASE OF NUMBER OF DIRECTORS Section 1. RESIGNATIONS.--Any director, member of a committee or other officer may resign at any time. Such resignations shall be made in writing and shall take effect at the time specified therein, and, if no time be specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective. Section 2. FILLING OF VACANCIES.--If the office of any director, member of a committee, or other officer becomes vacant, the remaining directors in office, though less than a quorum, by a majority vote, may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until his successor shall be duly chosen. Section 3. INCREASE OF NUMBER OF DIRECTORS.-- The number of directors may be increased at any time by the affirmative vote of a majority of the directors (or, by the affirmative vote of a majority in interest of the stockholders), at a special meeting called for that purpose, and by like vote, the additional directors may be chosen at such meeting to hold office until the next annual election and their successors are elected and qualify. - 6 - 7 ARTICLE VI CAPITAL STOCK Section 1. CERTIFICATE OF STOCK.--Certificates of stock, numbered and with the seal of the corporation affixed, signed by the President or Vice-President, and the Treasurer or Secretary, shall be issued to each stockholder certifying the number of shares owned by him in the Corporation. When such certificates are signed by a transfer agent, or an assistant transfer agent, or by a transfer clerk acting on behalf of the corporation and a registrar, the signatures of such officers may be facsimiles. Section 2. LOST CERTIFICATES.--A new certificate of stock may be issued in the place of any certificate theretofore issued by the corporation, alleged to have been lost or destroyed, and the directors may, in their discretion, require the owner of the lost or destroyed certificate, or his legal representatives, to give the corporation a bond, in such sum as they may direct, not exceeding double the value of the stock, to indemnify the corporation against any claim that may be made against it on account of the alleged loss of any such certificate. Section 3. TRANSFER OF SHARES.--Subject to the restrictions contained in the Articles of Incorporation, the shares of stock of the corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers or to such other person as the directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. Section 4. CLOSING OF TRANSFER BOOKS.--The Board of Directors shall have power to close the stock transfer books of the corporation for a period not exceeding sixty (60) days preceding the date of any meeting of stockholders or the date for the payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect, provided, however, that in lieu of closing the stock transfer books as aforesaid, the Board of Directors may fix in advance a date, not exceeding sixty (60) days preceding the date of any meeting of stockholders or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion of or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to receive payment of any such dividends, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion and in such cases such stockholders or exchange of capital stock, and in such cases such stockholders only as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividends, or to receive such allotment of rights, or to - 7 - 8 exercise such rights, as the case may be, not withstanding any transfer of any stock on the books of the corporation after any such record date fixed as aforesaid. Section 5. DIVIDENDS.--Subject to the provisions of the Articles of Incorporation, if any, the directors may declare dividends upon the capital stock of the corporation as and when they deem expedient. Before declaring any dividend there may be set apart out of any funds of the corporation available for dividends such sum or sums as the directors from time to time in their discretion think proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the directors shall think conducive to the interest of the corporation. ARTICLE VII MISCELLANEOUS PROVISIONS Section 1. CORPORATE SEAL.--The corporate seal shall be circular in form and shall contain the name of the corporation, the year of its creation, and the words "Corporate Seal, Nevada". Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Section 2. FISCAL YEAR.--The fiscal year of the corporation shall commence on February lst and shall end January 31st. Section 3. PRINCIPAL OFFICE.--The principal office in the State of Nevada shall be established and maintained at Carson City in Ormsby County, in the State of Nevada. Section 4. CHECKS, DRAFTS, NOTES.--All checks, drafts or other orders for the payment of money, notes, or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents, of the corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors. Section 5. NOTICE.--Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated; and any notice so required shall be deemed to be sufficient if given by depositing the same in a post office box in a sealed post-paid wrapper addressed to the person entitled thereto at his last known post office address, and such notice shall be deemed to have been given on the day of such mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meeting except as otherwise provided by statute. Section 6. ACTION AT MEETING NOT REGULARLY CALLED AND WAIVER OF NOTICE.--Whenever all parties entitled to vote at any meeting, whether of directors, trustees, or stockholders, consent, either by a writing on the records of the meeting or filed with the Secretary or by presence at such meeting and oral consent entered on the minutes or - 8 - 9 by taking part in the deliberations at such meeting without objection, the doing of such meeting shall be as valid as if a meeting had been regularly called and noticed, and at such meeting any business may be transacted which is not expected from the written consent or to the consideration of which no objection for want of notice is made at the time, and if any meeting be irregular for want of notice or of such consent, provided a quorum was present at such meeting, the proceedings of said meeting may be ratified and approved and rendered likewise valid and the irregularity or defect therein waived by a writing signed by all parties having the right to vote at such meeting; and such consent or approval of stockholders or creditors may be by proxy or attorney, but all such proxies and powers of attorney must be in writing. Whenever any notice whatever is required to be given under the provisions of this act, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE VIII AMENDMENTS Section 1. The power to amend, alter, and repeal these By-Laws and to make new By-Laws shall be vested in the Board of Directors subject to the By-Laws, if any, of the stockholders. - 9 - EX-3.9 10 ARTICLES OF INCORPORATION OF GBC INTERNATIONAL 1 EXHIBIT 3.9 ARTICLES OF INCORPORATION OF GBC INTERNATIONAL, INC. ********** KNOW ALL MEN BY THESE PRESENTS: That we, the undersigned, have this day voluntarily associated ourselves together for the purpose of forming a corporation under the General Corporation Law of the State of Nevada as approved March 21, 1925, and all acts amendatory thereof or in addition thereto, and to that end we do hereby certify that: 1st. The name of the corporation is GBC INTERNATIONAL, INC. 2nd. The location of the principal office of the corporation within the State of Nevada is 502 East John Street, Carson City, and the resident agent in charge of said office is United States Corporation Company. 3rd. The corporation may engage in any lawful activity, without limitation. 4th. The total number of shares of stock which the corporation is authorized to issue is One Million (1,000,000) shares of Common stock, each of which shall have a par value of One Cent ($ .01). 5th. The members of the governing board of the corporation shall be styled "directors" and the number of its first Board of Directors shall be five (5); provided, however, that the Board of Directors may, at any meeting by resolution, increase the number of such directors or decrease their number in such manner as shall be provided by the By-Laws of this corporation. The names and post office addresses of the Directors are as follows: -1- 2
NAME POST OFFICE ADDRESS ---- ------------------- John E. Preschlack One GBC Plaza Northbrook, Illinois 60062 Stephen P. Hayes One GBC Plaza Northbrook, Illinois 60062 Frank J. Lenahan One GBC Plaza Northbrook, Illinois 60062 Victor L. Lewis One GBC Plaza Northbrook, Illinois 60062 Steve Rubin One GBC Plaza Northbrook, Illinois 60062
6th. The capital stock and the holders thereof, after the amount of the subscription price has been paid in, shall not be subject to any assessment to pay the debts of the corporation or for any other purpose. 7th. The names and post office addresses of the Incorporators signing these Articles of Incorporation are as follows:
NAME POST OFFICE ADDRESS ---- ------------------- D. S. Nuter 33 North LaSalle Street Chicago, Illinois 60602 D. E. Howarth 33 North LaSalle Street Chicago, Illinois 60602 B. M. Fahy 33 North LaSalle Street Chicago, Illinois 60602
8th. The corporation is to have perpetual existence. 9th. In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized: To make, alter, amend, and rescind the By-Laws of the corporation, to fix the amount to be reserved as working capital, to fix the times for declaration and payment of dividends, and to authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation. -2- 3 With the consent in writing or pursuant to the affirmative vote of the holders of at least a majority of the stock issued and outstanding, at a stockholders' meeting duly called for that purpose, to sell, assign, transfer or otherwise dispose of the property of the corporation as an entirety. In order to promote the interest of the corporation and to encourage the utilization of the corporation's lands and other property, to sell, assign, transfer, lease and in any lawful manner dispose of such portions of said property as the Board of Directors shall deem advisable, and to use and apply the funds received in payment therefor to the surplus account for the benefit of the corporation, or the payment of dividends or otherwise; provided that a majority of the whole Board concurs therein, and further provided that the capital stock shall not be decreased except in accordance with the laws of Nevada. 10th. The corporation reserves the right to amend, alter or repeal any provisions contained in these Articles of Incorporation in the manner now or hereafter prescribed by statute, and all rights conferred on stockholders or directors herein are granted subject to this reservation. IN WITNESS WHEREOF, we have hereunto set our hands this 7th day of March, 1980. /s/ D. S. NUTER ------------------------------- D. S. Nuter, Incorporator /s/ D. E. HOWARTH ------------------------------- D. E. Howarth, Incorporator /s/ B. M. FAHY ------------------------------- B. M. Fahy, Incorporator -3- EX-3.10 11 BY-LAWS OF GBC INTERNATIONAL 1 EXHIBIT 3.10 BY-LAWS OF GBC INTERNATIONAL, INC. * * * ARTICLE I STOCKHOLDERS Section 1. PLACE OF HOLDING ANNUAL MEETINGS.--Annual meetings of the stockholders shall be held at the office of the corporation in the City of Northbrook, IL, or at such other place or places within or without the State of Nevada as the directors shall from time to time determine. Section 2. ANNUAL ELECTION OF DIRECTORS.--The annual meeting of stockholders for the election of directors and the transaction of other business shall be held on the first Monday of March in each year, commencing in 1980. If this date shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day. At each annual meeting, the stockholders entitled to vote shall, by plurality vote, elect a Board of Directors, and they may transact such other corporate business as shall be stated in the notice of the meeting. At least one-fourth in number of the directors shall be elected annually. No change of the time or place of a meeting for the election of directors, as fixed by the By-Laws, shall be made within sixty (60) days next before the day on which such election is to be held. In case of any change in such time or place for such election of directors, notice thereof shall be given to each stockholder entitled to vote, in person or by letter mailed to his last known post office address, ten (10) days before the election is held. Section 3. VOTING.--Each stockholder entitled to vote in accordance with the terms of the Articles of Incorporation and in accordance with the provisions of these By-Laws shall be entitled to one (1) vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after six (6) months from its date unless such proxy provides for a longer period which in no case shall exceed seven (7) years. After the first election of directors, except where the transfer books of the corporation shall have been closed or a date shall have been fixed as the record date for the determination of its 2 stockholders entitled to vote, as hereinafter provided in Section 4 of Article VI, no share of stock shall be voted on at any election for directors which shall have been transferred on the books of the corporation within twenty (20) days next preceding such election. Upon the demand of any stockholder, the vote for directors and the vote upon any question before the meeting shall be by ballot. All elections shall be had and all questions decided by plurality vote except as otherwise provided by the Articles of Incorporation and/or by the laws of the State of Nevada. Section 4. QUORUM.--The presence in person or by proxy of the holders of a majority of the shares entitled to vote at any meeting shall constitute a quorum for the transaction of business. Section 5. ACTION WHICH MAY BE TAKEN WITHOUT MEETING.--Any action, except the election of directors, which may be taken at a meeting of the shareholders may be taken without a meeting if authorized by a writing signed by all of the holders of shares who would be entitled to vote at a meeting for such purpose, and filed with the Secretary of the corporation. Section 6. ADJOURNMENT OF MEETINGS.--If less than a quorum shall be in attendance at any time for which the meeting shall have been called, the meeting may, after a lapse of at least half an hour, be adjourned from time to time by a majority of the stockholders present or represented and entitled to vote thereat. If notice of such adjourned meeting is sent to the stockholders entitled to receive the same, such notice also containing a statement of the purpose of the meeting and that the previous meeting failed for lack of a quorum, and that under the provisions of this Section it is proposed to hold the adjourned meeting with a quorum of those present then any number of stockholders, in person or by proxy, shall constitute a quorum at such meeting unless otherwise provided by statute. Section 7. SPECIAL MEETINGS: HOW CALLED.--Special meetings of the stockholders for any purpose or purposes may be called by the President or Secretary, and shall be called upon a requisition in writing therefor, stating the purpose or purposes thereof, delivered to the President or Secretary, signed by a majority of the directors or by fifty-one percent (51%) in interest of the stockholders entitled to vote, or by resolution of the directors. Section 8. NOTICE OF STOCKHOLDERS' MEETINGS.--Written or printed notice, stating the place and time of the meeting, and the general nature of the business to be considered, 2 3 shall be given by the Secretary to each stockholder entitled to vote thereat at his last known post office address, at least ten (10) days before the meeting in the case of a special meeting. ARTICLE II DIRECTORS Section 1. NUMBER: TERM.--The number of directors shall be three (3). The directors shall be elected at the annual meeting of the stockholders and each director shall be elected to serve until his successor shall be elected and shall qualify; provided that in the event of failure to hold such meeting or to hold such election at such meeting, it may be held at any special meeting of the stockholders called for that purpose. Directors need not be stockholders. Section 2. QUORUM.--A majority of the directors shall constitute a quorum for the transaction of business. If at any meeting of the board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at said meeting which shall be so adjourned. Section 3. FIRST MEETING.--The newly elected directors may hold their first meeting for the purpose of organization and the transaction of business, if a quorum be present, immediately after the annual meeting of the stockholders; or the time and place of such meeting may be fixed by consent in writing of a majority of the directors. Section 4. ELECTION OF OFFICERS.--At the first meeting or at any subsequent meeting called for the purpose, the directors shall elect a President, a Treasurer, a Secretary and such other officers as may be deemed necessary, who need not be directors. Such officers shall hold office until the next annual election of officers and until their successors are elected and qualify. Section 5. REGULAR MEETINGS.--Regular meetings of the directors may be held without notice at such places and times as shall be determined from time to time by resolution of the directors. Section 6. SPECIAL MEETINGS: HOW CALLED: NOTICE.--Special meetings of the board may be called by the President or by the Secretary or by any two (2) directors, on two (2) days' notice to each director. 3 4 Section 7. PLACE OF MEETING.--The directors may hold their meetings and have one or more offices, and keep the books of the corporation, outside the State of Nevada, at any office or offices of the corporation or at any other place as they may from time to time by resolution determine. Section 8. GENERAL POWERS OF DIRECTORS.--The Board of Directors shall have the management of the business of the corporation, and, subject to the restrictions imposed by law, by the Articles of Incorporation, or by these By-Laws, may exercise all the powers of the corporation. Section 9. SPECIFIC POWERS OF DIRECTORS.--Without prejudice to such general powers it is hereby expressly declared that the directors shall have the following powers, to wit: (1) To adopt and alter a common seal of the corporation. (2) To make and change regulations, not inconsistent with these By-Laws, for the management of the corporation's business and affairs. (3) to purchase or otherwise acquire for the corporation any property, rights, or privileges which the corporation is authorized to acquire. (4) To pay for any property purchased for the corporation either wholly or partly in money, stock, bonds, debentures, or other securities of the corporation. (5) To borrow money and to make and issue notes, bonds, and other negotiable and transferable instruments, mortgages, deeds of trust, and trust agreements, and to do every act and thing necessary to effectuate the same. (6) To remove any officer for cause, or any officer other than the President summarily without cause, and in their discretion from time to time, to devolve the powers and duties of any officer upon any other person for the time being. (7) To appoint and remove or suspend such subordinate officers, agents or factors as they may deem necessary and to determine their duties and fix, and from time to time change their salaries or 4 5 remuneration, and to require security as and when they think fit. (8) To confer upon any officer of the corporation the power to appoint, remove and suspend subordinate officers, agents and factors. (9) To determine who shall be authorized on the corporation's behalf to make and sign bills, notes, acceptances, endorsement, checks, releases, receipts, contracts and other instruments. (10) To determine who shall be entitled to vote in the name and behalf of the corporation upon, or to assign and transfer, any shares of stock, bonds, or other securities of other corporations held by this corporation. (11) To delegate any of the powers of the board in relation to the ordinary business of the corporation to any standing or special committee, or to any officer or agent (with power to sub-delegate), upon such terms as they think fit. (12) To call special meetings of the stockholders for any purpose or purposes. Section 10. COMPENSATION OF DIRECTORS.--Directors shall not receive any stated salary for their service as directors, but by resolution of the board a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent or otherwise and receiving compensation therefor. ARTICLE III COMMITTEES Section 1. The Board of Directors may, by resolution or resolutions passed by a majority of the whole board, designate one or more committees, each committee to consist of two or more of the directors of the corporation, which to the extent provided in said resolution or resolutions or in these By-Laws shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the corporation and may have power to authorize the seal of the corporation to be affixed to all papers which may require it. 5 6 Such committee or committees shall have such name or names as may be stated in these By-Laws or as may be determined from time to time by resolution adopted by the Board of Directors. Section 2. The committees shall keep regular minutes of their proceedings and report the same to the board when required. ARTICLE IV OFFICERS Section 1. The officers of the corporation, in addition to the directors, shall be a President, a Secretary, a Treasurer and such other officers as may from time to time be elected or appointed by the Board of directors. Any person may hold two or more offices. Section 2. PRESIDENT.--The President shall when present preside at all meetings of the directors and act as temporary chairman at, and call to order, all meetings of the stockholders; and he shall have power to call special meetings of the stockholders and directors for any purpose or purposes, appoint and discharge employees and agents of the corporation, and fix their compensation, make and sign contracts and agreements in the name and behalf of the corporation, and, while the directors and/or committees are not in session, he shall have general management and control of the business and affairs of the corporation; he shall see that the books, reports, statements and certificates required by the statute under which this corporation is organized or any other laws applicable thereto are properly kept, made, and filed according to law; and he shall generally do and perform all acts incident to the office of President or which are authorized or required by law. Section 3. VICE-PRESIDENT.--Vice-President, if any be appointed, shall have such powers and shall perform such duties as shall be assigned to him by the directors. Section 4. SECRETARY.--The Secretary shall give, or cause to be given, notice of all meetings of stockholders and directors and all other notices required by law or by these By-Laws, and, in case of his absence or refusal or neglect so to do, any such notice may be given by a person thereunto directed by the President, or by the directors, or stockholders, upon whose requisition the meeting is called as provided in these By-Laws. He shall record all the proceedings of the meeting of the corporation and of the directors in a book to be kept for that purpose and shall perform such other duties as may be assigned to 6 7 him by the directors or the President. He shall have the custody of the seal of the corporation and shall affix the same to all instruments requiring it, when authorized by the directors or the President, and attest the same. Section 5. TREASURER.--The Treasurer shall have the custody of all funds, securities, evidences of indebtedness, and other valuable documents of the corporation; he shall receive and give or cause to be given receipts and acquittances for moneys paid in on account of the corporation and shall pay out of the funds on hand all just debts of the corporation of whatever nature upon maturity of the same; he shall enter or cause to be entered in books of the corporation to be kept for that purpose full and accurate accounts of all money received and paid on account of the corporation, and, whenever required by the President or the directors, he shall render a statement of his cash accounts; he shall keep or cause to be kept such other books as will show a true record of the expenses, losses, gains, assets and liabilities of the corporation; he shall, unless otherwise determined by the directors, have charge of the original stock books, transfer books, and stock ledgers and act as transfer agent in respect to the stock and securities of the corporation; and he shall perform all of the other duties incident to the office of Treasurer. ARTICLE V RESIGNATIONS: FILLING OF VACANCIES: INCREASE OF NUMBER OF DIRECTORS Section 1. RESIGNATIONS.--Any director, member of a committee or other officer may resign at any time. Such resignations shall be made in writing and shall take effect at the time specified therein, and, if no time be specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective. Section 2. FILLING OF VACANCIES.--If the office of any director, member of a committee, or other officer becomes vacant, the remaining directors in office, though less than a quorum, by a majority vote, may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until his successor shall be duly chosen. Section 3. INCREASE OF NUMBER OF DIRECTORS.--The number of directors may be increased at any time by the affirmative vote of a majority of the directors (or, by the affirmative vote of a majority in interest of the stockholders), 7 8 at a special meeting called for that purpose, and by like vote, the additional directors may be chosen at such meeting to hold office until the next annual election and their successors are elected and qualify. ARTICLE VI CAPITAL STOCK Section 1. CERTIFICATE OF STOCK.--Certificates of stock, numbered and with the seal of the corporation affixed, signed by the President or Vice-President, and the Treasurer or Secretary, shall be issued to each stockholder certifying the number of shares owned by him in the corporation. When such certificates are signed by a transfer agent, or an assistant transfer agent, or by a transfer clerk acting on behalf of the corporation and a registrar, the signatures of such officers may be facsimiles. Section 2. LOST CERTIFICATES.--A new certificate of stock may be issued in the place of any certificate theretofore issued by the corporation, alleged to have been lost or destroyed, and the directors may, in their discretion, require the owner of the lost or destroyed certificate, or his legal representatives, to give the corporation a bond, in such sum as they may direct, not exceeding double the value of the stock, to indemnify the corporation against any claim that may be made against it on account of the alleged loss of any such certificate. Section 3. TRANSFER OF SHARES.--Subject to the restrictions contained in the Articles of Incorporation, the shares of stock of the corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers or to such other person as the directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. Section 4. CLOSING OF TRANSFER BOOKS.--The Board of Directors shall have power to close the stock transfer books of the corporation for a period not exceeding sixty (60) days preceding the date of any meeting of stockholders or the date for the payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect, provided, however, that in lieu of closing the stock transfer books as aforesaid, the Board 8 9 of Directors may fix in advance a date, not exceeding sixty (60) days preceding the date of any meeting of stockholders or the date for the payment of any dividends, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion, or exchange of capital stock, and in such cases such stockholders only as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividends, or to receive such allotment of rights, or to exercise such rights, as the case may be, not withstanding any transfer of any stock on the books of the corporation after any such record date fixed as aforesaid. Section 5. DIVIDENDS.--Subject to the provisions of the Articles of Incorporation, if any, the directors may declare dividends upon the capital stock of the corporation as and when they deem expedient. Before declaring any dividend there may be set apart out of any funds of the corporation available for dividends such sum or sums as the directors from time to time in their discretion think proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the directors shall think conducive to the interest of the corporation. ARTICLE VII MISCELLANEOUS PROVISIONS Section 1. CORPORATE SEAL.--The corporate seal shall be circular in form and shall contain the name of the corporation, the year of its creation, and the words "Corporate Seal, Nevada". Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Section 2. FISCAL YEAR.--The fiscal year of the corporation shall commence on January first and shall end December thirty-first. Section 3. PRINCIPAL OFFICE.--The principal office in the State of Nevada shall be established and maintained at Carson City in Ormsby County, in the State of Nevada. Section 4. CHECKS, DRAFTS, NOTES.--All checks, drafts or other orders for the payment of money, notes, or other evidence of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents, of the corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors. 9 10 Section 5. NOTICE.--Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated; and any notice so required shall be deemed to be sufficient if given by depositing the same in a post office box in a sealed post-paid wrapper addressed to the person entitled thereto at his last known post office address, and such notice shall be deemed to have been given on the day of such mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meeting except as otherwise provided by statute. Section 6. ACTION AT MEETING NOT REGULARLY CALLED AND WAIVER OF NOTICE.--Whenever all parties entitled to vote at any meeting, whether of directors, trustees, or stockholders, consent, either by a writing on the records of the meeting or filed with the Secretary or by presence at such meeting and oral consent entered on the minutes or by taking part in the deliberations at such meeting without objection, the doing of such meeting shall be as valid as if a meeting had been regularly called and noticed, and at such meeting any business may be transacted which is not expected from the written consent or to the consideration of which no objection for want of notice is made at that time, and if any meeting be irregular for want of notice or of such consent, provided a quorum was present at such meeting, the proceedings of said meeting may be ratified and approved and rendered likewise valid and the irregularity or defect therein waived by a writing signed by all parties having the right to vote at such meeting; and such consent or approval of stockholders or creditors may be by proxy or attorney, but all such proxies and powers of attorney must be in writing. Whenever any notice whatever is required to be given under the provisions of this act, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE VIII AMENDMENTS Section 1. The power to amend, alter, and repeal these By-Laws and to make new By-Laws shall be vested in the Board of Directors subject to the By-Laws, if any, of the stockholders. 10 EX-3.11 12 ARTICLES OF INCORPORATION OF GBC METALS 1 EXHIBIT 3.11 ARTICLES OF INCORPORATION OF GBC METALS CORP. -------- I, the person hereinafter named as incorporator, for the purpose of associating to establish a corporation, under the provisions and subject to the requirements of Title 7, Chapter 78 of Nevada Revised Statutes, and the acts amendatory thereof, and hereinafter sometimes referred to as the General Corporation Law of the State of Nevada, do hereby adopt and make the following Articles of Incorporation: FIRST: The name of the corporation (hereinafter called the corporation) is GBC METALS CORP. SECOND: The name of the corporation's resident agent in the State of Nevada is The Prentice-Hall Corporation System, Nevada, Inc., and the street address of the said resident agent where process may be served on the corporation is 502 East John Street, Carson City 89706. * * * * * * * * NO PAR SHARES THIRD: The number of shares the corporation is authorized to issue is 100, all of which are without nominal or par value. All such shares are of one class and are designated as Common Stock. FOURTH: The governing board of the corporation shall be styled as a "Board of Directors", and any member of said Board shall be styled as a "Director." The number of members constituting the first Board of Directors of the corporation is three (3); and the name and the post office box or street address, either residence or business, of each of said members are as follows:
NAME ADDRESS ---- ------- Rudolph Grua One GBC Plaza Northbrook, Illinois 60062 Steven Rubin One GBC Plaza Northbrook, Illinois 60062 William N. Lane, III One GBC Plaza Northbrook, Illinois 60062
The number of directors of the corporation may be increased or decreased in the manner provided in the Bylaws of the 2 corporation; provided, that the number of directors shall never be less than one. In the interim between elections of directors by stockholders entitled to vote, all vacancies, including vacancies caused by an increase in the number of directors and including vacancies resulting from the removal of directors by the stockholders entitled to vote which are not filled by said stockholders, may be filled by the remaining directors, though less than a quorum. FIFTH: The name and the post office box or street address, either residence or business, of the incorporator signing these Articles of Incorporation are as follows:
NAME ADDRESS ---- ------- Mark E. Dapier One GBC Plaza Northbrook, Illinois 60062
SIXTH: The corporation shall have perpetual existence. SEVENTH: The personal liability of the directors of the corporation is hereby eliminated to the fullest extent permitted by the General Corporation Law of the State of Nevada, as the same may be amended and supplemented. EIGHTH: The corporation shall, to the fullest extent permitted by the General Corporation Law of the State of Nevada, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said Law from and against any and all of the expenses, liabilities, or other matters referred to in or covered by said Law, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person. NINTH: The corporation's purpose shall be to engage in any lawful activity for which corporations may be incorporated under the Nevada General Corporation Law and specifically its purpose shall be to engage in the manufacture and sale of ring metals. The foregoing provisions of this Article NINTH shall be construed both as purposes and powers and each as an independent purpose and power. The foregoing enumeration of specific purposes and powers shall not be held to limit or restrict in any manner the purposes and powers of the corporation, and the purposes and powers herein specified shall, except when otherwise 2 3 provided in this Article NINTH, be in no wise limited or restricted by reference to, or inference from, the terms of any provision of this or any other Article of these Articles of Incorporation; provided, that the corporation shall not carry on any business or exercise any power in any state, territory, or country which under the laws thereof the corporation may not lawfully carry on or exercise. TENTH: The corporation reserves the right to amend, alter, change, or repeal any provision contained in these Articles of Incorporation in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. IN WITNESS WHEREOF, I do hereby execute these Articles of Incorporation on November 5, 1991. /s/ MARK E. DAPIER ------------------------------- 3 EX-3.12 13 BY-LAWS OF GBC METALS 1 EXHBIT 3.12 BYLAWS OF GBC METALS CORP. (a Nevada corporation) ARTICLE I STOCKHOLDERS 1. CERTIFICATES REPRESENTING STOCK. Every holder of stock in the corporation shall be entitled to have a certificate signed by, or in the name of, the corporation by the Chairman or Vice-Chairman of the Board of Directors, if any, or by the President or a Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the corporation or by agents designated by the Board of Directors, certifying the number of shares owned by him in the corporation and setting forth any additional statements that may be required by the General Corporation Law of Nevada. If any such certificate is countersigned or otherwise authenticated by a transfer agent or transfer clerk or by a registrar other than the corporation, a facsimile of the signature of any such officers or agents designated by the Board may be printed or lithographed upon such certificate in lieu of the actual signatures. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates shall cease to be such officer or officers of the corporation before such certificate or certificates shall have been delivered by the corporation, such certificate or certificates may nevertheless be adopted by the corporation and be issued and delivered as though the person or persons who signed such certificate or certificates, or whose facsimile signature or signatures shall have been used thereon, had not ceased to be such officer or officers of the corporation. Whenever the corporation shall be authorized to issue more than one class of stock or more than one series of any class of stock, and whenever the corporation shall issue any shares of special stock, the certificates representing shares of any such class or series or of any such special stock shall set forth thereon the statements prescribed by the General Corporation Law. Any restrictions on the transfer or registration of transfer of any shares of stock of any class or series shall be noted conspicuously on the certificate representing such shares. The corporation may issue a new certificate of stock in place of any certificate theretofore issued by it, alleged to have been lost, stolen, or destroyed, and the Board of Directors may require the owner of any lost, stolen, or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify the corporation against any claim that may be made against it on account of the alleged loss, theft, or destruction of any such certificate or the issuance of any such new certificate. 2 2. FRACTIONAL SHARE INTERESTS. The corporation shall not be obliged to but may execute and deliver a certificate for or including a fraction of a share. In lieu of executing and delivering a certificate for a fraction of a share, the corporation may pay to any person otherwise entitled to become a holder of a fraction of a share an amount in cash specified for such purpose as the value thereof in the resolution of the Board of Directors, or other instrument pursuant to which such fractional share would otherwise be issued, or, if not specified therein, then as may be determined for such purpose by the Board of Directors of the issuing corporation; or may execute and deliver registered or bearer scrip over the manual or facsimile signature of an officer of the corporation or of its agent for that purpose, exchangeable as therein provided for full share certificates, but such scrip shall not entitle the holder to any rights as a stockholder except as therein provided. Such scrip may provide that it shall become void unless the rights of the holders are exercised within a specified period and may contain any other provisions or conditions that the corporation shall deem advisable. Whenever any such scrip shall cease to be exchangeable for full share certificates, the shares that would otherwise have been issuable as therein provided shall be deemed to be treasury shares unless the scrip shall contain other provision for their disposition. 3. STOCK TRANSFERS. Upon compliance with provisions restricting the transfer or registration of transfer of shares of stock, if any, transfers or registration of transfers of shares of stock of the corporation shall be made only on the stock ledger of the corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the corporation or with a transfer agent or a registrar, if any, and on surrender of the certificate or certificates for such shares of stock properly endorsed and the payment of all taxes, if any , due thereon. 4. RECORD DATE FOR STOCKHOLDERS. For the purpose of determining the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or the allotment of any rights, or entitled to exercise any rights in respect of any change, conversion, or exchange of stock or for the purpose of any other lawful action, the directors may fix, in advance, a record date, which shall not be more than sixty days nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. If no record date is fixed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the day on which the first written consent is expressed; and the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at any meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. -2- 3 5. MEANING OF CERTAIN TERMS. As used in these Bylaws in respect of the right to notice of a meeting of stockholders or a waiver thereof or to participate or vote thereat or to consent or dissent in writing in lieu of a meeting, as the case may be, the term "share" or "shares" or "share of stock" or "shares of stock" or "stockholder" or "stockholders" refers to an outstanding share or shares of stock and to a holder or holders of record of outstanding shares of stock when the corporation is authorized to issue only one class of shares of stock, and said reference is also intended to include any outstanding share or shares of stock and any holder or holders of record of outstanding shares of stock of any class upon which or upon whom the Articles of Incorporation confers such rights where there are two or more classes or series of shares of stock or upon which or upon whom the General Corporation Law confers such rights notwithstanding that the articles of incorporation may provide for more than one class or series of shares of stock, one or more of which are limited or denied such rights thereunder; provided, however, that no such right shall vest in the event of an increase or a decrease in the authorized number of shares of stock of any class or series which is otherwise denied voting rights under the provisions of the Articles of Incorporation. 6. STOCKHOLDER MEETINGS. -TIME. The annual meeting shall be held on the date and at the time fixed, from time to time, by the directors, provided, that the first annual meeting shall be held on a date within thirteen months after the organization of the corporation, and each successive annual meeting shall be held on a date within thirteen months after the date of the preceding annual meeting. A special meeting shall be held on the date and at the time fixed by the directors. -PLACE. Annual meetings and special meetings shall be held at such place, within or without the State of Nevada, as the directors may, from time to time, fix. Whenever the directors shall fail to fix such place, the meeting shall be held at the principal office of the corporation in the State of Nevada. -CALL. Annual meetings and special meetings may be called by the directors or by any officer instructed by the directors to call the meeting. -NOTICE OR WAIVER OF NOTICE. Notice of all meetings shall be in writing and signed by the President or a Vice-President, or the Secretary, or an Assistant Secretary, or by such other person or persons as the directors shall designate. Such notice shall state the purpose or purposes for which the meeting is called and the time when, and the place, where it is to be held. A copy of such notice shall be either delivered personally to, or shall be mailed postage prepaid, to each stockholder not less than ten nor more than sixty days before such meeting. If mailed, it shall be directed to a stockholder at his address as it appears upon the records of the corporation. Any stockholder may waive notice of any meeting by a writing signed by him, or his duly authorized attorney, either before or after the meeting; and whenever notice of any kind is required to be given under the provisions of the General Corporation Law, a waiver thereof in writing and duly signed whether before or after the time stated therein, shall be deemed equivalent thereto. -3- 4 -CONDUCT OF MEETING. Meetings of the stockholders shall be presided over by one of the following officers in the order of seniority and if present and acting - the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, the President, a Vice-President, or, if none of the foregoing is in office and present and acting, by a chairman to be chosen by the stockholders. The Secretary of the corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present the Chairman of the meeting shall appoint a secretary of the meeting. -PROXY REPRESENTATION. Every stockholder may authorize another person or persons to act for him by proxy appointed by an instrument in writing in all matters in which a stockholder is entitled to participate, whether by voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be executed by the stockholder or by his attorney-in-fact. No proxy shall be valid after the expiration of six months from the date of its execution, unless coupled with an interest or unless it specifies therein the length of time for which it is to continue in force, which in no case shall exceed seven years from the date of its execution. -INSPECTORS. The directors, in advance of any meeting, may, but need not, appoint one or more inspectors of election to act at the meeting or any adjournment thereof. If an inspector or inspectors are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors. In case any person who may be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, if any, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspector or inspectors, if any, shall make a report in writing of any challenge, question or matter determined by him or them and execute a certificate of any fact found by him or them. -QUORUM. The holders of a majority of the outstanding shares of stock or of the voting power, as the case may be, shall constitute a quorum at a meeting of stockholders for the transaction of any business unless the action to be taken at the meeting shall require a greater proportion. The stockholders present may adjourn the meeting despite the absence of a quorum. -VOTING. Each share of stock shall entitles the holder thereof to one vote. In the election of directors, a plurality of the votes cast shall elect. Any other action shall be authorized by a majority of the votes cast except where the General Corporation Law, the Articles of Incorporation, or these Bylaws prescribe a different percentage of votes and/or a different exercise of voting power. In the election of directors, voting need not be by ballot; and, except as otherwise may be provided by the General Corporation Law, voting by ballot shall not be required for any other action. -4- 5 7. STOCKHOLDER ACTION WITHOUT MEETINGS. Except as may otherwise be provided by the General Corporation Law, any action which may be taken by the vote of stockholders at a meeting, may be taken without a meeting if authorized by the written consent of stockholders holding at least a majority of the voting power; provided that if any greater proportion of voting power is required for such action at a meeting, then such greater proportion of written consents shall be required. In no instance where action is authorized by written consent need a meeting of stockholders be called or noticed. Any written consent shall be subject to the requirements of Section 78.320 of the General Corporation Law and of any other applicable provision of law. ARTICLE II DIRECTORS 1. FUNCTIONS AND DEFINITION. The business and affairs of the corporation shall be managed by the Board of Directors of the corporation. The Board of Directors shall have authority to fix the compensation of the members thereof for services in any capacity. The use of the phrase "whole Board" herein refers to the total number of directors which the corporation would have if there were no vacancies. 2. QUALIFICATIONS AND NUMBER. Each director must be at least 18 years of age. A director need not be a stockholder or a resident of the State of Nevada. The initial Board of Directors shall consist Of 3 persons. Thereafter the number of directors constituting the whole board shall be at least one. Subject to the foregoing limitation and except for the first Board of Directors, such number may be fixed from time to time by action of the stockholders or of the directors, or, if the number is not fixed, the number shall be 3 . The number of directors may be increased or decreased by action of the stockholders or of the directors. 3. ELECTION AND TERM. Directors may be elected in the manner prescribed by the provisions of Sections 78.320 through 78.335 of the General Corporation Law of Nevada. The first Board of Directors shall hold office until the first election of directors by stockholders and until their successors are elected and qualified or until their earlier resignation or removal. Any director may resign at any time upon written notice to the corporation. Thereafter, directors who are elected at an election of directors by stockholders, and directors who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the next election of directors by stockholders and until their successors are elected and qualified or until their earlier resignation or removal. In the interim between elections of directors by stockholders, newly created directorships and any vacancies in the Board of Directors, including any vacancies resulting from the removal of directors for cause or without cause by the stockholders and not filled by said stockholders, may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum, or by the sole remaining director. -5- 6 4. MEETINGS. -TIME. Meetings shall be held at such time as the Board shall fix, except that the first meeting of a newly elected Board shall be held as soon after its election as the directors may conveniently assemble. -PLACE. Meetings shall be held at such place within or without the State of Nevada as shall be fixed by the Board. -CALL. No call shall be required for regular meetings for which the time and place have been fixed. Special meetings may be called by or at the direction of the Chairman of the Board, if any the Vice-Chairman of the Board, if any, of the President, or of a majority of the directors in office. -NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for regular meetings for which the time and place have been fixed. Written, oral, or any other mode of notice of the time and place shall be given for special meetings in sufficient time for the convenient assembly of the directors thereat. Notice if any need not be given to a director or to any member of a committee of directors who submits a written waiver of notice signed by him before or after the time stated therein. -QUORUM AND ACTION. A majority of the whole Board shall constitute a quorum except when a vacancy or vacancies prevents such majority, whereupon a majority of the directors in office shall constitute a quorum, provided, that such majority shall constitute at least one-third of the whole Board. A majority of the directors present, whether or not a quorum is present, may adjourn a meeting to another time and place. Except as the Articles of Incorporation or these Bylaws may otherwise provide, and except as otherwise provided by the General Corporation Law, the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board. The quorum and voting provisions herein stated shall not be construed as conflicting with any provisions of the General Corporation Law and these Bylaws which govern a meeting of directors held to fill vacancies and newly created directorships in the Board or action of disinterested directors. Members of the Board or of any committee which may be designated by the Board may participate in a meeting of the Board or of any such committee, as the case may be, by means of a conference telephone network or a similar communications method by which all persons participating in the meeting hear each other. Participation in a meeting by said means shall constitute presence in person at any such meeting. Each person participating in a meeting by such means shall sign the minutes thereof. -CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present and acting, shall preside at all meetings. Otherwise, the Vice-Chairman of the Board, if any and if present and acting, or the President, if present and acting, or any other director chosen by the Board, shall preside. -6- 7 5. REMOVAL OF DIRECTORS. Any or all of the directors may be removed for cause or without cause by the holders of at least two thirds of the outstanding stock of the corporation. One or more of the directors may be removed for cause by the Board of Directors. 6. COMMITTEES. Whenever its number consists of two or more, the Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the corporation and each committee to have such powers and duties as the Board shall determine. Any such committee, to the extent provided in the resolution or resolutions of the Board, shall have and may exercise the powers and authority of the Board of Directors in the management of the business and affairs of the corporation and may authorize the seal or stamp of the corporation to be affixed to all papers on which the corporation desires to place a seal or stamp. 7. WRITTEN ACTION. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all the members of the Board or committee, as the case may be. ARTICLE III OFFICERS 1. The corporation shall have a President, a Secretary, a Vice President, and such other officers, agents and factors with such titles as the resolution choosing them shall designate. Each of any such officers, agents, and factors shall be chosen by the Board of Directors or chosen in the manner determined by the Board of Directors. 2. QUALIFICATIONS. Except as may otherwise be provided in the resolution choosing him, no officer other than the Chairman of the Board, if any, and the Vice-Chairman of the Board, if any, need be a director. Any two or more offices may be held by the same person, as the directors may determine. 3. TERM OF OFFICE. Unless otherwise provided in the resolution choosing him, each officer, except the Resident Agent, shall be chosen for a term which shall continue until the meeting of the Board of Directors following the next annual meeting of stockholders and until his successor shall have been chosen and qualified. The Resident Agent shall serve until his or its successor shall have been chosen and qualified. Any officer may be removed, with or without cause, by the Board of Directors or in the manner determined by the Board. Any vacancy in any office may be filled by the Board of Directors or in the manner determined by the Board. -7- 8 4. DUTIES AND AUTHORITY. All officers of the corporation shall have such authority and perform such duties in the management and operation of the corporation as shall be prescribed in the resolution designating and choosing such officers and prescribing their authority and duties, and shall have such additional authority and duties as are incident to their office except to the extent that such resolutions or instruments may be inconsistent therewith. ARTICLE IV PRINCIPAL OFFICE The location of the initial principal office of the corporation in the State of Nevada is set forth in the original Articles of Incorporation. The corporation shall maintain at said principal office a copy of its Articles of Incorporation, and all amendments thereto, and a copy of these Bylaws, and all amendments thereto, as certified by the Secretary of the corporation. The corporation shall also keep at said principal office a stock ledger or a duplicate stock ledger, revised annually containing the names, alphabetically arranged, of all persons who are stockholders of the corporation, showing their places of residence, if known, and the number of shares held by them respectively or a statement setting out the name of the custodian of the stock ledger or duplicate stock ledger, and the present and complete post office address, including street and number, if any, where such stock ledger or duplicate stock ledger is kept. ARTICLE V CORPORATE SEAL OR STAMP The corporate seal or stamp shall be in such form as the Board of Directors may prescribe. ARTICLE VI FISCAL YEAR The fiscal year of the corporation shall be fixed, and shall be subject to change, by the Board of Directors. ARTICLE VII CONTROL OVER BYLAWS The power to amend, alter, and repeal these Bylaws and to make new Bylaws shall be vested in the Board of Directors subject to the Bylaws, if any, of the stockholders. -8- EX-3.13 14 ARTICLES OF INCORPORATION OF IBICO INC. 1 EXHIBIT 3.13 ARTICLES OF INCORPORATION OF IBICO INC., AS AMENDED STATE OF ILLINOIS, COOK COUNTY To JOHN W. LEWIS, Secretary of State: The undersigned
Name Number Street Address/City State - ---- ------ ------ ------------ ----- J.J. Murphy 208 South LaSalle Street, Chicago, Illinois 60604 A. P. Polizzi 208 South LaSalle Street, Chicago, Illinois 60604 R. D. Runo 208 South LaSalle Street, Chicago, Illinois 60604
being on one or more natural persons of the age of twenty-one years or more or a corporation, and having subscribed to shares of the corporation to be organized pursuant hereto, for the purpose of forming a corporation under "The Business Corporation Act" of the State of Illinois, do hereby adopt the following Articles of Incorporation: ARTICLE ONE The name of the corporation hereby incorporated is: IBICO INC. ARTICLE TWO The address of its initial registered office in the State of Illinois is: 208 South LaSalle Street, in the City of Chicago (Zip Code (60604)) County of Cook and the name of its initial Registered Agent at said address is: CT Corporation System. ARTICLE THREE The duration of the corporation is: perpetual. ARTICLE FOUR The purpose or purposes for which the corporation in organized are: To do a general mercantile and manufacturing business and to do anything and everything incidental thereto. 2 To sell plastic bindings and equipment, calculators, and typewriters, and to provide services in relation thereto; to sell watches and to provide repair services and general services in relation thereto. ARTICLE FIVE PARAGRAPH 1: The aggregate number of shares which the corporation is authorized to issue is 100,000 divided into one class. The designation of each class, the number of shares of each class, and the par value, if any, of the shares of each class, or a statement that the shares of any class are without par value are as follows:
Series Number of Par value per share or statement that shares Class (If any) Shares are without par value Common -- 100,000 $1.00
PARAGRAPH 2: The preferences, qualifications, limitations, restrictions and the special or relative rights in respect of the shares of each class are: None ARTICLE SIX The Class and number of shares which the corporation proposes to issue without further report to the Secretary of State, and the consideration (expressed in dollars) to be received by the corporation therefor, are:
Class of shares Number of shares Total consideration to be received therefor: Common 10,000 $10,000.00
ARTICLE SEVEN The corporation will not commence business until at least one thousand dollars has been received as consideration for the issuance of shares. ARTICLE EIGHT The number of directors to be elected at the first meeting of the shareholders is: three (3) ARTICLE NINE PARAGRAPH 1: It is estimated that the value of all property to be owned by the corporation for the following year wherever located will be $___________________ 3 PARAGRAPH 2: It is estimated that the value of the property to be located within the State of Illinois during the following year will be $________________ PARAGRAPH 3: It is estimated that the gross amount of business which will be transacted by the corporation during the following year will be $_______________ PARAGRAPH 4: It is estimated that the gross amount of business which will be transacted at or from places of business in the State of Illinois during the following year will be $_________________________ Note: If all the property of the corporation is to be located in this State and all of its business is to be transacted at or from places of business in this State, or if the incorporators elect to pay the initial franchise tax on the basis of its entire stated capital and paid-in surplus, then the information called for in Article Nine need not be stated. THE INCORPORATORS ELECT TO PAY THE INITIAL FRANCHISE TAX ON THE BASIS OF THE ENTIRE STATED CAPITAL AND PAID-IN SURPLUS. ARTICLE TEN The power to amend shall be in the shareholders at annual or special meeting of the shareholders, and in addition thereto the by-laws may be amended by the board of directors in accordance with the special notice as provided in the by-laws. /s/ J.J. MURPHY - ------------------------------ J. J. Murphy, Incorporator /s/ A. P. POLIZZI - ------------------------------ A. P. Polizzi, Incorporator /s/ R. D. RUNO - ------------------------------ R. D. Runo, Incorporator OATH AND ACKNOWLEDGMENT STATE OF ILLINOIS Cook County } SS. I, Howard L. Rosenberg, a Notary Public, do hereby certify that on the 15th day of May, 1975 J.J. Murphy, A.P. Polizzi and R. D. Runo personally appeared before me and being first duly sworn by me acknowledged the signing of the foregoing document in the respective capacities therein set forth and declared that the statements therein contained are true. IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year written. /s/ HOWARD L. ROSENBERG ------------------------------ (NOTARIAL SEAL) Notary Public Howard L. Rosenberg 4 ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF IBICO To ALAN J. DIXON Secretary of State Springfield, Illinois The undersigned corporation, for the purpose of amending its Articles of Incorporation and pursuant to the provisions of Section 55 of "The Business Corporation Act" of the State of Illinois, hereby executes the following Articles of Amendment: ARTICLE FIRST: The name of the corporation is: IBICO INC. ARTICLE SECOND: The following amendment or amendments were adopted in the manner prescribed by "The Business Corporation Act" of the State of Illinois: RESOLVED, that the Articles of Incorporation be amended so as to increase the authorized issuance of common shares to 300,000, with a par value of $1.00; and BE IT FURTHER RESOLVED, that ARTICLE FIVE of the Articles of Incorporation be amended and changed so as to read as follows; ARTICLE FIVE Paragraph 1. The aggregate number of shares which the corporation is authorized to issue is 300,000 divided into one class. The designation of each class, the number of shares of each class, and the par value, if any, of the shares of each class, or a statement that the shares of any class are without par value are as follows:
Series Number of Par Value per share or statement that Class (If any) Shares shares are without value - --------- ---------- -------- ------------------------------------- Common -- 300,000 $1.00
ARTICLE THIRD: The number of shares of the corporation outstanding at the time of the adoption of said amendment or amendments was 100,000; and the number of shares of each class entitled to vote as a class on the adoption of said amendment or amendments and the designation of each such class were as follows: [BLANK] Note: On the date of adoption of the amendment an additional no shares were held in treasury and not entitled to vote. 5 ARTICLE FOURTH: The number of shares voted for said amendment or amendments was 100,000; and the number of shares voted against said amendment or amendments was 0. The number of shares or each class entitled to vote as a class voted for and against said amendments or amendments, respectively, was:
CLASS NUMBER OF SHARES VOTED Common FOR AGAINST 100,000 None
IN WITNESS WHEREOF, the undersigned corporation has caused these Articles of Amendment to be executed in its name by its President, and its corporate seal to be hereto affixed, attested by its Secretary, this 22nd day of January, 1980. IBICO INC. By /s/ THEO WOLFENSBERGER --------------------------- (CORPORATE SEAL) Its President STATE OF ILLINOIS ------------------- SS. COUNTY OF COOK ------------------- I, Patricia A. Malinowski, a Notary Public, do hereby certify that on the 22nd day of January, 1980, Theo Wolfensberger personally appeared before me and, being first duly sworn by me, acknowledged that he signed the foregoing document in the capacity therein set forth and declared that the statements therein contained are true. IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year before written. /s/ PATRICIA A. MALINOWSKI ------------------------------ Notary Public (NOTARIAL SEAL) * * * * * * ARTICLES OF AMENDMENT Pursuant to the provision of "The Business Corporation Act of 1983", the undersigned corporation hereby adopts these Articles of Amendment to its Articles of Incorporation. 6 ARTICLE ONE The name of the corporation is Ibico Inc. . ARTICLE TWO The following amendment of the Articles of Incorporation was adopted on March 21, 1991 in the manner of indicated below. By the shareholders, in accordance with Section 10.20 and 7.10, a resolution of the board of directors have been duly adopted and submitted to the shareholders. A consent in writing has been signed by all the shareholders entitled to vote on this amendment. Resolution INCREASE IN AUTHORIZED SHARES; AMENDMENT TO ARTICLE FIVE OF ARTICLES OF INCORPORATION RESOLVED, that the number of shares which the corporation is authorized to issue is hereby increased from 300,000 to 3,000,000, all of which shall be common shares at $1 par value each. FURTHER RESOLVED, that Article Five of the Articles of Incorporation be deleted in its entirety and in lieu thereof said article shall read as follows: ARTICLE FIVE Paragraph 1. The aggregate number of shares which the corporation is authorized to issue is 3,000,000. The designation of each class and the number of shares of each class and the par value, if any, of the shares of each class, or a statement that the shares of each class are without par value are as follows:
Class No. of Shares Par Value Per Share - ----- ------------- ------------------- Common 3,000,000 $1.00
Paragraph 2. The preferences, qualifications, limitations, restrictions and the special or relative rights in respect of the shares of each class are: None. ARTICLE THREE The manner in which any exchange, reclassification or cancellation of issued shares, or a reduction of the number of authorized shares of any class below the number of issued shares of that class, provided for or effected by this amendment, is as follows: No Change ARTICLE FOUR (a) The manner in which said amendment effects a change in the amount of paid-in capital (Paid-in capital replaces the term Stated Capital and Paid in surplus and is equal to the total of these accounts) in as follows: No Change 7 (b) The amount of paid-in capital (Paid in Capital replaces the terms Stated Capital and Paid in Surplus and is equal to the total of these accounts) as changed by this amendment is as follows: No Change (1) The undersigned corporation has caused these articles to be signed by its duly authorized officers, each of whom affirm, under penalties of perjury, that the facts stated herein are true. Dated March 29, 1991 Ibico Inc. attested by /s/ MARSHAL I. McMAHON, JR. /s/ RICHARD O. DILL -------------------------- --------------------------------- (Signature of Secretary or (Signature of President or Vice Assistant Secretary) President) Marshal I. McMahon, Jr. Richard O. Dill * * * * * * ARTICLES OF AMENDMENT 1. CORPORATE NAME: Ibico Inc. 2. MANNER OF ADOPTION: The following amendment of the Articles of Incorporation was adopted on June 7, 1994 in the manner indicated below. By the shareholders, in accordance with Sections 10.20 and 7.10, a resolution of the board of directors having been duly adopted and submitted to the shareholders. A consent in writing has been signed by all the shareholders entitled to vote on this amendment. Resolution INCREASE IN AUTHORIZED SHARES AMENDMENT TO ARTICLE FIVE OF ARTICLES OF INCORPORATION RESOLVED, that the number of shares which the corporation is authorized to issue is hereby increased from 3,000,000 to 10,000,000, all of which shall be common shares at $1 par value each. FURTHER RESOLVED, that Article Five of the Articles of Incorporation be deleted in its entirety and in lieu thereof said article shall read as follows: ARTICLE FIVE Paragraph 1. The aggregate number of shares which the corporation is authorized to issue is 10,000,000. The designation of each class and the number of shares of each class and the par value, if any, of the shares of each class, or a statement that the shares of each class are without par value are as follows: 8
Class No. of Shares Par Value Per Share ----- ------------- ------------------- Common 10,00,000 $1.00
Paragraph 2. The preferences, qualifications, limitations, restrictions and the special or relative rights in respect of the shares of each class are: None. 3. The manner in which any exchange, reclassification of issued shares, or a reduction of the number of authorized shares of any class below the number of issued shares if that class, provided for or effected by this amendment, is as follows: No Change 4. (a) manner in which said amendment effects a change in the amount of paid-in capital (Paid-in capital replaces the terms Stated Capital and Paid-in Surplus and is equal to the total of these account) is as follows: No Change (b) The amount of paid-in capital (Paid-in capital replaces the terms Stated Capital and Paid-in Surplus and is equal to the total of these accounts) as changed by this amendment is as follows: No Change 5. The undersigned corporation has caused this statement to be signed by its duly authorized officers, each of whom affairs, under penalties or perjury, that the facts stated herein are true. Dated June 13, 1994 Ibico Inc. attested by /s/ MARSHAL I. McMAHON, JR. /s/ RICHARD O. DILL ---------------------------- ------------------------------------ (Signature of Secretary or (Signature of President or Vice Assistant Secretary) President) Marshal I. McMahon, Jr. Richard O. Dill EX-3.14 15 BY-LAWS OF IBICO 1 EXHIBIT 3.14 BY-LAWS OF IBICO INC. ARTICLE ONE REGISTERED OFFICE The registered office of the Corporation is located at 760 Bonnie Lane, Elk Grove Village, Illinois and the name of the registered agent of the Corporation at such address is: Richard O. Dill. ARTICLE TWO SHAREHOLDERS' MEETINGS Place of Meetings 2.01 All meetings of the Shareholders shall be held at the registered office of the Corporation, or any other place within or without the State of Illinois, as may be designated from time to time by the Board of Directors. Time of Annual Meeting 2.02 The annual meeting of the Shareholders shall be held each year on March 1st or at such other time as the Board of Directors shall determine. Special Meetings 2.03 Special meetings of the Shareholders may be called at any time by the President, by the entire Board of Directors, by any two (2) or more Directors, or by one (1) or more Shareholders, holding not less than one-fifth (1/5) of all the outstanding shares entitled to vote on the matters for which the meeting is called. Informal Action by Shareholders 2.04 Any action required or permitted by law to be taken at any meeting of the Shareholders may be taken without a meeting and without a vote, if a consent in writing, stating forth the action so taken, is signed (i) by all of the Shareholders entitled to vote with respect to the subject matter thereof; or (ii) by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voting provided five (5) days prior notice of the proposed action is given in writing to all of the Shareholders entitled to vote in respect to the subject matter thereof. Notice of the taking of the Corporation action without a meeting by less 2 than unanimous written consent shall be given in writing to those Shareholders who have not consented in writing. Notice of Meeting 2.05 Written or printed notice stating the place, day, hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than five (5) nor more than sixty (60) days before the date of the meeting, or in case of a merger, consolidation, share exchange, dissolution or sale, lease or exchange of assets, not less than twenty (20) nor more than sixty (60) days before the date of the meeting, either personally or by mail, by or at the direction of the President, or the Secretary, or the officer or persons calling the meeting, to each Shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the Shareholder at his or her address as it appears on the records of the Corporation, with postage thereon prepaid. Quorum 2.06 A majority of the outstanding shares entitled to vote on a matter represented in person or by proxy shall constitute a quorum for consideration of such matter at a meeting of Shareholders. If a quorum is present the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on a matter shall be the act of the Shareholders. Voting 2.07 Each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of Shareholders. In all elections for Directors, every Shareholder shall have the right to vote the number of shares owned by such Shareholder for as many persons as there are Directors to be elected, or to cumulate such votes and give one candidate as many votes as shall equal the number of directors multiplied by the number of such shares or to distribute such cumulative votes in any proportion among any number of candidates. Treasury shares shall not be voted directly or indirectly at any meeting and shall not be counted in determining the total number of outstanding shares at any given time. Proxies 2.08 At all meetings, any Shareholder may vote either in person or by proxy executed in writing by the Shareholder or by his duly authorized attorney in fact. No proxy shall be valid after the expiration of eleven (11) months from the date thereof, unless 2 3 otherwise provided in the proxy. Every proxy shall continue in full force and effect until revoked by the person executing it prior to the vote pursuant thereto unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest in the shares or in the Corporation generally. The dates contained on the forms of proxy shall presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed. Waiver of Notice 2.09 Whenever any notice is required to be given, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Attendance at any meeting shall constitute waiver of notice thereof unless the person at the meeting objects to the holding of the meeting because proper notice was not given. Fixing Record Date 2.10 The date on which notice of the meeting is mailed or the date on which a resolution of the Board of Directors declaring a dividend is adopted, as the case may be, shall be the record date for the determination of Shareholders. ARTICLE THREE DIRECTORS Powers 3.01 The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. The Board of Directors may give general, limited or special power and authority to the officers and employees of the Corporation to transact the general business, or any special business of the Corporation and may give power of attorney to agents of the Corporation to transact any special business requiring such authorization. Number and Qualifications of Directors 3.02 The number of Directors of this Corporation shall be one. The Directors need not be Shareholders of this Corporation or residents of Illinois. The number of Directors may be increased or decreased from time to time by amendment to these Bylaws, but no decrease shall have the effect of shortening the terms of any incumbent Director. Any directorship to be filled by reason of an increase in the number of Directors shall be filled by election at an annual meeting or at a special meeting of Shareholders called for that purpose. 3 4 Election and Term of Office 3.03 The Directors shall be elected annually by the Shareholders. The terms of all Directors shall expire at the next annual Shareholders meeting following their election. Despite the expiration of a Director's term, he or she shall continue to serve until the next meeting of Shareholders at which Directors are elected. Vacancies 3.04 The Directors of the Corporation may, by action of a majority of Directors then in office, fill one (1) or more vacancies arising between meetings of Shareholders by reason of an increase in the number of Directors or otherwise. Any Director so selected shall serve until the next meeting of Shareholders of the Corporation at which Directors are to be elected. Directors' Meetings 3.05 All regular (annual) and special meetings of the Board of Directors may be held either within or without the State of Illinois as may be designated from time to time by the Board. Regular (Annual) Meetings 3.06 Regular (annual) meetings of the Board of Directors shall be held without call or notice immediately following each annual meeting of the Shareholders of the Corporation. Special Meetings, Call and Notices 3.07 Special meetings of the Board of Directors for any purpose shall be called at any time by the President, or if he is absent or unable or refuses to act, by any Vice President or any Director. Written notices of the special meetings, stating the time and place of the meeting shall be mailed or telegraphed or personally delivered to each Director not later than three (3) days before the day appointed for the meeting. Attendance of a Director at any special meeting shall constitute a waiver of notice of such meeting except where a Director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Quorum 3.08 A majority of the number of Directors fixed by these Bylaws shall constitute a quorum for the transaction of business. The act of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Members of the Board of Directors may participate in and act at any meeting of the Board through the use of a conference 4 5 telephone or other communication equipment by means of which all persons participating in the meeting can hear each other. Informal Action by Board 3.09 Any action required or permitted by law to be taken at any meeting of the Board of Directors may be taken without a meeting and with a Note, if a consent in writing, stating the action so taken, is signed by all of the Directors entitled to vote with respect to the subject matter thereof. Adjournment Notice 3.10 A quorum of the Directors may adjourn any Directors' meeting to meet again at a stated day and hour. Notice of the time and place of holding an adjourned meeting need not be given to absent Directors if the time and place is fixed at the meeting adjourned. In the absence of a quorum, a majority of the Directors present at any Directors' meeting, either regular or special, may adjourn from time to time until the time fixed for the next regular meeting of the Board. Removal of Directors 3.11 One or more of the Directors may be removed, with or without cause, at a meeting of Shareholders by the affirmative vote of the holders of a majority of the outstanding shares then entitled to vote at an election of Directors, except that: No Director shall be removed at a meeting of Shareholders unless the notice of such meeting shall state that a purpose of the meeting is to vote upon the removal of one or more Directors named in the notice. Only the named Director or Directors may be removed at such meeting. If less than the entire Board is to be removed, no Director may be removed, with or without cause, if the votes cast against his or her removal would be sufficient to elect him or her if cumulatively voted at an election of the entire Board of Directors. Conflict of Interest 3.12 A Director may be a party to a transaction with the Corporation, either directly or indirectly, if the transaction is fair to the Corporation at the time it is authorized, approved, or ratified and so long as the material facts of the transaction and the Director's interest or relationship are disclosed or known to the Board of Directors and the Board authorized, approved or ratified the transaction by the affirmative votes of a majority of disinterested Directors, even though such disinterested Directors are less than a quorum. 5 6 ARTICLE FOUR OFFICERS Title and Appointment 4.01 The officers of the Corporation shall consist of a Chief Executive Officer (who may either be Chairman of the Board or President, as determined by the Board of Directors) and a Secretary and such other officers (including one or more Vice Presidents and a Treasurer) and assistant officers as the Board of Directors shall determine from time to time. Officers other than President, Secretary and Treasurer (if any) shall be considered "Administrative Officers" whose names need not be disclosed publicly (e.g. on annual report filings with the State of Illinois) depending on the discretion of the Chief Executive Officer. Any two (2) or more offices may be held by the same person. The officers shall be elected at the regular meeting of the Board of Directors, or at such other meeting of the Board as shall be called for such purpose, and unless employed by written contract, the terms of which provide otherwise, their term of office shall be at the will of the Board. 4.01.1 The Chief Executive Officer. The Chief Executive Officer shall be the principal executive officer of the Corporation and shall in general supervise and control all of the business and affairs of the Corporation. He shall preside at all meetings of the Shareholders and of the Board of Directors and shall see that orders and resolutions of the Board of Directors are carried into effect. He may sign bonds, mortgages, certificates for shares and all other contracts and documents except in cases where signing and execution thereof shall be expressly delegated by law, by the Board of Directors of these By-laws to some other officer or agent of the Corporation. He shall have general powers of supervision and shall be the final arbiter of all differences between officers of the Corporation and his decision as to any matter affecting the Corporation shall be final and binding as between the officers of the Corporation subject only to its Board of Directors. The Board of Directors may designate whether the Chairman of the Board, if one shall have been chosen, or the President shall be the Chief Executive Officer of the Corporation. If a Chairman of the Board has not been chosen, or if one has been chosen but not designated Chief Executive officer, then the President shall be the Chief Executive Officer of the Corporation. 4.01.2 The Chairman of the Board. If the Chairman of the Board has not been designated Chief Executive Officer, he shall perform such duties as may be assigned to him by the Chief Executive Officer or by the Board of Directors. 4.01.3 The President. If the President has not been designated Chief Executive Officer, he shall be considered the 6 7 Chief Operating Officer of the Corporation and shall perform such duties as may be assigned to him by the Chief Executive Officer or by the Board of Directors. 4.01.4 Consultant to President. The Consultant to President shall perform such duties as may be assigned to him by the Chief Executive Officer or by the Board of Directors and shall be answerable only to President. 4.01.5 The Vice President. In the absence of the President, or in the event of his inability or refusal to act, the Vice President is empowered to act, and shall thereupon be vested with all of the powers and duties of the President. 4.01.6 The Secretary. The Secretary shall (a) have custody of the corporate minute book, stock transfer ledger and all other business records of the Corporation; (b) have the authority to certify the By-laws, resolutions of the Shareholders and Board of Directors and other documents of the Corporation as true and correct copies thereof; (c) mail or cause to be mailed all notices required under the By-laws; (d) maintain a list of the Shareholders and their addresses, and perform all other duties incident to the office of Secretary. 4.01.7 The Treasurer. The Treasurer shall have custody of the funds of the Corporation, collect monies due, pay the obligations of the Corporation out of its funds, and perform such other duties as are incident to the office of Treasurer. 4.01.8 Assistant Treasurers and Assistant Secretaries. The Assistant Treasurers (a/k/a controllers or accounting managers) and Assistant Secretaries shall perform such duties as shall be assigned to them by the Treasurer or the Secretary, respectively, or by the President or the Board of Directors. If required by the Board of Directors, the Assistant Treasurers shall give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. Execution of Instruments 4.02 The Board of Directors may, in its discretion, designate any officer or officers, or other person or persons, to execute any corporate instrument or document, or to sign the corporate name without limitation, except where otherwise prohibited by law, and such execution or signature shall be binding upon the Corporation. Removal of Officers 4.03 Any officer or agent may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be 7 8 without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights. Compensation 4.04 The salaries of the officers shall be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a Director of the Corporation. Any payments made to an officer of the Corporation such as a salary, commission, bonus, interest, rent, or entertainment expenses incurred by him, which shall be disallowed in whole or in part as a deductible expense by the Internal Revenue Service, shall be reimbursed by such officer to the Corporation to the full extent of such disallowance. It shall be the duty of the Board of Directors to enforce payment of each such amount disallowed. In lieu of reimbursement by the officer, subject to the determination of the Board, proportionate amounts may be withheld from the officer's compensation payments until the amount owed to the Corporation has been recovered. Indemnification of Directors, Officers and Employees 4.05 To the fullest extent permitted by Section 8.75 of the Illinois Business Corporation Act, the Board of Directors is authorized, if it so elects, to indemnify any person by reason of the fact that he or she was or is a director, officer, employee or agent of the Corporation or who is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, if such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. ARTICLE FIVE ISSUANCE AND TRANSFER OF SHARES Share Certificates 5.01 The issued shares of this Corporation shall be represented by certificates in such form and manner as the Board of Directors may provide or if so authorized by the Board of Directors may be uncertificated shares. Certificates shall be signed by the President or Vice President and the Secretary or Assistant Secretary. The rights and obligations of holders of uncertificated shares and the rights and obligations of the holders of certificates representing shares of the same class and series shall be identical. 8 9 5.02 A corporate seal shall not be required to authenticate share certificates or any other document of this corporation. 5.03 Every certificate representing shares of more than one class shall set forth upon the face or back of the certificate a full summary or statement of all of the designations, preferences, qualifications, limitations, restrictions, and special or relative rights of the shares of each class authorized to be issued, and with respect to any preferred or special class in series, the variations in the relative rights and preferences between the shares of each such series so far as the same have been fixed and determined and the authority of the Board of Directors to fix and determine the relative rights and preferences of subsequent series. Such statement may be omitted from the certificate if it shall be set forth upon the face or back of the certificate that such statement, in full, will be furnished by the Corporation to any Shareholder upon request and without charge. 5.04 The Board of Directors may provide by resolution that some or all of any or all classes and series of the Corporation's shares shall be uncertificated shares, provided that such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Within a reasonable time after the issuance or transfer of uncertificated shares, the Corporation shall send to the registered owner thereof, a written notice containing the information required to be set forth or stated on certificates pursuant to Section 5.03. 5.05 No certificate shall be issued for any share until such share is fully paid. Replacement of Certificates 5.06 No new certificates shall be issued until the former certificate for the shares represented thereby shall have been surrendered and canceled, except in the case of lost or destroyed certificates for which the Board of Directors may order new certificates to be issued upon such terms, conditions, and guarantees as the Board may see fit to impose, including the filing of sufficient indemnity. Transfer of Shares 5.07 Shares of the Corporation may be transferred by endorsement by the signature of the owner, his agent, attorney, or legal representative, and the delivery of the certificate. The transferee in any transfer of shares shall be deemed to have full notice of, and to consent to, the Bylaws of the Corporation to the same extent as if he had signed a written assent thereto. 9 10 ARTICLE SIX INSPECTION OF BOOKS AND RECORDS All books and records provided for by statute shall be open to inspection of the Shareholders from time to time and to the extent expressly provided by statute, and not otherwise. The Directors may examine such books and records at all reasonable times. ARTICLE SEVEN FISCAL YEAR The fiscal year of the Corporation shall be determined by resolution of the Board of Directors. ARTICLE EIGHT AMENDMENT OF BYLAWS The power to make, alter, amend, or repeal the Bylaws is vested in the Board of Directors, unless for any reason (e.g. death or resignation) the Corporation would be without a Board of Directors, in which case said power shall be vested in the Shareholders. * * * * * * IBICO INC. BY-LAWS AMENDMENT (effective March 1, 1992) Section 3.02 of Article III of the by-laws be and it is hereby amended so as to increase the number of Directors of the Corporation from one (1) to three (3). 10 EX-3.15 16 RESTATED ARTICLES OF INCORPORATION OF PRO-TECH 1 EXHIBIT 3.15 RESTATED ARTICLES OF INCORPORATION OF PRO-TECH ENGINEERING CO., INC. PRO-TECH ENGINEERING CO., INC., a Wisconsin statutory close corporation under Subchapter XVIII, Chapter 180, Wis. Stats., hereby certifies pursuant to the provisions of Chapter 180, Wis. Stats., by its president and secretary, as follows: 1. PRO-TECH ENGINEERING CO., INC. has 2,800 authorized shares of no par value common stock of which 125 shares are issued and outstanding. 2. The following Restated Articles of PRO-TECH ENGINEERING CO., INC. were unanimously adopted and approved by the sole shareholder of PRO-TECH ENGINEERING CO., INC., General Binding Corporation, following the acquisition of all 125 outstanding shares of stock on December 20, 1995 pursuant to action taken without a meeting under the authority of Section 180.0704, Wis. Stats., on March 18, 1996 because the corporation no longer qualifies as a Wisconsin statutory close corporation. 3. The following Restated Articles of Incorporation of PRO-TECH ENGINEERING CO., INC. supersede and take the place of the existing Articles of Incorporation and all amendments thereto as filed with the Wisconsin Secretary of State. NOW, THEREFORE, following are the Restated Articles of Incorporation of PRO-TECH ENGINEERING CO., INC. RESTATED ARTICLES OF INCORPORATION OF PRO-TECH ENGINEERING CO., INC. I, the undersigned natural person, being more than eighteen (18) years of age, who acted as one of the incorporators of the corporation under the Wisconsin Business Corporation Law, Chapter 180, Wisconsin Statutes, adopt the following Restated Articles of Incorporation for such corporation. ARTICLE I NAME The name of the corporation is PRO-TECH ENGINEERING CO., INC. ARTICLE II EXISTENCE 2 The period of the corporation's existence shall be perpetual. ARTICLE III PURPOSES; POWERS SECTION 1. PURPOSES. The corporation is organized to engage in any lawful activity within the purposes for which corporations may be organized under the Wisconsin Business Corporation Law. SECTION 2. POWERS. The corporation shall have and may exercise all powers granted to corporations by the Wisconsin Business Corporation Law. ARTICLE IV AUTHORIZED SHARES; PRE-EMPTIVE RIGHTS SECTION 1. AUTHORIZED SHARES. The aggregate number of shares which the corporation shall have authority to issue is 2,800. The capital stock shall consist of one (1) class only, designated as "Common Stock" with no par value. SECTION 2. NO PRE-EMPTIVE RIGHTS. The holders, from time to time, of the shares of the common stock of the corporation, shall not have the pre-emptive right to purchase any of the shares of the common stock of the corporation (a) as may be issued from the common stock authorized by the original Articles of Incorporation of the corporation, (b) as may be authorized from time to time over and above the 2,800 shares of common stock authorized by the original Articles of Incorporation of the corporation or (c) as may be shares held in the treasury of the corporation, from time to time, whether derived from such original 2,800 authorized shares, or from shares thereafter authorized. ARTICLE V ADDRESS OF REGISTERED OFFICER; NAME OF REGISTERED AGENT SECTION 1. REGISTERED OFFICE. The street address of the registered office of the corporation is 4151 Anderson Road, DeForest, WI 53532. SECTION 2. REGISTERED AGENT. The name of the registered agent at such address is James E. Guither. ARTICLE VI BOARD OF DIRECTORS -2- 3 The number of directors constituting the Board of Directors of the corporation shall not be less than three (3). Thereafter, the number of directors shall be fixed by the Bylaws but shall not be less than three (3). The members of the Board of Directors shall be William N. Lane, III, Govi C. Reddy, and Steven Rubin. ARTICLE VII AMENDMENTS These Restated Articles may be amended in the manner authorized by law at the time of amendment. ARTICLE VIII AUTHORITY TO DISPOSE OF ASSETS The President, any Vice President, or the Secretary are authorized to sell, lease, exchange, mortgage, pledge, or otherwise convey or dispose of all or any part of the corporation's real property, fixtures, improvements or chattels, whether or not made in the usual and regular course of the business of the corporation, by instruments duly executed according to law after first obtaining authorization of the Board of Directors or the shareholders of the corporation. Executed on the 18th day of March 1996. PRO-TECH ENGINEERING CO. INC. By /s/ JAMES E. GUITHER --------------------------------- James E. Guither, President Attest /s/ STEVEN RUBIN ------------------------------ Steven Rubin, Secretary This instrument drafted by Attorney Richard W. Pitzner Return to Attorney Richard W. Pitzner PO Box 2038 Madison WI (608) 257-7181 -3- EX-3.16 17 BY-LAWS OF PRO-TECH 1 EXHIBIT 3.16 BY-LAWS OF PRO-TECH ENGINEERING COMPANY, INC. INTRODUCTION 0.01. Date of annual shareholders' meeting (See Section 2.01): 8:00 a.m. 1 1 October 1987 --------- ---- ---- ------- ---- (Hour) (Week) (Day) (Month) (First year) 0.02. Required notice of shareholders' meeting (See Section 2.04): not less than 2 days. 0.03. Authorized number of directors (See Section 3.01): Two Effective January 8, 1996: Authorized number of directors: Three 0.04. Required notice of directors' meetings (See Section 3.05): (a) not less than 72 hours if by mail, and (b) not less than 48 hours if by telegram or personal delivery. 0.05. Authorized number of Vice-Presidents (See Section 4.01): 1 Effective January 8, 1996: Authorized number of Vice- Presidents: 5 ARTICLE I. OFFICES 1.01. Principal and Business Offices. The corporation may have such principal and other business offices, either within or without the State of Wisconsin, as the Board of Directors may designate or as the business of the corporation may require from time to time. 1.02. Registered Office. The registered office of the corporation required by the Wisconsin Business Corporation Law to be maintained in the State of Wisconsin may be, but need not be, identical with the principal office in the State of Wisconsin, and the address of the registered office may be changed from time to time by the Board of Directors or by the registered agent. The business office of the registered agent of the corporation shall be identical to such registered office. 2 ARTICLE II. SHAREHOLDERS 2.01. Annual Meeting. The annual meeting of the shareholders shall be held at the date and hour in each year set forth in Section 0.01, or at such other time and date within thirty days before or after said date as may be fixed by or under the authority of the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the State of Wisconsin, such meeting shall be held on the next succeeding business day. If the election of directors shall not be held on the day designated herein, or fixed as herein provided, for any annual meeting of the shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as conveniently may be. 2.02. Special Meeting. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the President or the Board of Directors or by the person designated in the written request of the holders of not less than one-tenth of all shares of the corporation entitled to vote at the meeting. 2.03. Place of Meeting. The Board of Directors may designate any place, either within or without the State of Wisconsin, as the place of meeting for any annual meeting or for any special meeting called by the Board of Directors. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any place, either within or without the State of Wisconsin, as the place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal business office of the corporation in the State of Wisconsin or such other suitable place in the county of such principal office as may be designated by the person calling such meeting, but any meeting may be adjourned to reconvene at any place designated by vote of a majority of the shares represented thereat. 2.04. Notice of Meeting. Written notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than the number of days set forth in Section 0.02 (unless a longer period is required by law or the articles of incorporation) nor more than fifty days before the date of the meeting, either personally or by mail, by or at the direction of the President, or the Secretary, or other officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be 2 3 delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the stock record books of the corporation, with postage thereon prepaid. 2.05. Closing of Transfer Books or Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, fifty days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closeed for at least ten days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than fifty days and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the close of business on the date on which notice of the meeting is mailed or on the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall be applied to any adjournment thereof except where the determination has been made through the closing of the stock transfer books and the stated period of closing has expired. 2.06. Voting Records. The officer or agent having charge of the stock transfer books for shares of the corporation shall, before each meeting of shareholders, make a complete record of the shareholders entitled to vote at such meeting, or any adjournment thereof, with the address of and the number of shares held by each. Such record shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting for the purposes of the meeting. The original stock transfer books shall be prima facie evidence as to who are the shareholders entitled to examine such record or transfer books or to vote at any meeting of shareholders. Failure to comply with the requirements of this 3 4 section shall not affect the validity of any action taken at such meeting. 2.07. Quorum. Except as otherwise provided in the articles of incorporation, a majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders unless the vote of a greater number or voting by classes is required by law or the articles of incorporation. Though less than a quorum of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. 2.08. Conduct of Meetings. The President, and in his absence, a Vice-President in the order provided under Section 4.06, and in their absence, any person chosen by the shareholders present shall call the meeting of the shareholders to order and shall act as chairman of the meeting, and the Secretary of the corporation shall act as secretary of all meetings of the shareholders, but, in the absence of the Secretary, the presiding officer may appoint any other person to act as secretary of the meeting. 2.09. Proxies. At all meetings of shareholders, a shareholder entitled to vote may vote in person or by proxy appointed in writing by the shareholder or by his duty authorized attorney in fact. Such proxy shall be filed with the Secretary of the corporation before or at the time of the meeting. Unless otherwise provided in the proxy, a proxy may be revoked at any time before it is voted, either by written notice filed with the Secretary or the acting secretary of the meeting or by oral notice given by the shareholder to the presiding officer during the meeting. The presence of a shareholder who has filed his proxy shall not of itself constitute a revocation. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. The Board of Directors shall have the power and authority to make rules establishing presumptions as to the validity and sufficiency of proxies. 2.10. Voting of Shares. Each outstanding share shall be entitled to one vote upon each matter submitted to a vote at a meeting of shareholders, except to the extent that the voting rights of the shares of any class or classes are enlarged, limited or denied by the articles of incorporation. 4 5 2.11. Voting of Shares by Certain Holders. (a) Other Corporations. Shares standing in the name of another corporation may be voted either in person or by proxy, by the president of such corporation or any other officer appointed by such president. A proxy executed by any principal officer of such other corporation or assistant thereto shall be conclusive evidence of the signer's authority to act, in the absence of express notice to this corporation, given in writing to the Secretary of this corporation, of the designation of some other person by the board of directors or the by-laws of such other corporation. (b) Legal Representatives and Fiduciaries. Shares held by an administrator, executor, guardian, conservator, trustee in bankruptcy, receiver, or assignee for creditors may be voted by him, either in person or by proxy, without a transfer of such shares into his name, provided that there is filed with the Secretary before or at the time of meeting proper evidence of his incumbency and the number of shares held. Shares standing in the name of a fiduciary may be voted by him, either in person or by proxy. A proxy executed by a fiduciary, shall be conclusive evidence of the signer's authority to act, in the absence of express notice to this corporation, given in writing to the Secretary of this corporation, that such manner of voting is expressly prohibited or otherwise directed by the document creating the fiduciary relationship. (c) Pledges. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. (d) Treasury Stock and Subsidiaries. Neither treasury shares, nor shares held by another corporation if a majority of the shares entitled to vote for the election of directors of such other corporation is held by this corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares entitled to vote, but shares of its own issue held by this corporation in a fiduciary capacity, or held by such other corporation in a fiduciary capacity, may be voted and shall be counted in determining the total number of outstanding shares en titled to vote. (e) Minors. Shares held by a minor may be voted by such minor in person or by proxy and no such vote shall be subject to disaffirmance or avoidance, unless prior to such vote the Secretary of the corporation has received written notice or has actual knowledge that such shareholder is a minor. 5 6 (f) Incompetents and Spendthrifts. Shares held by an incompetent or spendthrift may be voted by such incompetent or spendthrift in person or by proxy and no such vote shall be subject to disaffirmance or avoidance, unless prior to such vote the Secretary of the corporation has actual knowledge that such shareholder has been adjudicated an incompetent or spendthrift or actual knowledge of filing of judicial proceedings for appointment of a guardian. (g) Joint Tenants. Shares registered in the names of two or more individuals who are named in the registration as joint tenants may be voted in person or by proxy signed by any one or more of such individuals if either (i) no other such individual or his legal representative is present and claims the right to participate in the voting of such shares or prior to the vote files with the Secretary of the corporation a contrary written voting authorization or direction or written denial of authority of the individual present or signing the proxy proposed to be voted or (ii) all such other individuals are deceased and the Secretary of the corporation has no actual knowledge that the survivor has been adjudicated not to be the successor to the interests of those deceased. 2.12. Waiver of Notice by Shareholders. Whenever any notice whatever is required to be given to any shareholder of the corporation under the articles of incorporation or by-laws or any provision of law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the shareholder entitled to such notice, shall be deemed equivalent to the giving of such notice; provided that such waiver in respect to any matter of which notice is required under any provision of the Wisconsin Business Corporation Law, shall contain the same information as would have been required to be included in such notice, except the time and place of meeting. 2.13. Unanimous Consent without Meeting. Any action required or permitted by the articles of incorporation or by-laws or any provision of law to be taken at a meeting of the shareholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. ARTICLE III. BOARD OF DIRECTORS 3.01. General Powers and Number. The business and affairs of the corporation shall be managed by its Board of Directors. The number of directors of the corporation shall be as provided in Section 0.03. 6 7 3.02. Tenure and Qualifications. Each director shall hold office until the next annual meeting of shareholders and until his successor shall have been elected, or until his prior death, resignation or removal. A director may be removed from office by affirmative vote of a majority of the outstanding shares entitled to vote for the election of such director, taken at a meeting of shareholders called for that purpose. A director may resign at any time by filing his written resignation with the Secretary of the corporation. Directors need not be residents of the State of Wisconsin or shareholders of the corporation. 3.03. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this by-law immediately after the annual meeting of shareholders, and each ad journed session thereof. The place of such regular meeting shall be the same as the place of the meeting of shareholders which precedes it, or such other suitable place as may be announced at such meeting of shareholders. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Wisconsin, for the holding of additional regular meetings without other notice than such resolution. 3.04. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the President, Secretary or any two directors. The President or Secretary calling any special meeting of the Board of Directors may fix any place, either within or without the State of Wisconsin, as the place for holding any special meeting of the Board of Directors called by them, and if no other place is fixed the place of meeting shall be the principal business office of the corporation in the State of Wisconsin. 3.05. Notice; Waiver. Notice of each meeting of the Board of Directors (unless otherwise provided in or pursuant to Section 3.03) shall be given by written notice delivered personally or mailed or given by telegram to each director at his business address or at such other address as such director shall have designated in writing filed with the Secretary, in each case not less than that number of hours prior thereto as set forth in Section 0.04. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Whenever any notice whatever is required to be given to any director of the corporation under the articles of incorporation or by-laws or any provision of law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the director entitled to such notice, 7 8 shall be deemed equivalent to the giving of such notice. The at tendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting and objects thereat to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any, regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. 3.06. Quorum. Except as otherwise provided by law or by the articles of incorporation or these by-laws, a majority of the number of directors as provided in Section 0.03 shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but a majority of the directors present (though less than such quorum) may adjourn the meeting from time to time without further notice. 3.07. Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless the act of a greater number is required by law or by the articles of incorporation of these by-laws. 3.08. Conduct of Meetings. The President, and in his absence, a Vice-President in the order provided under Section 4.06, and in their absence, any director chosen by the directors present, shall call meetings of the Board of Directors to order and shall act as chairman of the meeting. The Secretary of the corporation shall act as secretary of all meetings of the Board of Directors, but in the absence of the Secretary, the presiding officer may appoint any Assistant Secretary or any director or other person present to act as secretary of the meeting. 3.09. Vacancies. Any vacancy occurring in the Board of Directors, including a vacancy created by an increase in the number of directors, may be filled until the next succeeding annual election by the affirmative vote of a majority of the directors then in office though less than a quorum of the Board of Directors; provided, that in case of a vacancy created by the removal of a director by vote of the shareholders, the shareholders shall have the right to fill such vacancy at the same meeting or any adjournment thereof. 3.10 Compensation. The Board of Directors, by affirmative vote of a majority of the directors then in office, and irrespective of any personal interest of any of its members, may establish reasonable compensation of all directors for services to the corporation as directors, officers or otherwise, or may 8 9 delegate such authority to an appropriate committee. The Board of Directors also shall have authority to provide for or to delegate authority to an appropriate committee to provide for reasonable pensions, disability or death benefits, and other benefits or payments, to directors, officers and employes and to their estates, families, dependents or beneficiaries on account of prior services rendered by such directors, officers and employes to the corporation. 3.11. Presumption of Assent. A director of the corporation who is present at a meeting of the Board of Directors or a committee thereof of which he is a member at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. 3.12. Committees. The Board of Directors by resolution adopted by the affirmative vote of a majority of the number of directors as provided in Section 0.03 may designate one or more committees, each committee to consist of three or more directors elected by the Board of Directors, which to the extent provided in said resolution as initially adopted, and as thereafter supplemented or amended by further resolution adopted by a like vote, shall have and may exercise, when the Board of Directors is not in session, the powers of the Board of Directors in the management of the business and affairs of the corporation, except action in respect to dividends to shareholders, election of the principal officers or the filling of vacancies in the Board of Directors or committees created pursuant to this section. The Board of Directors may elect one or more of its members as alternate members of any such committee who may take the place of any absent member or members at any meeting of such committee, upon request by the President or upon request by the chairman of such meeting. Each such committee shall fix its own rules governing the conduct of its activities and shall make such reports to the Board of Directors of its activities as the Board of Directors may request. 3.13. Unanimous Consent without Meeting. Any action required or permitted by the articles of incorporation or by-laws or any provision of law to be taken by the Board of Directors at a meeting or by resolution may be taken without a meeting if a consent in 9 10 writing, setting forth the action so taken, shall be signed by all of the directors then in office. ARTICLE IV. OFFICERS 4.01. Number. The principal officers of the corporation shall be a President, the number of Vice-Presidents as provided in Section 0.05, a Secretary, and a Treasurer, each of whom shall be elected by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. Any two or more offices may be held by the same person, except the offices of President and Secretary and the offices of President and Vice-President. 4.02. Election and Term of Office. The officers of the corporation to be elected by the Board of Directors shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of the shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each officer shall hold office until his successor shall have been duly elected or until his prior death, resignation or removal. 4.03. Removal. Any officer or agent may be removed by the Board of Directors whenever in its judgment the best interests of the corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment shall not of itself create contract rights. 4.04. Vacancies. A vacancy in any principal office because of death, resignation, removal, disqualification or otherwise, shall be filled by the Board of Directors for the unexpired portion of the term. 4.05. President. The President shall be the principal executive officer of the corporation and, subject to the control of the Board of Directors, shall in general supervise and control all of the business and affairs of the corporation. He shall, when present, preside at all meetings of the shareholders and of the Board of Directors. He shall have authority, subject to such rules as may be prescribed by the Board of Directors, to appoint such agents and employes of the corporation as he shall deem necessary, to prescribe their powers, duties and compensation, and to delegate authority to them. Such agents and employes shall hold office at the discretion of the President. He shall have authority to sign, execute and acknowledge, on behalf of the corporation, all deeds, 10 11 mortgages, bonds, stock certificates, contracts, leases, reports and all other documents or instruments necessary or proper to be executed in the course of the corporation's regular business, or which shall be authorized by resolution of the Board of Directors; and, except as otherwise provided by law or the Board of Directors, he may authorize any Vice-President or other officer or agent of the corporation to sign, execute and acknowledge such documents or instruments in his place and stead. In general he shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors from time to time. 4.06. The Vice-Presidents. In the absence of the President or in the event of his death, inability or refusal to act, or in the event for any reason it shall be impracticable for the President to act personally, the Vice-President (or in the event there be more than one Vice-President, the Vice-Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Any Vice-President may sign, with the Secretary or Assistant Secretary, certificates for shares of the corporation; and shall perform such other duties and have such authority as from time to time may be delegated or assigned to him by the President or by the Board of Directors. The execution of any instrument of the corporation by any Vice-President shall be conclusive evidence, as to third parties, of his authority to act in the stead of the President. 4.07. The Secretary. The Secretary shall: (a) keep the minutes of the meetings of the shareholders and of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these by-laws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all documents the execution of which on behalf of the corporation under its seal is duly authorized; (d) keep or arrange for the keeping of a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder; (e) sign with the President, or a Vice-President, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation; and (g) in general perform all duties incident to the office of Secretary and have such other duties and exercise such authority as from time to time 11 12 may be delegated or assigned to him by the President or by the Board of Directors. 4.08. The Treasurer. The Treasury shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositaries as shall be selected in accordance with the provisions of Section 5.04; and (c) in general perform all of the duties incident to the office of Treasurer and have such other duties and exercise such other authority as from time to time may be delegated or assigned to him by the President or by the Board of Directors. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine. 4.09. Assistant Secretaries and Assistant Treasurers. There shall be such number of Assistant Secretaries and Assistant Treasurers as the Board of Directors may from time to time authorize. The Assistant Secretaries may sign with the President or a Vice-President certificates for shares of the corporation the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers shall respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties and have such authority as shall from time to time be delegated or assigned to them by the Secretary or the Treasurer, respectively, or by the President or the Board of Directors. 4.10. Other Assistants and Acting Officers. The Board of Directors shall have the power to appoint any person to act as assistant to any officer, or as agent for the corporation in his stead, or to perform the duties of such officer whenever for any reason it is impracticable for such officer or other agent so appointed by the Board of Directors shall have the power to perform all the duties of the office to which he is so appointed to be assistant, or as to which he is so appointed to act, except as such power may be otherwise defined or restricted by the Board of Directors. 4.11. Salaries. The salaries of the principal officers shall be fixed from time to time by the Board of Directors or by a duly authorized committee thereof, and no officer shall be prevented 12 13 from receiving such salary by reason of the fact that he is also a director of the corporation. ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS; SPECIAL CORPORATE ACTS 5.01. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute or deliver any instrument in the name of and on behalf of the corporation, and such authorization may be general or confined to specific instances. In the absence of other designation, all deeds, mortgages and instruments of assignment or pledge made by the corporation shall be executed in the name of the corporation by the President or one of the Vice-Presidents and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer; the Secretary or an Assistant Secretary, when necessary or required, shall affix the corporate seal thereto; and when so executed no other party to such instrument or any third party shall be required to make any inquiry into the authority of the signing officer or officers. 5.02. Loans. No indebtedness for borrowed money shall be contracted on behalf of the corporation and no evidences of such indebtedness shall be issued in its name unless authorized by or under the authority of a resolution of the Board of Directors. Such authorization may be general or confined to specific instances. 5.03. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by or under the authority of a resolution of the Board of Directors. 5.04. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositaries as may be selected by or under the authority of a resolution of the Board of Directors. 5.05. Voting of Securities Owned by this Corporation. Subject always to the specific directions of the Board of Directors, (a) any shares or other securities issued by any other corporation and owned or controlled by this corporation may be voted at any meeting of security holders of such other corporation by the President of this corporation if he be present, or in his absence by any Vice-President of this corporation who may be 13 14 present, and (b) whenever, in the judgment of the President, or in his absence, of any Vice-President, it is desirable for this corporation to execute a proxy or written consent in respect to any shares or other securities issued by any other corporation and owned by this corporation, such proxy or consent shall be executed in the name of this corporation by the President or one of the Vice-Presidents of this corporation, without necessity of any authorization by the Board of Directors, affixation of corporate seal or countersignature or attestation by another officer. Any person or persons designated in the manner above stated as the proxy or proxies of this corporation shall have full right, power and authority to vote the shares or other securities issued by such other corporation and owned by this corporation the same as such shares or other securities might be voted by this corporation. ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER 6.01. Certificates for Shares. Certificates representing shares of the corporation shall be in such form, consistent with law, as shall be determined by the Board of Directors. Such certificates shall be signed by the President or a Vice-President and by the Secretary or an Assistant Secretary. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except as provided in Section 6.06. 6.02. Facsimile Signatures and Seal. The seal of the corporation on any certificates for shares may be a facsimile. The signatures of the President or Vice-President and the Secretary or Assistant Secretary upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent, or a registrar, other than the corporation itself or an employee of the corporation. 6.03. Signature by Former Officers. In case any officer, who has signed or whose facsimile signature has been placed upon any certificate for shares, shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of its issue. 6.04. Transfer of Shares. Prior to due presentment of a certificate for shares for registration of transfer the corporation may treat the registered owner of such shares as the person 14 15 exclusively entitled to vote, to receive notifications and otherwise to have and exercise all the rights and power of an owner. Where a certificate for shares is presented to the corporation with a request to register for transfer, the corporation shall not be liable to the owner or any other person suffering loss as a result of such registration of transfer if (a) there were on or with the certificate the necessary endorsements, and (b) the corporation had no duty to inquire into adverse claims or has discharged any such duty. The corporation may require reasonable assurance that said endorsements are genuine and effective and compliance with such other regulations as may be prescribed by or under the authority of the Board of Directors. 6.05. Restrictions on Transfer. The face or reverse side of each certificate representing shares shall bear a conspicuous notation of any restriction imposed by the corporation upon the transfer of such shares. 6.06. Lost, Destroyed or Stolen Certificates. Where the owner claims that his certificate for shares has been lost, destroyed or wrongfully taken, a new certificate shall be issued in place thereof if the owner (a) so requests before the corporation has notice that such shares have been acquired by a bona fide purchaser, and (b) files with the corporation a sufficient indemnity bond, and (c) satisfies such other reasonable requirements as may be prescribed by or under the authority of the Board of Directors. 6.07. Consideration for Shares. The shares of the corporation may be issued for such consideration as shall be fixed from time to time by the Board of Directors, provided that any shares having a par value shall not be issued for a consideration less than the par value thereof. The consideration to be paid for shares may be paid in whole or in part, in money, in other property, tangible or intangible, or in labor or services actually performed for the corporation. When payment of the consideration for which shares are to be issued shall have been received by the corporation, such shares shall be deemed to be fully paid and nonassessable by the corporation. No certificate shall be issued for any share until such share is fully paid. 6.08. Stock Regulations. The Board of Directors shall have the power and authority to make all such further rules and regulations not inconsistent with the statutes of the State of Wisconsin as it may deem expedient concerning the issue, transfer and registration of certificates representing shares of the corporation. 15 16 ARTICLE VII. SEAL 7.01. The Board of Directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the corporation and the state of incorporation and the words, "Corporate Seal." ARTICLE VIII. AMENDMENTS 8.01. By shareholders. These by-laws may be altered, amended or repealed and new by-laws may be adopted by the shareholders by affirmative vote of not less than a majority of the shares present or represented at any annual or special meeting of the shareholders at which a quorum is in attendance. 8.02. By Directors. These by-laws may also be altered, amended or repealed and new by-laws may be adopted by the Board of Directors by affirmative vote of a majority of the number of directors present at any meeting at which a quorum is in attendance; but no by-law adopted by the shareholders shall be amended or repealed by the Board of Directors if the by-law so adopted so provides. 8.03. Implied Amendments. Any action taken or authorized by the shareholders or by the Board of Directors, which would be inconsistent with the by-laws then in effect but is taken or authorized by affirmative vote of not less than the number of shares or the number of directors required to amend the by-laws so that the by-laws would be consistent with such action, shall be given the same effect as though the by-laws had been temporarily amended or suspended so far, but only so far, as is necessary to permit the specific action so taken or authorized. 16 EX-3.17 18 ARTICLES OF INCORPORATION OF SICKINGER COMPANY 1 EXHIBIT 3.17 STATE OF MICHIGAN CORPORATION AND SECURITIES COMMISSION LANSING, MICHIGAN ARTICLES OF INCORPORATION These Articles of Incorporation are signed and acknowledged by the incorporators for the purpose of forming a corporation for profit under the provisions of Act No. 327 of the Public Acts of 1931, as amended, as follows: ARTICLE I. The name of the corporation is HANS SICKINGER CO. ARTICLE II. The purpose or purposes for which the corporation is formed are as follows: To engage in any kind of commercial, mercantile or manufacturing enterprise, as principal or as agent for others; to buy, sell, lease, import, export, license, sub-license, manufacture, warehouse, fabricate, service or generally trade in machinery or parts and merchandise of every nature and description and to do any and all acts and things necessary to carry on any of the foregoing activities. In general to carry on any business in connection therewith and incident thereto not forbidden by the laws of the State of Michigan and with all the powers conferred upon corporations by the laws of the State of Michigan. ARTICLE III. Location of the first registered office is: 1071 Stratford Lane, Bloomfield Hills (City), Oakland (County), Michigan Post office address of the first registered office is: 1071 Stratford Lane, Bloomfield Hills, Michigan ARTICLE IV. The name of the first resident agent is Albert E. Sickinger ARTICLE V. The total authorized capital stock is (1) {Preferred shs. 2,700 } {Par Value $ 100.00 } {Common shs. 300 } {Par Value $ 100.00 } per share {Preferred None } {Book Value $___________________} (2) and/or shs. of {Common: None } no par value {Price fixed for sale$ None } per share {Book Value $ None } {Price fixed for sale $_________}
(3) A statement of all or any of the designations and the powers, preferences and rights, and the qualifications, limitations or restrictions thereof is as follows: The above common shares shall have equal voting powers, rights and privileges; however, the holders 2 of said shares waive their preemptive rights to the purchase and issuance of the above common and preferred shares or any subsequent authorized common or preferred shares. The Preferred Stock shall be non-voting and non-cumulative; when earned surplus is available in any annual period, it may be paid a dividend, but no more than 6% in any annual period. In relation to the common stock, it shall be preferred as to both dividends and assets. In the discretion of the Company, said preferred stock may be redeemed at any time after two years from date of issuance, by payment of the par value of said stock at the time of redemption. ARTICLE VI. The names and places of residence or business of each of the incorporators and the number and class of shares subscribed for by each are as follows: (Statute requires one or more incorporators)
============================================================================================================ - ------------------------------------------------------------------------------------------------------------ Name Residence or Number of Shares Business Address - ------------------------------------------------------------------------------------------------------------ (No.) (Street) (City) (State) Par Stock Non-Par Stock -------------------------------------------------- Common Preferred Common Preferred - ------------------------------------------------------------------------------------------------------------ Hans Sickinger, 116 Endicott Road, Bloomfield Hills, 11 None None None Michigan - ------------------------------------------------------------------------------------------------------------ Albert E. Sickinger, 1071 Stratford Lane, Bloomfield 10 None None None Hills, Michigan - ------------------------------------------------------------------------------------------------------------
ARTICLE VII. The names and addresses of the first board of directors are as follows (Statute requires at least three directors):
====================================================================================================== Name Residence or Business Address (No.) (Street) (City) (State) Hans Sickinger 116 Endicott Road, Bloomfield Hills, Michigan - ------------------------------------------------------------------------------------------------------ Albert E. Sickinger 1071 Stratford Lane, " - ------------------------------------------------------------------------------------------------------ James R. Jenkins 801 Pontiac State Bank Bldg., Pontiac, Michigan - ------------------------------------------------------------------------------------------------------
ARTICLE VIII. The term of the corporate existence is thirty years. ARTICLE IX. Whenever a compromise or arrangement or any plan of reorganization of this corporation is proposed between this corporation and its creditors or any class of them and/or between the corporation and its shareholders or any class of them, any court of equity jurisdiction within the State of Michigan, may on the application of this corporation or of any creditor or any shareholder thereof, or on the application of any receiver or receivers appointed for this corporation, order a meeting of the creditors or class of creditors, and/or of the shareholders or class of shareholders, as the case may be, to be affected by the proposed compromise or arrangement or reorganization, to be summoned in such manner as said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the shareholders or class of shareholders, as the case may be, to be affected by the proposed compromise or arrangement or reorganization, agree to any compromise or arrangement or to any reogoranization of this corporation as a consequence of such compromise or 3 arrangement, said compromise or arrangement and said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the shareholders or class of shareholders, as the case may be, and also on this corporation. We, the incorporators, sign our names this 1st day of July, 1963. /s/ HANS SICKINGER - ------------------------------ /s/ ALBERT E. SICKINGER - ------------------------------ STATE OF MICHIGAN } ss. COUNTY OF WAYNE } On this 1st day of July, 1963, Before me personally appeared Hans Sickinger and Albert E. Sickinger to me known to be the persons described in and who executed the foregoing instrument, and acknowledged that they executed the same as their free act and deed. /s/ CHRISTINE M. ANDERSON ------------------------------ (Signature of Notary) Christine M. Anderson (Print or type name of Notary) Notary Public for Wayne County, State of Michigan My commission expires Oct. 15, 1963 * * * * * * CERTIFIED RESOLUTION OF CHANGE OF REGISTERED OFFICE I, Albert E. Sickinger, Secretary of HANS SICKINGER CO. do hereby certify that the following is a true and correct copy of the resolution adopted by the board of directors of said corporation at a meeting called and held on the 1st day of March, 1966: "RESOLVED, that the location of the registered office of HANS SICKINGER CO. within the State of Michigan is changed from 1071 Stratford Lane, Bloomfield Hills, 48013 (Zone) , County of Oakland, Michigan, to 576 So. Telegraph Road, Pontiac, 48053 (Zone), County of Oakland, Michigan." Signed on 18th May, 1966 /s/ ALBERT E. SICKINGER --------------------------- * * * * * * CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION Pursuant to the provisions of Act 284, Public Acts of 1972, as amended (profit corporations), or Act 162, Public Acts of 1982 (nonprofit corporation), the undersigned corporation executes the following Certificate: - -------------------------------------------------------------------------------- 1. The present name of the corporation is: HANS SICKINGER CO. 2. The corporation identification number (CID) assigned by the Bureau is: [1] [3] [1] [-] [7] [8] [6] 3. The location of its registered office is: 2266 Franklin Road, Bloomfield Hills , Michigan 48013 ----------------------------------------------- ------------------- (Street Address) (City) (Zip Code) - -------------------------------------------------------------------------------- 4 - -------------------------------------------------------------------------------- 4. Article I of the Articles of Incorporation is hereby amended to read as follows: The name of the corporation is Sickinger Company. Article III of the Articles of Incorporation is hereby amended to read as follows: The location of its registered office is 3275 Lapeer Road, Auburn Hills, Michigan 48057. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 5. The foregoing amendment to the Articles of Incorporation was duly adopted on the 17th day of January, 1986. The amendment was duly adopted by the written consent of all the shareholders or members entitled to vote in accordance with Section 407(3) of the Act. Signed this 16 day of June, 1986 By /s/ ALBERT E. SICKINGER ---------------------------------------------- Albert E. Sickinger, President & Secretary - -------------------------------------------------------------------------------- CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION Pursuant to the provisions of Act 284, Public Acts of 1972 (profit corporations), or Act 162, Public Acts of 1982 (nonprofit corporations), the undersigned corporation executes the following Certificate: - -------------------------------------------------------------------------------- 1. The present name of the corporation is: Sickinger Company 2. The corporation identification number (CID) assigned by the Bureau is: [1] [3] [1] [-] [7] [8] [6] 3. The location of its registered office is: 3275 Lapeer, P.O. Box 215230, Auburn Hills Michigan 48321 ---------------------------------------------------- ------------------ (Street Address) (City) (Zip Code) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4. Article V of the Articles of Incorporation is hereby amended to read as follows: The total authorized capital stock is 300 shares of common stock, par value $100.00 per share. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 5. The foregoing amendment to the Articles of Incorporation was duly adopted on the 15th day of June, 1990. The amendment was duly adopted by the written consent of all the shareholders or members entitled to vote in accordance with Section 407(3) of the Act if a non-profit corporation, and Section 407(2) of the Act if a profit corporation. Signed this 24 day of January, 1992 By /s/ ALBERT E. SICKINGER -------------------------------------- Albert E. Sickinger, President - -------------------------------------------------------------------------------- * * * * * * CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION Pursuant to the provisions of Act 284, Public Acts of 1972 (profit corporations), or Act 162, Public Acts of 1982 (nonprofit corporations), the undersigned corporation executes the following Certificate: 5 - -------------------------------------------------------------------------------- 1. The present name of the corporation is: Sickinger Company 2. The corporation identification number (CID) assigned by the Bureau is: [1] [3] [1] [-] [7] [8] [6] 3. The location of its registered office is: 3275 Lapeer, P.O. Box 215230 Auburn Hills , Michigan 48321 ---------------------------------------------------- ---------------- (Street Address) (City) (Zip Code) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4. Article VIII of the Articles of Incorporation is hereby amended to read as follows: The term of the Corporate existence is perpetual. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 5. The foregoing amendment to the Articles of Incorporation was duly adopted on the 20th day of April, 1992. The amendment was duly adopted by the written consent of all the shareholders or members entitled to vote in accordance with Section 407(3) of the Act if a non-profit corporation, and Section 407(2) of the Act if a profit corporation. Signed this 20 day of April, 1992 By /s/ ALBERT E. SICKINGER ------------------------------------ Albert E. Sickinger, President - -------------------------------------------------------------------------------- EX-3.18 19 BY-LAWS OF SICKINGER 1 EXHIBIT 3.18 BY-LAWS OF SICKINGER COMPANY A MICHIGAN CORPORATION I. OFFICES The principal office of the Company may be either in the City of Bloomfield Hills, Michigan, or such other place within or without the State as the Board of Directors may determine. II. SEAL The Corporate Seal shall have incorporated thereon the name of the Corporation and the word "SEAL". III. STOCKHOLDERS' MEETINGS Meetings of the stockholders shall be held at such places as the Board of Directors may designate. The Annual Meeting of stockholders shall be held on the fourth Monday in September of each year, if not a legal holiday; if a legal holiday, then on the next business day, at which meeting the stockholders shall elect by a plurality vote the Board of Directors as hereinafter designated, and transact such other business as may properly be brought before the meeting. The holders of the majority of the stock issued and outstanding and entitled to vote thereat present, either in person or by proxy, shall constitute a quorum for the transaction of business, except as otherwise provided by law, by the Articles of Incorporation or by these By-Laws, or amendments thereof. Less than a quorum may adjourn the meeting from time to time. A written notice of the Annual Meeting shall be mailed to each stockholder of record at least fifteen (15) days before such meeting, at such address as appears on the stock book of the corporation. Special meetings of stockholders may be called by the 2 President or Secretary or by a majority of the Board, or at the request of stockholders holding a majority amount of the entire capital stock of the corporation issued and outstanding and entitled to vote, PROVIDED HOWEVER, a special meeting of stockholders may be held at any time, without notice, if all stockholders are present. Such notices shall state specifically the purpose or purposes of the proposed meetings and business transacted at special meetings shall be confined to the specifications stated in the call. Notice of special meetings shall likewise be given fifteen (15) days before such meeting. IV. DIRECTORS The property and business of this corporation shall be managed by a Board of three (3) directors. They shall be elected at the Annual Meeting of the stockholders and each Director shall be elected to serve until his successor shall be elected. If the office of any director or officer of the corporation becomes vacant by reason of death, resignation, retirement, disqualification, removal from office, or otherwise, the remaining directors, though less than a quorum, shall choose a successor or successors, who shall hold office until the next Annual election and until a successor or successors have been duly elected, unless sooner displaced. In addition to the powers and authority expressly conferred upon the Board of Directors by these by- laws, they shall and may exercise all such powers of the corporation and do all such lawful acts and things as are not restricted by Statute or by the Articles of Incorporation or by these by-laws from doing. V. MEETINGS OF THE BOARD The Board of Directors shall meet at any time on the call of the President, Vice President or Secretary, on twenty-four hours' notice to each Director, either personally or by mail or by telegram, and may meet at any time when all directors are present, without notice. A Majority of the Board of Directors shall constitute a quorum, except where otherwise specifically provided by Statute or by the Articles of Incorporation or by these by-laws. Regular meetings of the Board of Directors shall convene at the call of the President or Secretary or as the Board may otherwise direct. -2- 3 VI. OFFICERS The Officers of the Corporation shall be chosen by the Directors and shall be President, Vice President, Secretary and Treasurer. Any two offices may be combined except the office of President and Vice President. The officers may appoint such other officers and agents, including an auditor and general legal counsel, as in their judgment shall seem desirable. PRESIDENT The President, as chief executive officer of the corporation, shall preside at all meetings of stockholders and directors and shall have general and active management of the business of the corporation and see that all orders and resolutions of the Board are carried into effect. He shall execute all instruments requiring the Seal of the corporation, unless otherwise ordered by a resolution of the Board of Directors. VICE PRESIDENT The Vice President, in the absence of, or disability of the President shall perform the duties and exercise the powers of the President and shall perform such other duties as the Board of Directors may prescribe. SECRETARY The Secretary shall attend all sessions of the Board of Directors and all meetings of the stockholders and keep a record of all such meetings in the book to be kept for that purpose, and shall perform like duties for any standing committees, when required. He shall give or cause to be given notice of all meetings of the officers and of the Board of Directors and shall perform such other duties as may be prescribed by the Board of Directors and shall keep in safe custody the Seal of the corporation, and when authorized by the Board affix the same to any instrument requiring it. TREASURER The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation, in such depositories -3- 4 as may be designated by the Board of Directors. All funds of the Corporation shall be disbursed by check, which shall be executed pursuant to any resolution adopted by the Board of Directors. The Treasurer shall take proper vouchers or receipts for such disbursements and shall render reports to the Board of Directors, when required, of all transactions affecting the financial condition of the Company. OTHER OFFICERS The Board of Directors may elect such other officers as in its opinion are desirable for the conduct of the business of the company. DUTIES OF OFFICERS MAY BE DELEGATED In case of the absence of any officer of the corporation, or for any other reason which the Board may deem sufficient, the Board may delegate for the time being powers and duties of any such officers to any other officer or any other director or to any assistants designated or appointed by the Board by a majority vote of the Board. VII. CERTIFICATES OF STOCK The certificates of stock of the corporation shall be numbered and shall be entered in the books of the corporation as they are issued. That it show the holder's name and the number of shares and shall be signed by the President or Vice President and by the Secretary or Treasurer. The designation, preferences and other special rights of any class of stock and qualification, limitations or restrictions thereof shall be set forth in full and summarized on the face or back of the certificate which the corporation shall issue to represent such class or series of stock. VIII. TRANSFERS OF STOCK Transfer of stock shall be made on the books of the Company by the holder thereof, in person or by attorney, upon the surrender and cancellation of certificates for like number of shares, but the Board of Directors shall have power and authority to make all such rules and regulations as they shall deem expedient concerning the issue, transfer and registration of -4- 5 certificates for shares of capital stock, and in particular may appoint a transfer agent and/or a registrar of transfers and may require all stock certificates to bear the signature of such transfer agent and/or of such registrar of transfers. IX. REGISTERED STOCKHOLDERS The Corporation shall be entitled to treat the holders of record of any share or shares of stocks as the holder in fact thereof, and accordingly shall not be bound to recognize any equity or any claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, except as expressly provided by the laws of the State of Michigan. X. DIVIDENDS The Board of Directors may declare dividends from surplus or net profits of the Company from time to time, payable in such form as the Board may determine and adopt resolutions relative to the closing of the transfer books. The stock transfer book of the company shall be closed at least ten (10) days before the Annual Meeting of stockholders and may be closed at the discretion of the Board of Directors for any period of time before the declaration and payment of any dividend deemed desirable. XI. LOST CERTIFICATES Any person claiming a certificate of stock to be lost or destroyed shall make an affidavit or affirmation of that fact and the Board of Directors may, at its discretion, require the owner of the lost or destroyed certificate, or his legal representative, to give the corporation his bond in such sum as it may direct, not exceeding double the value of the stock to indemnify the corporation against any claim that may be had or made against it on account of the alleged loss of any such certificate; a new certificate of the same tenure and for the same number of shares as the number alleged to be lost or destroyed may be issued without requiring any bond, when, in the judgment of the Directors, it is proper to do so. -5- 6 XII. CHECKS All checks, drafts and notes of the corporation shall be signed by such officer or officers and such other person or persons as the Board of Directors from time to time may designate. XIII. FISCAL YEAR The fiscal year of the Company shall begin July 1st in each year, and end June 30th. XIV. NOTICES Whenever, under the provisions of these By-Laws, notice is required to be given to any director, officer or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, telephone or telegram, and if by mail, by depositing the same, postage prepaid, in sealed wrapper in post office letter box addressed to such person, at the address appearing on the books of the corporation, or in default of such address to the last known address in the City where the party resides, and such notice shall be deemed to have been given at the time when the same was mailed or sent. Any stockholder, director or officer may waive any notice required to be given under these By-Laws. XV. AMENDMENTS These By-Laws may be altered or amended or repealed by the affirmative vote of a majority of the stock issued and outstanding and entitled to vote at any regular meeting or any special meeting of stockholders called for that purpose or by the affirmative vote of the majority of the Board of Directors at any regular or special meeting of the Board. * * * * * * AMENDMENTS TO THE BY-LAWS OF SICKINGER COMPANY (effective August 4, 1981) -6- 7 ARTICLE III Stockholders Meetings An additional paragraph is added as follows: If and when all the Shareholders shall severally or collectively consent in writing to any action to be taken by the Corporation, such action shall be valid corporate action as though it had been authorized at a meeting of the Shareholders. ARTICLE V Meetings of the Board An additional paragraph is added as follows: If and when all the Directors shall severally or collectively consent in writing to any action to be taken by the Corporation, such action shall be valid corporate action as though it had been authorized at a meeting of the Board of Directors. * * * * * * AMENDMENTS TO THE BY-LAWS OF SICKINGER COMPANY (effective September 11, 1995) Article XIII is amended to read: "The fiscal year of the Company shall begin January lst of each year and end December 31st." -7- EX-3.19 20 ARTICLES OF ORGANIZATION OF U.S. RING BINDER 1 EXHIBIT 3.19 ARTICLES OF INCORPORATION FOR U.S. RING BINDER CORP. (f/k/a/ GBC METALS CORP.) THE COMMONWEALTH OF MASSACHUSETTS PAUL GUZZI Secretary of the Commonwealth STATE HOUSE BOSTON, MASS. ARTICLES OF INCORPORATION (Under G.L. Ch. 156B) Incorporators NAME POST OFFICE ADDRESS ---- ------------------- Include given name in full in case of natural persons; in case of a corporation, give state of incorporation. Robert G. Dickerson 299 South State Street Dover, Delaware 19901 The above-named incorporator does hereby form a corporation under the provisions of General Laws, Chapter 156B and hereby state(s): 1. The name by which the corporation shall be known is: GBC METALS CORP. 2. The purposes for which the corporation is formed are as follows: To manufacture metal rings and devices used in the assembly and construction of loose-leaf binders and other devices. To engage generally in the manufacture and sale of plastic products; and To carry on a general mercantile, industrial, investing, and trading business in all its branches; to devise, invent, manufacture, fabricate, assemble, install, service, maintain, alter, buy, sell, import, export, license as licensor or licensee, lease as lessor or lessee, distribute, job, enter into, negotiate, execute, acquire, and assign contracts in respect of, acquire, receive, grant, and assign licensing arrangements, options, franchises, and other rights in respect of, and generally deal in and with, 2 at wholesale and retail, as principal, and as sales, business, special, or general agent, representative, broker, factor, merchant, distributor, jobber, advisor, and in any other lawful capacity, goods, wares, merchandise, commodities, and unimproved, improved, finished, processed, and other real, personal, and mixed property of any and all kinds, together with the components, resultants, and by-products thereof; to acquire by purchase or otherwise own, hold, lease, mortgage, sell, or otherwise dispose of, erect, construct, make, alter, enlarge, improve, and to aid or subscribe toward the construction, acquisition or improvement of any factories, shops, storehouses, buildings, and commercial and retail establishments of every character, including all equipment, fixtures, machinery, implements and supplies necessary, or incidental to, or connected with, any of the purposes or business of the corporation; and generally to perform any and all acts connected therewith or arising therefrom or incidental thereto, and all acts proper or necessary for the purpose of the business. To engage generally in the real estate business as principal, agent, broker, and in any lawful capacity, and generally to take, lease, purchase, or otherwise acquire, and to own, use, hold, sell, convey, exchange, lease, mortgage, work, clear, improve, develop, divide, and otherwise handle, manage, operate, deal in and dispose of real estate, real property, lands, houses, buildings and other works and any interest or right therein; to take, lease, purchase or otherwise acquire, and to own, use, hold, sell, convey, exchange, hire, lease, pledge, mortgage, and otherwise handle, and deal in and dispose of, as principal, agent, broker, and in any lawful capacity, such personal property, chattels, chattels real, rights, easements, privileges, choses in action, notes, bonds, mortgages, and securities as may lawfully be acquired, held, or disposed of; and to acquire, purchase, sell, assign, transfer, dispose of, and generally deal in and with, as principal, agent, broker, and in any lawful capacity, mortgages and other interests in real, personal, and mixed properties; to carry on a general construction, contracting, and building business as principal, agent, representative, contractor, subcontractor, and in any other lawful capacity. To be a partner in any enterprise which the corporation would have power to conduct itself. 3 To apply for, register, obtain, purchase, lease, take licenses in respect of or otherwise acquire, and to hold, own, use, operate, develop, enjoy, turn to account, grant licenses and immunities in respect of, manufacture under and to introduce, sell, assign, mortgage, pledge or otherwise dispose of, and, in any manner deal with and contract with reference to: (a) inventions, devices, formulae, processes and any improvements and modifications thereof; (b) letters patent, patent rights, patented processes, copyrights, designs, and similar rights, trade-marks, trade symbols and other indications of origin and ownership granted by or recognized under the laws of the United States of America or of any state or subdivision thereof, or of any foreign country or subdivision thereof, and all rights connected therewith or appertaining thereunto; (c) franchises, licenses, grants and concessions. To have, in furtherance of the corporate purposes, all of the powers conferred upon corporations organized under the Business Corporation Law subject to any limitations thereof contained in these Articles of Organization or in the laws of the Commonwealth of Massachusetts. 3. The total number of shares and the par value, if any, of each class of stock which the corporation is authorized is as follows:
WITHOUT PAR WITH PAR VALUE VALUE NUMBER PAR CLASS OF STOCK NUMBER OF SHARES OF SHARES VALUE AMOUNT - -------------- ---------------- --------- -------------- ------ Preferred -- -- -- $ -- Common 12,500 -- -- --
*4. If more than one class is authorized, a description of each of the different classes of stock with, if any, the preferences, voting powers, qualifications, special or relative rights or privileges as to each class thereof and any series now established: None 4 *5. The restrictions, if any, imposed by the Articles of Organization upon the transfer of shares of stock of any class are as follows: None; however, shares of stock of the corporation may be subjected to restrictions on the transfer thereof under duly adopted by-law provisions and/or under any agreement to which the corporation shall be a party. *6. Other lawful provisions, if any, for the conduct and regulation of the business and affairs of the corporation, for its voluntary dissolution, or for limiting, defining, or regulating the powers of the corporation, or of its directors or stockholders, or of any class of stockholders: 6A. The Board of Directors of the corporation may also make, amend, or repeal the by-laws of the corporation, in whole or in part, except with respect to any provision thereof which, by law, the articles of organization, or the by-laws, requires action exclusively by the stockholders entitled to vote thereon; but any by-law adopted by the Board of Directors may be amended or repealed by the stockholders. All meetings of stockholders of the corporation may be held within the Commonwealth of Massachusetts or elsewhere within the United States. The place of such meetings shall be fixed in, or determined in the manner provided in, the by-laws. 6B. Each director, officer, employee, or agent, present or former, of the corporation or of any other organization, in which it owns shares or of which it is a creditor, shall be indemnified by the corporation against all cost and expenses reasonably incurred by or imposed upon him in connection with or arising out of any action, suit, or proceeding in which he may be involved by reason of his being or having been such director, officer, employee, or agent, such expenses to include the cost of reasonable settlements (other than amounts paid to the corporation itself) made with a view to curtailing costs of litigation whenever, in the judgement of the Board of Directors, or in the written opinion of independent legal counsel appointed by the Board, the best interests of the corporation are served. Such indemnification may include payment by the corporation of expenses incurred in defending a civil or criminal action or proceeding in advance of the final disposition of such action or proceeding, 5 upon receipt of an undertaking by the person indemnified to repay such payment if he shall be adjudicated to be not entitled to indemnification. The corporation shall not, however, indemnify any such person with respect to any matter as to which he shall have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his action was in the best interests of the corporation. The foregoing right of indemnification shall not be exclusive of other rights to which any such director or officer may be entitled as a matter of law. In determining the reasonableness of any settlement, the judgement of the Board of Directors shall be final. The corporation shall have power to purchase and maintain insurance on behalf of any such person who is or was a director, officer, employee or other agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or other agent of another organization, in which it owns shares or of which it is a creditor against any liability incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability. No contract or other transaction between this corporation and any other firm or corporation shall be affected or invalidated by reason of the fact that any one or more of the directors or officers of this corporation is or are interested in, or is a member, stockholder, director, or officer, or are members, stockholders, directors, or officers of such other firm or corporation; and any director or officer or officers, individually or jointly, may be a party or parties to, or may be interested in, any contract or transaction of this corporation or in which this corporation is interested, and no contract, act, or transaction of this corporation with any person or persons, firm, association or corporation, shall be affected or invalidated by reason of the fact that any director or directors or officer or officers of this corporation is a party or are parties to, or interested in, such contract, act or transaction, or in any way connected with such person or persons, firm, association or corporation, and each and every person who may become a director or officer of this corporation is hereby relieved from any liability that might otherwise exist from thus contracting with this corporation for the benefit of himself or any firm, association or corporation in which he may be anywise interested. 6 6C. No holder of any of the shares of any class of the corporation shall be entitled as of right to subscribe for, purchase, or otherwise acquire any shares of any class of the corporation which the corporation proposes to issue or any rights or options which the corporation proposes to grant for the purchase of shares of any class of the corporation or for the purchase of any shares, bonds, securities, or obligations of the corporation which are convertible into or exchangeable for, or which carry any rights, to subscribe for, purchase, or otherwise acquire shares of any class of the corporation; and any and all of such shares, bonds, securities or obligations of the corporation, whether now or hereafter authorized or created, may be issued, or may be reissued or transferred if the same have been reacquired and have treasury status, and any and all of such rights and options may be granted by the Board of Directors to such persons, firms, corporations and associations, and for such lawful consideration, and on such terms, as the Board of Directors in its discretion may determine, without first offering the same, or any thereof, to any said holder. 6D. No holder of any class of shares of the corporation shall be entitled to cumulate his votes at any election of directors. 7. By-laws of the corporation have been duly adopted and the initial directors, president, treasurer and clerk, whose names are set out below, have been duly elected. 8. The effective date of organization of the corporation shall be the date of filing with the Secretary of the Commonwealth or if later date is desired, specify date, (not more than 30 days after date of filing). 9. The following information shall not for any purpose be treated as a permanent part of the Articles of Organization of the corporation. a. The post office address of the initial principal office of the corporation in Massachusetts is: 84 State Street, Boston, Massachusetts 02109 b. The name, residence, and post office address of each of the initial directors and following officers of the corporation are as follows: 7
RESIDENCE POST OFFICE NAME ADDRESS ---- ---------------------- Chairman of the William N. Lane 1101 Skokie Blvd., Board: Northbrook, Ill. 60062 President: Warren R. 1101 Skokie Blvd., Rothwell Northbrook, Ill. 60062 Treasurer: Frank Lenahan 1101 Skokie Blvd., Northbrook, Ill. 60062 Clerk: Victor L. Lewis 1101 Skokie Blvd., Northbrook, Ill. 60062 Directors: William N. Lane 1101 Skokie Blvd., Northbrook, Ill. 60062 Warren R. 1101 Skokie Blvd., Rothwell Northbrook, Ill. 60062 1101 Skokie Blvd., Victor L. Lewis Northbrook, Ill. 60062
c. The date initially adopted on which the corporation's fiscal year ends is: October 31st. d. The date initially fixed in the by-laws for the annual meeting of stockholders of the corporation is: Second Tuesday in April at 10:00 o'clock A.M. e. The name and business address of the resident agent, if any, of the corporation is: The Prentice-Hall Corporation System, Inc. 84 State Street, Boston, Massachusetts 02109 IN WITNESS WHEREOF and under the penalties of perjury the above-named INCORPORATOR(S) sign(s) these Articles of Organization this tenth day of June 1977. /s/ ROBERT G. DICKERSON ----------------------- Robert G. Dickerson * * * * * * The Commonwealth of Massachusetts PAUL GUZZI Secretary of the Commonwealth STATE HOUSE, BOSTON, MASS. ARTICLES OF AMENDMENT General Laws, Chapter 156B, Section 72 8 We, Robert H. Cenek, Vice President, and Steve Rubin, Clerk, of GBC Metals Corp. located at 84 State Street, Boston, Mass. 02109 do hereby certify that the following amendment to the articles of organization of the corporation was duly adopted at a meeting held on July 1, 1977, by vote of 12,500 shares of common stock out of 12,500 shares outstanding, being at least a majority of each class outstanding and entitled to vote thereon. Article One of the Articles of Organization was amended to read in its entirety as follows: "1. The name by which the corporation shall be known is: U.S. Ring Binder Corp." The foregoing amendment will become effective when these articles of amendment are filed in accordance with Chapter 156B, Section 6 of the General Laws unless these articles specify, in accordance with the vote adopting the amendment, a later effective date not more than thirty days after such filing, in which event the amendment will become effective on such later date. IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names this 14th day of July, in the year 1977. /s/ ROBERT H. CENEK, Vice President ------------------- /s/ STEVEN RUBIN, Clerk ---------------- [FILED August 1, 1977] EX-3.20 21 BY-LAWS OF U.S. RING BINDER 1 EXHIBIT 3.20 BY-LAWS OF U. S. RING BINDER CORP. ARTICLE FIRST DIRECTORS Section 1. Number. The property, affairs and business of the corporation shall be managed by a Board of Directors which shall consist of such number not less than three (except as otherwise authorized in the next following sentence of this section) nor more than three persons as the stockholders having voting power may at the annual or a special meeting in lieu of the annual meeting of stockholders determine and elect. The number of directors shall, however be not less than two wherever there shall be two stockholders and not less than one director wherever there shall be one stockholder only of the corporation; provided, however, that only one director shall be required prior to the issuance of any of the stock of the corporation. If a vacancy or vacancies shall occur, for any reason, in the membership of the Board, other than through removal by stockholder action, the remaining directors or director may, quorum requirements notwithstanding, elect a successor or successors. Section 2. Increase or Decrease. The Board of Directors shall have the power at any time when a stockholders' meeting is not in session, to increase or decrease their own number within the limits provided in Section 1 above. If the number of directors be increased, the additional directors may be elected by a majority of the directors at the time in office or, if not so elected prior to the next following meeting of stockholders, by the stockholders. If the directors shall vote to decrease their number, the decrease shall become effective to the extent made possible by vacancies in the office of director or by resignations and no director may be removed solely for the purpose of effecting such decrease. Section 3. Removal. Directors may be removed from office with cause by the Board of Directors or with or without cause by the stockholders at a meeting called at least in part for the purpose of considering removal, upon the affirmative vote of a majority of the Board of Directors or the holders of a majority in interest of the stock or class of stock entitled to vote upon the election of the director or directors proposed to be removed, as the case may be. Removal may be effected with cause only after reasonable notice to each director proposed to be removed and the opportunity to be heard by the body proposing removal. Section 4. Term of Office. The term of office of a director elected at the annual meeting of the stockholders shall be one year: provided, however, that he shall hold his office until his successor shall be elected and qualified. A director elected by the stockholders at other than the annual meeting of stockholders, or elected by the directors, shall hold office until the next annual meeting of stockholders and the election and qualification of his successor. 2 Section 5. Meetings. The Board of Directors shall meet at the principal office of the corporation or at such other place within the United States as may from time to time be fixed by resolution of the Board or as may be specified in the notice of the meeting. Regular meetings of the Board of Directors shall be held at such times as the Board may by resolution fix; special meetings may be held at any time upon the call of the President or a Vice President or the Clerk, or of any two directors, by written (including telegraphic) notice specifying the date, place and hour (but not necessarily the purpose) of the meeting served on or sent or mailed to each director not less than two days before the meeting. A meeting of the Board of Directors may be held without notice immediately after the annual meeting of stockholders. Notice need not be given of any regular meeting of the Board. Notice of a meeting need not be given to a director if a written waiver of notice, executed by him before or after the meeting, is filed with the records of the meeting; notice need not be given to any director attending a meeting without protesting the lack of notice prior to or at the commencement of the meeting. The members of the Board of Directors or of any committee designated by said Board of Directors may participate in a meeting of the Board of Directors or of any such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time, and participation by such means shall constitute presence in person at a meeting. Section 6. Committees. The Board of Directors may elect from the Board an Executive Committee or other committee or committees which shall have and exercise such powers of the Board as may be permitted by law and as shall be conferred upon any such committee by the Board. A majority of any such committee may fix the time and place of its meetings and approve any action as the act of the committee, unless the Board of Directors shall otherwise provide. The Board of Directors shall have power at any time to fill vacancies in, change the membership of, or discharge any such committee. Section 7. Management. The Board of Directors shall have the entire charge, control and management of the corporation and its property and business and may exercise all or any of its powers. Among other things the Board may (1) authorize the issuance of the shares of the corporation from time to time in its discretion for such considerations as the Board shall determine and as may be permitted by law; (2) determine the amounts to be distributed as dividends; (3) appoint and at its discretion remove or suspend such subordinate officers, agents and employees as it from time to time thinks fit, determine their duties, and fix and, from time to time as it sees fit, change their salaries and compensation; (4) appoint any officer, permanently or temporarily as it sees fit, to have the powers and perform the duties of any other officer; (5) appoint any persons to be agents of the corporation (with the power to sub-delegate) upon such terms as it sees fit; and (6) appoint any person or persons to accept and hold in trust for the corporation any property belonging to the corporation or in which it is interested and cause such instruments to be executed, and do and cause to be done such things as it may deem requisite, in relation to any such trust. -2- 3 Section 8. Quorum and Voting. A majority of the members of the Board of Directors acting at a meeting duly assembled, shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at a meeting at which a quorum exists shall be the act of the Board of Directors. If at any meeting of the Board of Directors, a quorum shall not be present, a majority of the directors present may adjourn the meeting, without further notice, from time to time until a quorum shall have been obtained. Section 9. Class Voting. Whenever the Board of Directors shall consist of directors elected by two or more classes of stockholders having voting rights, a quorum at all meetings of directors, unless the Articles of Organization otherwise provide, shall, Section 8 above notwithstanding, consist of a majority of the directors then in office of each class, and the vote of a majority of the directors of each class present at a meeting at which a quorum is had shall be required to approve any matter before the Board: provided, however, that with respect to the filling of vacancies among the directors of any class whether arising from death, resignation, removal, or an increase in the membership of the Board, such vacancy shall be filled by the remaining director or directors of that class, a majority of the votes cast by the directors of that class shall be sufficient to elect, and, for the purpose of such election, the presence of a majority of the directors of that class in office at the time of such election shall constitute a quorum. Section 10. Chairman. The directors may elect from their number a Chairman of the Board who shall preside at all meetings of the Board of Directors and may have such additional powers and responsibilities, executive or otherwise, as may from time to time be vested in him by resolution of the Board of Directors. Section 11. Action Without Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all the directors consent to such action in writing and the written consents are filed with the records of the meetings of directors. Such consents shall be treated for all purposes as a vote at a meeting. ARTICLE SECOND OFFICERS Section 1. General. The Board of Directors, as soon as may be after its election in each year, shall elect a President, a Clerk and a Treasurer, and from time to time may appoint one or more Vice Presidents and such Assistant Clerks, Assistant Treasurers and such other officers, including a Secretary to the Board of Directors, agents and employees as it may deem proper. The President may but need not be chosen from among the directors. Section 2. Term of Office. The term of office of all officers shall be one year and until their respective successors are elected and qualify, but any officer may at any time be removed from office, with or without cause, as provided by law, by the affirmative vote of a majority of the members of the Board of Directors then in office at a meeting called for the purpose. If removal of any officer be proposed for cause, reasonable notice shall be provided -3- 4 such officer and he shall be provided an opportunity to be heard by the Board. A vacancy in any office arising from any cause may be filled for the unexpired portion of the term by the Board of Directors. Section 3. President. The President when present shall preside at all meetings of the stockholders and, if a director, unless a Chairman of the Board has been appointed and is present, at all meetings of the Board of Directors. He shall be the chief executive officer of the corporation and shall have general operating charge of its business. As soon as reasonably possible after the close of each fiscal year, he shall submit to the Board a report of the operations of the corporation for such year and a statement of its affairs, and shall from time to time report to the Board all matters within his knowledge which the interests of the corporation may require to be brought to its notice. The President shall perform such duties and have such powers additional to the foregoing as the Board may designate. Section 4. Vice President. In the absence or disability of the President, his powers and duties shall be performed by the Vice President, if only one, or, if more than one, by the Vice President designated for the purpose by the Board. Each Vice President shall have such other powers and perform such other duties as the Board shall from time to time designate. Section 5. Treasurer. The Treasurer shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as shall be designated by the Board or in the absence of such designation in such depositories as he shall from time to time deem proper. He shall disburse the funds of the corporation as ordered by the Board, taking proper vouchers for such disbursements. He shall promptly render to the President and to the Board such statements of his transactions and accounts as the President and Board respectively may from time to time require. If required by the Board he shall give bond in such amount, with such security and in such form as the Board shall determine. The Treasurer shall perform such duties and have such powers additional to the foregoing as the Board may designate. Section 6. Assistant Treasurer. In the absence or disability of the Treasurer, his powers and duties shall be performed by the Assistant Treasurer, if only one or, if more than one, by the one designated for the purpose by the Board. Each Assistant Treasurer shall have such other powers and perform such other duties as the Board shall from time to time designate. Section 7. Clerk. The Clerk shall, unless the corporation has designated a Resident Agent in the manner provided by law, be a resident of the Commonwealth of Massachusetts. It shall be his duty to record in books kept for the purpose all votes and proceedings of the stockholders and, if there be no Secretary, of the Board of Directors. Unless the Board of Directors shall appoint a transfer agent and/or registrar or other officer or officers for the purpose, the Clerk shall be charged with the duty of keeping, or causing to be kept, accurate records of all stock outstanding, stock certificates issued, and stock transfers; subject to such other or different rules as shall be adopted from time to time by the Board, such records may be -4- 5 kept solely in the stock certificate books. The Clerk shall perform such duties and have such powers additional to the foregoing as the Board shall designate. The Assistant Clerk, if one be elected or appointed shall perform the duties of the Clerk during the Clerk's absence as well as such other duties as may be assigned to him by the Board. In the absence of the Clerk or Assistant Clerk at any meeting of stockholders or, if there be no Secretary, of the directors, a Clerk pro tempore shall be chosen by the meeting to perform the duties of the Clerk thereat. Section 8. Secretary. The Secretary, if there be one, shall attend all meetings of the Board of Directors and shall record the proceedings thereat in books provided for the purpose. Section 9. Resignation. Any officer and any director may resign at any time by delivering his resignation to the corporation at its principal office or to the President, Clerk or Secretary. Such resignation shall be effective at the time or upon the happening of the condition, if any, specified therein or, if no such time or condition shall be specified, upon its receipt. Section 10. Voting of Corporation Securities. Unless otherwise ordered by the Board of Directors, the President or the Treasurer shall have full power and authority in the name and behalf of the corporation to waive notice of, to attend, act and to vote at, and to appoint any person or persons to act as proxy or attorney-in-fact for this corporation at, any meeting of stockholders or security holders of any other corporations or organization the securities of which are held by the corporation, and at such meetings shall possess and may exercise any and all rights and powers incident to the ownership of such securities, which, as the owner thereof the corporation may possess and exercise. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons. ARTICLE THIRD STOCKHOLDERS Section 1. Meetings. The annual meeting of the stockholders of the corporation shall be held at Northbrook, Illinois or at such other place within the Commonwealth of Massachusetts or elsewhere within the United States of America as the Board of Directors shall fix, or in the absence of any such designation, such place as may be designated by the Clerk in the notice of the meeting or the place to which any annual meeting shall be adjourned, on the 3rd Monday of September at 2:00 o'clock in the afternoon in each year to elect a Board of Directors, to hear the reports of the officers, and to transact other business. If the day fixed for the annual meeting shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day not a legal holiday. If the election of directors shall not be held on the day herein designated for an annual meeting, or at an adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the stockholders as soon thereafter as conveniently may be. At such special meeting the stockholders may elect the directors and transact other business with the same force and effect as at an annual meeting duly called and held. -5- 6 Section 2. Closing of Transfer Books. The Board of Directors may in its discretion fix a date not less than ten days nor more than sixty days prior to the date of any annual or special meeting of stockholders or prior to the payment of any dividend or the making of any other distribution as the record date for determining stockholders having the right to notice of and to vote at such meeting or any adjournment thereof, or the right to receive such dividend or distribution. In lieu of fixing such record date, the Board may, subject to the limitations herein provided, order the closing of the stock transfer records of the corporation for such purposes. The holders of record of shares of the corporation on such record date or on the date of closing the stock transfer records shall, if a dividend or distribution be declared, have the sole right to receive such dividend or distribution, or if such shares have a voting right, the sole right to receive notice of, attend and vote at such meeting. Section 3. Special Meetings. Special meetings of the stockholders may be called by the President or by the directors, and shall be called by the Clerk, or in the event of his death, absence, incapacity or refusal by any other officer, upon the written application of one or more stockholders who hold at least one tenth in interest of the stock entitled to vote thereat. Notice shall be given in the manner set forth in Section 4 below and shall state the time, place and purpose of the meeting. Special meetings shall be held at the office of the corporation in Northbrook, Illinois, or at such other place within the Commonwealth of Massachusetts or elsewhere within the United States of America, as the directors may fix, or, if the meeting is called upon the application of stockholders, at such place as shall be stated in the Application therefor, or the place to which such meeting may be adjourned: provided, however, that a special meeting may be held at any place approved in writing by every stockholder entitled to notice of the meeting or at which every stockholder entitled to such notice shall be present and represented at the date and time of the meeting. Section 4. Notice of Meetings. Written notice of the place, date and hour, and specifying the purpose of every meeting of stockholders, shall be given by the Clerk or by any other officer designated by the directors or these By-Laws, at least seven days before the meeting, to each stockholder entitled to vote thereat. If a special meeting is called upon written stockholder application and the Clerk shall be unable or shall refuse to give notice thereof, notice may be given by any other officer of the corporation. Such notice may be delivered in hand to each stockholder entitled to notice, at his residence or usual place of business or mailed to him, postage prepaid, addressed to his address as it appears in the records of the corporation. No notice of any meeting need be given a stockholder if a written waiver of notice executed before or after the meeting by the stockholder, or his attorney thereunto authorized, is filed with the records of the meeting, and, if notice of a special meeting shall be waived by all stockholders entitled to notice thereof, no call of such special meeting shall be required. Section 5. Quorum. At all meetings of stockholders a quorum for the transaction of any business shall consist of the holders of record, present in person or by proxy, of a majority in interest of all of the issued and outstanding shares of the stock of the corporation entitled to vote thereon. -6- 7 Section 6. Action Without Meeting. Any action required or permitted at any meeting of the stockholders, including the election of directors or officers, may be taken without a meeting if a written consent thereto is signed by the holders of all of the issued and outstanding capital stock entitled to vote at such meeting and such written consent is filed with the records of the meetings of stockholders. Section 7. Voting. Except as otherwise provided by law or by the Articles of Organization or these By-Laws every stockholder entitled to vote at a meeting of stockholders shall have one vote for each share of stock having the right to vote at such meeting held by him and registered in his name on the books of the corporation at the time of the meeting or at the record date fixed by the directors for the determination of stockholders entitled to vote thereat, if such date be fixed. Stockholders may vote in person or by proxy in writing filed with the Clerk at the meeting. Except as otherwise permitted by law, no proxy dated more than six months before the meeting named therein shall be accepted, and no such proxy shall be valid after the adjournment of the meeting. Except as otherwise permitted by law, by the Articles of Organization or these By-Laws, any matter coming before any meeting of the stockholders shall be adopted as the act and deed of the stockholders if approved by a majority in interest of the stock issued, outstanding and entitled to vote thereon, present or represented at the meeting, a quorum being present: provided, however, that at all elections of directors and officers a plurality of the votes cast for any nominee or nominees shall elect. No ballot shall be required for election of a director or officer unless requested by the holder of one or more shares entitled to vote thereon or his representative. Section 8. Class Voting. Unless the Articles of Organization shall otherwise provide, whenever the issued and outstanding shares of the corporation shall consist of shares of two or more classes having a voting right, a quorum at all meetings of stockholders shall, Section 5 above notwithstanding, with respect to any matter, including the election of directors, on which such two or more classes shall be entitled to vote as a separate class, consist of a majority in interest of the issued and outstanding stock of each such class; voting on such matter shall be had by class, and approval of action thereon as the act of the stockholders of the corporation, shall require the vote of a majority in interest of the issued and outstanding stock of each class present or represented at the meeting and entitled to vote thereat: provided, however, that in the matter of election of directors elected by a particular class of shares a quorum shall consist of a majority in interest of the issued and outstanding stock of that class and a plurality of the votes cast by the holders of such stock at a meeting at which such quorum is present shall elect. ARTICLE FOURTH CAPITAL STOCK Section 1. Stock Certificates. Each stockholder shall be entitled to a certificate or certificates in such form as the Board shall adopt, stating the number of shares and the class thereof held by him, and the designation of the series thereof, if any. Each certificate of stock shall be signed by the President or a Vice President and by the Treasurer or an Assistant -7- 8 Treasurer; the signatures of such officer may be facsimiles if the certificate is signed by a transfer agent or registrar, other than a director, officer or employee of the corporation. If any officer who has signed or whose facsimile signature has been placed on any such certificate shall have ceased to be such officer before such certificate is issued, the certificate may be issued by the corporation with the same effect as if he were such officer at the time of issue. Every certificate issued for shares of stock subject to a restriction on transfer pursuant to the Articles of Organization, these By-Laws or any agreement to which the corporation is a party, or issued while the corporation is authorized to issue more than one class of stock, shall have the full text of such restriction or the full text of the preferences, voting powers, qualifications and special and relative rights of the stock of each class and series authorized to be issued, as the case may be, set forth on the face or back of the certificate, or alternatively, shall contain the statement that the corporation will furnish a copy thereof to the holder of the certificate without charge upon written request. Section 2. Transfer. The stock of the corporation shall be transferable, so as to affect the rights of the corporation, after satisfaction of the provisions of the Articles of Organization, or other lawful provisions to which the corporation is a party, imposing a restriction upon transfer unless the same shall be waived by the Board of Directors by transfer recorded on the books of the corporation, in person or by duly authorized attorney, upon the surrender of the certificate or certificates properly endorsed or assigned. Section 3. Fractional Shares. Fractional shares of stock of any class may be issued. Fractional shares shall entitle the holder thereof to the voting and dividend rights and the right to participate in assets upon liquidation, and shall have and be subject to the preferences, qualifications, restrictions and special and relative rights, of the class of stock or series in which issued. In lieu of fractional shares, the corporation may issue scrip in registered or bearer form entitling the holder thereof to receive a certificate for a full share upon the surrender of scrip aggregating a full share. Any scrip issued by the corporation may be issued upon such terms and conditions and in such manner as the directors shall fix. Section 4. Equitable Interests. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person except as may be otherwise expressly provided by law. Section 5. Lost Certificates. The directors of the corporation may, from time to time, determine the conditions upon which a new certificate of stock may be issued in place of any certificate alleged to have been lost or destroyed. They may in their discretion require the owner of a lost or destroyed certificate, or his legal representative, to give a bond to the corporation with or without surety; surety if required shall be such as the directors deem sufficient to indemnify the corporation against any loss or claim which may arise by reason of the issue of a certificate in place of such lost or destroyed stock certificate. -8- 9 ARTICLE FIFTH MAINTENANCE AND INSPECTION OF RECORDS The corporation shall maintain in the Commonwealth of Massachusetts the original or attested copies of its Articles of Organization, By-Laws and records of all meetings of incorporators and stockholders, as well as its stock and transfer records which shall contain the names of all stockholders and the record address and amount of stock held by each. Such copies and records may be maintained at the principal office of the corporation or an office of its transfer agent or the office of the Clerk and shall be open at all reasonable times to the inspection of any stockholder for a proper purpose. ARTICLE SIXTH CHECKS, NOTES, DRAFTS, AND OTHER INSTRUMENTS Checks, notes, drafts and other instruments for the payment of money drawn or endorsed in the name of the corporation may be signed by any officer or officers or person or persons authorized by the Board of Directors to sign the same. No officer or person shall sign any such instrument as aforesaid unless authorized by said Board to do so. ARTICLE SEVENTH SEAL The seal of the corporation shall be circular in form, bearing the inscription U.S. Ring Binder Corp., Massachusetts. The Treasurer shall have custody of the seal and may affix it (as may any other officer if authorized by the directors) to any instrument requiring the corporate seal. ARTICLE EIGHTH FISCAL YEAR The fiscal year of the corporation shall be the year ending with the 31st day of December in each year. ARTICLE NINTH CONTROL OVER BY-LAWS These By-Laws may be altered, amended or repealed and any new By-Laws adopted at any annual or special meeting of the stockholders by the affirmative vote of a majority of the shares of capital stock then issued, outstanding and entitled to vote or, to the extent permitted by law and authorized by the Articles of Organization, by the affirmative vote of a majority of the Board of Directors at any meeting of the Board: provided, however, that notice of -9- 10 a proposal to alter, amend or repeal these By-Laws or adopt new By-Laws shall be included in the notice of any meeting at which such alteration, amendment or repeal or adoption is considered. Not later than the time of giving notice of the meeting of stockholders next following the making, amending or repealing by the Board of Directors of any By-Laws or the adoption of any new ByLaws, notice thereof stating the substance of such change shall be given all stockholders entitled to vote on amending the By-Laws. Any alteration, amendment or repeal of these By-Laws or any new By-Laws adopted by the Board of Directors may be amended or repealed by the stockholders. ARTICLE TENTH EFFECT OF PROVISIONS OF LAW AND ARTICLES OF ORGANIZATION Each of the provisions of these By-Laws shall be subject to and controlled by any specific provisions of law or the Articles of Organization which relate to their subject matter, and shall also be subject to any exceptions, or more specific provisions, dealing with the subject matter, appearing elsewhere in these By-Laws as amended from time to time. -10- EX-3.21 22 CERTIFICATE OF INCORPORATION OF VELOBIND 1 EXHIBIT 3.21 CERTIFICATE OF INCORPORATION OF VELOBIND, INCORPORATED 1. The name of the corporation is VeloBind, Incorporated (the "Corporation"). 2. The address of the Corporation's registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, 19801, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. 3. The nature of the business of the Corporation and the objects or purposes to be transacted, promoted or carried on by it are as follows: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. 4. The total number of shares of all classes of stock that the Corporation is authorized to issue is twenty million (20,000,000) shares, consisting of fifteen million (15,000,000) shares of Common Stock with a par value of fifty cents ($.50) per share and five million (5,000,000) shares of Preferred Stock with a par value of fifty cents ($.50) per share. The Preferred Stock may be issued in one or more series, and the Board of Directors of the Corporation is expressly authorized (i) to fix the designations, powers, preferences, rights, qualifications, limitations, and restrictions with respect to any series of Preferred Stock and (ii) to specify the number of shares of any series of Preferred Stock. 5. The name and mailing address of the incorporator are as follows: Hilary E. O'Brien Morrison & Foerster 345 California Street San Francisco, California 94104 6. The Board of Directors is expressly authorized to make, alter, amend or repeal the bylaws of the Corporation. 7. Elections of directors need not be by written ballot unless the bylaws of the Corporation shall so provide. 8. To the fullest extent permitted by Delaware statutory or decisional law, as amended or interpreted, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. This Articles 8 does not affect the availability of equitable remedies for breach of fiduciary duties. Neither any amendment or repeal of this Article 8, nor the adoption of any provision of this Certificate of Incorporation inconsistent with the Article 8, shall eliminate or reduce the effect of this Article 8 2 in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article 8, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision. 9. Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code, or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. 10. Advance notice of new business and stockholder nominations for, and cumulative voting in, the election of directors shall be given in the manner and to the extent provided in the bylaws of the Corporation. 11. The following provision is interested for the regulation and conduct of the business and affairs of the Corporation and is in furtherance, and not in limitation or exclusion, of any powers conferred upon it by statute. In all elections of directors each shareholder shall be entitled to as many votes as shall equal the number of shares held by the shareholder multiplied by the number of directors to be elected, and he or she may cast all of such votes for a single director or may distribute them among the number to be voted for, or any two or more of them, as he or she may see fit, which right, when exercised, shall be termed "cumulative voting." 12. The Corporation reserves the right to amend, alter, change or repeal any provision contained in the Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring any certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hands this 6th day of June, 1998. /s/ HILARY E. O'BRIEN ----------------------- -2- 3 * * * * * * CERTIFICATE OF MERGER OF GBC ACQUISITION CORPORATION (a Delaware corporation) INTO VELOBIND, INCORPORATED (a Delaware corporation) ************* The undersigned corporation, organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify: FIRST: That the name and state of incorporation of each of the constituent corporations of the merger (the "Merger") is as follows: STATE OF NAME INCORPORATION ---- ------------- GBC Acquisition Corporation Delaware VeloBind, Incorporated Delaware SECOND: That an Agreement of Merger between the parties to the Merger has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations in accordance with the requirements of subsection (c) of section 251 of the General Corporation Law of the State of Delaware. THIRD: That VeloBind, Incorporated shall be the surviving corporation. FOURTH: That the amendments of the Certificate of Incorporation of VeloBind, Incorporated to be effected by the Merger are as follows; 1. Article Two is amended in its entirety to read as follows: 2. The address of Corporation's registered office in the State of Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover, -3- 4 Delaware, County of Kent. The name of its registered agent at such address in The Prentice-Hall Corporation System, Inc. 2. Article 4 is amended in its entirety to read as follows: 4. The total number of shares of stock which the Corporation shall have authority to issue is 100, all of which shares shall be common stock, $.50 par value per share. 3. Article 11 is deleted in its entirety. 4. Article 12 is redesignated Article 11. FIFTH: That the executed Agreement of Merger is on file at the principal place of business of the surviving corporation. The address of said principal place of business is One GBC Plaza, Northbrook, Illinois 60062. SIXTH: That a copy of the Agreement of Merger will be furnished on request and without cost to any stockholder of any constituent corporation. Dated: [FILED November 1, 1991] VELOBIND, INCORPORATED a Delaware corporation By: /s/ CARL J. SWENSON --------------------------- Name: Carl J. Swenson Title: President and Chief Executive Officer ATTEST: By: /s/ GRANT E. ROLLIN ------------------------- Name: Grant E. Rollin Title: Secretary -4- EX-3.22 23 BY-LAWS OF VELOBIND 1 EXHIBIT 3.22 BYLAWS OF VELOBIND, INCORPORATED ARTICLE I OFFICES Section 1. Registered Office. The registered office of the corporation in the State of Delaware shall be in the City of Wilmington, County of New Castle. Section 2. Other Offices. The corporation shall also have and maintain an office or principal place of business at 47212 Mission Falls Court, Fremont, California, 94539, and may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine or the business of the corporation may require. ARTICLE II STOCKHOLDERS' MEETINGS Section 1. Place of Meetings. Meetings of the stockholders of the corporation shall be held at such place, either within or without the State of Delaware, as may be designated from time to time by the Board of Directors, or, if not so designated, then at the office of the corporation required to be maintained pursuant to Section 2 of Article I hereof. Section 2. Annual Meetings. The annual meetings of the stockholders of the corporation, commencing with the year 1989, for the purpose of election of directors and for such other business as may lawfully come before it, shall be held on such date and at such time as may be designated from time to time by the Board of Directors, or, if not so designated, then at 10:00 a.m. on the third Thursday in June in each year if not a legal holiday, and, if a legal holiday, at the same hour and place on the next succeeding day not a holiday. Section 3. Special Meetings. Special meetings of the stockholders of the corporation may be called, for any purpose or purposes, by the Chairman of the Board or the President or the Board of Directors at any time. Upon written request of any stockholder or stockholders holding in the aggregate one-fifth of 1 2 the voting power of all stockholders, delivered in person or sent by registered mail to the Chairman of the Board, President or Secretary of the Corporation, the Secretary shall call a special meeting of stockholders to be held at the office of the corporation required to be maintained pursuant to Section 2 of Article I hereof, at such time as the Secretary may fix, such meeting to be held not less than ten nor more than sixty days after the receipt of such request, and if the Secretary shall neglect or refuse to call such meeting, within seven days after the receipt of such request, the stockholder making such request may do so. Section 4. Notice of Meetings. (a) Except as otherwise provided by law or the Certificate of Incorporation, written notice of each meeting of stockholders, specifying the place, date and hour and purpose or purposes of the meeting, shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote thereat, directed to his or her address as it appears upon the books of the corporation; except that where the matter to be acted on is a merger or consolidation of the Corporation or a sale, lease or exchange of all or substantially all of its assets, such notice shall be given not less than twenty (20) nor more than sixty (60) days prior to such meeting. (b) If at any meeting action is proposed to be taken which, if taken, would entitle shareholders fulfilling the requirements of section 262(d) of the Delaware General Corporation Law to an appraisal of the fair value of their shares, the notice of such meeting shall contain a statement of that purpose and to that effect and shall be accompanied by a copy of that statutory section. (c) When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken unless the adjournment is for more than thirty days, or unless after the adjournment a new record date is fixed for the adjourned meeting, in which event a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. (d) Notice of the time, place and purpose of any meeting of stockholders may be waived in writing, either before or after such meeting, and to the extent permitted by law, will be waived by any stockholder by his or her attendance thereat, in person or by proxy. Any stockholder so waiving notice of such 2 3 meeting shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given. (e) Unless and until voted, every proxy shall be revocable at the pleasure of the person who executed it or of his or her legal representatives or assigns, except in those cases where an irrevocable proxy permitted by statute has been given. Section 5. Advance Notice of Stockholder Nominees, and Cumulative Voting. Only persons who are nominated in accordance with the procedures set forth in this Section 5 shall be eligible for election as directors. Nominations of persons for election to the Board of Directors of the corporation may be made at a meeting of stockholders by or at the direction of the Board of Directors or by any stockholder of the corporation entitled to vote in the election of directors at the meeting who complies with the notice procedures set forth in this Section 5. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the corporation. Timely notice shall also be given of any stockholder's intention to cumulate votes in the election of directors at a meeting. In either case, to be timely, a stockholder's notice shall be delivered to or mailed and received at the principal executive offices of the corporation not less than twenty (20) days nor more than sixty (60) days prior to the meeting; provided, however, that in the event less than thirty (30) days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. Such stockholder's notice shall set forth (a) as to each person, if any, whom the stockholder proposes to nominate for election or re-election as a director: (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of the corporation which are beneficially owned by such person, and (iv) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including without limitation such person's written consent to be named in the proxy statement, if any, as nominee and to serving as a director if elected); and (b) as to the stockholder giving the notice: (i) the name and address, as they appear on the corporation's books, of such 3 4 stockholder, (ii) the class and number of shares of the corporation which are beneficially owned by such stockholder, and (iii) whether such stockholder intends to request cumulative voting in the election of directors at the meeting. At the request of the Board of Directors any person nominated by the Board for election as a director shall furnish to the Secretary of the corporation that information required to be set forth in the stockholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth in this Section 5. The chairman of the meeting shall, if the facts warrant, determine and declare at the meeting that a nomination was not made in accordance with the procedures prescribed by these Bylaws, and if he should so determine, he shall so declare at the meeting and the defective nomination shall be disregarded. Section 6. Advance Notice of Stockholder Business. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be: (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than sixty (60) days nor more than ninety (90) days prior to the meeting; provided, however, that in the event that less than fifty (50) days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting: (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the corporation's books, of the stockholder proposing such business (iii) the class and number of shares of the corporation which are beneficially owned by the stockholder, (iv) any material interest of the stockholder in such business and (v) any 4 5 other information that is required to be provided by the stockholder pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, in his or her capacity as a proponent of a stockholder proposal. Notwithstanding the foregoing, in order to include information with respect to a stockholder proposal in the proxy statement and form of proxy for a stockholders' meeting, stockholders must provide notice as required by the regulations promulgated under the Securities and Exchange Act of 1934, as amended. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this Section 6. The chairman of the annual meeting shall, if the facts warrant, determine and declare at the meeting that business was not properly brought before the meeting and in accordance with the provisions of this Section 6, and, if he should so determine, he shall so declare at the meeting that any such business not properly brought before the meeting shall not be transacted. Section 7. Quorum and Voting. (a) At all meetings of stockholders, except where otherwise provided by law, the Certificate of Incorporation, or these Bylaws, the presence, in person or by proxy duly authorized, of the holders of a majority of the outstanding shares of stock entitled to vote shall constitute a quorum for the transaction of business. Shares, the voting of which at said meeting have been enjoined, or which for any reason cannot be lawfully voted at such meeting, shall not be counted to determine a quorum at said meeting. In the absence of a quorum, any meeting of stockholders may be adjourned, from time to time, by vote of the holders of a majority of the shares represented thereat, but no other business shall be transacted at such meeting. At such adjourned meeting at which a quorum is present or represented, any business may be transacted which might have been transacted at the original meeting. The stockholders present at a duly called or convened meeting, at which a quorum is present, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. (b) Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, all action taken by the holders of a majority of the voting power represented at any meeting at which a quorum is present shall be valid and binding upon the corporation. 5 6 Section 8. Voting Rights. (a) Except as otherwise provided by law, only persons in whose names shares entitled to vote stand on the stock records of the corporation on the record date for determining the stockholders entitled to vote at said meeting shall be entitled to vote at such meeting. Shares standing in the names of two or more persons shall be voted or represented in accordance with the determination of the majority of such persons, or, if only one of such persons is present in person or represented by proxy, such person shall have the right to vote such shares and such shares shall be deemed to be represented for the purpose of determining a quorum. (b) Every person entitled to vote or execute consents shall have the right to do so either in person or by an agent or agents authorized by a written proxy executed by such person or his duly authorized agent, which proxy shall be filed with the Secretary of the corporation at or before the meeting at which it is to be used. Said proxy so appointed need not be a stockholder. No proxy shall be voted on after three years from its date unless the proxy provides for a longer period. Section 9. List of Stockholders. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order, showing the address of and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held and which place shall be specified in the notice of the meeting, or, if not specified, at the place where said meeting is to be held, and the list shall be produced and kept at the time and place of meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 10. Action Without Meeting. Unless otherwise provided in the Certificate of Incorporation, any action required by statute to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, are signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. To be effective, a written consent must be delivered to the corporation 6 7 by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. Every written consent shall bear the date of signature of each stockholder who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless, within sixty days of the earliest dated consent delivered in the manner required by this Section to the corporation, written consents signed by a sufficient number of holders to take action are delivered to the corporation in accordance with this Section. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS Section 1. Number and Term of Office. The number of directors which shall constitute the whole of the Board of Directors shall be nine (9). With the exception of the first Board of Directors, which shall be elected by the incorporator, and except as provided in Section 3 of this Article III, the directors shall be elected by a plurality vote of the shares represented in person or by proxy at the stockholders annual meeting in each year and entitled to vote on the election of directors. Elected directors shall hold office until the next annual meeting and until their successors shall be duly elected and qualified. Directors need not be stockholders. If, for any cause, the Board of Directors shall not have been elected at an annual meeting, they may be elected as soon thereafter as convenient at a special meeting of the stockholders called for that purpose in the manner provided in these Bylaws. As provided in the Certificate of Incorporation, at all elections of directors each shareholder having the right to vote shall be entitled to as many votes as the number of shares so held of record by the shareholder multiplied by the number of directors to be elected, and the shareholder may cast all of such votes for a single director, or may distribute them among any two or more of the directors to be voted for, as he or she may see fit. 7 8 Section 2. Powers. The powers of the corporation shall be exercised, its business conducted and its property controlled by or under the direction of the Board of Directors. Section 3. Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director, and each director so elected shall hold office for the unexpired portion of the term of the director whose place shall be vacant, and until his or her successor shall have been duly elected and qualified. A vacancy in the Board of Directors shall be deemed to exist under this section in the case of the death, removal or resignation of any director, or if the stockholders fail at any meeting of stockholders at which directors are to be elected (including any meeting referred to in Section 4 below) to elect the number of directors then constituting the whole Board. Section 4. Resignations and Removals. (a) Any director may resign at any time by delivering his written resignation to the Secretary, such resignation to specify whether it will be effective at a particular time, upon receipt by the Secretary or at the pleasure of the Board of Directors. If no such specification is made, it shall be deemed effective at the pleasure of the Board of Directors. When one or more directors shall resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office for the unexpired portion of the term of the director whose place shall be vacated and until his successor shall have been duly elected and qualified. (b) At a special meeting of stockholders called for the purpose in the manner hereinabove provided, the Board of Directors, or any individual director, may be removed from office, with or without cause, and a new director or directors elected by a vote of stockholders holding a majority of the outstanding shares entitled to vote at an election of directors. Section 5. Meetings. (a) The annual meeting of the Board of Directors shall be held immediately after the annual stockholders' meeting and at the place where such meeting is held or at the place announced by the Chairman at such meeting. No notice of an annual meeting of 8 9 the Board of Directors shall be necessary, and such meeting shall be held for the purpose of electing officers and transacting such other business as may lawfully come before it. (b) Except as hereinafter otherwise provided, regular meetings of the Board of Directors shall be held in the office of the corporation required to be maintained pursuant to Section 2 of Article I hereof. Regular meetings of the Board of Directors may also be held at any place within or without the State of Delaware which has been designated by resolutions of the Board of Directors or the written consent of all directors. (c) Special meetings of the Board of Directors may be held at any time and place within or without the State of Delaware whenever called by the Chairman of the Board or a majority of the directors. (d) Written notice of the time and place of all regular and special meetings of the Board of Directors shall be delivered personally to each director or sent by telegram at least 48 hours before the start of the meeting, or sent by first class mail at least 120 hours before the start of the meeting. Notice of any meeting may be waived in writing at any time before or after the meeting and will be waived by any director by attendance thereat. (e) A majority of the directors present, whether or not constituting a quorum, may adjourn any meeting to another time and place. Notice of the time and place of holding an adjourned meeting need not be given, unless the meeting is adjourned for more than twenty-four hours, in which case notice of the time and place shall be given before the time of the adjourned meeting, in the manner specified in these Bylaws, to the directors who were not present at the time of the adjournment. Section 6. Quorum and Voting. (a) A quorum of the Board of Directors shall consist of a majority of the exact number of directors fixed from time to time in accordance with Section 1 of Article III and Article XIII of these Bylaws, but not less than one; provided, however, at any meeting, whether a quorum be present or otherwise, a majority of the directors present may adjourn from time to time until the time fixed for the next regular meeting of the Board of Directors, without notice other than by announcement at the meeting. 9 10 (b) At each meeting of the Board of Directors at which a quorum is present, all questions and business shall be determined by a vote of a majority of the directors present, unless a different vote be required by law, the Certificate of Incorporation, or these Bylaws. (c) Any member of the Board of Directors, or of any committee thereof, may participate in a meeting by means of conference telephone or similar communication equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence in person at such meeting. (d) The transactions of any meeting of the Board of Directors, or any committee thereof, however called or noticed, or wherever held, shall be as valid as if undertaken at a meeting duly held after regular call and notice, if a quorum be present and if, either before or after the meeting, each of the directors not present shall sign a written waiver of notice, or a consent to holding such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Section 7. Action Without Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or of such committee, as the case may be, consent thereto in writing, and such writing or writings are filed with the minutes of proceedings of the Board or committee. Section 8. Fees and Compensation. Directors shall not receive any stated salary for their services as directors but by resolution of the Board. A fixed fee, with or without expenses of attendance, may be allowed for attendance at each meeting and at each meeting of any committee of the Board of Directors. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee, or otherwise, and receiving compensation therefor. Section 9. Approval of Loans to Officers. The corporation may lend money to, or guarantee any obligation of, or otherwise assist, any officer or other employee of the corporation or of its subsidiaries, including any officer or employee who is a director of the corporation or its subsidiaries, whenever, in the judgment of the directors, such 10 11 loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing contained in this Section shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute. Section 10. Inspectors of Election. Before any annual or special meeting of shareholders, the Board of Directors may appoint any person or persons other than nominees for office to act as inspectors of election at the meeting or its adjournment. If no inspectors of election are so appointed, the chairman of the meeting may, and on the request of any shareholder or a shareholder's proxy shall, appoint inspectors of election at the meeting. The number of inspectors shall be either one (1) or three (3). If inspectors are appointed at a meeting on the request of one or more shareholders or proxies, the holders of a majority of shares or their proxies present at the meeting shall determine whether one (1) or three (3) inspectors are to be appointed. If any person appointed as inspector fails to appear or fails or refuses to act, the chairman of the meeting may, and upon the request of any shareholder or a shareholder's proxy shall, appoint a person to fill that vacancy. These inspectors shall: (a) Determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies; (b) Receive votes, ballots or consents; (c) Hear and determine all challenges and questions in any way arising in connection with the right to vote; (d) Count and tabulate all votes or consents; (e) Determine when the polls shall close; (f) Determine the result; and (g) Do any other acts that may be proper to conduct the election or vote with fairness to all shareholders. 11 12 Section 11. Committees. (a) Executive Committee: The Board of Directors may, by resolution passed by a majority of the whole Board, appoint an Executive Committee of not less than one member, each of whom shall be a director. The Executive Committee, to the extent permitted by law, shall have and may exercise, when the Board of Directors is not in session, all powers of the Board in the management of the business and affairs of the corporation, including, without limitation, the power and authority to declare a dividend or to authorize the issuance of stock, except such committee shall not have the power or authority to amend the Certificate of Incorporation, to adopt an agreement of merger or consolidation, to recommend to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, to recommend to the stockholders of the corporation a dissolution of the corporation or a revocation of a dissolution, or to amend these Bylaws. (b) Other Committees: The Board of Directors may, by resolution passed by a majority of the whole Board, from time to time appoint such other committees as may be permitted by law. Such other committees appointed by the Board of Directors shall have such powers and perform such duties as may be prescribed by the resolution or resolutions creating such committees, but in no event shall any such committee have the powers denied to the Executive Committee in these Bylaws. (c) Term: The members of all committees of the Board of Directors shall serve a term coexistent with that of the Board of Directors which shall have appointed such committees. The Board, subject to the provisions of subsection (a) or (b) of this Section 11, may at any time increase or decrease the number of members of a committee or terminate the existence of a committee; provided, that no committee shall consist of less than one member. The membership of a committee member shall terminate on the date of his or her death or voluntary resignation, but the Board of Directors may at any time for any reason remove any individual committee member, and the Board of Directors may fill any committee vacancy created by death, resignation, removal or increase in the number of members of the committee. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee, and, in addition, in the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of 12 13 the Board of Directors to act at the meeting in the place of any such absent or disqualified member. (d) Meetings: Unless the Board of Directors shall otherwise provide, regular meetings of the Executive Committee or any other committee appointed pursuant to this Section 11 shall be held at such times and places as are determined by the Board of Directors, or by any such committee, and when notice thereof has been given to each member of such committee, no further notice of such regular meetings need be given thereafter; special meetings of any such committee may be held at the principal office of the corporation required to be maintained pursuant to Section 2 of Article I hereof; or at any place which has been designated from time to time by resolution of such committee or by written consent of all members thereof, and may be called by any director who is a member of such committee, upon written notice to the members of such committee of the time and place of such special meeting given in the manner provided for the giving of written notice to members of the Board of Directors of the time and place of special meetings of the Board of Directors. Notice of any special meeting of any committee may be waived in writing at any time after the meeting and will be waived by any director by attendance thereat. A majority of the authorized number of members of any such committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of such committee. ARTICLE IV OFFICERS Section 1. Officers Designated. The officers of the corporation shall be a Chairman of the Board of Directors and a President, each of whom shall be a member of the Board of Directors, and one or more Vice-Presidents, a Secretary, and a Treasurer. The order of the seniority of the Vice-Presidents shall be in the order of their nomination, unless otherwise determined by the Board of Directors. The Board of Directors or the Chairman of the Board or the President may also appoint one or more assistant secretaries, assistant treasurers, and such other officers and agents with such powers and duties as it or he shall deem necessary. The Board of Directors may assign such additional titles to one or more of the officers as it shall deem appropriate. Any one person may hold any number of offices of the corporation at any one time unless specifically prohibited therefrom by law. The salaries and other compensation of the 13 14 officers of the corporation shall be fixed by or in the manner designated by the Board of Directors. Section 2. Tenure and Duties of Officers. (a) General: All officers shall hold office at the pleasure of the Board of Directors and until their successors shall have been duly elected and qualified, unless sooner removed. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board of Directors. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors. Nothing in these Bylaws shall be construed as creating any kind of contractual right to employment with the corporation. (b) Duties of the Chairman of the Board of Directors: The Chairman of the Board of Directors (if there be such an officer appointed) shall be the chief executive officer of the corporation and, when present, shall preside at all meetings of the shareholders and the Board of Directors. The Chairman of the Board of Directors shall perform such other duties and have such other powers as the Board of Directors shall designate from time to time. (c) Duties of President: The President shall be the chief executive officer of the corporation in the absence of the Chairman of the Board and shall preside at all meetings of the shareholders and at all meetings of the Board of Directors, unless the Chairman of the Board of Directors has been appointed and is present. The President shall perform such other duties and have such other powers as the Board of Directors shall designate from time to time. (d) Duties of Vice-Presidents: The Vice-Presidents, in the order of their seniority, may assume and perform the duties of the President in the absence or disability of the President or whenever the office of the President is vacant. The Vice-Presidents shall perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. (e) Duties of Secretary: The Secretary shall attend all meetings of the shareholders and of the Board of Directors and any committee thereof, and shall record all acts and proceedings thereof in the minute book of the corporation. The Secretary shall give notice, in conformity with these Bylaws, of all meetings of the shareholders, and of all meetings of the Board of Directors and any committee thereof requiring notice. The Secretary shall perform such other duties and have such other 14 15 powers as the Board of Directors shall designate from time to time. The President may direct any Assistant Secretary to assume and perform the duties of the Secretary in the absence or disability of the Secretary, and each Assistant Secretary shall perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. (f) Duties of Treasurer: The Treasurer shall keep or cause to be kept the books of account of the corporation in a thorough and proper manner, and shall render statements of the financial affairs of the corporation in such form and as often as required by the Board of Directors or the President. The Treasurer, subject to the order of the Board of Directors, shall have the custody of all funds and securities of the corporation. The Treasurer shall perform all other duties commonly incident to his office and shall perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. The President may direct any Assistant Treasurer to assume and perform the duties of the Treasurer in the absence or disability of the Treasurer, and each Assistant Treasurer shall perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. ARTICLE V EXECUTION OF CORPORATE INSTRUMENTS, AND VOTING OF SECURITIES OWNED BY THE CORPORATION Section 1. Execution of Corporate Instruments. (a) The Board of Directors may, in its discretion, determine the method and designate the signatory officer or officers, or other person or persons, to execute any corporate instrument or document, or to sign the corporate name without limitation, except where otherwise provided by law, and such execution or signature shall be binding upon the corporation. (b) Unless otherwise specifically determined by the Board of Directors or otherwise required by law, formal contracts of the corporation, promissory notes, deeds of trust, mortgages and other evidences of indebtedness of the corporation, and other corporate instruments or documents requiring the corporate seal, and certificates of shares of stock owned by the corporation, shall be executed, signed or endorsed by the Chairman of the Board (if there be such an officer appointed) or by the President; such documents may also be executed by any Vice-President and by the Secretary or Treasurer or any Assistant 15 16 Secretary or Assistant Treasurer. All other instruments and documents requiring the corporate signature, but not requiring the corporate seal, may be executed as aforesaid or in such other manner as may be directed by the Board of Directors. (c) All checks and drafts drawn on banks or other depositories on funds to the credit of the corporation, or in special accounts of the corporation, shall be signed by such person or persons as the Board of Directors shall authorize so to do. Section 2. Voting of Securities Owned by the Corporation. All stock and other securities of other corporations owned or held by the corporation for itself, or for other parties in any capacity, shall be voted, and all proxies with respect thereto shall be executed, by the person authorized so to do by resolution of the Board of Directors or, in the absence of such authorization, by the Chairman of the Board (if there be such an officer appointed), or by the President, or by any Vice-President. ARTICLE VI SHARES OF STOCK Section 1. Form and Execution of Certificates. Certificates for the shares of stock of the corporation shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock in the corporation shall be entitled to have a certificate signed by, or in the name of the corporation by, the Chairman of the Board (if there be such an officer appointed), or by the President or any Vice-President and by the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary, certifying the number of shares owned by him or her in the corporation. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued with the same effect as if he or she were such officer, transfer agent, or registrar at the date of issue. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate 16 17 which the corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in section 202 of the Delaware General Corporation Law, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his or her legal representative, to indemnify the corporation in such manner as it shall require and/or to give the corporation a surety bond in such form and amount as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed. Section 3. Transfers. Transfers of record of shares of stock of the corporation shall be made only upon its books by the holders thereof, in person or by attorney duly authorized, and upon the surrender of a certificate or certificates for a like number of shares, properly endorsed. Section 4. Fixing Record Dates. (a) In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the date on which the meeting is held. A 17 18 determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. (b) In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by the Delaware General Corporation Law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a registered office of the Corporation shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. (c) In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. Section 5. Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive 18 19 dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII OTHER SECURITIES OF THE CORPORATION All bonds, debentures and other corporate securities of the corporation, other than stock certificates, may be signed by the Chairman of the Board (if there be such an officer appointed), or the President or any Vice-President or such other person as may be authorized by the Board of Directors and the corporate seal impressed thereon or a facsimile of such seal imprinted thereon and attested by the signature of the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer; provided, however, that where any such bond, debenture or other corporate security shall be authenticated by the manual signature of a trustee under an indenture pursuant to which such bond, debenture or other corporate security shall be issued, the signature of the persons signing and attesting the corporate seal on such bond, debenture or other corporate security may be the imprinted facsimile of the signatures of such persons. Interest coupons appertaining to any such bond, debenture or other corporate security, authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the corporation, or such other person as may be authorized by the Board of Directors, or bear imprinted thereon the facsimile signature of such person. In case any officer who shall have signed or attested any bond, debenture or other corporate security, or whose facsimile signature shall appear thereon or before the bond, debenture or other corporate security so signed or attested shall have been delivered, such bond, debenture or other corporate security nevertheless may be adopted by the corporation and issued and delivered as though the person who signed the same or whose facsimile signature shall have been used thereon had not ceased to be such officer of the corporation. ARTICLE VIII CORPORATE SEAL The corporate seal shall consist of a die bearing the name of the corporation and the state and date of its incorporation. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. 19 20 ARTICLE IX INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS Section 1. Right to Indemnification. Each person who was or is a party or is threatened to be made a party to or is involved (as a party, witness, or otherwise) in any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (hereinafter a "Proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director, officer, employee, or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation or of a partnership, joint venture, trust, or other enterprise, including service with respect to employee benefit plans, whether the basis of the Proceeding is alleged action in an official capacity as a director, officer, employee, or agent or in any other capacity while serving as a director, officer, employee, or agent (hereinafter an "Agent"), shall be indemnified and held harmless by the corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended or interpreted (but, in the case of any such amendment or interpretation, only to the extent that such amendment or interpretation permits the corporation to provide broader indemnification rights than were permitted prior thereto) against all expenses, liability, and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid or to be paid in settlement, and any interest, assessments, or other charges imposed thereon, and any federal, state, local, or foreign taxes imposed on any Agent as a result of the actual or deemed receipt of any payments under this Article) reasonably incurred or suffered by such person in connection with investigating, defending, being a witness in, or participating in (including on appeal), or preparing for any of the foregoing in, any Proceeding (hereinafter "Expenses"); provided, however, that except as to actions to enforce indemnification rights pursuant to Section 3 of this Article, the corporation shall indemnify any Agent seeking indemnification in connection with a Proceeding (or part thereof) initiated by such person only if the Proceeding (or part thereof) was authorized by the Board of Directors of the corporation. The right to indemnification conferred in this Article shall be a contract right. 20 21 Section 2. Authority to Advance Expenses. Expenses incurred by an officer or director (acting in his or her capacity as such) in defending a Proceeding shall be paid by the corporation in advance of the final disposition of such Proceeding, provided, however, that if required by the Delaware General Corporation Law, as amended, such Expenses shall be advanced only upon delivery to the corporation of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the corporation as authorized in this Article or otherwise. Expenses incurred by other Agents of the corporation (or by the directors or officers not acting in their capacity as such, including service with respect to employee benefit plans) may be advanced upon such terms and conditions as the Board of Directors deems appropriate. Any obligation to reimburse the corporation for Expense advances shall be unsecured, and no interest shall be charged thereon. Section 3. Right of Claimant to Bring Suit. If a claim under Section 1 or 2 of this Article is not paid in full by the corporation within 20 days after a written claim has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense (including attorneys' fees) of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending a Proceeding in advance of its final disposition where the required undertaking has been tendered to the corporation) that the claimant has not met the standards of conduct that make it permissible under the Delaware General Corporation Law for the corporation to indemnify the claimant for the amount claimed. The burden of proving such a defense shall be on the corporation. Neither the failure of the corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper under the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant had not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct. Section 4. Provisions Nonexclusive. The rights conferred on any person by this Article shall not be exclusive of any other rights that such person may have or hereafter acquire 21 22 under any statute, provision of the Certificate of Incorporation, agreement, vote of stockholders or disinterested directors, or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office. To the extent that any provision of the Certificate of Incorporation, agreement, or vote of the stockholders or disinterested directors is inconsistent with these Bylaws, the provision, agreement, or vote shall take precedence. Section 5. Authority to Insure. The corporation may purchase and maintain insurance to protect itself and any Agent against any Expenses, whether or not the corporation would have the power to indemnify the Agent against such Expenses under applicable law or the provisions of this Article. Section 6. Survival of Rights. The rights provided by this Article shall continue as to a person who has ceased to be an Agent and shall inure to the benefit of the heirs, executors, and administrators of such a person. Section 7. Settlement of Claims. The corporation shall not be liable to indemnify any Agent under this Article (a) for any amounts paid in settlement of any action or claim effected without the corporation's written consent, which consent shall not be unreasonably withheld; or (b) for any judicial award if the corporation was not given a reasonable and timely opportunity, at its expense, to participate in the defense of such action. Section 8. Effect of Amendment. Any amendment, repeal, or modification of this Article shall not adversely affect any right or protection of any Agent existing at the time of such amendment, repeal, or modification. Section 9. Subrogation. In the event of payment under this Article, the corporation shall be subrogated to the extent of such payment to all of the rights of recovery of the Agent, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the corporation effectively to bring suit to enforce such rights. Section 10. No Duplication of Payments. The corporation shall not be liable under this Article to make any payment in connection with any claim made against the Agent to the extent the Agent has otherwise actually received payment (under any insurance policy, agreement, vote, or otherwise) of the amounts otherwise indemnifiable hereunder. 22 23 Section 11. Indemnity Fund. Upon resolution passed by the Board of Directors, the corporation may establish a trust or other designated account, grant a security interest or use other means (including, without limitation, a letter of credit) to ensure the payment of any or all of its obligations arising under this Article and/or agreements which may be entered into between the corporation and its officers and directors from time to time. ARTICLE X NOTICES Whenever, under any provisions of these Bylaws, notice is required to be given to any stockholder, the same shall be given in writing, timely and duly deposited in the United States mail, postage prepaid, and addressed to his or her last known post office address as shown by the stock record of the corporation or its transfer agent. Any notice required to be given to any director may be given by the method hereinabove stated, or by telegram, except that such notice, other than one which is delivered personally, shall be sent to such address as such director shall have filed in writing with the Secretary of the corporation, or, in the absence of such filing, to the last known post office address of such director. If no address of a stockholder or director be known, such notice may be sent to the office of the corporation required to be maintained pursuant to Section 2 of Article I hereof. An affidavit of mailing, executed by a duly authorized and competent employee of the corporation or its transfer agent appointed with respect to the class of stock affected, specifying the name and address or the names and addresses of the stockholder or stockholders, director or directors, to whom any such notice or notices was or were given, and the time and method of giving the same, shall be conclusive evidence of the statements therein contained. All notices given by mail, as above provided, shall be deemed to have been given as of the time of mailing, and all notices given by telegram shall be deemed to have been given as of the sending time recorded by the telegraph company transmitting the same. It shall not be necessary that the same method of giving be employed in respect of all directors, but one permissible method may be employed in respect of any one or more, and any other permissible method or methods may be employed in respect of any other or others. The period or limitation of time within which any stockholder may exercise any option or right, or enjoy any privilege or benefit, or be required to act, or within which any director may exercise any power or right, or enjoy any privilege, pursuant to any notice sent to him or her in the manner above provided, shall not be affected or extended in any manner by the failure of such a 23 24 stockholder or such director to receive such notice. Whenever any notice is required to be given under the provisions of the statutes or of the Certificate of Incorporation, or of these Bylaws, a waiver thereof in writing signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Whenever notice is required to be given, under any provision of law or of the Certificate of Incorporation or Bylaws of the corporation, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the corporation is such as to require the filing of a certificate under any provision of the Delaware General Corporation Law, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful. ARTICLE XI FISCAL YEAR The fiscal year of the corporation shall be fixed and may be changed from time to time by resolution of the Board of Directors. ARTICLE XII AMENDMENTS These Bylaws may be repealed, altered or amended or new Bylaws adopted by written consent of stockholders in the manner authorized by Section 8 of Article II, or at any meeting of the stockholders, either annual or special, by the affirmative vote of a majority of the stock entitled to vote at such meeting. The Board of Directors shall also have the authority to repeal, alter or amend these Bylaws or adopt new Bylaws (including, without limitation, the amendment of any Bylaws setting forth the number of directors who shall constitute the whole Board of Directors) by unanimous written consent or at any annual, regular, or special meeting by the affirmative vote of a majority of the whole number of directors, subject to the power of the stockholders to change or repeal such Bylaws and provided that the Board of Directors shall not make or alter any Bylaws fixing the qualifications, classifications, term of office or compensation of directors. 24 25 * * * * * * VELOBIND, INCORPORATED BY-LAWS AMENDMENT (EFFECTIVE JANUARY 7, 1991) The first sentence of Article III, Section 1 is amended to read: "Section 1. Number and Term of Office. The number of directors which shall constitute the whole Board of Directors shall be three (3) directors." 25 EX-4.1 24 INDENTURE DATED AS OF MAY 27, 1998 1 EXHIBIT 4.1 --------------------------------------- GENERAL BINDING CORPORATION, AS ISSUER, THE SUBSIDIARY GUARANTORS NAMED HEREIN, AND FIRST UNION NATIONAL BANK, AS TRUSTEE ----------------- INDENTURE DATED AS OF MAY 27, 1998 ----------------- UP TO $225,000,000 --------------------------------------- 2 CROSS-REFERENCE TABLE
TIA Indenture Section Section - ------- --------- 310(a)(1)........................................................................ 7.10 (a)(2).......................................................................... 7.10 (a)(3).......................................................................... N.A. (a)(4).......................................................................... N.A. (a)(5).................................................................... 7.08; 7.10 (b)................................................................ 7.08; 7.10; 13.02 (c)............................................................................. N.A. 311(a)........................................................................... 7.11 (b)............................................................................. 7.11 (c)............................................................................. N.A. 312(a)........................................................................... 2.05 (b)............................................................................. 13.03 (c)............................................................................. 13.03 313(a)........................................................................... 7.06 (b)(1).......................................................................... N.A. (b)(2).......................................................................... 7.06 (c)....................................................................... 7.06; 13.02 (d)............................................................................. 7.06 314(a)............................................................... 4.06; 4.08; 13.02 (b)............................................................................. N.A. (c)(1).......................................................................... 13.04 (c)(2).......................................................................... 13.04 (c)(3).......................................................................... N.A. (d)............................................................................. N.A. (e)............................................................................. 13.05 (f)............................................................................. N.A. 315(a)......................................................................... 7.01(b) (b)....................................................................... 7.05; 13.02 (c)........................................................................... 7.01(a) (d)........................................................................... 7.01(c) (e)............................................................................. 6.11 316(a)(last sentence)............................................................. 2.09 (a)(1)(A)........................................................................ 6.05 (a)(1)(B)........................................................................ 6.04 (a)(2)........................................................................... N.A. (b).............................................................................. 6.07 (c).............................................................................. 9.04 317(a)(1)......................................................................... 6.08 (a)(2)........................................................................... 6.09 (b).............................................................................. 2.04 318(a)........................................................................... 13.01 (c)............................................................................. 13.01
- -------------------- N.A. means Not Applicable NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of this Indenture. 3 TABLE OF CONTENTS ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE...............................1 SECTION 1.01. Definitions..........................................1 SECTION 1.02. Incorporation by Reference of TIA...................28 SECTION 1.03. Rules of Construction...............................28 ARTICLE TWO THE NOTES...............................................................28 SECTION 2.01. Form and Dating.....................................29 SECTION 2.02. Execution and Authentication; Aggregate Principal Amount....................................30 SECTION 2.03. Registrar and Paying Agent..........................31 SECTION 2.04. Paying Agent To Hold Assets in Trust................32 SECTION 2.05. Holder Lists........................................32 SECTION 2.06. Transfer and Exchange...............................32 SECTION 2.07. Replacement Notes...................................33 SECTION 2.08. Outstanding Notes...................................33 SECTION 2.09. Treasury Notes......................................34 SECTION 2.10. Temporary Notes.....................................34 SECTION 2.11. Cancellation........................................34 SECTION 2.12. Defaulted Interest..................................35 SECTION 2.13. CUSIP Number........................................36 SECTION 2.14. Deposit of Monies...................................36 SECTION 2.15. Restrictive Legends.................................36 SECTION 2.16. Book-Entry Provisions for Global Security...........36 SECTION 2.17. Special Transfer Provisions.........................38 SECTION 2.18. Liquidated Damages Under Registration Rights Agreement....................................40 ARTICLE THREE REDEMPTION..............................................................41 SECTION 3.01. Notices to Trustee..................................41 SECTION 3.02. Selection of Notes To Be Redeemed...................41 SECTION 3.03. Optional Redemption.................................41 SECTION 3.04. Notice of Redemption................................42 SECTION 3.05. Effect of Notice of Redemption......................43 SECTION 3.06. Deposit of Redemption Price.........................43 SECTION 3.07. Notes Redeemed in Part..............................44
i 4 ARTICLE FOUR COVENANTS.........................................................................44 SECTION 4.01. Payment of Notes..............................................44 SECTION 4.02. Maintenance of Office or Agency...............................44 SECTION 4.03. Corporate Existence...........................................45 SECTION 4.04. Payment of Taxes and Other Claims.............................45 SECTION 4.05. Maintenance of Properties and Insurance.......................45 SECTION 4.06. Compliance Certificate; Notice of Default.....................46 SECTION 4.07. Compliance with Laws..........................................47 SECTION 4.08. Reports to Holders............................................47 SECTION 4.09. Waiver of Stay, Extension or Usury Laws.......................47 SECTION 4.10. Limitation on Restricted Payments.............................47 SECTION 4.11. Limitation on Transactions with Affiliates....................50 SECTION 4.12. Limitation on Incurrence of Additional Indebtedness...........51 SECTION 4.13. Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.............................51 SECTION 4.14. Change of Control.............................................52 SECTION 4.15. Limitation on Asset Sales.....................................54 SECTION 4.16. Limitation on Preferred Stock of Restricted Subsidiaries......57 SECTION 4.17. Limitation on Restricted and Unrestricted Subsidiaries........57 SECTION 4.18. Limitation on Liens...........................................59 SECTION 4.19. Conduct of Business...........................................59 SECTION 4.20. Additional Subsidiary Guarantees..............................59 SECTION 4.21. Limitation of Guarantees by Restricted Subsidiaries...........60 SECTION 4.22. Prohibition on Incurrence of Senior Subordinated Debt.........61 ARTICLE FIVE SUCCESSOR CORPORATION.............................................................61 SECTION 5.01. Merger, Consolidation and Sale of Assets......................61 SECTION 5.02. Successor Corporation Substituted.............................62 ARTICLE SIX REMEDIES..........................................................................63 SECTION 6.01. Events of Default.............................................63 SECTION 6.02. Acceleration..................................................64 SECTION 6.03. Other Remedies................................................65 SECTION 6.04. Waiver of Past Defaults.......................................66 SECTION 6.05. Control by Majority...........................................66
ii 5 SECTION 6.06. Limitation on Suits...........................................66 SECTION 6.07. Right of Holders To Receive Payment...........................67 SECTION 6.08. Collection Suit by Trustee....................................67 SECTION 6.09. Trustee May File Proofs of Claim..............................67 SECTION 6.10. Priorities....................................................68 SECTION 6.11. Undertaking for Costs.........................................68 SECTION 6.12. Restoration of Rights and Remedies............................68 ARTICLE SEVEN TRUSTEE..........................................................................69 SECTION 7.01. Duties of Trustee.............................................69 SECTION 7.02. Rights of Trustee.............................................70 SECTION 7.03. Individual Rights of Trustee..................................71 SECTION 7.04. Trustee's Disclaimer..........................................71 SECTION 7.05. Notice of Default.............................................71 SECTION 7.06. Reports by Trustee to Holders.................................72 SECTION 7.07. Compensation and Indemnity....................................72 SECTION 7.08. Replacement of Trustee........................................73 SECTION 7.09. Successor Trustee by Merger, Etc..............................74 SECTION 7.10. Eligibility; Disqualification.................................74 SECTION 7.11. Preferential Collection of Claims Against the Company.........75 ARTICLE EIGHT DISCHARGE OF INDENTURE; DEFEASANCE...............................................75 SECTION 8.01. Termination of Company's Obligations..........................75 SECTION 8.02. Application of Trust Money....................................77 SECTION 8.03. Repayment to the Company......................................78 SECTION 8.04. Reinstatement.................................................78 SECTION 8.05. Acknowledgment of Discharge by Trustee........................78 ARTICLE NINE MODIFICATION OF THE INDENTURE....................................................79 SECTION 9.01. Without Consent of Holders....................................79 SECTION 9.02. With Consent of Holders.......................................79 SECTION 9.03. Compliance with TIA...........................................80 SECTION 9.04. Revocation and Effect of Consents.............................80 SECTION 9.05. Notation on or Exchange of Notes..............................80 SECTION 9.06. Trustee To Sign Amendments, Etc...............................81
iii 6 SECTION 9.07. Trustee To Sign Consents......................................80 ARTICLE TEN SUBORDINATION.....................................................................81 SECTION 10.01. Notes Subordinated to Senior Indebtedness....................81 SECTION 10.02. Suspension of Payment When Senior Indebtedness is in Default................................................82 SECTION 10.03. Notes Subordinated to Prior Payment of All Senior Indebtedness on Dissolution, Liquidation or Reorganization of Company...................................................83 SECTION 10.04. Holders To Be Subrogated to Rights of Holders of Senior Indebtedness.......................................85 SECTION 10.05. Obligations of the Company Unconditional.....................85 SECTION 10.06. Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice.........................................86 SECTION 10.07. Application by Trustee of Assets Deposited with It...........86 SECTION 10.08. No Waiver of Subordination Provisions........................87 SECTION 10.09. Holders Authorize Trustee To Effectuate Subordination of Notes.....................................................87 SECTION 10.10. Right of Trustee to Hold Senior Indebtedness.................88 SECTION 10.11. This Article Ten Not To Prevent Events of Default............88 SECTION 10.12. No Fiduciary Duty of Trustee to Holders of Senior Indebtedness.................................................88 ARTICLE ELEVEN GUARANTEE OF NOTES................................................................89 SECTION 11.01. Unconditional Guarantee......................................89 SECTION 11.02. Limitations on Guarantees....................................90 SECTION 11.03. Execution and Delivery of Guarantee..........................90 SECTION 11.04. Release of a Subsidiary Guarantor............................91 SECTION 11.05. Waiver of Subrogation........................................92 SECTION 11.06. No Set-Off...................................................92 SECTION 11.07. Obligations Absolute.........................................93 SECTION 11.08. Obligations Continuing.......................................93 SECTION 11.09. Obligations Not Reduced......................................93 SECTION 11.10. Obligations Reinstated.......................................93 SECTION 11.11. Obligations Not Affected.....................................94 SECTION 11.12. Waiver.......................................................95 SECTION 11.13. No Obligation To Take Action Against the Company.............95
iv 7 SECTION 11.14. Dealing with the Company and Others..............................95 SECTION 11.15. Default and Enforcement..........................................96 SECTION 11.16. Amendment, Etc...................................................96 SECTION 11.17. Acknowledgment...................................................96 SECTION 11.18. Costs and Expenses...............................................96 SECTION 11.19. No Merger or Waiver; Cumulative Remedies.........................97 SECTION 11.20. Survival of Obligations..........................................97 SECTION 11.21. Guarantee in Addition to Other Obligations.......................97 SECTION 11.22. Severability.....................................................97 SECTION 11.23. Successors and Assigns...........................................97 ARTICLE TWELVE SUBORDINATION OF GUARANTEE............................................................98 SECTION 12.01. Obligations of Guarantors Subordinated to Guarantor Senior Indebtedness.................................98 SECTION 12.02. Suspension of Guarantee Obligations When Guarantor Senior Indebtedness is in Default......................98 SECTION 12.03. Guarantee Obligations Subordinated to Prior Payment of All Guarantor Senior Indebtedness on Dissolution, Liquidation or Reorganization of Such Subsidiary Guarantor.....................................99 SECTION 12.04. Holders of Guarantee Obligations To Be Subrogated to Rights of Holders of Guarantor Senior Indebtedness. ..............................101 SECTION 12.05. Obligations of the Subsidiary Guarantors Uncondition............102 SECTION 12.06. Trustee Entitled To Assume Payments Not Prohibited in Absence of Notice.............................103 SECTION 12.07. Application by Trustee of Assets Deposited with It..............103 SECTION 12.08. No Waiver of Subordination Provisions...........................103 SECTION 12.09. Holders Authorize Trustee To Effectuate Subordination of Guarantee Obligations..........................104 SECTION 12.10. Right of Trustee to Hold Guarantor Senior Indebtedness...................................105 SECTION 12.11. No Suspension of Remedies.......................................105 SECTION 12.12. No Fiduciary Duty of Trustee to Holders of Guarantor Senior Indebtedness.............................................105
v 8 ARTICLE THIRTEEN MISCELLANEOUS..............................................................106 SECTION 13.01. TIA Controls.........................................106 SECTION 13.02. Notices..............................................106 SECTION 13.03. Communications by Holders with Other Holders.........107 SECTION 13.04. Certificate and Opinion as to Conditions Precedent...107 SECTION 13.05. Statements Required in Certificate or Opinion........107 SECTION 13.06. Rules by Trustee, Paying Agent, Registrar............108 SECTION 13.07. Legal Holidays.......................................108 SECTION 13.08. Governing Law........................................108 SECTION 13.09. No Adverse Interpretation of Other Agreements........108 SECTION 13.10. No Personal Liability................................109 SECTION 13.11. Successors...........................................109 SECTION 13.12. Duplicate Originals..................................109 SECTION 13.13. Severability.........................................109 SIGNATURES ....................................................................109 EXHIBIT A Form of Series A Note................................................A-1 EXHIBIT B Form of Series B Note................................................B-1 EXHIBIT C Form of Legend for Global Note.......................................C-1 EXHIBIT D Form of Certificate to Be Delivered in Connection with Transfers to Non-QIB Accredited Investors.......................D-1 EXHIBIT E Form of Certificate to Be Delivered in Connection with Transfers Pursuant To Regulation S..............................E-1 EXHIBIT F Form of Guarantee....................................................F-1
vi 9 INDENTURE, dated as of May 27, 1998, among General Binding Corporation, a Delaware corporation (the "Company"), each of the Subsidiary Guarantors named herein, as guarantors, and First Union National Bank, as Trustee (the "Trustee"). The Company has duly authorized the creation of an issue of 93/8% Senior Subordinated Notes due 2008 and 93/8% Senior Subordinated Notes due 2008 to be issued in exchange therefor pursuant to a registration rights agreement and, to provide therefor, the Company has duly authorized the execution and delivery of this Indenture. All things necessary to make the 93/8% Senior Subordinated Notes due 2008, when duly issued and executed by the Company and authenticated and delivered hereunder, the valid and binding obligations of the Company and to make this Indenture a valid and binding agreement of the Company, have been done. Each party hereto agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Notes: ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions. "Acquired Indebtedness" of a Person means Indebtedness of another Person or any of its Subsidiaries existing at the time such other Person becomes a Restricted Subsidiary of the referent Person or at the time it merges or consolidates with the referent Person or any of the referent Person's Restricted Subsidiaries or is assumed by the referent Person or any Restricted Subsidiary of the referent Person in connection with the acquisition of assets from such other Person and in each case not incurred by such other Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary of the referent Person or such acquisition, merger or consolidation. "Additional Interest" shall have the meaning set forth in the Registration Rights Agreement or, with respect to Initial Notes issued under this Indenture subsequent to the Issue Date pursuant to Section 2.02, the applicable registration rights agreement. "Affiliate" means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls or is controlled by, or is under common control with, such specified Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise (and the terms "controlling" and "controlled" have meanings correlative of the foregoing). 1 10 "Agent" means any Registrar, Paying Agent or co-Registrar. "Agent Members" has the meaning provided in Section 2.16. "Asset Acquisition" means (a) an Investment by the Company or any Restricted Subsidiary of the Company in any other Person pursuant to which such Person shall become a Restricted Subsidiary of the Company or any Restricted Subsidiary of the Company, or shall be merged with or into the Company or any Restricted Subsidiary of the Company, or (b) the acquisition by the Company or any Restricted Subsidiary of the Company of the assets of any Person (other than a Restricted Subsidiary of the Company) which constitute all or substantially all of the assets of such Person or comprises any division or line of business of such Person, or any other properties or assets of such Persons other than in the ordinary course of business. "Asset Sale" means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases entered into in the ordinary course of business), assignment or other transfer for value by the Company or any of its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to any Person other than the Company or a Wholly-Owned Restricted Subsidiary of the Company of (a) any Capital Stock of any Restricted Subsidiary of the Company; or (b) any other property or assets of the Company or any Restricted Subsidiary of the Company other than in the ordinary course of business; provided, however, that Asset Sale shall not include (i) transactions (taken collectively) for which the Company or its Restricted Subsidiaries receive aggregate consideration of less than $15.0 million in any consecutive 12- month period, (ii) the sale, lease, conveyance, disposition or other transfer of all or substantially all of the assets of the Company as permitted under Section 5.01, (iii) the sale, lease, conveyance, disposition or other transfer by the Company or any Restricted Subsidiary of assets or property to one or more Restricted Subsidiaries or Permitted Joint Ventures in connection with Investments permitted under Section 4.10, (iv) sales of Receivables of the type specified in the definition of "Qualified Securitization Transaction" to a Securitization Entity for the Fair Market Value thereof, and (v) the sale of the Company's ringbinder manufacturing business, including the assets of U.S. RingBinder Corp., the interests in the Champion Stationery Manufacturing Company Limited and the Sun Kwong Metal Manufacturer Company Limited joint ventures, and the stock of GBC Metals Corp. "Authenticating Agent" has the meaning provided in Section 2.02. "Bankruptcy Law" means Title 11, U.S. Code or any similar federal, state or foreign law for the relief of debtors. "Blockage Period" has the meaning provided in Section 10.02. 2 11 "Board of Directors" means the board of directors, advisory committee, management committee or similar governing body or any authorized committee thereof responsible for the management of the business and affairs of any Person. "Board Resolution" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means any day other than a Saturday, Sunday or any other day on which banking institutions in the city of New York or the Corporate Trust Office of the Trustee are required or authorized by law or other governmental action to be closed. "Capital Stock" means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock of such Person and (ii) with respect to any Person that is not a corporation, any and all partnership or other equity interests of such Person. "Capitalized Lease Obligation" means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP. "Cash Equivalents" means (i) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof; (ii) marketable direct obligations issued by (x) any State of the United States of America or any political subdivision of any such State or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either the Standard & Poor's Rating Group Division of McGraw Hill Incorporated ("S&P") or Moody's Investors Service, Inc. ("Moody's") or (y) the sovereign debt of any foreign government maturing within six months from the date of acquisition thereof and, at the time of acquisition having a rating of at least A-1 from S&P or at least P-1 from Moody's (or equivalent long-term ratings) (provided that the aggregate face amount of all Investments pursuant to this clause (y) shall not at the time of each such new Investment exceed the greater of $3,000,000 (or the local currency equivalent thereof) or 10% of all Investments described in this definition); (iii) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's or the equivalent long term rating by any other nationally recognized rating agency; (iv) certificates of deposit, time deposits or bankers' 3 12 acceptances maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States of America, any State thereof or the District of Columbia, any foreign branch of such a bank, any foreign bank, or any U.S. or foreign branch of such a bank, in each case having at the date of acquisition thereof combined capital and surplus of not less than $250,000,000 (or the local currency equivalent thereof) and whose long-term unsecured debt has a rating of A or better or A2 or better from S&P or Moody's, respectively, or the equivalent rating by any other nationally recognized rating agency; (v) repurchase obligations with a term of not more than one month for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause (iv) above; (vi) "Money Market" preferred stock maturing within six months after issuance thereof; (vii) bonds or notes maturing within six months from the date of acquisition thereof and at the time of acquisition having a rating of AA or better or Aa or better from either S&P or Moody's, respectively, or the equivalent rating by any other nationally recognized rating agency (provided that the principal amount of bonds or notes issued by any one issuer shall not at the time of each such new Investment exceed the greater of $3,000,000 or 10% of all Investments described in this definition); and (viii) investments in money market funds which invest substantially all their assets in securities of the types described in clauses (i) through (vii) above. "Cash Instruments" means (i) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof; (ii) marketable direct obligations issued by any State of the United States of America or any political subdivision of any such State or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody's; (iii) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's; and (iv) certificates of deposit, time deposits or bankers' acceptances maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States of America, any State thereof or the District of Columbia, in each case having at the date of acquisition thereof combined capital and surplus of not less than $250,000,000. "Change of Control" means the occurrence of one or more of the following events: (i) any sale, lease, exchange, transfer or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a "Group"), together with any Affiliates thereof (whether or not otherwise in compliance with the provisions of this Indenture); (ii) the approval by the holders of Capital Stock of the Company of any plan or proposal for the liquidation or dissolution of the Company (whether or not otherwise in compliance with the provisions of this Indenture); (iii) any Person or Group other than the Permitted Holders or a Group controlled by the Permitted Holders shall 4 13 become the owner, directly or indirectly, beneficially or of record, of shares representing more than the aggregate ordinary voting power represented by the Capital Stock of the Company owned, directly or indirectly, by the Permitted Holders; (iv) the Permitted Holders shall own, directly or indirectly, less than 30.0% of the aggregate ordinary voting power of the Capital Stock of the Company or the Permitted Holders shall cease to be able to elect a majority of the members of the Board of Directors of the Company; or (v) the replacement of a majority of the Board of Directors of the Company from the directors who constituted the Board of Directors of the Company on the Issue Date, and such replacement shall not have been approved by a vote of at least a majority of the Board of Directors of the Company then still in office who either were members of such Board of Directors on the Issue Date or whose election as a member of such Board of Directors was previously so approved. "Change of Control Offer" has the meaning provided in Section 4.14. "Change of Control Payment Date" has the meaning provided in Section 4.14. "Commission" means the Securities and Exchange Commission. "Commodity Agreements" means any commodity futures contracts, commodity options or other similar agreements or arrangements designed to protect the Company or any Restricted Subsidiary of the Company against fluctuations in the prices of commodities actually at that time used in the ordinary course of business of the Company or any Restricted Subsidiary of the Company. "Common Stock" of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person's common stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock. "Company" means the party named as such in this Indenture until a successor replaces it pursuant to this Indenture and thereafter means such successor and also includes for the purposes of any provision contained herein and required by the TIA any other obligor on the Notes. "Consolidated Cash Flow" means, with respect to any Person, for any period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to the extent Consolidated Net Income has been reduced thereby, (A) all income taxes of such Person and its Restricted Subsidiaries paid or accrued in accordance with GAAP for such period (other than income taxes attributable to extraordinary, unusual or nonrecurring gains or losses or taxes attributable to sales or dispositions outside the ordinary course of business), (B) Consolidated Interest Expense and (C) Consolidated Non-cash Charges less any non-cash items increasing Consolidated Net Income 5 14 for such period, all as determined on a consolidated basis for such Person and its Restricted Subsidiaries in accordance with GAAP. "Consolidated Fixed Charge Coverage Ratio" means, with respect to any Person, the ratio of Consolidated Cash Flow of such Person during the four full fiscal quarters (the "Four Quarter Period") ending on or prior to the date of the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of such Person for such Four Quarter Period. In addition to and without limitation of the foregoing, for purposes of this definition, "Consolidated Cash Flow" and "Consolidated Fixed Charges" shall be calculated after giving effect on a pro forma basis for the period of such calculation to (i) the incurrence or repayment of any Indebtedness of such Person or any of its Restricted Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such calculation and any incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to working capital facilities, occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period and (ii) any Asset Sales or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or one of its Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of the Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness and also including any Consolidated Cash Flow (including any pro forma expense and cost reductions calculated on a basis consistent with Regulation S-X under the Securities Act as in effect on the Issue Date) (provided that such Consolidated Cash Flow shall be included only to the extent includable pursuant to the definition of "Consolidated Net Income") attributable to the assets which are the subject of the Asset Acquisition or Asset Sale during the Four Quarter Period) occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition (including the incurrence, assumption or liability for any such Acquired Indebtedness) occurred on the first day of the Four Quarter Period. If such Person or any of its Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a Person other than the Company or a Restricted Subsidiary of the Company, the preceding sentence shall give effect to the incurrence of such guaranteed Indebtedness as if such Person or any Restricted Subsidiary of such Person had directly incurred or otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating "Consolidated Fixed Charges" for purposes of determining the denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1) interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date; (2) if interest on any Indebtedness actually incurred on the Transaction Date may optionally be determined at an 6 15 interest rate based upon a prime or similar rate, a eurocurrency interbank offered rate, or other rates, then the interest rate in effect on the Transaction Date will be deemed to have been in effect during the Four Quarter Period; and (3) notwithstanding clause (1) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Interest Swap Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements. "Consolidated Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) Consolidated Interest Expense, plus (ii) the product of (x) the amount of all dividend payments on any series of Preferred Stock of such Person and its Restricted Subsidiaries (other than dividends paid in Qualified Capital Stock and other than dividends paid to such Person or a Restricted Subsidiary of such Person) paid, accrued or scheduled to be paid or accrued during such period times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local tax rate of such Person, expressed as a decimal. "Consolidated Interest Expense" means, with respect to any Person for any period, the sum, without duplication of: (i) the aggregate of the interest expense of such Person and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, including without limitation, (a) any amortization of debt discount, (b) the net cost (which may be positive or negative) under Interest Swap Obligations, (c) all capitalized interest and (d) the interest portion of any deferred payment obligation; and (ii) the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such Person and its Restricted Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP; provided, that Consolidated Interest Expense with respect to any Person for any period shall not include any amortization or write off of deferred financing costs. "Consolidated Net Income" means, with respect to any Person, for any period, the aggregate net income (or loss) of such Person and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; provided, however, that there shall be excluded therefrom (a) gains (and losses) on an after-tax basis from asset sales or abandonments or reserves relating thereto, (b) items classified as extraordinary or nonrecurring gains or losses on an after-tax basis, (c) the net income or loss of any Person acquired in a "pooling of interests" transaction accrued prior to the date it becomes a Restricted Subsidiary of the referent Person or is merged or consolidated with the referent Person or any Restricted Subsidiary of the referent Person, (d) the net income (but not the loss for such period) of any Restricted Subsidiary of the referent Person which is not a Subsidiary Guarantor to the extent that the declaration of dividends or similar distributions by that Restricted Subsidiary to the referent Person or any Subsidiary thereof of that income is restricted, directly or indirectly, by operation of the terms of its charter or constituent documents or any agreement, instrument, judgment or decree, (e) the net income (but not the loss for such period) of any Restricted Subsidiary of the referent Person which is a 7 16 Subsidiary Guarantor to the extent that the payments of amounts under the Guarantee by that Restricted Subsidiary is restricted, directly or indirectly, by operation of the terms of its charter or constituent documents or any agreement, instrument, judgment, decree, law, order, statute, rule, governmental regulation or for any other reason whatsoever, (f) the net income or loss of any other Person, other than a Restricted Subsidiary of the referent Person, except to the extent (in the case of net income) of cash dividends or distributions paid to the referent Person, or to a Wholly-Owned Restricted Subsidiary of the referent Person, by such other Person, (g) any restoration to income of any contingency reserve of an extraordinary, nonrecurring or unusual nature, except to the extent that provision for such reserve was made out of Consolidated Net Income accrued at any time following the Issue Date, (h) income or loss attributable to discontinued operations (including, without limitation, operations disposed of during such period whether or not such operations were classified as discontinued), and (i) in the case of a successor to the referent Person by consolidation or merger or as a transferee of the referent Person's assets, any earnings of the successor corporation prior to such consolidation, merger or transfer of assets. "Consolidated Net Worth" of any Person means the consolidated stockholders' equity of such Person, determined on a consolidated basis in accordance with GAAP, less (without duplication) amounts attributable to Disqualified Capital Stock of such Person. "Consolidated Non-cash Charges" means, with respect to any Person, for any period, the aggregate depreciation, amortization and other non-cash expenses of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charge which requires an accrual of or a reserve for cash charges for any future period). "consolidation" means, with respect to any Person, the consolidation of the accounts of the Subsidiaries of such Person with those of such Person, all in accordance with GAAP; provided, however, that "consolidation" will not include consolidation of the accounts of any Subsidiary of such Person with the accounts of such Person. The term "consolidated" has a correlative meaning to the foregoing. "Corporate Trust Office" means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which office at the date of execution of this Indenture is located at 230 S. Tryon St., Charlotte, North Carolina 28288-1179, Attention: Corporate Trust Department - 9th Floor. "Covenant Defeasance" has the meaning set forth in Section 8.01. 8 17 "Credit Agreement" means the Multicurrency Credit Agreement dated as of January 13, 1997, as amended, among the Company, each of the guarantors party thereto, the lenders party thereto in their capacities as lenders thereunder and Harris Trust & Savings Bank, as administrative agent, together with the related documents thereto (including, without limitation, any guarantee agreements), in each case as such agreements may be further amended (including any amendment and restatement thereof), supplemented or otherwise modified or replaced from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amount of available borrowings thereunder (provided, however, that such increase in borrowings is permitted by Section 4.12 of this Indenture) or adding Subsidiaries of the Company as additional borrowers or guarantors thereunder) all or any portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders. "Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any Restricted Subsidiary of the Company against fluctuations in currency values. "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy law. "Default" means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default. "Defeasance Payment" means any distribution from any defeasance trust described under Section 8.01. "Depository" means The Depository Trust Company, its nominees and successors. "Designated Senior Indebtedness" means (i) Indebtedness under or in respect of the Credit Agreement and (ii) any other Indebtedness constituting Senior Indebtedness or Guarantor Senior Indebtedness which, at the time of determination, has an aggregate principal amount of at least $10.0 million and is specifically designated in the instrument evidencing such Senior Indebtedness or Guarantor Senior Indebtedness as "Designated Senior Indebtedness" by the Company or the applicable Subsidiary Guarantor, as the case may be. "Disqualified Capital Stock" means that portion of any Capital Stock that, by its term (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the stated maturity of the Notes. 9 18 "Domestic Restricted Subsidiary" of any Person means any Domestic Subsidiary that is also a Restricted Subsidiary of such Person. "Domestic Subsidiary" means any Subsidiary of the Company that is organized under the laws of any State of the United States, the District of Columbia or any territory or possession of the United States. "Event of Default" has the meaning provided in Section 6.01. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto. "Exchange Notes" means the 93/8% Senior Subordinated Notes due 2008 of the Company to be issued in exchange for the Initial Notes pursuant to the Registration Rights Agreement or, with respect to Initial Notes issued under this Indenture subsequent to the Issue Date pursuant to Section 2.02, a registration rights agreement substantially identical to the Registration Rights Agreement. "Exchange Offer" has the meaning provided in the Registration Rights Agreement. "Fair Market Value" means, with respect to any asset or property, the price which could be negotiated in an arm's-length transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value shall be determined by the Board of Directors of the Company acting in good faith and shall be evidenced by a Board Resolution of the Board of Directors of the Company. "Foreign Restricted Subsidiary" of any Person means any Foreign Subsidiary that is also a Restricted Subsidiary of such Person. "Foreign Subsidiary" means any Subsidiary of the Company other than a Domestic Subsidiary. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, which are in effect on the Issue Date. "Global Note" has the meaning provided in Section 2.01. 10 19 "guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part) (but if in part, only to the extent thereof); provided, however, that the term "guarantee" shall not include (A) endorsements for collection or deposit in the ordinary course of business and (B) guarantees (other than guarantees of Indebtedness) by the Company in respect of assisting one or more Subsidiaries in the ordinary course of their respective businesses, including without limitation guarantees of trade obligations and operating leases, on ordinary business terms. The term "guarantee" used as a verb has a corresponding meaning. "Guarantees" means the guarantees of the Notes by the Subsidiary Guarantors. "Guarantor Senior Indebtedness" means, with respect to any Subsidiary Guarantor, the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on any Indebtedness of such Subsidiary Guarantor, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument or agreement creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Guarantee of such Subsidiary Guarantor. Without limiting the generality of the foregoing, "Guarantor Senior Indebtedness" shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of, (x) all monetary obligations of every nature of a Subsidiary Guarantor under the Credit Agreement, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities, (y) all Interest Swap Obligations and (z) all obligations under Currency Agreements and Commodity Agreements, in each case whether outstanding on the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Guarantor Senior Indebtedness" shall not include (i) any Indebtedness of such Subsidiary Guarantor to a Subsidiary of such Subsidiary Guarantor or any Affiliate of such Subsidiary Guarantor or any of such Affiliate's Subsidiaries, (ii) Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer or employee of the Company or any Subsidiary of the Company (including, without limitation, amounts owed for compensation), (iii) Indebtedness to trade creditors and other amounts incurred in connection with obtaining 11 20 goods, materials or services, (iv) Indebtedness represented by Disqualified Capital Stock, (v) any liability for federal, state, local or other taxes owed or owing by a Subsidiary Guarantor, (vi) Indebtedness incurred in violation of the provisions set forth in Section 4.12, (vii) Indebtedness which, when incurred and without respect to any election under Section 1111 (b) of Title 11, United States Code is without recourse to such Subsidiary Guarantor and (viii) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of a Subsidiary Guarantor. "Holder" means any holder of Notes. "IAI Global Note" means a permanent global note in registered form representing the aggregate principal amount of Notes sold to Institutional Accredited Investors. "incur" has the meaning set forth in Section 4.12. "Indebtedness" means with respect to any Person, without duplication, (i) all Obligations of such Person for borrowed money, (ii) all Obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all Capitalized Lease Obligations of such Person, (iv) all Obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all Obligations under any title retention agreement (but excluding trade accounts payable and other accrued liabilities arising in the ordinary course of business that are not overdue by 90 days or more or are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted), (v) all Obligations for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction, except to the extent secured by Cash and Cash Equivalents, (vi) guarantees and other contingent obligations in respect of Indebtedness referred to in clauses (i) through (v) above and clause (viii) below, (vii) all Obligations of any other Person of the type referred to in clauses (i) through (vi) above which are secured by any lien on any property or asset of such Person, the amount of such Obligation being deemed to be the lesser of the Fair Market Value of such property or asset or the amount of the Obligation so secured, (viii) all Obligations under Currency Agreements, Commodity Agreements and Interest Swap Agreements of such Person (whether or not entered into for the purpose of protecting the Company or any Restricted Subsidiary of the Company from fluctuations in currency or commodity values or interest rates) and (ix) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any. For purposes hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the Fair Market Value of such Disqualified Capital 12 21 Stock, such Fair Market Value shall be determined in good faith by the Board of Directors of the issuer of such Disqualified Capital Stock. "Indenture" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof. "Independent Financial Advisor" means a firm (i) which does not, and whose directors, officers and employees or Affiliates do not, have a direct or indirect financial interest in the Company and (ii) which, in the judgment of the Board of Directors of the Company, is otherwise independent and qualified to perform the task for which it is to be engaged. "Initial Notes" means, collectively, (i) the 93/8% Senior Subordinated Notes due 2008 of the Company issued on the Issue Date and (ii) one or more series of 93/8% Senior Subordinated Notes due 2008 that are isssued under this Indenture subsequent to the Issue Date pursuant to Section 2.02, in each case for so long as such securities constitute Restricted Securities. "Initial Purchasers" means BT Alex. Brown Incorporated, CIBC Oppenheimer Corp., ABN AMRO Incorporated, First Chicago Capital Markets, Inc. and Nesbitt Burns Securities Inc. "Institutional Accredited Investor" means an institution that is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "interest" means, when used with respect to any Note, the amount of all interest accruing on such Note, including any applicable defaulted interest pursuant to Section 2.12 and any Additional Interest. "Interest Payment Date" means the stated maturity of an installment of interest on the Notes. "Interest Swap Agreements" means any interest rate swap agreement, interest rate cap agreement, interest rate floor agreement, interest rate collar agreement, treasury rate-lock agreement or other similar agreement or arrangement designed to protect the Company or any Restricted Subsidiary of the Company from fluctuations in interest rates. "Interest Swap Obligations" means the obligations of any Person pursuant to any Interest Swap Agreement with any other Person. "Internal Revenue Code" means the Internal Revenue Code of 1986, and regulations promulgated thereunder, as amended, or any successor statute or statutes thereto. 13 22 "Investment" means, with respect to any Person, any direct or indirect loan or other extension of credit (including, without limitation, a guarantee) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any Person. "Investment" shall exclude extensions of trade credit by the Company and its Restricted Subsidiaries on commercially reasonable terms in accordance with normal trade practices of the Company or such Restricted Subsidiary, as the case may be. For the purposes of Section 4.10, the amount of any Investment shall be the original cost of such Investment plus the cost of all additional Investments by the Company or any of its Restricted Subsidiaries, without any adjustments for increases or decreases in value, or write-ups, write-downs or writeoffs with respect to such Investment, reduced by the payment of dividends or distributions in connection with such Investment or any other amounts received in respect of such Investment; provided, however, that no such payment of dividends or distributions or receipt of any such other amounts shall reduce the amount of any Investment if such payment of dividends or distributions or receipt of any such amounts would be included in Consolidated Net Income. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Common Stock of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, the Company no longer owns, directly or indirectly, greater than 50% of the outstanding Common Stock of such Restricted Subsidiary, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Common Stock of such former Restricted Subsidiary not sold or disposed of. "Issue Date" means May 27, 1998, the date of original issuance of the Notes. "Legal Defeasance" has the meaning set forth in Section 8.01. "Legal Holiday" has the meaning provided in Section 13.07. "Lien" means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest). "Maturity Date" means June 1, 2008. "Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (other than the portion of any such deferred payment constituting interest) received by the Company or any of its Restricted Subsidiaries from such Asset Sale net of (a) reasonable out-of-pocket expenses and fees relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and sales 14 23 commissions), (b) taxes reasonably estimated to be paid or payable after taking into account any reduction in consolidated tax liability due to available tax credits or deductions and any tax sharing arrangements, to the extent the Company elects to apply such credits or deductions thereto, (c) repayment of Indebtedness that is required to be repaid in connection with such Asset Sale and (d) appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale. "Net Proceeds Offer" has the meaning set forth in Section 4.15. "Net Proceeds Offer Amount" has the meaning set forth in Section 4.15. "Net Proceeds Offer Payment Date" has the meaning set forth in Section 4.15. "Net Proceeds Offer Trigger Date" has the meaning set forth in Section 4.15. "Non-U.S. Person" means a person who is not a U.S. person, as defined in Regulation S. "Notes" means, collectively, the Initial Notes, the Exchange Notes, the Private Exchange Notes, if any, and the Unrestricted Notes, treated as a single class of securities, as amended or supplemented from time to time in accordance with the terms of this Indenture, that are issued pursuant to this Indenture. "Obligations" means, when used with reference to any Indebtedness, all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation evidencing or governing any Indebtedness. "Officer" means, with respect to any Person, the Chairman of the Board of Directors, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Treasurer, the Controller, or the Secretary of such Person, or any other officer designated by the Board of Directors serving in a similar capacity and with respect to the Trustee or any agent of the Trustee, a Trust Officer. "Officers' Certificate" means, with respect to any Person, a certificate signed by the Chairman, Chief Executive Officer, the President or any Vice President and the Chief Financial Officer, Controller or the Treasurer of such Person that shall comply with applicable provisions of this Indenture. 15 24 "Opinion of Counsel" means a written opinion from legal counsel who is reasonably acceptable to the Trustee complying with the requirements of Sections 13.04 and 13.05, as they relate to the giving of an Opinion of Counsel. "Paying Agent" has the meaning provided in Section 2.03. "Permitted Holders" means William N. Lane II, his children or other lineal descendants (whether adoptive or biological), probate estate of any such individual, and any trust, so long as one or more of the foregoing individuals is, directly or indirectly, the beneficiary thereunder, and any other corporation, partnership or other entity, all of the shareholders, partners, members or owners of which are, directly or indirectly, any of the foregoing. "Permitted Indebtedness" means, without duplication, each of the following: (i) Indebtedness under the Notes issued on the Issue Date and the Guarantees outstanding on the Issue Date or entered into thereafter in accordance with this Indenture; (ii) Indebtedness of the Company or any of its Restricted Subsidiaries which are Subsidiary Guarantors incurred pursuant to the Credit Agreement in an aggregate principal amount at any time outstanding not to exceed $550.0 million in the aggregate reduced by any required permanent repayments pursuant to Section 4.15 (which are accompanied by a corresponding permanent commitment reduction) thereunder (it being recognized that a reduction in any borrowing base in and of itself shall not be deemed a required permanent repayment); (iii) Interest Swap Obligations of the Company or any of its Restricted Subsidiaries which are Subsidiary Guarantors covering Indebtedness of the Company or any of its Restricted Subsidiaries; provided, however, that such Interest Swap Obligations are entered into to protect the Company and its Restricted Subsidiaries from fluctuations in interest rates on Indebtedness incurred in accordance with this Indenture and the notional principal amount of any such Interest Swap Obligation does not exceed the principal amount of the Indebtedness to which such Interest Swap Obligation relates; (iv) Indebtedness of the Company or any of its Restricted Subsidiaries which are Subsidiary Guarantors under Currency Agreements and Commodity Agreements; provided, however, that such Currency Agreements and Commodity Agreements do not increase the Indebtedness of the Company and its Restricted Subsidiaries outstanding other than as a result of fluctuations in foreign currency exchange rates or commodity prices, as the case may be, or by reason of fees, indemnities and compensation payable thereunder; (v) Indebtedness of a Restricted Subsidiary to the Company or to a Wholly-Owned Restricted Subsidiary of the Company for so long as such Indebtedness is held by the Company or 16 25 a Wholly-Owned Restricted Subsidiary of the Company, in each case subject to no Liens held by any Person other than the Company or a Wholly-Owned Restricted Subsidiary of the Company; provided, however, that if as of any date any Person other than the Company or a Wholly-Owned Restricted Subsidiary of the Company owns or holds any such Indebtedness or holds a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness by the issuer of such Indebtedness; (vi) Indebtedness of the Company to a Restricted Subsidiary of the Company which is a Subsidiary Guarantor for so long as such Indebtedness is held by a Restricted Subsidiary of the Company which is a Subsidiary Guarantor, provided, however, that (a) any Indebtedness of the Company to any Restricted Subsidiary of the Company which is a Subsidiary Guarantor is unsecured and subordinated, pursuant to a written agreement, to the Company's obligations under this Indenture and the Notes and (b) if as of any date any Person other than a Restricted Subsidiary which is a Subsidiary Guarantor of the Company owns or holds any such Indebtedness or a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness by the Company; (vii) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within three business days of incurrence; (viii) Indebtedness of the Company or any of its Restricted Subsidiaries which are Subsidiary Guarantors represented by letters of credit for the account of the Company or such Restricted Subsidiary, as the case may be, in order to provide security for workers' compensation claims, payment obligations in connection with self-insurance or other requirements in the ordinary course of business; (ix) Indebtedness represented by Capitalized Lease Obligations and Purchase Money Indebtedness of the Company or any of its Restricted Subsidiaries which are Subsidiary Guarantors or otherwise incurred to finance the lease or improvement of real or personal property or equipment in an aggregate principal amount not to exceed $10.0 million at any one time outstanding; (x) Indebtedness permitted by clause (x) of the definition of "Permitted Investments"; (xi) Indebtedness of Foreign Restricted Subsidiaries to the extent that the aggregate outstanding amount of Indebtedness incurred by all Foreign Restricted Subsidiaries to Persons other than Foreign Restricted Subsidiaries under this clause (xi) does not exceed at any one time the greater of (I) an amount equal to the sum of (A) 80% of the consolidated book value of the accounts receivable of all Foreign Restricted Subsidiaries and (B) 60% of the consolidated book value of the inventory of all Foreign Restricted Subsidiaries and (II) 2.25 multiplied by the 17 26 Consolidated Net Worth of all Foreign Restricted Subsidiaries; provided, however, that for purposes of calculating Consolidated Net Worth for this clause (xi), Indebtedness owing to the Company or any of its Restricted Subsidiaries which are Subsidiary Guarantors shall be deemed a component of consolidated stockholders' equity; and, provided, further, that at the date of the incurrence of any such Indebtedness under this clause (xi), the Company is able to incur at least $1.0 of additional Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.12; (xii) additional Indebtedness of the Company or any of its Restricted Subsidiaries in an aggregate principal amount not to exceed $25.0 million at any one time outstanding; (xiii) Indebtedness of the Company or any of its Restricted Subsidiaries which are Subsidiary Guarantors constituting commercial paper programs, money-market facilities, medium-term note programs or comparable Indebtedness; provided, that the aggregate amount of Indebtedness permitted to be outstanding under this clause (xiii) at any time should not, when added to the principal amount of Indebtedness then outstanding under clause (ii) hereof, exceed the aggregate amount of Indebtedness then permitted under clause (ii) hereof; (xiv) the incurrence by a Securitization Entity of Indebtedness of a Qualified Securitization Transaction that is not recourse to the Company or any Restricted Subsidiary of the Company (except for Standard Securitization Undertakings); and (xv) Refinancing Indebtedness. "Permitted Investments" means (i) Investments by the Company or any Restricted Subsidiary of the Company in any Person that is or will become immediately after such Investment a Restricted Subsidiary of the Company, or that will merge or consolidate into the Company or a Restricted Subsidiary of the Company; (ii) Investments in the Company by any Restricted Subsidiary of the Company; provided, however, that any Indebtedness evidencing such Investment by a Restricted Subsidiary is unsecured and subordinated, pursuant to a written agreement, to the Company's obligations under the Notes and this Indenture; (iii) Investments in cash and Cash Equivalents; (iv) loans to employees and officers of the Company and its Subsidiaries made in connection with such employees' and officers' participation in stock purchase plans or similar arrangements of the Company, and other loans and advances to employees and officers of the Company and its Subsidiaries in the ordinary course of business for bona fide business purposes not to exceed $3.0 million in the aggregate at any one time outstanding; (v) Currency Agreements, Commodity Agreements and Interest Swap Obligations entered into in the ordinary course of the Company's or its Restricted Subsidiaries' businesses and otherwise in compliance with this Indenture; (vi) Investments in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers; (vii) Investments made by the 18 27 Company or its Restricted Subsidiaries as a result of non-cash consideration received in connection with an Asset Sale made in compliance with Section 4.15; (viii) Investments in Permitted Joint Ventures; (ix) any Investment by the Company or a Restricted Subsidiary of the Company in a Securitization Entity or any Investment by a Securitization Entity in any other Person in connection with a Qualified Securitization Transaction; and (x) additional Investments in an amount outstanding at any one time not to exceed $20.0 million. "Permitted Joint Venture" means any joint venture arrangement (which may be structured as a corporation, partnership, trust, limited liability company or any other Person) if (a) such Person is engaged in the same or a similar line of business as the Company and its Restricted Subsidiaries were engaged in on the Issue Date or any business ancillary or related or complementary thereto or supportive thereof (as determined in good faith by the Company's Board of Directors), (b) the Company and/or any of its Restricted Subsidiaries at all times owns at least 25% of the total outstanding shares of Capital Stock of such Person entitled to participate in distributions in respect of the earnings, sale or liquidation of such Person but such Person does not constitute a Subsidiary of the Company, (c) immediately after giving effect to such Investment on a pro forma basis (to give effect to the contribution of any property or assets to such Person or Indebtedness incurred to fund such Investment or otherwise), the Company could incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.12, and (d) no default with respect to any Indebtedness of such Person or any Subsidiary of such Person having a principal amount in excess of $1.0 million (including any right which the holders thereof may have to take enforcement action against such Person) would permit (upon notice, lapse of time or both) any holder of any Indebtedness of the Company or its Restricted Subsidiaries to declare a default on such Indebtedness or cause the payment thereof to be accelerated or payable prior to its final scheduled maturity. "Permitted Liens" means the following types of Liens: (i) Liens in favor of the Trustee in its capacity as trustee for the Holders; (ii) Liens securing Senior Indebtedness, including Senior Indebtedness outstanding under the Credit Agreement; (iii) Liens for taxes, assessments or governmental charges or claims either (a) not delinquent or (b) contested in good faith by appropriate proceedings and as to which the Company or its Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP; (iv) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other 19 28 appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof; (v) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, including any Lien securing letters of credit issued in the ordinary course of business consistent with past practice in connection therewith, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return- of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); (vi) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; (vii) survey exceptions or encumbrances, easements, rights-of-way, reservations, zoning restrictions and other similar charges or encumbrances in respect of real property not interfering in any material respect with the ordinary conduct of the business of the Company or any of its Subsidiaries; (viii) any interest or title of a lessor under any Capitalized Lease Obligation; provided, however, that such Liens do not extend to any property or assets which is not leased property subject to such Capitalized Lease Obligation; (ix) Liens to secure Purchase Money Indebtedness of the Company or any Restricted Subsidiary; provided, however, that (A) the related Purchase Money Indebtedness is permitted to be incurred in accordance with Section 4.12, (B) the related Purchase Money Indebtedness shall not exceed the cost of such property or assets and shall not be secured by any property or assets of the Company or any Restricted Subsidiary of the Company other than the property and assets so acquired and (C) the Lien securing such Indebtedness shall be created within 120 days of such acquisition; (x) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off; (xi) Liens securing Interest Swap Obligations which Interest Swap Obligations relate to Indebtedness that is otherwise permitted under this Indenture; (xii) Liens securing Indebtedness under Currency Agreements and Commodity Agreements; 20 29 (xiii) Liens securing Acquired Indebtedness incurred in accordance with Section 4.12; provided, however, that (A) such Liens secured such Acquired Indebtedness at the time of and prior to the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company and were not granted in connection with, or in anticipation of, the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company and (B) such Liens do not extend to or cover any property or assets of the Company or of any of its Restricted Subsidiaries other than the property or assets that secured the Acquired Indebtedness prior to the time such Indebtedness became Acquired Indebtedness of the Company or a Restricted Subsidiary of the Company and are no more favorable to the lienholders than those securing the Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company; (xiv) Liens securing Refinancing Indebtedness; provided that any such Lien does not extend to or cover any property or assets other than the property or assets securing the Indebtedness so refunded, refinanced or extended; (xv) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of bankers' acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods in the ordinary course of business; (xvi) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof; (xvii) Liens granted in connection with any Qualified Securitization Transaction; and (xviii) Other Liens securing Obligations which do not exceed $10 million in the aggregate at any one time outstanding. "Person" means an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof. "Physical Notes" has the meaning provided in Section 2.01. "Preferred Stock" of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation. 21 30 "principal" of any Indebtedness (including the Notes) means the principal amount of such Indebtedness plus the premium, if any, on such Indebtedness. "Private Exchange Notes" shall have the meaning provided in the Registration Rights Agreement. "Private Placement Legend" means the legend set forth on the Initial Notes in the form set forth in the first paragraph on Exhibit A. "pro forma" means, with respect to any calculation made or required to be made pursuant to the terms of this Indenture, a calculation in accordance with Article 11 of Regulation S-X under the Securities Act. "Public Equity Offering" means an underwritten offering of Qualified Capital Stock of the Company pursuant to an effective registration statement filed under the Securities Act. "Purchase Money Indebtedness" means Indebtedness the net proceeds of which are used to finance the cost (including the cost of construction) of property or assets acquired in the normal course of business by the Person incurring such Indebtedness. "Qualified Capital Stock" means any Capital Stock that is not Disqualified Capital Stock. "Qualified Institutional Buyer" or "QIB" shall have the meaning specified in Rule 144A. "Qualified Securitization Transaction" means any transaction or series of transactions that may be entered into by the Company or any of its Restricted Subsidiaries pursuant to which the Company or any of its Restricted Subsidiaries may sell, convey or otherwise transfer pursuant to customary terms to (a) a Securitization Entity (in the case of a transfer by the Company or any of its Restricted Subsidiaries) and (b) any other Person (in the case of transfer by a Securitization Entity), or may grant a security interest in any Receivables (whether now existing or arising or acquired in the future) of the Company or any of its Restricted Subsidiaries. "Receivables" means any right to payment from or on behalf of any obligor, whether constituting an account, chattel paper, instrument, general intangible or otherwise, arising from the provision by the Company or any Restricted Subsidiary of the Company of merchandise, goods or services or otherwise evidencing the payment of a sum certain arising in the ordinary course of business, and monies due thereunder, all security therefor, whether in such merchandise, goods and services or otherwise, all guarantees, indemnities, warranties, insurance policies and financing statements and other agreements relating thereto, records related thereto, and the right to payment of any interest or finance charges and other obligations with respect thereto, proceeds 22 31 from claims on insurance policies related thereto, any other proceeds related thereto, and any other related rights. "Record Date" means the Record Dates specified in the Notes. "Redemption Date" means, when used with respect to any Note to be redeemed, the date fixed for such redemption pursuant to this Indenture and the Notes. "Redemption Price" means, when used with respect to any Note to be redeemed, the price fixed for such redemption, including principal and premium, if any, pursuant to this Indenture and the Notes. "Reference Date" has the meaning set forth in Section 4.10. "Refinance" means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness in whole or in part. "Refinanced" and "Refinancing" shall have correlative meanings. "Refinancing Indebtedness" means any Refinancing by the Company or any Restricted Subsidiary of the Company of Indebtedness incurred in accordance with Section 4.12 (provided that Refinancing Indebtedness shall not include Indebtedness described in clauses (ii) through (xiii) of the definition of Permitted Indebtedness), in each case that does not (1) result in an increase in the aggregate principal amount of Indebtedness of such Person as of the date of such proposed Refinancing (plus the amount of any premium required to be paid under the terms of the instrument governing such Indebtedness and plus the amount of reasonable expenses incurred by the Company or such Restricted Subsidiary, as the case may be, in connection with such Refinancing), except to the extent that any such increase in Indebtedness is otherwise permitted by this Indenture or (2) create Indebtedness with (A) a Weighted Average Life to Maturity that is less than the Weighted Average Life to Maturity of the Indebtedness being Refinanced or (B) a final maturity earlier than the final maturity of the Indebtedness being Refinanced; provided, however, that (y) if such Indebtedness being Refinanced is solely Indebtedness of the Company, then such Refinancing Indebtedness shall be Indebtedness solely of the Company and (z) if such Indebtedness being Refinanced is subordinate or junior to the Notes or the Guarantees, then such Refinancing Indebtedness shall be subordinate to the Notes or the Guarantees, as the case may be, at least to the same extent and in the same manner as the Indebtedness being Refinanced. "Registrar" has the meaning provided in Section 2.03. "Registration Rights Agreement" means the Registration Rights Agreement dated the Issue Date among the Company, the Subsidiary Guarantors and the Initial Purchasers. 23 32 "Regulation S" means Regulation S under the Securities Act. "Regulation S Global Note" means a permanent global note in registered form representing the aggregate principal amount of Notes sold in reliance on Regulation S under the Securities Act. "Replacement Assets" shall have the meaning set forth in Section 4.15. "Representative" means the indenture trustee or other trustee, agent or representative in respect of any Designated Senior Indebtedness; provided, however, that if, and for so long as, any Designated Senior Indebtedness lacks such a representative, then the Representative for such Designated Senior Indebtedness shall at all times constitute the holders of the greater of a majority in outstanding principal amount of such Designated Senior Indebtedness or the holders thereof generally necessary to take action or approve amendments under the agreement governing such Designated Senior Indebtedness. "Restricted Payment" shall have the meaning set forth in Section 4.10. "Restricted Security" has the meaning assigned to such term in Rule 144(a)(3) under the Securities Act; provided, however, that the Trustee shall be entitled to request and conclusively rely on an Opinion of Counsel with respect to whether any Note constitutes a Restricted Security. "Restricted Subsidiary" of any Person means any Subsidiary of such Person which at the time of determination is not an Unrestricted Subsidiary. "Rule 144A" means Rule 144A under the Securities Act. "Sale and Leaseback Transaction" means any direct or indirect arrangement with any Person or to which any such Person is a party, providing for the leasing to the Company or a Restricted Subsidiary of the Company of any property, whether owned by the Company or any Restricted Subsidiary of the Company at the Issue Date or later acquired, which has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person or to any other Person from whom funds have been or are to be advanced by such Person on the security of such property. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Securitization Entity" means a Restricted Subsidiary of the Company (or another Person in which the Company or any Subsidiary of the Company makes an Investment and to which the Company or any Subsidiary of the Company transfers Receivables) which engages in no activities 24 33 other than in connection with the financing of Receivables and which is designated by the Board of Directors of the Company (as provided below) as a Securitization Entity (a) no portion of the Indebtedness or any other Obligations (contingent or otherwise) of which (i) is guaranteed by the Company or any other Restricted Subsidiary of the Company (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates the Company or any Restricted Subsidiary of the Company (other than the Securitization Entity) in any way other than pursuant to Standard Securitization Undertakings or (iii) subjects any property or asset of the Company or any Restricted Subsidiary of the Company (other than the Securitization Entity), directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings, (b) with which neither the Company nor any Restricted Subsidiary of the Company has any material contract, agreement, arrangement or understanding other than on terms no less favorable to the Company or such Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Company, other than fees payable in the ordinary course of business in connection with servicing Receivables of such entity and Standard Securitization Undertakings and (c) to which neither the Company nor any Restricted Subsidiary of the Company has any obligation to maintain or preserve such entity's financial condition or cause such entity to achieve certain levels of operating results. Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a Board Resolution of the Company giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions. "Senior Indebtedness" means, the principal of, premium, if any, and interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all fees, indemnities, reimbursement obligations with respect to, letters of credit and all other monetary obligations with respect to any Indebtedness of the Company, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Notes. Without limiting the generality of the foregoing, "Senior Indebtedness" shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of, (x) all monetary obligations of every nature of the Company under the Credit Agreement, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities, (y) all Interest Swap Obligations and (z) all obligations under Currency Agreements and Commodity Agreements, in each case whether outstanding on the Issue Date or thereafter incurred. Notwithstanding the foregoing, "Senior Indebtedness" shall not include (i) any Indebtedness of the Company to a Subsidiary of the Company or any Affiliate of the 25 34 Company or any of such Affiliate's Subsidiaries, (ii) Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer or employee of the Company or any Subsidiary of the Company (including, without limitation, amounts owed for compensation), (iii) Indebtedness to trade creditors and other amounts incurred in connection with obtaining goods, materials or services, (iv) Indebtedness represented by Disqualified Capital Stock, (v) any liability for federal, state, local or other taxes owed or owing by the Company, (vi) Indebtedness incurred in violation of Section 4.12, (vii) Indebtedness which, when incurred and without respect to any election under Section 1111 (b) of Title 11, United States Code is without recourse to the Company and (viii) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of the Company. "Significant Subsidiary" shall have the meaning set forth in Rule 1.02(w) of Regulation S-X under the Securities Act. "Standard Securitization Undertakings" means representations, warranties, covenants and indemnities entered into by the Company or any Restricted Subsidiary of the Company which are reasonably customary in a Receivables securitization transaction. "Subsidiary", with respect to any Person, means (i) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person or (ii) any other Person of which at least a majority of the outstanding voting interests under ordinary circumstances is at the time, directly or indirectly, owned by such Person. "Subsidiary Guarantor" means (a) each of the Company's Domestic Restricted Subsidiaries as of the Issue Date and (b) each of the Company's Restricted Subsidiaries that in the future executes a supplemental indenture in which such Subsidiary agrees to be bound by the terms of this Indenture as a Subsidiary Guarantor; provided, however, that any Person constituting a Subsidiary Guarantor as described above shall cease to constitute a Subsidiary Guarantor when its Guarantee is released in accordance with the terms of this Indenture. "Surviving Entity" shall have the meaning set forth in Section 5.01. "Tax Sharing Agreement" means the Tax Allocation Agreement dated as of June 1, 1978 by and between Lane Industries and its subsidiaries and the Company and its United States subsidiaries, as amended as of January 1, 1991, and the State Tax Allocation Agreement dated as of May 31, 1985 by and between Lane Industries and its subsidiaries and the Company and its United States subsidiaries. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb), as amended, as in effect on the date of this Indenture, except as otherwise provided in Section 9.03. 26 35 "Trustee" means the party named as such in this Indenture until a successor replaces it in accordance with the provisions of this Indenture and thereafter means such successor. "Trust Officer" means any officer in the Corporate Trust Office of the Trustee, including any managing director, vice president, assistant vice president, assistant treasurer, assistant secretary, or any other officer of the Trustee who customarily performs functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such officer's knowledge of and familiarity with the particular subject. "U.S. Government Obligations" means direct obligations of, and obligations guaranteed by, the United States of America for the payment of which the full faith and credit of the United States of America is pledged. "U.S. Legal Tender" means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. "Unrestricted Notes" means one or more Notes that do not and are not required to bear the Private Placement Legend in the form set forth in Exhibit A. "Unrestricted Subsidiary" of any Person means (i) any Subsidiary of such Person that at the time of determination shall be or continue to be designated as an Unrestricted Subsidiary by the Board of Directors of such Person in the manner provided for in Section 4.17 and (ii) any Subsidiary of an Unrestricted Subsidiary. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the then outstanding aggregate principal amount of such Indebtedness into (b) the sum of the total of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment. "Wholly-Owned Subsidiary" of any Person means any Subsidiary of such Person of which all the outstanding voting securities (other than director qualifying shares or other de minimis third-party ownership interests required by law) normally entitled to vote in the election of the Board of Directors are owned by such Person or any Wholly-Owned Subsidiary of such Person. "Wholly-Owned Restricted Subsidiary" of any Person means any Wholly-Owned Subsidiary which is also a Restricted Subsidiary of such Person. 27 36 SECTION 1.02. Incorporation by Reference of TIA. Whenever this Indenture refers to a provision of the TIA, such provision is incorporated by reference in, and made a part of, this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes. "indenture security holder" means a Holder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company or any other obligor on the Notes. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule and not otherwise defined herein have the meanings assigned to them therein. SECTION 1.03. Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP on any date of determination; (3) "or" is not exclusive; (4) words in the singular include the plural, and words in the plural include the singular; (5) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and (6) any reference to a statute, law or regulation means that statute, law or regulation as amended and in effect from time to time and includes any successor statute, law or regulation; 28 37 provided, however, that any reference to the Bankruptcy Law shall mean the Bankruptcy Law as applicable to the relevant case. ARTICLE TWO THE NOTES SECTION 2.01. Form and Dating. The Initial Notes, the notation thereon relating to the Guarantees and the Trustee's certificate of authentication relating thereto shall be substantially in the form of Exhibit A hereto. The Exchange Notes, the notation thereon relating to the Guarantees and the Trustee's certificate of authentication relating thereto shall be substantially in the form of Exhibit B hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or depository rule or usage. The Company shall approve the form of the Notes and any notation, legend or endorsement on them. Each Note shall be dated the date of its issuance and shall show the date of its authentication. Each Note shall have an executed Guarantee from each of the Subsidiary Guarantors endorsed thereon substantially in the form of Exhibit F hereto. The terms and provisions contained in the Notes and the Guarantees annexed hereto as Exhibits A, B and F shall constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Company, the Subsidiary Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. Notes offered and sold in reliance on Rule 144A, Notes offered and sold to institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and Notes offered and sold in reliance on Regulation S shall be issued initially in the form of one or more permanent global Notes in registered form, substantially in the form set forth in Exhibit A (the "Global Note"), deposited with the Trustee, as custodian for the Depository, duly executed by the Company (and having an executed Guarantee endorsed thereon) and authenticated by the Trustee as hereinafter provided and shall bear the legend set forth in Exhibit C. The aggregate principal amount of the Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depository, as hereinafter provided. Notes issued in exchange for interests in a Global Note pursuant to Section 2.16 may be issued and Notes offered and sold in reliance on any other exemption from registration under the Securities Act other than as described in the preceding paragraph shall be issued in the form of 29 38 permanent certificated Notes in registered form in substantially the form set forth in Exhibit A (the "Physical Notes"). All Notes offered and sold in reliance on Regulation S shall remain in the form of a Global Note until the consummation of the Exchange Offer pursuant to the Registration Rights Agreement; provided, however, that all of the time periods specified in the Registration Rights Agreement to be complied with by the Company and the Subsidiary Guarantors have been so complied with. SECTION 2.02. Execution and Authentication; Aggregate Principal Amount. Two Officers, or an Officer and an Assistant Secretary of the Company, shall sign, or one Officer shall sign and one Officer or an Assistant Secretary (each of whom shall, in each case, have been duly authorized by all requisite corporate actions) shall attest to, the Notes for the Company by manual or facsimile signature. If an Officer or Assistant Secretary whose signature is on a Note or a Guarantee was an Officer or Assistant Secretary at the time of such execution but no longer holds that office or position at the time the Trustee authenticates the Note, the Note shall nevertheless be valid. A Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall authenticate (i) Initial Notes for original issue in the aggregate principal amount not to exceed $225,000,000 in one or more series, (ii) Private Exchange Notes from time to time for issue only in exchange for a like principal amount of Initial Notes and (iii) Unrestricted Notes from time to time only (A) in exchange for a like principal amount of Initial Notes or (B) in an aggregate principal amount of not more than the excess of $225,000,000 over the sum of the aggregate principal amount of (x) Initial Notes then outstanding, (y) Private Exchange Notes then outstanding and (z) Unrestricted Notes issued in accordance with (iii)(A) above, in each case upon a written order of the Company in the form of an Officers' Certificate of the Company. Each such written order shall specify the amount of Notes to be authenticated and the date on which the Notes are to be authenticated, whether the Notes are to be Initial Notes, Private Exchange Notes or Unrestricted Notes and whether the Notes are to be issued as Physical Notes or Global Notes or such other information as the Trustee may reasonably request. The aggregate principal amount of Notes outstanding at any time may not exceed $225,000,000, except as provided in Sections 2.07 and 2.08. 30 39 In the event that the Company shall issue and the Trustee shall authenticate any Notes issued under this Indenture subsequent to the Issue Date pursuant to clauses (i) and (iii) of the first sentence of the immediately preceding paragraph, the Company shall use its reasonable efforts to obtain the same "CUSIP" number for such Notes as is printed on the Notes outstanding at such time; provided, however, that if any series of Notes issued under this Indenture subsequent to the Issue Date is determined, pursuant to an Opinion of Counsel of the Company in a form reasonably satisfactory to the Trustee, to be a different class of security than the Notes outstanding at such time for federal income tax purposes, the Company may obtain a "CUSIP" number for such Notes that is different than the "CUSIP" number printed on the Notes then outstanding. Notwithstanding the foregoing, all Notes issued under this Indenture shall vote and consent together on all matters (as to which any of such Notes may vote or consent) as one class and no series of Notes will have the right to vote or consent as a separate class on any matter. The Trustee may appoint an authenticating agent (the "Authenticating Agent") reasonably acceptable to the Company to authenticate Notes. Unless otherwise provided in the appointment, an Authenticating Agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such Authenticating Agent. An Authenticating Agent has the same rights as an Agent to deal with the Company or with any Affiliate of the Company. The Notes shall be issuable in fully registered form only, without coupons, in denominations of $1,000 and any integral multiple thereof. SECTION 2.03. Registrar and Paying Agent. The Company shall maintain an office or agency (which shall be located in the Borough of Manhattan in the City of New York, State of New York) where (a) Notes may be presented or surrendered for registration of transfer or for exchange ("Registrar"), (b) Notes may be presented or surrendered for payment ("Paying Agent") and (c) notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may have one or more co-Registrars and one or more additional paying agents reasonably acceptable to the Trustee. The term "Paying Agent" includes any additional Paying Agent. The Company may act as its own Paying Agent, except that for the purposes of payments on the Notes pursuant to Sections 4.14 and 4.15, neither the Company nor any Affiliate of the Company may act as Paying Agent. The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture, which agreement shall incorporate the provisions of the TIA and implement the provisions of this Indenture that relate to such Agent. The Company shall notify the Trustee of the name and address of any such Agent. If the Company shall fail to maintain a Registrar or Paying Agent the Trustee shall act as such. 31 40 The Company initially appoints the Trustee as Registrar, Paying Agent and agent for service of demands and notices in connection with the Notes, until such time as the Trustee has resigned or a successor has been appointed. Any of the Registrar, the Paying Agent or any other agent may resign upon 30 days' notice to the Company. SECTION 2.04. Paying Agent To Hold Assets in Trust. The Company shall require each Paying Agent other than the Trustee to agree in writing that such Paying Agent shall hold in trust for the benefit of the Holders or the Trustee all assets held by the Paying Agent for the payment of principal of, premium, if any, or interest on, the Notes (whether such assets have been distributed to it by the Company or any other obligor on the Notes), and the Company and the Paying Agent shall notify the Trustee of any Default by the Company (or any other obligor on the Notes) in making any such payment. The Company at any time may require a Paying Agent to distribute all assets held by it to the Trustee and account for any assets disbursed and the Trustee may at any time during the continuance of any payment Default, upon written request to a Paying Agent, require such Paying Agent to distribute all assets held by it to the Trustee and to account for any assets distributed. Upon distribution to the Trustee of all assets that shall have been delivered by the Company to the Paying Agent, the Paying Agent shall have no further liability for such assets. SECTION 2.05. Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the Company shall furnish or cause the Registrar to furnish to the Trustee within five (5) Business Days after each Record Date and at such other times as the Trustee may request in writing a list as of such date and in such form as the Trustee may reasonably require of the names and addresses of the Holders, which list may be conclusively relied upon by the Trustee, and the Company shall otherwise comply with TIA Section 312(a). SECTION 2.06. Transfer and Exchange. Subject to Sections 2.16 and 2.17, when Notes are presented to the Registrar or a co- Registrar with a request to register the transfer of such Notes or to exchange such Notes for an equal principal amount of Notes or other authorized denominations, the Registrar or co-Registrar shall register the transfer or make the exchange as requested if its requirements for such transaction are met; provided, however, that the Notes presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Company, the Trustee and the Registrar or co-Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. To permit registration of 32 41 transfers and exchanges, the Company shall execute and the Trustee shall authenticate Notes and the Subsidiary Guarantors shall execute Guarantees thereon at the Registrar's or co-Registrar's request. No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax, fee or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchanges or transfers pursuant to Section 2.10, 3.04, 4.14, 4.15 or 9.05, in which event the Company shall be responsible for the payment of such taxes). The Registrar or co-Registrar shall not be required to register the transfer of or exchange of any Note (i) during a period beginning at the opening of business 15 days before the mailing of a notice of redemption of Notes and ending at the close of business on the day of such mailing and (ii) selected for redemption in whole or in part pursuant to Article Three, except the unredeemed portion of any Note being redeemed in part. Any Holder of a beneficial interest in a Global Note shall, by acceptance of such Global Note, agree that transfers of beneficial interests in such Global Notes may be effected only through a book entry system maintained by the Holder of such Global Note (or its agent), and that ownership of a beneficial interest in the Note shall be required to be reflected in a book entry system. SECTION 2.07. Replacement Notes. If a mutilated Note is surrendered to the Trustee or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Note and the Subsidiary Guarantors shall execute a Guarantee thereon if the Trustee's requirements are met. If required by the Trustee or the Company, such Holder must provide an indemnity bond or other indemnity of reasonable tenor, sufficient in the reasonable judgment of the Company, the Subsidiary Guarantors and the Trustee, to protect the Company, the Subsidiary Guarantors, the Trustee or any Agent from any loss which any of them may suffer if a Note is replaced. Every replacement Note shall constitute an additional obligation of the Company and the Subsidiary Guarantors. SECTION 2.08. Outstanding Notes. Notes outstanding at any time are all the Notes that have been authenticated by the Trustee except those canceled by it, those delivered to it for cancellation and those described in this Section as not outstanding. Subject to the provisions of Section 2.09, a Note does not cease to be outstanding because the Company or any of its Affiliates holds the Note. 33 42 If a Note is replaced pursuant to Section 2.07 (other than a mutilated Note surrendered for replacement), it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender of such Note and replacement thereof pursuant to Section 2.07. If on a Redemption Date or the Maturity Date the Paying Agent holds U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the principal, premium, if any, and interest due on the Notes payable on that date and is not prohibited from paying such money to the Holders thereof pursuant to the terms of this Indenture, then on and after that date such Notes shall be deemed not to be outstanding and interest on them shall cease to accrue. SECTION 2.09. Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver, consent or notice, Notes owned by the Company or an Affiliate of the Company shall be considered as though they are not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which a Trust Officer of the Trustee actually knows are so owned shall be so considered. The Company shall notify the Trustee, in writing, when either it or, to its knowledge, any of its Affiliates repurchases or otherwise acquires Notes, of the aggregate principal amount of such Notes so repurchased or otherwise acquired and such other information as the Trustee may reasonably request and the Trustee shall be entitled to rely thereon. SECTION 2.10. Temporary Notes. Until definitive Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes upon receipt of a written order of the Company in the form of an Officers' Certificate. The Officers' Certificate shall specify the amount of temporary Notes to be authenticated and the date on which the temporary Notes are to be authenticated. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Company considers appropriate for temporary Notes and so indicates in the Officers' Certificate. Without unreasonable delay, the Company shall prepare, the Trustee shall authenticate and the Subsidiary Guarantors shall execute Guarantees on, upon receipt of a written order of the Company pursuant to Section 2.02, definitive Notes in exchange for temporary Notes. SECTION 2.11. Cancellation. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for transfer, exchange or payment. The Trustee, or at the direction of the Trustee, the Registrar or 34 43 the Paying Agent, and no one else, shall cancel and, at the written direction of the Company, shall dispose, in its customary manner, of all Notes surrendered for transfer, exchange, payment or cancellation. Subject to Section 2.07, the Company may not issue new Notes to replace Notes that they have paid or delivered to the Trustee for cancellation. If the Company shall acquire any of the Notes, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Notes unless and until the same are surrendered to the Trustee for cancellation pursuant to this Section 2.11. SECTION 2.12. Defaulted Interest. The Company will pay interest on overdue principal from time to time on demand at the rate of interest then borne by the Notes. The Company shall, to the extent lawful, pay interest on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the rate of interest then borne by the Notes. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months, and, in the case of a partial month, the actual number of days elapsed. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest, plus (to the extent lawful) any interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, which special record date shall be the fifteenth day next preceding the date fixed by the Company for the payment of defaulted interest or the next succeeding Business Day if such date is not a Business Day. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment (a "Default Interest Payment Date"), and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such defaulted interest or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such defaulted interest as provided in this Section; provided, however, that in no event shall the Company deposit monies proposed to be paid in respect of defaulted interest later than 11:00 a.m. New York City time of the proposed Default Interest Payment Date. At least 15 days before the subsequent special record date, the Company shall mail (or cause to be mailed) to each Holder, as of a recent date selected by the Company, with a copy to the Trustee, a notice that states the subsequent special record date, the payment date and the amount of defaulted interest, and interest payable on such defaulted interest, if any, to be paid. Notwithstanding the foregoing, any interest which is paid prior to the expiration of the 30-day period set forth in Section 6.01(i) shall be paid to Holders as of the regular record date for the Interest Payment Date for which interest has not been paid. Notwithstanding the foregoing, the Company may make payment of any defaulted interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange. 35 44 SECTION 2.13. CUSIP Number. The Company in issuing the Notes may use a "CUSIP" number, and, if so, the Trustee shall use the CUSIP number in notices of redemption or exchange as a convenience to Holders; provided, however, that no representation is hereby deemed to be made by the Trustee as to the correctness or accuracy of the CUSIP number printed in the notice or on the Notes, and that reliance may be placed only on the other identification numbers printed on the Notes. The Company shall promptly notify the Trustee of any change in the CUSIP number. SECTION 2.14. Deposit of Monies. Prior to 11:00 a.m. New York City time on each Interest Payment Date, Maturity Date, Redemption Date, Change of Control Payment Date and Net Proceeds Offer Payment Date, the Company shall have deposited with the Paying Agent in immediately available funds money sufficient to make cash payments, if any, due on such Interest Payment Date, Maturity Date, Redemption Date, Change of Control Payment Date and Net Proceeds Offer Payment Date, as the case may be, in a timely manner which permits the Paying Agent to remit payment to the Holders on such Interest Payment Date, Maturity Date, Redemption Date, Change of Control Payment Date and Net Proceeds Offer Payment Date, as the case may be. SECTION 2.15. Restrictive Legends. Each Global Note and Physical Note that constitutes a Restricted Security shall bear the Private Placement Legend on the face thereof until after the second anniversary of the later of the Issue Date and the last date on which the Company or any Affiliate of the Company was the owner of such Note (or any predecessor security) (or such shorter period of time as permitted by Rule 144(k) under the Securities Act or any successor provision thereunder) (or such longer period of time as may be required under the Securities Act or applicable state securities laws in the opinion of counsel for the Company, unless otherwise agreed by the Company and the Holder thereof). Each Global Note shall also bear the legend as set forth in Exhibit C. SECTION 2.16. Book-Entry Provisions for Global Security. (a) The Global Notes initially shall (i) be registered in the name of the Depository or the nominee of such Depository, (ii) be delivered to the Trustee as custodian for such Depository and (iii) bear the legend as set forth in Exhibit C. Members of, or participants in, the Depository ("Agent Members") shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depository, or 36 45 the Trustee as its custodian, or under the Global Notes, and the Depository may be treated by the Company, the Trustee and any Agent of the Company or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any Agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note. (b) Transfers of a Global Note shall be limited to transfers in whole, but not in part, to the Depository, its successors or their respective nominees. Interests of beneficial owners in a Global Note may be transferred or exchanged for Physical Notes in accordance with the rules and procedures of the Depository and the provisions of Section 2.17. In addition, Physical Notes shall be transferred to all beneficial owners in exchange for their beneficial interests in a Global Note if (i) the Depository notifies the Company that it is unwilling or unable to continue as Depository for the Global Notes and a successor depositary is not appointed by the Company within 90 days of such notice or (ii) an Event of Default has occurred and is continuing and the Registrar has received a written request from the Depository to issue Physical Notes. (c) In connection with any transfer or exchange of a portion of the beneficial interest in a Global Note to beneficial owners pursuant to paragraph (b), the Registrar shall (if one or more Physical Notes are to be issued) reflect on its books and records the date and a decrease in the principal amount of such Global Note in an amount equal to the principal amount of the beneficial interest in the Global Note to be transferred, and the Company shall execute, the Subsidiary Guarantors shall execute Guarantees on, and the Trustee shall authenticate and deliver, one or more Physical Notes of like tenor and amount. (d) In connection with the transfer of an entire Global Note to beneficial owners pursuant to paragraph (b) of this Section 2.16, such Global Note shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, the Subsidiary Guarantors shall execute Guarantees on and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depository in exchange for its beneficial interest in the Global Note, an equal aggregate principal amount of Physical Notes of authorized denominations. (e) Any Physical Note constituting a Restricted Security delivered in exchange for an interest in a Global Note pursuant to paragraph (b) or (c) of this Section 2.16 shall, except as otherwise provided by paragraphs (a)(i)(x) and (d) of Section 2.17, bear the Private Placement Legend. (f) The Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes. 37 46 SECTION 2.17. Special Transfer Provisions. (a) Transfers to Non-QIB Institutional Accredited Investors and Non-U.S. Persons. The following provisions shall apply with respect to the registration of any proposed transfer of a Note constituting a Restricted Security to any Institutional Accredited Investor which is not a QIB or to any Non- U.S. Person: (i) the Registrar shall register the transfer of any Note constituting a Restricted Security, whether or not such Note bears the Private Placement Legend, if (x) the requested transfer is after the second anniversary of the Issue Date (provided, however, that neither the Company nor any Affiliate of the Company has held any beneficial interest in such Note, or portion thereof, at any time on or prior to the second anniversary of the Issue Date) or (y) (1) in the case of a transfer to an Institutional Accredited Investor which is not a QIB (excluding Non-U.S. Persons), the proposed transferee has delivered to the Registrar a certificate substantially in the form of Exhibit D hereto or (2) in the case of a transfer to a Non-U.S. Person, the proposed transferor has delivered to the Registrar a certificate substantially in the form of Exhibit E hereto; and (ii) if the proposed transferee is an Agent Member and the Notes to be transferred consist of Physical Notes which after transfer are to be evidenced by an interest in the IAI Global Note or Regulation S Global Note, as the case may be, upon receipt by the Registrar of (x) written instructions given in accordance with the Depository's and the Registrar's procedures and (y) the appropriate certificate, if any, required by clause (y) of paragraph (i) above, the Registrar shall register the transfer and reflect on its books and records the date and an increase in the principal amount of the IAI Global Note or Regulation S Global Note, as to case may be, in an amount equal to the principal amount of Physical Notes to be transferred, and the Trustee shall cancel the Physical Notes so transferred; and (iii) if the proposed transferor is an Agent Member seeking to transfer an interest in a Global Note, upon receipt by the Registrar of (x) written instructions given in accordance with the Depository's and the Registrar's procedures and (y) the appropriate certificate, if any, required by clause (y) of paragraph (i) above, the Registrar shall register the transfer and reflect on its books and records the date and (A) a decrease in the principal amount of the Global Note from which such interests are to be transferred in an amount equal to the principal amount of the Notes to be transferred and (B) an increase in the principal amount of the IAI Global Note or the Regulation S Global Note, as the case may be, in an amount equal to the principal amount of the Notes to be transferred. (b) Transfers to QIBs. The following provisions shall apply with respect to the registration of any proposed transfer of a Note constituting a Restricted Security to a QIB (excluding transfers to Non-U.S. Persons): 38 47 (i) the Registrar shall register the transfer of any Restricted Security if such transfer is being made by a proposed transferor who has checked the box provided for on the form of Note stating, or has otherwise advised the Company and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Note stating, or has otherwise advised the Company and the Registrar in writing, that it is purchasing the Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; and (ii) if the proposed transferee is an Agent Member, and the Notes to be transferred consist of Physical Notes which after transfer are to be evidenced by an interest in a Global Note, upon receipt by the Registrar of written instructions given in accordance with the Depository's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of such Global Note in an amount equal to the principal amount of the Physical Notes to be transferred, and the Trustee shall cancel the Physical Notes so transferred; and (iii) if the proposed transferor is an Agent Member seeking to transfer an interest in the IAI Global Note or the Regulation S Global Note, upon receipt by the Registrar of written instructions given in accordance with the Depository's and the Registrar's procedures, the Registrar shall register the transfer and reflect on its books and records the date and (A) a decrease in the principal amount of the IAI Global Note or the Regulation S Global Note, as the case may be, in an amount equal to the principal amount of the Notes to be transferred and (B) an increase in the principal amount of the Global Note in an amount equal to the principal amount of the Notes to be transferred. (c) Restrictions on Transfer and Exchange of Global Notes. Notwithstanding any other provisions of this Indenture, a Global Note may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. (d) Private Placement Legend. Upon the transfer, exchange or replacement of Notes not bearing the Private Placement Legend, the Registrar shall deliver Notes that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Notes bearing the Private Placement Legend, the Registrar shall deliver only Notes that bear the Private Placement Legend unless (i) the requested transfer is after the second anniversary of the Issue Date (provided, however, that neither the Company nor any Affiliate of the Company has held any 39 48 beneficial interest in such Note, or portion thereof, at any time prior to or on the second anniversary of the Issue Date), or (ii) there is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. (e) General. By its acceptance of any Note bearing the Private Placement Legend, each Holder of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Note only as provided in this Indenture. The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.16 or this Section 2.17. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time during the Registrar's normal business hours upon the giving of reasonable written notice to the Registrar. (f) Transfers of Notes Held by Affiliates. Any certificate (i) evidencing a Note that has been transferred to an Affiliate of the Company within two years after the Issue Date, as evidenced by a notation on the Assignment Form for such transfer or in the representation letter delivered in respect thereof or (ii) evidencing a Note that has been acquired from an Affiliate of the Company (other than by an Affiliate) in a transaction or a chain of transactions not involving any public offering, shall, until two years after the last date on which the Company or any Affiliate of the Company was an owner of such Note, in each case, bear the Private Placement Legend, unless otherwise agreed by the Company (with written notice thereof to the Trustee). SECTION 2.18. Liquidated Damages Under Registration Rights Agreement. Under certain circumstances, the Company shall be obligated to pay certain liquidated damages to the Holders, all as set forth in Section 4 of the Registration Rights Agreement (or, with respect to any additional registration rights agreement entered into in connection with Initial Notes issued subsequent to the Issue Date pursuant to Section 2.02, the applicable section). The terms thereof are hereby incorporated herein by reference. 40 49 ARTICLE THREE REDEMPTION SECTION 3.01. Notices to Trustee. If the Company elects to redeem Notes pursuant to Paragraph (5) of the Notes, it shall notify the Trustee and the Paying Agent in writing of the Redemption Date and the principal amount of the Notes to be redeemed. The Company shall give each notice provided for in this Section 3.01 60 days before the Redemption Date (unless a shorter notice period shall be satisfactory to the Trustee, as evidenced in a writing signed on behalf of the Trustee), together with an Officers' Certificate stating that such redemption shall comply with the conditions contained herein and in the Notes. Any such notice may be canceled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect. SECTION 3.02. Selection of Notes To Be Redeemed. In the event that less than all of the Notes are to be redeemed at any time, selection of such Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed (subject to DTC procedures) or, if such Notes are not then listed on a national securities exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided, however, that no Notes of a principal amount of $1,000 or less shall be redeemed in part; provided, further, however, that if a partial redemption is made with the proceeds of a Public Equity Offering, selection of the Notes or portions thereof for redemption shall be made by the Trustee only on a pro rata basis or on as nearly a pro rata basis as is practicable (subject to DTC procedures), unless such method is otherwise prohibited. Notice of redemption shall be mailed by first-class mail at least 30 but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at its registered address. If any Note is to be redeemed in part only, the notice of redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in a principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption as long as the Company has deposited with the Paying Agent funds in satisfaction of the applicable Redemption Price. SECTION 3.03. Optional Redemption. 41 50 (a) The Notes will be redeemable at the Company's option, in whole at any time or in part from time to time, on and after June 1, 2003, upon not less than 30 nor more than 60 days' notice, at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on June 1 of the year set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption:
Year Percentage ---- ---------- 2003 . . . . . . . . . . . . . . . . . . . 104.688% 2004 . . . . . . . . . . . . . . . . . . . 103.125% 2005 . . . . . . . . . . . . . . . . . . . 101.563% 2006 and thereafter. . . . . . . . . . . . 100.000%
(b) Notwithstanding the foregoing, at any time, or from time to time, on or prior to June 1, 2001, the Company may, at its option, redeem up to 35% of the aggregate principal amount of the Notes originally issued with the net cash proceeds of one or more Public Equity Offerings at a redemption price equal to 109.375% of the principal amount thereof plus accrued and unpaid interest to the date of redemption; provided, however, that at least 65% of the aggregate principal amount of the Notes originally issued remain outstanding immediately following such redemption. In order to effect the foregoing redemption with the proceeds of any Public Equity Offering, the Company shall make such redemption not more than 120 days after the consummation of any such Public Equity Offering. SECTION 3.04. Notice of Redemption. At least 30 days but not more than 60 days before a Redemption Date, the Company shall mail or cause to be mailed a notice of redemption by first class mail to each Holder of Notes to be redeemed at its registered address, with a copy to the Trustee and any Paying Agent. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. The Company shall provide such notices of redemption to the Trustee at least five days before the intended mailing date. Each notice of redemption shall identify (including the CUSIP number) the Notes to be redeemed and shall state: (1) the Redemption Date; (2) the Redemption Price and the amount of accrued interest, if any, to be paid; (3) the name and address of the Paying Agent; 42 51 (4) the subparagraph of the Notes pursuant to which such redemption is being made; (5) that Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price plus accrued interest, if any; (6) that, unless the Company defaults in making the redemption payment, interest on Notes or applicable portions thereof called for redemption ceases to accrue on and after the Redemption Date, and the only remaining right of the Holders of such Notes is to receive payment of the Redemption Price plus accrued interest as of the Redemption Date, if any, upon surrender to the Paying Agent of the Notes redeemed; (7) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the Redemption Date, and upon surrender of such Note, a new Note or Notes in the aggregate principal amount equal to the unredeemed portion thereof will be issued; and (8) if fewer than all the Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the purchase of Notes. SECTION 3.05. Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.04, such notice of redemption shall be irrevocable and Notes called for redemption become due and payable on the Redemption Date and at the Redemption Price plus accrued interest as of such date, if any. Upon surrender to the Trustee or Paying Agent, such Notes called for redemption shall be paid at the Redemption Price plus accrued interest thereon to the Redemption Date, but installments of interest, the maturity of which is on or prior to the Redemption Date, shall be payable to Holders of record at the close of business on the relevant record dates referred to in the Notes. Interest shall accrue on or after the Redemption Date and shall be payable only if the Company defaults in payment of the Redemption Price. SECTION 3.06. Deposit of Redemption Price. On or before the Redemption Date and in accordance with Section 2.14, the Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price plus 43 52 accrued interest, if any, of all Notes to be redeemed on that date. The Paying Agent shall promptly return to the Company any U.S. Legal Tender so deposited which is not required for that purpose, except with respect to monies owed as obligations to the Trustee pursuant to Article Seven. Unless the Company fails to comply with the preceding paragraph and defaults in the payment of such Redemption Price plus accrued interest, if any, interest on the Notes to be redeemed will cease to accrue on and after the applicable Redemption Date, whether or not such Notes are presented for payment. SECTION 3.07. Notes Redeemed in Part. Upon surrender of a Note that is to be redeemed in part, the Trustee shall authenticate for the Holder a new Note or Notes equal in principal amount to the unredeemed portion of the Note surrendered. ARTICLE FOUR COVENANTS SECTION 4.01. Payment of Notes. (a) The Company shall pay the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes and in this Indenture. (b) An installment of principal of or interest on the Notes shall be considered paid on the date it is due if the Trustee or Paying Agent (other than the Company or any of its Affiliates) holds, prior to 11:00 a.m. New York City time on that date, U.S. Legal Tender designated for and sufficient to pay the installment in full and is not prohibited from paying such money to the Holders pursuant to the terms of this Indenture or the Notes. (c) Notwithstanding anything to the contrary contained in this Indenture, the Company may, to the extent it is required to do so by law, deduct or withhold income or other similar taxes imposed by the United States of America from principal or interest payments hereunder. SECTION 4.02. Maintenance of Office or Agency. The Company shall maintain the office or agency required under Section 2.03. The Company shall give prior written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such 44 53 required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 13.02. SECTION 4.03. Corporate Existence. Except as otherwise permitted by Article Five, the Company shall do or cause to be done, at its own cost and expense, all things necessary to preserve and keep in full force and effect its corporate existence and the corporate existence of each of its Subsidiaries in accordance with the respective organizational documents of each such Subsidiary and the material rights (charter and statutory) and franchises of the Company and each such Subsidiary; provided, however, that the Company shall not be required to preserve, with respect to itself, any material right or franchise and, with respect to any of its Subsidiaries, any such existence, material right or franchise, if the Board of Directors of the Company shall determine in good faith that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole, and that the loss thereof is not, and will not be, adverse in any material respect to the Holders. SECTION 4.04. Payment of Taxes and Other Claims. The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all material taxes, assessments and governmental charges (including withholding taxes and any penalties, interest and additions to taxes) levied or imposed upon it or any of its Subsidiaries or properties of it or any of its Subsidiaries and (ii) all material lawful claims for labor, materials and supplies that, if unpaid, might by law become a Lien upon the property of the Company or any of its Subsidiaries; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate negotiations or proceedings properly instituted and diligently conducted for which adequate reserves, to the extent required under GAAP, have been taken. SECTION 4.05. Maintenance of Properties and Insurance. (a) The Company shall, and shall cause each of its Subsidiaries to, maintain all properties used or useful in the conduct of its business in good working order and condition (subject to ordinary wear and tear) and make all necessary repairs, renewals, replacements, additions, betterments and improvements thereto and actively conduct and carry on its business; provided, however, that nothing in this Section 4.05 shall prevent the Company or any of the Subsidiaries of the Company from discontinuing the operation and maintenance of any of its properties, if such discontinuance is (i) in the ordinary course of business pursuant to customary business terms or (ii) in the good faith judgment of the respective Boards of Directors or other 45 54 governing body of the Company or Subsidiary, as the case may be, desirable in the conduct of their respective businesses and is not disadvantageous in any material respect to the Holders. (b) The Company shall provide or cause to be provided, for itself and each of the Subsidiaries of the Company, insurance (including appropriate self-insurance) against loss or damage of the kinds that, in the good faith judgment of the Company, are adequate and appropriate for the conduct of the business of the Company and its Subsidiaries in a prudent manner, with reputable insurers. SECTION 4.06. Compliance Certificate; Notice of Default. (a) The Company shall deliver to the Trustee, within 120 days after the end of each of the Company's fiscal years, an Officers' Certificate (provided, however, that one of the signatories to each such Officers' Certificate shall be the Company's principal executive officer, principal financial officer or principal accounting officer), as to such Officers' knowledge, without independent investigation, of the Company's compliance with all conditions and covenants under this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and in the event any Default of the Company's exists, such Officers shall specify the nature of such Default. Each such Officers' Certificate shall also notify the Trustee should the Company elect to change the manner in which it fixes its fiscal year-end. (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the annual financial statements delivered pursuant to Section 4.08 shall be accompanied by a written report of the Company's independent certified public accountants (who shall be a firm of established national reputation) stating (A) that their audit examination has included a review of the terms of this Indenture and the form of the Notes as they relate to accounting matters, and (B) whether, in connection with their audit examination, any Default or Event of Default has come to their attention and if such a Default or Event of Default has come to their attention, specifying the nature and period of existence thereof; provided, however, that, without any restriction as to the scope of the audit examination, such independent certified public accountants shall not be liable by reason of any failure to obtain knowledge of any such Default or Event of Default that would not be disclosed in the course of an audit examination conducted in accordance with generally accepted auditing standards. (c) (i) If any Default or Event of Default has occurred and is continuing or (ii) if any Holder seeks to exercise any remedy hereunder with respect to a claimed Default under this Indenture or the Notes, the Company shall deliver to the Trustee, at its address set forth in Section 13.02, by registered or certified mail or by facsimile transmission followed by hard copy by registered or certified mail an Officers' Certificate specifying such event, notice or other action within 10 days of its becoming aware of such occurrence. 46 55 SECTION 4.07. Compliance with Laws. The Company shall comply, and shall cause each of its Subsidiaries to comply, with all applicable statutes, rules, regulations, orders and restrictions of the United States of America and each other country in which they conduct business, all states, provinces, and municipalities and other political subdivisions of the foregoing, and any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing, in respect of the conduct of their respective businesses and the ownership of their respective properties, except for such noncompliance as could not singly or in the aggregate reasonably be expected to have a material adverse effect on the financial condition or results of operations of the Company and its Subsidiaries taken as a whole. SECTION 4.08. Reports to Holders. The Company will deliver to the Trustee within 15 days after the filing of the same with the Commission, copies of the quarterly and annual reports and of the information, documents and other reports, if any, which the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will file with the Commission, to the extent permitted, and provide the Trustee and the Holders with such annual reports and such information, documents and other reports specified in Sections 13 and 15(d) of the Exchange Act. The Company will also comply with the other provisions of Section 314(a) of the TIA. SECTION 4.09. Waiver of Stay, Extension or Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Company from paying all or any portion of the principal of or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that it may lawfully do so) the Company hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. SECTION 4.10. Limitation on Restricted Payments. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly: (a) declare or pay any dividend or make any distribution (other than dividends or distributions made to the Company or any Wholly-Owned Restricted Subsidiary of 47 56 the Company and other than any dividend or distribution payable solely in Qualified Capital Stock of the Company) on or in respect of its Capital Stock to holders of such Capital Stock; (b) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company or any warrants, rights or options to purchase or acquire such Capital Stock (other than the exchange of such Capital Stock or any warrants, rights or options to acquire Capital Stock of the Company for Qualified Capital Stock of the Company); (c) make any principal payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment, any Indebtedness of the Company or a Subsidiary Guarantor that is subordinate or junior in right of payment to the Notes or such Subsidiary Guarantor's Guarantee; or (d) make any Investment (other than Permitted Investments) (each of the foregoing actions set forth in clauses (a), (b), (c) and (d) being referred to as a "Restricted Payment"), if at the time of such Restricted Payment or immediately after giving effect thereto, (i) a Default or an Event of Default shall have occurred and be continuing, or (ii) the Company is not able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.12, or (iii) the aggregate amount of all Restricted Payments (including such proposed Restricted Payment) made subsequent to the Issue Date (the amount expended for such purposes, if other than in cash, being the Fair Market Value of such property) shall exceed the sum of: (v) 50% of the cumulative Consolidated Net Income (or if cumulative Consolidated Net Income shall be a loss, minus 100% of such loss) of the Company earned during the period beginning on the first day of the fiscal quarter including the Issue Date and ending on the last day of the fiscal quarter ending at least 30 days prior to the date the Restricted Payment occurs (the "Reference Date") (treating such period as a single accounting period); plus (w) 100% of the aggregate net proceeds (including the Fair Market Value of any business or property other than cash) received by the Company from any Person (other than a Subsidiary of the Company) from the issuance and sale subsequent to the Issue Date of Qualified Capital Stock of the Company, including treasury stock; plus (x) without duplication of any amounts included in clause (iii) (w) above, 100% of the aggregate net cash proceeds of any equity contribution received by the Company from a holder of the Company's Capital Stock (excluding, in the case of clauses (iii) (w) and (x), any net cash proceeds from a Public Equity Offering to the extent used to redeem the Notes and any net cash proceeds received by the Company from the sale of Qualified Capital Stock of the Company or equity contribution which has been financed, directly or indirectly, using funds (1) borrowed from the Company or any of its Subsidiaries, unless and until and to the extent such borrowing is repaid or (2) contributed, extended, guaranteed or advanced by the Company or by any of its Subsidiaries); plus (y) an amount equal to the net reduction in Investments in Unrestricted Subsidiaries resulting from dividends, interest payments, repayments of loans or advances, or other transfers of cash, in each case, to the Company or to any Restricted Subsidiary of the Company from Unrestricted Subsidiaries (but without duplication of any such amount included in cumulative Consolidated Net Income of the Company), or from redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries (in each case valued as provided in Section 4.17), not to exceed, in the case of an Unrestricted Subsidiary, the amount of Investments previously made by the Company or any 48 57 Restricted Subsidiary of the Company in such Unrestricted Subsidiary and which were treated as a Restricted Payment under this Indenture; plus (z) $40.0 million. Notwithstanding the foregoing, the provisions set forth in the immediately preceding paragraph shall not prohibit: (1) the payment of any dividend or consummation of irrevocable redemption within 60 days after the date of declaration of such dividend or giving of irrevocable redemption notice if the dividend or redemption would have been permitted on the date of declaration or giving of irrevocable redemption notice; (2) if no Default or Event of Default shall have occurred and be continuing, the acquisition of any Capital Stock of the Company, either (i) solely in exchange for shares of Qualified Capital Stock of the Company or (ii) through the application of net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of the Company) of shares of Qualified Capital Stock of the Company; (3) if no Default or Event of Default shall have occurred and be continuing, the acquisition or repayment of any Indebtedness of the Company that is subordinate or junior in right of payment to the Notes either (i) solely in exchange for shares of Qualified Capital Stock of the Company, or (ii) through the application of net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of the Company) of (A) shares of Qualified Capital Stock of the Company or (B) Refinancing Indebtedness; (4) if no Default or Event of Default shall have occurred and be continuing, payments by the Company to repurchase Capital Stock or other securities of the Company from current or former directors, officers and other employees of the Company or any of its Subsidiaries; and (5) if no Default or Event of Default shall have occurred and be continuing, purchases of Capital Stock for use in connection with compensation arrangements of directors, officers and other employees of the Company and its Subsidiaries, provided that the aggregate amount of payments pursuant to clauses (4) and (5) shall not together exceed $5.0 million in any calendar year (net of the net cash proceeds received by the Company from the purchase by directors, officers and other employees of Capital Stock in connection with such compensation arrangements) plus any amount unused for the prior calendar year. In determining the aggregate amount of Restricted Payments made subsequent to the Issue Date in accordance with clause (iii) of the immediately preceding paragraph, amounts expended pursuant to clauses (1), (2) (ii) and (3) (ii) (A) shall be included in such calculation. Within 30 days after making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment complies with this Indenture and setting forth in reasonable detail the basis upon which the required calculations were computed, which calculations may be based upon the Company's latest available internal quarterly financial statements. 49 58 SECTION 4.11. Limitation on Transactions with Affiliates. (a) The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or for the benefit of, any of its Affiliates (each an "Affiliate Transaction"), other than (x) Affiliate Transactions permitted under clause (b) below and (y) Affiliate Transactions on terms that are no less favorable than those that might reasonably have been obtained or are obtainable in a comparable transaction at such time on an arm's-length basis from a Person that is not an Affiliate of the Company or such Restricted Subsidiary. In connection with all Affiliate Transactions (and each series of related Affiliate Transactions which are similar or part of a common plan) involving aggregate payments or other property with a Fair Market Value in excess of $10.0 million, the Company shall either (i) obtain the approval of the Board of Directors of the Company or such Restricted Subsidiary, as the case may be, such approval to be evidenced by a Board Resolution stating that such Board of Directors has determined that such transaction complies with the foregoing provisions or (ii) obtain a favorable opinion as to the fairness of such transaction or series of related transactions to the Company or the relevant Restricted Subsidiary, as the case may be, from a financial point of view, from an Independent Financial Advisor and file the same with the Trustee. If the Company or any Restricted Subsidiary of the Company enters into an Affiliate Transaction (or a series of related Affiliate Transactions which are similar or part of a common plan) involving aggregate payments or other property with a Fair Market Value in excess of $25.0 million, the Company or such Restricted Subsidiary, as the case may be, shall, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such transaction or series of related transactions to the Company or the relevant Restricted Subsidiary, as the case may be, from a financial point of view, from an Independent Financial Advisor and file the same with the Trustee. (b) The restrictions set forth in clause (a) shall not apply to (i) reasonable fees and compensation paid to, and indemnity provided on behalf of, officers, directors, employees, consultants or agents of the Company or any Restricted Subsidiary of the Company as determined in good faith by the Company's Board of Directors or senior management; (ii) transactions exclusively between or among the Company and any of its Restricted Subsidiaries or exclusively between or among such Restricted Subsidiaries, provided such transactions are not otherwise prohibited by this Indenture; (iii) transactions with distributors, suppliers or other purchasers of sales of goods or services, in each case in the ordinary course of business consistent with the Company's customary practices and otherwise in compliance with the terms of this Indenture, and which are fair to the Company or the Restricted Subsidiaries as applicable, in the reasonable determination of the Board of Directors of the Company or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; (iv) any agreement as in effect as of the Issue Date, including the Tax Sharing Agreement, or any amendment thereto or any transaction contemplated thereby (including 50 59 pursuant to any amendment thereto) or in any replacement agreement thereto so long as any such amendment or replacement agreement is not more disadvantageous to the Holders than the original agreement as in effect on the Issue Date; (v) loans to the Company provided that the terms thereof, when taken as a whole, are no less favorable to the Company than those available from a financing source that is not an Affiliate of the Company; and (vi) Restricted Payments permitted by this Indenture. SECTION 4.12. Limitation on Incurrence of Additional Indebtedness. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of (collectively, "incur"), any Indebtedness (including, without limitation, Acquired Indebtedness) other than Permitted Indebtedness. Notwithstanding the foregoing, if no Default or Event of Default shall have occurred and be continuing at the time of or as a consequence of the incurrence of any such Indebtedness, the Company and its Restricted Subsidiaries which are Subsidiary Guarantors may incur Indebtedness (including, without limitation, Acquired Indebtedness) if on the date of the incurrence of such Indebtedness, after giving effect to the incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the Company is greater than 2.25 to 1.0. No Indebtedness incurred in compliance with the preceding sentence shall thereafter be included in calculating any limitation set forth in the definition of Permitted Indebtedness even if such Indebtedness is of a type which constitutes, or may constitute, Permitted Indebtedness. Within 30 days after any incurrence of Indebtedness pursuant to the second sentence of the preceding paragraph (other than Permitted Indebtedness), the Company shall deliver to the Trustee an Officers' Certificate setting forth the calculations by which such incurrence was determined to be permitted. SECTION 4.13. Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary of the Company to (a) pay dividends or make any other distributions on or in respect of its Capital Stock; (b) make loans or advances or to pay any Indebtedness or other obligation owed to the Company or any other Restricted Subsidiary of the Company; or (c) transfer any of its property or assets to the Company or any other Restricted Subsidiary of the Company, except for such encumbrances or restrictions existing under or by reason of: (1) applicable law; (2) this Indenture; (3) the Credit Agreement; (4) non-assignment provisions of any contract or any lease governing a leasehold interest of any Restricted Subsidiary of the Company; (5) any instrument governing Acquired Indebtedness, 51 60 which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired; (6) agreements existing on the Issue Date to the extent and in the manner such agreements are in effect on the Issue Date; (7) Indebtedness or other contractual requirements of a Securitization Entity in connection with a Qualified Securitization Transaction; provided that such restrictions apply only to such Securitization Entity; or (8) an agreement governing Indebtedness incurred to Refinance the Indebtedness issued, assumed or incurred pursuant to an agreement referred to in clause (2), (3), (5) or (6) above; provided, however, that the provisions relating to such encumbrance or restriction contained in any such Indebtedness are no less favorable to the Company or to the Holders in any material respect as determined by the Board of Directors of the Company in its reasonable and good faith judgment than the provisions relating to such encumbrance or restriction contained in agreements referred to in such clause (2), (3), (5) or (6), respectively. SECTION 4.14. Change of Control. (a) Upon the occurrence of a Change of Control, each Holder will have the right to require that the Company purchase all or a portion of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer"), at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of purchase. (b) Prior to the mailing of the notice referred to below, but in any event within 30 days following any Change of Control, the Company covenants to (i) repay in full all indebtedness, and terminate all commitments, under the Credit Agreement and all other Senior Indebtedness the terms of which require repayment upon a Change of Control or (ii) obtain the requisite consents under the Credit Agreement and all other Senior Indebtedness to permit the repurchase of the Notes as provided below. The Company shall first comply with the covenant in the immediately preceding sentence before it shall be required to repurchase Notes pursuant to the provisions described below. The Company's failure to comply with the second preceding sentence shall be governed by Section 6.01(iii) and not Section 6.01(iv). (c) Within 30 days following the date upon which a Change of Control occurs, the Company shall send, by first class mail, a notice to each Holder at such Holder's last registered address, with a copy to the Trustee, which notice shall govern the terms of the Change of Control Offer. The notice to the Holders shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Change of Control Offer. Such notice shall state: (i) that the Change of Control Offer is being made pursuant to this Section 4.14, that all Notes tendered and not withdrawn will be accepted for payment and that the Change of Control Offer shall remain open for a period of 20 Business Days or such longer period as may be required by law; 52 61 (ii) the purchase price (including the amount of accrued interest) and the purchase date (which shall be no earlier than 30 days nor later than 45 days from the date such notice is mailed, other than as may be required by law) (the "Change of Control Payment Date"); (iii) that any Note not tendered will continue to accrue interest; (iv) that, unless the Company defaults in making payment therefor, any Note accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (v) that Holders electing to have a Note purchased pursuant to a Change of Control Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day prior to the Change of Control Payment Date; (vi) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the second Business Day prior to the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Notes the Holder delivered for purchase and a statement that such Holder is withdrawing its election to have such Notes purchased; (vii) that Holders whose Notes are purchased only in part will be issued new Notes in a principal amount equal to the unpurchased portion of the Notes surrendered; provided, however, that each Note purchased and each new Note issued shall be in an original principal amount of $1,000 or integral multiples thereof; and (viii) the circumstances and relevant facts regarding such Change of Control. On or before the Change of Control Payment Date, the Company shall (i) accept for payment Notes or portions thereof tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent in accordance with Section 2.14 U.S. Legal Tender sufficient to pay the purchase price plus accrued interest, if any, of all Notes so tendered and (iii) deliver to the Trustee Notes so accepted together with an Officers' Certificate stating the Notes or portions thereof being purchased by the Company. Upon receipt by the Paying Agent of the monies specified in clause (ii) above and a copy of the Officers' Certificate specified in clause (iii) above, the Paying Agent shall promptly mail to the Holders of Notes so accepted payment in an amount equal to the purchase price plus accrued interest, if any, and the Trustee shall promptly authenticate and mail to such Holders new Notes equal in principal amount to any unpurchased portion of the Notes surrendered. For purposes of this Section 4.14, the Trustee shall act as the Paying Agent. 53 62 Neither the Board of Directors of the Company nor the Trustee may waive the provisions of this Section 4.14 relating to the Company's obligation to make a Change of Control Offer. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.14, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the provisions of this Section 4.14 by virtue thereof. SECTION 4.15. Limitation on Asset Sales. (a) The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless: (i) the Company or the applicable Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets sold or otherwise disposed of; (ii) at least 75% of the consideration received by the Company or the Restricted Subsidiary, as the case may be, from such Asset Sale shall be in the form of cash or Cash Equivalents and is received at the time of such disposition; and (iii) upon the consummation of an Asset Sale, the Company shall apply, or cause such Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within 360 days of receipt thereof either (A) to prepay any Senior Indebtedness or Guarantor Senior Indebtedness and, in the case of any Senior Indebtedness or Guarantor Senior Indebtedness under any revolving credit facility, effect a permanent reduction in the commitment available under such revolving credit facility, (B) to make an investment in properties and assets that replace the properties and assets that were the subject of such Asset Sale or in properties and assets (including Capital Stock or other equity interests that satisfy the requirements of a Permitted Joint Venture or result in the Person becoming a Restricted Subsidiary) that will be used in the business of the Company and its Restricted Subsidiaries as existing on the Issue Date or in businesses reasonably related or complementary thereto (as determined in good faith by the Company's Board of Directors) ("Replacement Assets"), or (C) a combination of prepayment and investment permitted by the foregoing clauses (iii) (A) and (iii) (B). Pending final application, the Company or the applicable Restricted Subsidiary may temporarily reduce Indebtedness under any revolving credit facility or invest in cash or Cash Equivalents. On the 361st day after an Asset Sale or such earlier date, if any, as the Board of Directors of the Company or of such Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses (iii) (A), (iii) (B) and (iii) (C) of the next preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which have not been applied on or before such Net Proceeds Offer Trigger Date as permitted in clauses (iii) (A), (iii) (B) and (iii) (C) of the next preceding sentence (each, a "Net Proceeds Offer Amount") shall be applied by the Company or such Restricted Subsidiary to make an offer to purchase (the "Net Proceeds 54 63 Offer") on a date (the "Net Proceeds Offer Payment Date") not less than 30 nor more than 45 days following the applicable Net Proceeds Offer Trigger Date, from all Holders on a pro rata basis, that amount of Notes equal to the Net Proceeds Offer Amount at a price equal to 100% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest thereon, if any, to the date of purchase; provided, however, that if at any time any non-cash consideration received by the Company or any Restricted Subsidiary of the Company, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash or Cash Equivalents (other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be applied in accordance with this Section 4.15. The Company or any such Restricted Subsidiary of the Company, as the case may be, may defer the Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer Amount equal to or in excess of $15.0 million resulting from one or more Asset Sales (at which time, the entire unutilized Net Proceeds Offer Amount, and not just the amount in excess of $15.0 million, shall be applied as required pursuant to this paragraph). (b) Notwithstanding clause (a) of this Section 4.15, (1) the Company and its Restricted Subsidiaries will be permitted to consummate an Asset Sale without complying with such paragraph to the extent (i) at least 75% of the consideration for such Asset Sale constitutes Replacement Assets and/or Cash Equivalents and (ii) such Asset Sale is for Fair Market Value; provided, however, that any consideration not constituting Replacement Assets received by the Company or any of its Restricted Subsidiaries in connection with any Asset Sale permitted to be consummated under this clause (b) shall constitute Net Cash Proceeds subject to the provisions of clause (a) of this Section 4.15, and (2) the Company and its Restricted Subsidiaries will be permitted to consummate an Asset Sale without complying with the requirement that at least 75% of the consideration received by the Company or its Restricted Subsidiaries be in the form of cash or Cash Equivalents if any shortfall from such 75% requirement is deemed an Investment under clause (d) of Section 4.10. (c) Subject to the deferral of the Net Proceeds Offer contained in clause (a)(iii) above, each notice of a Net Proceeds Offer pursuant to this Section 4.15 shall be mailed or caused to be mailed, by first class mail, by the Company not more than 25 days after the Net Proceeds Offer Trigger Date to all Holders at their last registered addresses, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Net Proceeds Offer and shall state the following terms: (i) that the Net Proceeds Offer is being made pursuant to this Section 4.15, that all Notes tendered will be accepted for payment; provided, however, that if the aggregate principal amount of Notes tendered in a Net Proceeds Offer plus accrued interest at the expiration of such offer exceeds the aggregate amount of the Net Proceeds Offer, the Company shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed 55 64 appropriate by the Company so that only Notes in denominations of $1,000 or multiples thereof shall be purchased) and that the Net Proceeds Offer shall remain open for a period of 20 Business Days or such longer period as may be required by law; (ii) the purchase price (including the amount of accrued interest) and the Net Proceeds Offer Payment Date (which shall be not less than 30 nor more than 45 days following the applicable Net Proceeds Offer Trigger Date and which shall be at least five Business Days after the Trustee receives notice thereof from the Company); (iii) that any Note not tendered will continue to accrue interest; (iv) that, unless the Company defaults in making payment therefor, any Note accepted for payment pursuant to the Net Proceeds Offer shall cease to accrue interest after the Net Proceeds Offer Payment Date; (v) that Holders electing to have a Note purchased pursuant to a Net Proceeds Offer will be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day prior to the Net Proceeds Offer Payment Date; (vi) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the second Business Day prior to the Net Proceeds Offer Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Notes the Holder delivered for purchase and a statement that such Holder is withdrawing its election to have such Note purchased; and (vii) that Holders whose Notes are purchased only in part will be issued new Notes in a principal amount equal to the unpurchased portion of the Notes surrendered; provided, however, that each Note purchased and each new Note issued shall be in an original principal amount of $1,000 or integral multiples thereof; On or before the Net Proceeds Offer Payment Date, the Company shall (i) accept for payment Notes or portions thereof tendered pursuant to the Net Proceeds Offer which are to be purchased in accordance with item (b)(i) above, (ii) deposit with the Paying Agent in accordance with Section 2.14 U.S. Legal Tender sufficient to pay the purchase price plus accrued interest, if any, of all Notes to be purchased and (iii) deliver to the Trustee Notes so accepted together with an Officers' Certificate stating the Notes or portions thereof being purchased by the Company. The Paying Agent shall promptly mail to the Holders of Notes so accepted payment in an amount equal to the purchase price plus accrued interest, if any. For purposes of this Section 4.15, the Trustee shall act as the Paying Agent. The Trustee shall promptly authenticate and mail to such 56 65 Holders new Notes equal in principal amount to any unpurchased portion of the Notes surrendered. Upon the payment of the purchase price for the Notes accepted for purchase, the Trustee shall return the Notes purchased to the Company for cancellation. Any monies remaining after the purchase of Notes pursuant to a Net Proceeds Offer shall be returned within three Business Days by the Trustee to the Company except with respect to monies owed as obligations to the Trustee pursuant to Article Seven. For purposes of this Section 4.15, the Trustee shall act as the Paying Agent. To the extent the amount of Notes tendered pursuant to any Net Proceeds Offer is less than the amount of Net Cash Proceeds subject to such Net Proceeds Offer, the Company may use any remaining portion of such Net Cash Proceeds not required to fund the repurchase of tendered Notes for general corporate purposes and such Net Proceeds Offer Amount shall be reset to zero. (d) The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with this Section 4.15, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under Section 4.15 by virtue thereof. SECTION 4.16. Limitation on Preferred Stock of Restricted Subsidiaries. The Company will not permit any of its Restricted Subsidiaries which are not Subsidiary Guarantors to issue any Preferred Stock (other than to the Company or to a Wholly-Owned Restricted Subsidiary of the Company) or permit any Person (other than the Company or a Wholly-Owned Restricted Subsidiary of the Company) to own any Preferred Stock of any Restricted Subsidiary of the Company which is not a Subsidiary Guarantor. SECTION 4.17. Limitation on Restricted and Unrestricted Subsidiaries. (a) The Board of Directors of the Company may, if no Default or Event of Default shall have occurred and be continuing or would arise therefrom, designate an Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that (i) any such redesignation shall be deemed to be an incurrence as of the date of such redesignation by the Company and its Restricted Subsidiaries of the Indebtedness (if any) of such redesignated Subsidiary for purposes of Section 4.12, (ii) unless such redesignated Subsidiary shall not have any Indebtedness outstanding (other than Permitted Indebtedness), no such designation shall be permitted if immediately after giving effect to such redesignation and the incurrence of any such additional Indebtedness, the Company could not incur $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.12 and (iii) such Subsidiary, if a Domestic 57 66 Subsidiary, assumes by execution of a supplemental indenture all of the obligations of a Subsidiary Guarantor under a Guarantee. (b) The Board of Directors of the Company also may, if no Default or Event of Default shall have occurred and be continuing or would arise therefrom, designate any Restricted Subsidiary (including any newly formed or acquired Subsidiary) to be an Unrestricted Subsidiary if (i) such designation is at that time permitted under Section 4.10 above and (ii) immediately after giving effect to such designation, the Company could incur $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.12 above. Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by the filing with the Trustee of a Board Resolution of the Company giving effect to such designation or redesignation and an Officers' Certificate certifying that such designation or redesignation complied with the foregoing conditions and setting forth in reasonable detail the underlying calculations. If any Restricted Subsidiary is designated an Unrestricted Subsidiary in accordance with this Section 4.17, such Restricted Subsidiary's Guarantee will be automatically discharged and released. (c) For purposes of Section 4.10, (i) an "Investment" shall be deemed to have been made at the time any Restricted Subsidiary of the Company is designated as an Unrestricted Subsidiary in an amount (proportionate to the Company's equity interest in such Subsidiary) equal to the net worth of such Restricted Subsidiary at the time that such Restricted Subsidiary is designated as an Unrestricted Subsidiary; (ii) at any date, the aggregate amount of all Restricted Payments made as Investments since the Issue Date shall exclude and be reduced by an amount (proportionate to the Company's equity interest in such Subsidiary) equal to the net worth of any Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is designated as a Restricted Subsidiary, not to exceed, in the case of any such redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the amount of Investments previously made by the Company and its Restricted Subsidiaries in such Unrestricted Subsidiary (in each case (i) and (ii), "net worth" to be calculated based upon the Fair Market Value of such Subsidiary as of any such date of designation); and (iii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer. (d) Notwithstanding the foregoing, the Board of Directors of the Company may not designate any Restricted Subsidiary of the Company to be an Unrestricted Subsidiary if, after any such designation, such Subsidiary owns any Capital Stock of, or holds any Lien on any property of, the Company or any Restricted Subsidiary of the Company which is not a Subsidiary of the Subsidiary to be so designated. (e) Subsidiaries of the Company that are not designated by the Board of Directors of the Company as Restricted or Unrestricted Subsidiaries will be deemed to be Restricted Subsidiaries of the Company. Notwithstanding the foregoing, all Subsidiaries of an Unrestricted Subsidiary will be Unrestricted Subsidiaries. 58 67 SECTION 4.18. Limitation on Liens. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or permit or suffer to exist any Liens of any kind against or upon any property or assets of the Company or any of its Restricted Subsidiaries whether owned on the Issue Date or acquired after the Issue Date, or any proceeds therefrom, or assign or otherwise convey any right to receive income or profits therefrom unless (i) in the case of Liens securing Indebtedness that is expressly subordinate or junior in right of payment to the Notes or any Guarantee, the Notes and such Guarantee, as the case may be, are secured by a Lien on such property, assets or proceeds that is senior in priority to such Liens and (ii) in all other cases, the Notes and the Guarantees are equally and ratably secured for so long as such Lien exists, except for (A) Liens existing as of the Issue Date to the extent and in the manner such Liens are in effect on the Issue Date; (B) Liens securing Senior Indebtedness or Guarantor Senior Indebtedness; (C) Liens securing the Notes and the Guarantees; (D) Liens of the Company or a Wholly-Owned Restricted Subsidiary of the Company on assets of any Restricted Subsidiary of the Company; (E) Liens securing Refinancing Indebtedness which is incurred to Refinance any Indebtedness which has been secured by a Lien permitted under this Indenture and which has been incurred in accordance with the provisions of this Indenture; provided, however, that such Liens (1) are no less favorable to the Holders and are not more favorable to the lienholders with respect to such Liens than the Liens in respect of the Indebtedness being Refinanced and (2) do not extend to or cover any property or assets of the Company or any of its Subsidiaries not securing the Indebtedness so Refinanced (other than property or assets subject to Liens under clause (B) above); and (F) Permitted Liens. SECTION 4.19. Conduct of Business. The Company will not, and will not cause or permit any of its Restricted Subsidiaries (other than a Securitization Entity) to, engage in any businesses other than the businesses in which the Company is engaged on the Issue Date, and any businesses reasonably related or complementary thereto (as determined in good faith by the Company's Board of Directors). SECTION 4.20. Additional Subsidiary Guarantees. If the Company or any of its Restricted Subsidiaries transfers or causes to be transferred, in one transaction or a series of related transactions, any property having a Fair Market Value in excess of $2.5 million to any Restricted Subsidiary that is not a Subsidiary Guarantor, or if the Company or any of its Restricted Subsidiaries shall organize, acquire or otherwise invest in another Restricted Subsidiary that is not a Subsidiary Guarantor which has property with a Fair Market Value in excess of $2.5 million, then such transferee or acquired or other Subsidiary (other than, in any such case, a Foreign Subsidiary) shall (a) execute and deliver to the Trustee a 59 68 supplemental indenture in form reasonably satisfactory to the Trustee pursuant to which such Subsidiary shall unconditionally guarantee all of the Company's obligations under the Notes and this Indenture on the terms set forth in this Indenture and (b) deliver to the Trustee an opinion of counsel that such supplemental indenture has been duly authorized, executed and delivered by such Subsidiary and constitutes a legal, valid, binding and enforceable obligation of such Subsidiary, subject to customary exceptions. After the execution and delivery of such supplemental indenture, such Subsidiary shall be a Subsidiary Guarantor for all purposes of this Indenture. SECTION 4.21. Limitation of Guarantees by Restricted Subsidiaries. The Company will not permit any of its Restricted Subsidiaries, directly or indirectly, by way of the pledge of any intercompany note or otherwise, to assume, guarantee or in any other manner become liable with respect to any Indebtedness of the Company or any other Restricted Subsidiary (other than any guarantee by a Foreign Restricted Subsidiary of Indebtedness of another Foreign Restricted Subsidiary permitted under Section 4.12), unless, in any such case (a) such Restricted Subsidiary, if it is not a Subsidiary Guarantor, executes and delivers a supplemental indenture to this Indenture, providing a Guarantee and (b) (x) if any such assumption, guarantee or other liability of such Restricted Subsidiary is provided in respect of Senior Indebtedness, the guarantee or other instrument provided by such Restricted Subsidiary in respect of such Senior Indebtedness may be superior to the Guarantee pursuant to subordination provisions which, taken as a whole, are no less favorable in any material respect to the Holders than those contained in this Indenture and (y) if such assumption, guarantee or other liability of such Restricted Subsidiary is provided in respect of Indebtedness that is expressly subordinated to the Notes, the guarantee or other instrument provided by such Restricted Subsidiary in respect of such subordinated Indebtedness shall be subordinated to the Guarantee pursuant to subordination provisions which, taken as a whole, are no less favorable in any material respect to the Holders than those contained in this Indenture. Notwithstanding the foregoing, any such Guarantee by a Restricted Subsidiary of the Notes pursuant to the foregoing paragraph shall provide by its terms that it shall be automatically and unconditionally released and discharged, without any further action required on the part of the Trustee or any Holder, upon: (i) the unconditional release of such Restricted Subsidiary from its liability in respect of the Indebtedness in connection with which such Guarantee was executed and delivered pursuant to the preceding paragraph; or (ii) any sale or other disposition (by merger or otherwise) to any Person which is not a Restricted Subsidiary of the Company of all of the Company's (or a Restricted Subsidiary of the Company's) Capital Stock in, or all or substantially all of the assets of, such Restricted Subsidiary or the parent of such Restricted Subsidiary; provided, that (a) such sale or disposition of such Capital Stock or assets is otherwise in compliance with the terms of this Indenture and (b) such assumption, guarantee or other liability of such Restricted Subsidiary has been released by the holders of the other Indebtedness so 60 69 guaranteed or (iii) such Subsidiary Guarantor becoming an Unrestricted Subsidiary in accordance with this Indenture. SECTION 4.22. Prohibition on Incurrence of Senior Subordinated Debt. The Company will not incur or suffer to exist Indebtedness that by its terms is senior in right of payment to the Notes and subordinate in right of payment to any other Indebtedness of the Company. No Subsidiary Guarantor shall incur or suffer to exist Indebtedness that by its terms is senior in right of payment to the Guarantees and subordinate in right of payment to any other Indebtedness of such Subsidiary Guarantor. ARTICLE FIVE SUCCESSOR CORPORATION SECTION 5.01. Merger, Consolidation and Sale of Assets. (a) The Company will not, in a single transaction or series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or cause or permit any Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the Company's assets (determined on a consolidated basis for the Company and its Restricted Subsidiaries) unless: (i) either (1) the Company shall be the surviving or continuing corporation or (2) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company and of the Company's Restricted Subsidiaries substantially as an entirety (the "Surviving Entity") (x) shall be a corporation organized and validly existing under the laws of the United States or any State thereof or the District of Columbia and (y) shall expressly assume as primary obligor, by supplemental indenture (in form and substance satisfactory to the Trustee), executed and delivered to the Trustee, the due and punctual payment of the principal of, and premium, if any, and interest on all of the Notes and the performance of every covenant of the Notes, this Indenture and the Registration Rights Agreement on the part of the Company to be performed or observed, as the case may be; (ii) immediately after giving effect to such transaction and the assumption contemplated by clause (i) (2) (y) above (including giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction), the Company or such Surviving Entity, as the case may be, (1) shall have a Consolidated Net Worth equal to or greater than the Consolidated Net Worth of the Company immediately prior to such transaction and (2) shall be able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.12; 61 70 (iii) immediately before and immediately after giving effect to such transaction and the assumption contemplated by clause (i) (2) (y) above (including, without limitation, giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred and any Lien granted in connection with or in respect of the transaction), no Default or Event of Default shall have occurred or be continuing; and (iv) the Company or the Surviving Entity, as the case may be, shall have delivered to the Trustee an Officers' certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with the applicable provisions of this Indenture and that all conditions precedent in this Indenture relating to such transaction have been satisfied. (b) For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries of the Company the Capital Stock of which constitutes all or substantially all of the properties and assets of the Company shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. (c) Each Subsidiary Guarantor (other than any Subsidiary Guarantor whose Guarantee is to be released in accordance with the terms of the Guarantee and this Indenture in connection with any transaction complying with the provisions of Section 4.15) will not, and the Company will not cause or permit any Subsidiary Guarantor to, consolidate with or merge with or into any Person other than the Company or another Subsidiary Guarantor that is a Wholly-Owned Subsidiary unless: (a) the entity formed by or surviving any such consolidation or merger (if other than the Subsidiary Guarantor) or to which such sale, lease, conveyance or other disposition shall have been made is a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia; (b) such entity assumes by execution of a supplemental indenture all of the obligations of the Subsidiary Guarantor under its Guarantee; (c) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and (d) immediately after giving effect to such transaction and the use of any net proceeds therefrom on a pro forma basis, the Company could satisfy the provisions of clause (ii) of paragraph (a) of this Section 5.01. Any merger or consolidation of a Subsidiary Guarantor with and into the Company (with the Company being the surviving entity) or another Subsidiary Guarantor that is a Wholly-Owned Restricted Subsidiary need only comply with clause (iv) of paragraph (a) of this Section 5.01. SECTION 5.02. Successor Corporation Substituted. Upon any consolidation, combination or merger or any transfer of all or substantially all of the assets of the Company in accordance with Section 5.01, in which the Company is not the continuing corporation, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, lease or transfer is made shall succeed to, and 62 71 be substituted for, and may exercise every right and power of, the Company under this Indenture and the Notes with the same effect as if such successor had been named as the Company herein. ARTICLE SIX REMEDIES SECTION 6.01. Events of Default. An "Event of Default" means any of the following events: (i) the failure to pay interest (including any Additional Interest, if any) on any Notes when the same becomes due and payable and the default continues for a period of 30 days (whether or not such payment is prohibited by Article Ten of this Indenture); (ii) the failure to pay the principal on any Notes when such principal becomes due and payable, at maturity, upon acceleration, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to a Change of Control Offer or a Net Proceeds Offer) (whether or not such payment is prohibited by Article Ten of this Indenture); (iii) failure to perform or comply with the restrictive covenants in Section 5.01; (iv) a default in the observance or performance of any other covenant or agreement contained in this Indenture which default continues for a period of 45 days after the Company receives written notice specifying the default (and demanding that such default be remedied) from the Trustee or the Holders of at least 25% of the outstanding principal amount of the Notes; (v) the failure to pay at final maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness of the Company or any Restricted Subsidiary of the Company, or the acceleration of the final stated maturity of any such Indebtedness, if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at final maturity or which has been accelerated, aggregates $15.0 million or more at any time; (vi) one or more judgments in an aggregate amount in excess of $15.0 million shall have been rendered against the Company or any of its Subsidiaries and such judgments remain undischarged, unpaid or unstayed for a period of 60 days after such judgment or judgments become final and non-appealable; 63 72 (vii) the Company or any of its Significant Subsidiaries pursuant to or under or within the meaning of any Bankruptcy Law: (a) commences a voluntary case or proceeding; (b) consents to the entry of an order for relief against it in an involuntary case or proceeding; (c) consents to the appointment of a Custodian of it or for all or substantially all of its property; (d) makes a general assignment for the benefit of its creditors; or (e) shall generally not pay its debts when such debts become due or shall admit in writing its inability to pay its debts generally; (viii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (a) is for relief against the Company or any Significant Subsidiary of the Company in an involuntary case or proceeding; (b) appoints a Custodian of the Company or any Significant Subsidiary of the Company for all or substantially all of its properties; or (c) orders the liquidation of the Company or any Significant Subsidiary of the Company, and in each case the order or decree remains unstayed and in effect for 60 consecutive days; or (ix) any of the Guarantees ceases to be in full force and effect or any of the Guarantees is declared to be null and void or any of the Guarantees is found to be invalid or unenforceable or any of the Subsidiary Guarantors denies or disaffirms its liability under its Guarantee (other than by reason of the release of a Subsidiary Guarantor in accordance with the terms of this Indenture). SECTION 6.02. Acceleration. (a) Upon the happening of an Event of Default specified in Section 6.01 (other than an Event of Default specified in clause (vii) or (viii) of Section 6.01), the Trustee or the holders of at least 25% in principal amount of outstanding Notes may declare the principal of and accrued interest on all the Notes to be due and payable by notice in writing to the Company and the Trustee specifying the respective Event of Default and that such notice is a "notice of 64 73 acceleration" (the "Acceleration Notice"), and the same shall become immediately due and payable provided that if there are any amounts outstanding under the Credit Agreement, such principal of and interest on the Notes shall become due and payable upon the first to occur of an acceleration under the Credit Agreement or five business days after receipt by the Company and the Representative under the Credit Agreement of such Acceleration Notice, unless the Event or Events of Default specified in such Acceleration Notice (other than any Event of Default in respect of non-payment of principal) shall have been cured or waived in writing. If an Event of Default specified in clause (vii) or (viii) of Section 6.01 occurs and is continuing, then all unpaid principal of, and premium, if any, and accrued and unpaid interest on all of the outstanding Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. (b) At any time after a declaration of acceleration with respect to the Notes as described in the preceding paragraph, the Holders of a majority in aggregate principal amount of the Notes then outstanding by written notice to the Company and the Trustee may rescind and cancel such declaration and its consequences (i) if the rescission would not conflict with any judgment or decree, (ii) if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of such acceleration, (iii) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid, (iv) if the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee for its expenses, disbursements and advances and (v) in the event of the cure or waiver of an Event of Default of the type described in clause (vii) or (viii) of Section 6.01, the Trustee shall have received an Officers' Certificate and an Opinion of Counsel that such Event of Default has been cured or waived. No such rescission shall affect any subsequent Default or impair any right consequent thereto. SECTION 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of the principal of, premium, if any, or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. All rights of action and claims under this Indenture or the Notes may be enforced by the Trustee even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law. 65 74 SECTION 6.04. Waiver of Past Defaults. Prior to the declaration of acceleration of the Notes, the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may, on behalf of the Holders of all the Notes, waive any existing Default or Event of Default and its consequences under this Indenture, except a Default or Event of Default specified in Section 6.01(i) or (ii) or in respect of any provision hereof which cannot be modified or amended without the consent of the Holder so affected pursuant to Section 9.02. When a Default or Event of Default is so waived, it shall be deemed cured and shall cease to exist. This Section 6.04 shall be in lieu of Section 316(a)(1)(B) of the TIA and such Section 316(a)(1)(B) of the TIA is hereby expressly excluded from this Indenture and the Notes, as permitted by the TIA. SECTION 6.05. Control by Majority. Subject to Section 9.02, the Holders of the Notes may not enforce this Indenture or the Notes except as provided in this Article Six and under the TIA. The Holders of not less than a majority in aggregate principal amount of the outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, provided, however, that the Trustee may refuse to follow any direction (a) that conflicts with any rule of law or this Indenture, (b) that the Trustee determines may be unduly prejudicial to the rights of another Holder, or (c) that may expose the Trustee to personal liability for which reasonable indemnity provided to the Trustee against such liability shall be inadequate; provided, further, however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction or this Indenture. SECTION 6.06. Limitation on Suits. A Holder may not pursue any remedy with respect to this Indenture or the Notes unless: (1) the Holder gives to the Trustee notice of a continuing Event of Default; (2) Holders of at least 25% in aggregate principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (3) such Holders offer to the Trustee indemnity or security against any loss, liability or expense to be incurred in compliance with such request which is satisfactory to the Trustee; (4) the Trustee does not comply with the request within 45 days after receipt of the request and the offer of satisfactory indemnity or security; and 66 75 (5) during such 45-day period the Holders of a majority in aggregate principal amount of the then outstanding Notes do not give the Trustee a direction which, in the opinion of the Trustee, is inconsistent with the request. A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over such other Holder. SECTION 6.07. Right of Holders To Receive Payment. Notwithstanding any other provision in this Indenture, the right of any Holder of a Note to receive payment of the principal of, premium, if any, and interest on such Note, on or after the respective due dates expressed or provided for in such Note, or to bring suit for the enforcement of any such payment on or after the respective due dates, is absolute and unconditional and shall not be impaired or affected without the consent of the Holder. SECTION 6.08. Collection Suit by Trustee. If an Event of Default specified in clause (i) or (ii) of Section 6.01 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company, or any other obligor on the Notes for the whole amount of the principal of, premium, if any, and accrued interest remaining unpaid, together with interest on overdue principal and, to the extent that payment of such interest is lawful, interest on overdue installments of interest, in each case at the rate per annum provided for by the Notes and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents, counsel, accountants and experts) and the Holders allowed in any judicial proceedings relative to the Company or Subsidiaries (or any other obligor upon the Notes), their creditors or their property and shall be entitled and empowered to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same, and any Custodian in any such judicial proceedings is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agent and counsel, and any other amounts due the Trustee under Section 7.07. The Company's payment obligations under this 67 76 Section 6.09 shall be secured in accordance with the provisions of Section 7.07. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.10. Priorities. If the Trustee collects any money pursuant to this Article Six it shall pay out such money in the following order: First: to the Trustee for amounts due under Section 7.07; Second: to Holders for interest accrued on the Notes, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for interest; Third: to Holders for the principal amounts (including any premium) owing under the Notes, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for the principal (including any premium); and Fourth: the balance, if any, to the Company. The Trustee, upon prior written notice to the Company, may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court may in its discretion require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to any suit by the Trustee, any suit by a Holder pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in aggregate principal amount of the outstanding Notes. SECTION 6.12. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture or any Note and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every 68 77 such case the Company, the Trustee and the Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. ARTICLE SEVEN TRUSTEE SECTION 7.01. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee may exercise such of the rights and powers vested in it by this Indenture and shall use the same degree of care and skill in its exercise thereof as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (1) The Trustee need perform only those duties as are specifically set forth in this Indenture and no duties, covenants or obligations of the Trustee shall be implied in this Indenture. (2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) Notwithstanding anything to the contrary herein contained, the Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) This paragraph does not limit the effect of paragraph (b) of this Section 7.01. (2) The Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (3) The Trustee shall not be liable with respect to any action it takes or omits to 69 78 take in good faith in accordance with a direction received by it pursuant to Section 6.02, 6.04 or 6.05. (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (e) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01 and Section 7.02. (f) The Trustee shall not be liable for interest on any money or assets received by it except as the Trustee may agree in writing with the Company. Assets held in trust by the Trustee need not be segregated from other assets except to the extent required by law. (g) The Trustee may refuse to perform any duty or exercise any right or power hereunder unless (i) it is provided adequate funds to enable it to do so and (ii) it receives indemnity reasonably satisfactory to it against any loss, liability, fee or expense. SECTION 7.02. Rights of Trustee. Subject to Section 7.01: (a) The Trustee may rely and shall be fully protected in acting or refraining from acting upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not and shall not be required to investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may consult with counsel of its selection and may require an Officers' Certificate or an Opinion of Counsel, or both, which shall conform to Sections 13.04 and 13.05. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action that it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers. (e) The Trustee shall not be bound to make any investigation into the facts or matters 70 79 stated in any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond, debenture, or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled, upon reasonable notice to the Company, to examine the books, records, and premises of the Company, personally or by agent or attorney and to consult with the officers and representatives of the Company, including the Company's accountants and attorneys. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities which may be incurred by it in compliance with such request, order or direction. (g) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder. (h) Delivery of reports, information and documents to the Trustee under Section 4.08 is for informational purposes only and the Trustee's receipt of the foregoing shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of their covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). SECTION 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company, any of their Subsidiaries, or their respective Affiliates with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, and it shall not be accountable for the Company's use of the proceeds from the Notes, and it shall not be responsible for any statement of the Company in this Indenture or any document entered into or issued in connection with the issuance and sale of the Notes or any statement in the Notes other than the Trustee's certificate of authentication. SECTION 7.05. Notice of Default. If a Default or an Event of Default occurs and is continuing and if it is known to a Trust 71 80 Officer, the Trustee shall mail to each Holder notice of the uncured Default or Event of Default within 90 days after obtaining knowledge thereof. Except in the case of a Default or an Event of Default in payment of principal of, or interest on, any Note, including an accelerated payment, a Default in payment on the Change of Control Payment Date pursuant to a Change of Control Offer or on the Net Proceeds Offer Payment Date pursuant to a Net Proceeds Offer and a Default in compliance with Article Five hereof, the Trustee may withhold the notice if and so long as its Board of Directors, the executive committee of its Board of Directors or a committee of its directors and/or Trust Officers in good faith determines that withholding the notice is in the interest of the Holders. The foregoing sentence of this Section 7.05 shall be in lieu of the proviso to Section 315(b) of the TIA and such proviso to Section 315(b) of the TIA is hereby expressly excluded from this Indenture and the Notes, as permitted by the TIA. SECTION 7.06. Reports by Trustee to Holders. Within 60 days after June 1 of each year beginning with 1998, the Trustee shall, to the extent that any of the events described in TIA Section 313(a) occurred within the previous twelve months, but not otherwise, mail to each Holder a brief report dated as of such date that complies with TIA Section 313(a). The Trustee also shall comply with TIA Sections 313(b), (c) and (d). A copy of each report at the time of its mailing to Holders shall be mailed to the Company and filed with the Commission and each stock exchange, if any, on which the Notes are listed. The Company shall promptly notify the Trustee if the Notes become listed on any stock exchange and the Trustee shall comply with TIA Section 313(d). SECTION 7.07. Compensation and Indemnity. The Company shall pay to the Trustee from time to time such compensation for its services as has been agreed to by the Company and the Trustee. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket disbursements, advances or expenses incurred or made by it in connection with the performance of its duties under this Indenture. Such expenses shall include the reasonable fees and expenses of the Trustee's agents, counsel, accountants and experts. The Company shall indemnify each of the Trustee (or any predecessor Trustee) and its agents, employees, stockholders, Affiliates and directors and officers for, and hold them each harmless against, any and all loss, liability, damage, claim or expense (including reasonable fees and expenses of counsel), including taxes (other than taxes based on the income of the Trustee) incurred by any of them except for such actions to the extent caused by any negligence, bad faith or willful misconduct on their part, arising out of or in connection with the acceptance or 72 81 administration of this trust including the reasonable costs and expenses of defending themselves against any claim or liability in connection with the exercise or performance of any of their rights, powers or duties hereunder. The Trustee shall notify the Company promptly of any claim asserted against the Trustee for which it may seek indemnity, provided, however, that failure to so notify the Company shall not release the Company of its obligations hereunder unless and to the extent such failure results in the forfeiture by the Company of substantial rights and defenses. At the Trustee's sole discretion, the Company shall defend the claim and the Trustee shall cooperate and may participate in the defense; provided, however, that any settlement of a claim shall be approved in writing by the Trustee, such approval not to be unreasonably withheld. Alternatively, the Trustee may at its option have separate counsel of its own choosing and the Company shall pay the reasonable fees and expenses of such counsel. To secure the Company's payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Notes on all assets or money held or collected by the Trustee, in its capacity as Trustee, except assets or money held in trust to pay principal of or premium, if any, or interest on particular Notes, provided that nothing herein shall affect the operation of Section 6.10 First hereunder. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(vii) or (viii) occurs, such expenses and the compensation for such services are intended to constitute expenses of administration under any Bankruptcy Law. The provisions of this Section 7.07 shall survive the termination of this Indenture or the resignation or removal of the Trustee. SECTION 7.08. Replacement of Trustee. The Trustee may resign at any time by so notifying the Company in writing at least 30 days in advance of such resignation; provided, however, that no such resignation shall be effective until a successor Trustee has accepted its appointment pursuant to this Section 7.08. The Holders of a majority in principal amount of the outstanding Notes may remove the Trustee and appoint a successor Trustee with the Company's consent, by so notifying the Company and the Trustee. The Company may remove the Trustee if: (1) the Trustee fails to comply with Section 7.10; (2) the Trustee is adjudged bankrupt or insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting. 73 82 If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall notify each Holder of such event and shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in aggregate principal amount of the outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided in Section 7.07, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail notice of such successor Trustee's appointment to each Holder. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least 10% in aggregate principal amount of the outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 7.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Notwithstanding any resignation or replacement of the Trustee pursuant to this Section 7.08, the Company's obligations under Section 7.07 shall continue for the benefit of the retiring Trustee. SECTION 7.09. Successor Trustee by Merger, Etc. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the resulting, surviving or transferee corporation without any further act shall, if such resulting, surviving or transferee corporation is otherwise eligible hereunder, be the successor Trustee; provided, however, that such corporation shall be otherwise qualified and eligible under this Article Seven. SECTION 7.10. Eligibility; Disqualification. This Indenture shall always have a Trustee who satisfies the requirement of TIA Sections 310(a)(1), (2) and (5). The Trustee (or, in the case of a Trustee that is a corporation included in a bank holding company system, the related bank holding company) shall have a combined capital and surplus of at least $50 million as set forth in its most recent published annual report of condition, and have a Corporate Trust Office in the City of New York. In addition, if the Trustee is a corporation included in a bank holding company system, the Trustee, independently of such 74 83 bank holding company, shall meet the capital requirements of TIA Section 310(a)(2). The Trustee shall comply with TIA Section 310(b); provided, however, that there shall be excluded from the operation of TIA Section 310(b)(1) any indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding, if the requirements for such exclusion set forth in TIA Section 310(b)(1) are met. The provisions of TIA Section 310 shall apply to the Company, as obligor of the Notes. SECTION 7.11. Preferential Collection of Claims Against the Company. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. The provisions of TIA Section 311 shall apply to the Company, as obligor of the Notes. ARTICLE EIGHT DISCHARGE OF INDENTURE; DEFEASANCE SECTION 8.01. Termination of Company's Obligations. This Indenture will be discharged and will cease to be of further effect (except as to surviving rights of registration of transfer or exchange of the Notes, as expressly provided for in this Indenture) as to all outstanding Notes when (i) either (a) all Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust) have been delivered to the Trustee for cancellation or (b) all Notes not theretofore delivered to the Trustee for cancellation have become due and payable and the Company has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on the Notes to the date of deposit together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be; (ii) the Company has paid all other sums payable under this Indenture by the Company; and (iii) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel stating that all conditions precedent under this Indenture relating to the satisfaction and discharge of this Indenture have been complied with. The Company may, at its option and at any time, elect to have its obligations and the 75 84 corresponding obligations of the Subsidiary Guarantors discharged with respect to the outstanding Notes ("Legal Defeasance"). Such Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the outstanding Notes, except for (i) the rights of Holders to receive payments, solely from the trust fund created under this Section 8.01, in respect of the principal of, premium, if any, and interest on the Notes when such payments are due, (ii) the Company's obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payments, (iii) the rights, powers, trust, duties and immunities of the Trustee and the Company's obligations in connection therewith including, but not limited to, those contained in Section 7.07 and (iv) the Legal Defeasance provisions of this Section 8.01. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company and its Restricted Subsidiaries released with respect to covenants contained in Sections 4.10 through 4.22 and Article Five ("Covenant Defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Notes. In the event of Covenant Defeasance, those events described under Section 6.01 (except those events described in Section 6.01(i),(ii),(vii) and (viii)) will no longer constitute an Event of Default with respect to the Notes. In order to exercise either Legal Defeasance or Covenant Defeasance: (i) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders cash in United States dollars, non-callable U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the Notes on the stated date for payment thereof or on the applicable Redemption Date, as the case may be; (ii) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that (w) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (x) since the date of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax 76 85 on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or insofar as Events of Default under Section 6.01(vii) or (viii) are concerned, at any time in the period ending on the 91st day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under this Indenture or any other material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (vi) the Company shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others; (vii) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance, as the case may be, have been complied with; (viii) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that (A) the trust funds will not be subject to any rights of holders of Indebtedness of the Company other than the Notes and (B) after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; and (ix) certain other customary conditions precedent are satisfied. SECTION 8.02. Application of Trust Money. The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or U.S. Government Obligations deposited with it pursuant to Section 8.01, and shall apply the deposited U.S. Legal Tender and the money from U.S. Government Obligations in accordance with this Indenture to the payment of the principal of and interest on the Notes. The Trustee shall be under no obligation to invest said U.S. Legal Tender or U.S. Government Obligations except as it may agree in writing with the Company. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Legal Tender or U.S. Government Obligations deposited pursuant to Section 8.01 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of outstanding Notes. 77 86 SECTION 8.03. Repayment to the Company. Subject to Section 8.01, the Trustee and the Paying Agent shall promptly pay to the Company upon request any excess U.S. Legal Tender or U.S. Government Obligations held by them at any time and thereupon shall be relieved from all liability with respect to such money. The Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for one year; provided, however, that the Trustee or such Paying Agent, before being required to make any payment, may at the expense of the Company cause to be published once in a newspaper of general circulation in the City of New York or mail to each Holder entitled to such money notice that such money remains unclaimed and that after a date specified therein which shall be at least 30 days from the date of such publication or mailing any unclaimed balance of such money then remaining will be repaid to the Company. After payment to the Company, Holders entitled to such money must look to the Company for payment as general creditors unless an applicable law designates another Person. SECTION 8.04. Reinstatement. If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender or U.S. Government Obligations in accordance with Section 8.01 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.01 until such time as the Trustee or Paying Agent is permitted to apply all such U.S. Legal Tender or U.S. Government Obligations in accordance with Section 8.01; provided, however, that if the Company has made any payment of interest on or principal of any Notes because of the reinstatement of their obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the U.S. Legal Tender or U.S. Government Obligations held by the Trustee or Paying Agent. SECTION 8.05. Acknowledgment of Discharge by Trustee. After (i) the conditions of Section 8.01 have been satisfied, (ii) the Company has paid or caused to be paid all other sums payable hereunder by the Company and (iii) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent referred to in clause (i) above relating to the satisfaction and discharge of this Indenture have been complied with, the Trustee upon request shall acknowledge in writing the discharge of the Company's obligations under this Indenture except for those surviving obligations specified in Section 8.01; provided the legal counsel delivering such Opinion of Counsel may rely as to matters of fact on one or more Officers' Certificates of the Company. 78 87 ARTICLE NINE MODIFICATION OF THE INDENTURE SECTION 9.01. Without Consent of Holders. Notwithstanding Section 9.02, the Company, the Subsidiary Guarantors and the Trustee may amend, waive or supplement this Indenture without notice to or consent of any Holder: (a) to cure any ambiguity, defect or inconsistency, so long as such change does not, in the opinion of the Trustee, adversely affect the rights of any of the Holders in any material respect; (b) to comply with Article V of this Indenture; (c) to provide for uncertificated Notes in addition to certificated Notes; (d) to comply with any requirements of the Commission in order to effect or maintain the qualification of this Indenture under the TIA; or (e) to make any other change that would provide any additional benefit or rights to the Holders or that does not adversely affect in any material respect the rights of any of the Holders; provided, however, that the Company has delivered to the Trustee an Opinion of Counsel and an Officers' Certificate, each stating that such amendment or supplement complies with the provisions of this Section 9.01. In formulating its opinion on such matters, the Trustee will be entitled to rely on such evidence as it deems appropriate, including, without limitation, solely on an Opinion of Counsel. SECTION 9.02. With Consent of Holders. All other modifications, waivers and amendments of this Indenture may be made with the consent of the Holders of a majority in principal amount of the then outstanding Notes, except that, without the consent of each Holder of the Notes affected thereby, no amendment or waiver may: (i) reduce the amount of Notes whose Holders must consent to an amendment; (ii) reduce the rate of or change or have the effect of changing the time for payment of interest, including defaulted interest, on any Notes; (iii) reduce the principal of or change or have the effect of changing the fixed maturity of any Notes, or change the date on which any Notes may be subject to redemption or repurchase, or reduce the redemption or repurchase price therefor; (iv) make any Notes payable in money other than that stated in the Notes; (v) make any change in provisions of this Indenture protecting the right of each Holder to receive payment of principal of and interest on such Note on or after the due date thereof or to bring suit to enforce such payment, or permitting Holders of a majority in principal amount of Notes to waive Defaults or Events of Default; (vi) amend, change or modify in any material respect the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control or make and consummate a Net Proceeds Offer with respect to any Asset Sale that has been consummated or modify any of the provisions or definitions with respect thereto; (vii) modify or change any provision of this Indenture or the related definitions affecting the subordination or ranking of the Notes or any Guarantee in a manner which adversely affects the Holders; or (viii) release any Subsidiary Guarantor from any of its obligations under its Guarantee or this Indenture other than in accordance with the terms of this Indenture. 79 88 After an amendment, supplement or waiver under this Section 9.02 becomes effective (as provided in Section 9.04), the Company shall mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 9.03. Compliance with TIA. Every amendment, waiver or supplement of this Indenture or the Notes shall comply with the TIA as then in effect; provided, however, that this Section 9.03 shall not of itself require that this Indenture or the Trustee be qualified under the TIA or constitute any admission or acknowledgment by any party hereto that any such qualification is required prior to the time this Indenture and the Trustee are required by the TIA to be so qualified. SECTION 9.04. Revocation and Effect of Consents. Until an amendment, waiver or supplement becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. Subject to the following paragraph, any such Holder or subsequent Holder may revoke the consent as to such Holder's Note or portion of such Note by notice to the Trustee or the Company received before the date on which the Trustee receives an Officers' Certificate certifying that the Holders of the requisite principal amount of Notes have consented (and not theretofore revoked such consent) to the amendment, supplement or waiver. An amendment, supplement or waiver becomes effective upon receipt by the Trustee of such Officers' Certificate and evidence of consent by the Holders of the requisite percentage in principal amount of outstanding Notes. The Company may, but shall not be obligated to, fix a Record Date for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver, which Record Date shall be at least 30 days prior to the first solicitation of such consent. If a Record Date is fixed, then notwithstanding the second sentence of the immediately preceding paragraph, those Persons who were Holders at such Record Date (or their duly designated proxies), and only those Persons, shall be entitled to revoke any consent previously given, whether or not such Persons continue to be Holders after such Record Date. No such consent shall be valid or effective for more than 90 days after such Record Date unless consents from Holders of the requisite percentage in principal amount of outstanding Notes required hereunder for the effectiveness of such consents shall have also been given and not revoked within such 90 day period. SECTION 9.05. Notation on or Exchange of Notes. 80 89 If an amendment, supplement or waiver changes the terms of a Note, the Trustee may require the Holder of such Note to deliver it to the Trustee. The Trustee may place an appropriate notation on the Note about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determine, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. SECTION 9.06. Trustee To Sign Amendments, Etc. The Trustee shall execute any amendment, supplement or waiver authorized pursuant to this Article Nine; provided, however, that the Trustee may, but shall not be obligated to, execute any such amendment, supplement or waiver which affects the Trustee's own rights, duties or immunities under this Indenture. In executing such supplement or waiver the Trustee shall be entitled to receive indemnity reasonably satisfactory to it, and shall be fully protected in relying upon an Opinion of Counsel and an Officers' Certificate of the Company, stating that no event of default shall occur as a result of such amendment, supplement or waiver and that the execution of any amendment, supplement or waiver authorized pursuant to this Article Nine is authorized or permitted by this Indenture; provided the legal counsel delivering such Opinion of Counsel may rely as to matters of fact on one or more Officers' Certificates of the Company. Such Opinion of Counsel shall not be an expense of the Trustee. SECTION 9.07. Trustee To Sign Consents. The Trustee shall at the request of the Company execute a consent or approval of any merger, consolidation or sale of assets pursuant to Article Five if and to the extent such consent or approval is required by applicable law; provided, however, that the Trustee may, but shall not be obligated to, execute any such consent or approval which affects the Trustee's own rights, duties or immunities under this Indenture. In executing such approval or consent the Trustee will receive indemnity reasonably satisfactory to it, and shall be fully protected in relying upon an Opinion of Counsel and an Officers' Certificate of the Company, stating that no event of default shall occur as a result of such consent or approval, that no Holder consent is required with respect to such merger, consolidation or sale of assets and that the execution of any consent or approval authorized pursuant to this Article Nine is authorized or permitted by this Indenture; provided, the legal counsel delivering such Opinion of Counsel may rely as to matters of fact on one or more Officers' Certificates of the Company. Such Opinion of Counsel shall not be an expense of the Trustee. ARTICLE TEN SUBORDINATION SECTION 10.01. Notes Subordinated to Senior Indebtedness. 81 90 The Company, for itself and its successors, covenants and agrees, and each Holder of the Notes, by its acceptance thereof, likewise covenants and agrees, that all Notes shall be subject to the provisions of this Article Ten; and the Company and each Person holding any Note, whether upon original issue or upon transfer, assignment or exchange thereof, accepts and agrees that the payment of all Obligations on the Notes by the Company shall, to the extent and in the manner herein set forth, be subordinated and junior in right of payment to the prior payment and satisfaction in full in cash or Cash Instruments of all Obligations on Senior Indebtedness, including, without limitation, the Company's obligations under the Credit Agreement; that the subordination is for the benefit of, and shall be enforceable directly by, the holders of Senior Indebtedness, and that each holder of Senior Indebtedness whether now outstanding or hereafter created, incurred, assumed or guaranteed shall be deemed to have acquired Senior Indebtedness in reliance upon the covenants and provisions contained in this Indenture and the Notes. SECTION 10.02 Suspension of Payment When Senior Indebtedness is in Default. (a) No direct or indirect payment by or on behalf of the Company of Obligations on the Notes whether pursuant to the terms of the Notes or upon acceleration or otherwise shall be made if, at the time of such payment, there exists a default in the payment of all or any portion of principal of, premium, if any, or interest on, any Designated Senior Indebtedness (and the Trustee has received written notice thereof), and such default shall not have been cured or waived in writing or the benefits of this sentence waived in writing by or on behalf of the holders of such Designated Senior Indebtedness. In addition, if any other event of default occurs and is continuing with respect to any Designated Senior Indebtedness, as such event of default is defined in the instrument creating or evidencing such Designated Senior Indebtedness, permitting the holders of such Designated Senior Indebtedness then outstanding to accelerate the maturity thereof and if the Representative for the respective issue of Designated Senior Indebtedness gives notice of the event of default to the Trustee (a "Default Notice"), then, unless and until all events of default have been cured or waived in writing or have ceased to exist or the Trustee receives notice thereof from the Representative for the respective issue of Designated Senior Indebtedness terminating the Blockage Period (as defined below), during the 180 days after the delivery of such Default Notice (the "Blockage Period"), neither the Company nor any other Person on its behalf shall (x) make any payment of any kind or character with respect to any Obligations on the Notes or (y) acquire any of the Notes for cash or property or otherwise. Notwithstanding anything herein to the contrary, in no event will a Blockage Period extend beyond 180 days from the date the payment on the Notes was due and only one such Blockage Period may be commenced within any 360 consecutive days. No event of default which existed or was continuing on the date of the commencement of any Blockage Period with respect to the Designated Senior Indebtedness shall be, or be made, the basis for commencement of a second Blockage Period by the Representative of such Designated Senior Indebtedness whether or not within a period of 360 consecutive days, unless such event of default shall have been cured or waived in writing for a period of not less 82 91 than 90 consecutive days (it being acknowledged that any subsequent action, or any breach of any of the financial covenants for a new accounting period commencing after the date of such Blockage Period that, in either case, would give rise to an event of default pursuant to any provisions under which an event of default previously existed or was continuing shall constitute a new event of default for this purpose). (b) In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee or any Holder when such payment is prohibited by Section 10.02(a), such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness (pro rata to such holders on the basis of the respective amounts of Senior Indebtedness held by such holders) or their respective Representatives upon written instruction of the Company or a court of competent jurisdiction. The Trustee shall be entitled to rely on written information regarding amounts then due and owing on the Senior Indebtedness, if any, received from the Company and only amounts included in the information provided to the Trustee shall be paid to the holders of Senior Indebtedness. Nothing contained in this Article Ten shall limit the right of the Trustee or the Holders of Notes to take any action to accelerate the maturity of the Notes pursuant to Section 6.02 or to pursue any rights or remedies hereunder; provided that all Senior Indebtedness thereafter due or declared to be due shall first be paid in full in cash or Cash Instruments before the Holders are entitled to receive any payment of any kind or character with respect to Obligations on the Notes. SECTION 10.03. Notes Subordinated to Prior Payment of All Senior Indebtedness on Dissolution, Liquidation or Reorganization of Company. Upon any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities to creditors upon any liquidation, dissolution, winding up, reorganization, assignment for the benefit of creditors or marshaling of assets of the Company, whether voluntary or involuntary, or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding relating to the Company or its property, whether voluntary or involuntary: (a) the holders of all Senior Indebtedness shall first be entitled to receive payments in full in cash or Cash Instruments, or such payment duly provided for to the satisfaction of the holders of Senior Indebtedness, of all amounts payable under Senior Indebtedness before the Holders will be entitled to receive any payment or distribution of any kind or character on account of any Notes or for the acquisition of any of the Notes for cash or property or otherwise, and until all Obligations with respect to the Senior Indebtedness are paid in full in cash or Cash Instruments, or such payment duly provided for to the satisfaction of the holders of Senior Indebtedness, any distribution to which the Holders would be entitled shall be made to the holders 83 92 of Senior Indebtedness; (b) any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders or the Trustee on behalf of the Holders would be entitled except for the provisions of this Article Ten shall be paid by the liquidating trustee or agent or other Person making such a payment or distribution, directly to the holders of Senior Indebtedness or their Representatives, ratably according to the respective amounts of Senior Indebtedness remaining unpaid held or represented by each, until all Senior Indebtedness remaining unpaid shall have been paid in full in cash or Cash Instruments, or such payment duly provided for to the satisfaction of the holders of Senior Indebtedness, after giving effect to any concurrent payment or distribution to the holders of Senior Indebtedness; and (c) in the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether such payment shall be in cash, property or securities, and the Comany shall have made payment to the Trustee or directly to the Holders or any Paying Agent on account of any Obligations under the Notes before all Senior Indebtedness is paid in full in cash or Cash Instruments, or such payment duly provided for to the satisfaction of the holders of Senior Indebtedness, such payment or distribution (subject to the provisions of Sections 10.06 and 10.07) shall be received, segregated from other funds, and held in trust by the Trustee or such Holder or Paying Agent for the benefit of, and shall immediately be paid over by the Trustee (if the notice required by Section 10.06 has been received by the Trustee) or by the Holder to, the holders of Senior Indebtedness or their Representatives, ratably according to the respective amounts of Senior Indebtedness held or represented by each, until all Senior Indebtedness remaining unpaid shall have been paid in full in cash or Cash Instruments, or such payment duly provided for to the satisfaction of the holders of Senior Indebtedness, after giving effect to any concurrent payment or distribution to the holders of Senior Indebtedness. (d) The consolidation of the Company with, or the merger of the Company with or into, another corporation or the liquidation or dissolution of the Company following the conveyance or transfer of all or substantially all of its assets, to another corporation upon the terms and conditions provided in Article Five hereof and as long as permitted under the terms of the Senior Indebtedness shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, assume the Company's obligations hereunder in accordance with Article Five hereof. The Company shall give prompt notice to the Trustee prior to any dissolution, winding-up, total or partial liquidation or total or reorganization (including, without limitation, in bankruptcy, insolvency, or receivership proceedings or upon any assignment for the benefit of creditors or any other marshaling of the Company's assets and liabilities). 84 93 SECTION 10.04. Holders To Be Subrogated to Rights of Holders of Senior Indebtedness. Subject to the payment and satisfaction in full in cash or Cash Instruments of all Senior Indebtedness, the Holders of the Notes shall be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company applicable to the Senior Indebtedness until the Notes shall be paid in full; and, for the purposes of such subrogation, no such payments or distributions to the holders of the Senior Indebtedness by or on behalf of the Company or by or on behalf of the Holders by virtue of this Article Ten which otherwise would have been made to the Holders shall, as between the Company and the Holders of the Notes, be deemed to be a payment by the Company to or on account of the Senior Indebtedness, it being understood that the provisions of this Article Ten are and are intended solely for the purpose of defining the relative rights of the Holders of the Notes, on the one hand, and the holders of the Senior Indebtedness, on the other hand. SECTION 10.05. Obligations of the Company Unconditional. Nothing contained in this Article Ten or elsewhere in this Indenture or in the Notes is intended to or shall impair, as between the Company and the Holders, the obligation of the Company, which is absolute and unconditional, to pay to the Holders the principal of and interest on the Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Company other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article Ten of the holders of Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy. Upon any payment or distribution of assets or securities of the Company referred to in this Article Ten, the Trustee, subject to the provisions of Sections 7.01 and 7.02, and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any liquidation, dissolution, winding-up or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidating trustee or agent or other Person making any payment or distribution to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of Senior Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Ten. Nothing in this Article Ten shall apply to the claims of, or payments to, the Trustee under or pursuant to Section 7.07. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of any Senior Indebtedness (or a trustee on behalf of, or other representative of, such holder) to establish that such notice has been given by a holder of such Senior Indebtedness or a trustee or representative on behalf of any such holder. 85 94 In the event that the Trustee determines in good faith that any evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article Ten, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article Ten, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 10.06. Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice. The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Notes pursuant to the provisions of this Article Ten. Regardless of anything to the contrary contained in this Article Ten or elsewhere in this Indenture, the Trustee shall not be charged with knowledge of the existence of any default or event of default with respect to any Senior Indebtedness or of any other facts which would prohibit the making of any payment to or by the Trustee unless and until a Trust Officer shall have received notice in writing from the Company, or from a holder of Senior Indebtedness or a Representative therefor, together with proof satisfactory to the Trustee of such holding of Senior Indebtedness or of the authority of such Representative, and, prior to the receipt of any such written notice, the Trustee shall be entitled to assume (in the absence of actual knowledge to the contrary) that no such facts exist. SECTION 10.07. Application by Trustee of Assets Deposited with It. U.S. Legal Tender or U.S. Government Obligations deposited in trust with the Trustee pursuant to and in accordance with Sections 8.01 and 8.02 shall be for the sole benefit of the Holders of the Notes and, to the extent allocated for the payment of Notes, shall not be subject to the subordination provisions of this Article Ten. Otherwise, any deposit of assets or securities by or on behalf of the Company with the Trustee or any Paying Agent (whether or not in trust) for the payment of principal of or interest on any Notes shall be subject to the provisions of this Article Ten; provided, however, that if prior to the second Business Day preceding the date on which by the terms of this Indenture any such assets may become distributable for any purpose (including, without limitation, the payment of either principal of or interest on any Note) the Trustee or such Paying Agent shall not have received with respect to such assets the notice provided for in Section 10.06, then the Trustee or such Paying Agent shall have full power and authority to receive such assets and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary received by it on or after such 86 95 date. The foregoing shall not apply to the Paying Agent if the Company or any Subsidiary or Affiliate of the Company is acting as Paying Agent. Nothing contained in this Section 10.07 shall limit the right of the holders of Senior Indebtedness to recover payments as contemplated by this Article Ten. SECTION 10.08. No Waiver of Subordination Provisions. (a) No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act by any such holder, or by any non-compliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with. (b) Without limiting the generality of subsection (a) of this Section 10.08, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Notes, without incurring responsibility to the Holders of the Notes and without impairing or releasing the subordination provided in this Article Ten or the obligations hereunder of the Holders of the Notes to the holders of Senior Indebtedness, do any one or more of the following: (1) change the manner, place, terms or time of payment of, or renew or alter, Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding; (2) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (3) release any Person liable in any manner for the collection or payment of Senior Indebtedness; and (4) exercise or refrain from exercising any rights against the Company and any other Person. SECTION 10.09. Holders Authorize Trustee To Effectuate Subordination of Notes. Each Holder of the Notes by such Holder's acceptance thereof authorizes and expressly directs the Trustee on his behalf to take such action as may be necessary or appropriate to effect the subordination provisions contained in this Article Ten, and appoints the Trustee such Holder's attorney-in-fact for such purpose, including, in the event of any liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets of the Company tending towards liquidation or reorganization of the business and assets of the Company, the immediate filing of a claim for the unpaid balance of such Holder's Notes in the form required in said proceedings and cause said claim to be approved. If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claim or claims, then any of the holders of the Senior Indebtedness or their Representative is hereby authorized to file an appropriate claim for and on behalf of the Holders of said Notes. Nothing herein contained shall be deemed to authorize the Trustee or the holders 87 96 of Senior Indebtedness or their Representative to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee or the holders of Senior Indebtedness or their Representative to vote in respect of the claim of any Holder in any such proceeding. SECTION 10.10. Right of Trustee to Hold Senior Indebtedness. The Trustee and any agent of the Company or the Trustee shall be entitled to all the rights set forth in this Article Ten with respect to any Senior Indebtedness which may at any time be held by it in its individual or any other capacity to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee or any such agent of any of its rights as such holder. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article Ten, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness. Whenever a distribution is to be made or a notice given to holders or owners of Senior Indebtedness, the distribution may be made and the notice may be given to their Representative, if any. SECTION 10.11. This Article Ten Not To Prevent Events of Default. The failure to make a payment on account of principal of or interest on the Notes by reason of any provision of this Article Ten will not be construed as preventing the occurrence of a Default or an Event of Default. Nothing contained in this Article Ten shall limit the right of the Trustee or the Holders of Notes to take any action to accelerate the maturity of the Notes pursuant to Article Six or to pursue any rights or remedies hereunder or under applicable law, subject to the rights, if any, under this Article Ten of the holders, from time to time, of Senior Indebtedness. SECTION 10.12. No Fiduciary Duty of Trustee to Holders of Senior Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness, and it undertakes to perform or observe such of its covenants and obligations as are 88 97 specifically set forth in this Article Ten, and no implied covenants or obligations with respect to the Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be liable to any such holders (other than for its willful misconduct or gross negligence) if it shall pay over or deliver to the Holders of Notes or the Company or any other Person money or assets in compliance with the terms of this Indenture. Nothing in this Section 10.12 shall affect the obligation of any Person other than the Trustee to hold such payment for the benefit of, and to pay such payment over to, the holders of Senior Indebtedness or their Representative. ARTICLE ELEVEN GUARANTEE OF NOTES SECTION 11.01. Unconditional Guarantee. Subject to the provisions of this Article Eleven, each Subsidiary Guarantor hereby, jointly and severally, unconditionally and irrevocably guarantees, on a senior subordinated basis (such guarantee to be referred to herein as a "Guarantee") to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Company or any other Subsidiary Guarantor hereunder or thereunder, that: (a) the principal of, premium, if any, and interest on the Notes (and any Additional Interest payable thereon) shall be duly and punctually paid in full when due, whether at maturity, upon redemption at the option of Holders pursuant to the provisions of the Notes relating thereto, by acceleration or otherwise, and interest on the overdue principal and (to the extent permitted by law) interest, if any, on the Notes and all other obligations of the Company or the Subsidiary Guarantors to the Holders or the Trustee hereunder or thereunder (including amounts due the Trustee under Section 7.07) and all other obligations shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, the same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed, or failing performance of any other obligation of the Company to the Holders under this Indenture or under the Notes, for whatever reason, each Subsidiary Guarantor shall be obligated to pay, or to perform or cause the performance of, the same immediately. An Event of Default under this Indenture or the Notes shall constitute an event of default under this Guarantee, and shall entitle the Holders of Notes to accelerate the obligations of the Subsidiary Guarantors hereunder in the same manner and to the same extent as the obligations of the Company. Each of the Subsidiary Guarantors hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, any release of any other Subsidiary 89 98 Guarantor, the recovery of any judgment against the Company, any action to enforce the same, whether or not a Guarantee is affixed to any particular Note, or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Each of the Subsidiary Guarantors hereby waives the benefit of diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that its Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes, this Indenture and this Guarantee. This Guarantee is a guarantee of payment and not of collection. If any Holder or the Trustee is required by any court or otherwise to return to the Company or to any Subsidiary Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to the Company or such Subsidiary Guarantor, any amount paid by the Company or such Subsidiary Guarantor to the Trustee or such Holder, this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Subsidiary Guarantor further agrees that, as between it, on the one hand, and the Holders of Notes and the Trustee, on the other hand, (a) subject to this Article Eleven, the maturity of the obligations guaranteed hereby may be accelerated as provided in Article Six hereof for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (b) in the event of any acceleration of such obligations as provided in Article Six hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Subsidiary Guarantors for the purpose of this Guarantee. No stockholder, officer, director, employee or incorporator, past, present or future, of any Subsidiary Guarantor, as such, shall have any personal liability under this Guarantee by reason of his, her or its status as such stockholder, officer, director, employee or incorporator. Each Subsidiary Guarantor that makes a payment or distribution under its Guarantee shall be entitled to a contribution from each other Subsidiary Guarantor in an amount pro rata, based on the net assets of each Subsidiary Guarantor, determined in accordance with GAAP. SECTION 11.02. Limitations on Guarantees. The obligations of each Subsidiary Guarantor under its Guarantee will be limited to the maximum amount which, after giving effect to all other contingent and fixed liabilities of such Subsidiary Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under its Guarantee or pursuant to its contribution obligations under this Indenture, will result in the obligations of such Subsidiary Guarantor under its Guarantee not constituting a fraudulent conveyance or fraudulent transfer under any laws of the United States, any state of the United States or the District of Columbia. SECTION 11.03. Execution and Delivery of Guarantee. 90 99 To further evidence the Guarantee set forth in Section 11.01, each Subsidiary Guarantor hereby agrees that a notation of such Guarantee, substantially in the form of Exhibit F hereto, shall be endorsed on each Note authenticated and delivered by the Trustee. Such Guarantee shall be executed on behalf of each Subsidiary Guarantor by either manual or facsimile signature of two Officers of each Subsidiary Guarantor, each of whom, in each case, shall have been duly authorized to so execute by all requisite corporate action. The validity and enforceability of any Guarantee shall not be affected by the fact that it is not affixed to any particular Note. Each of the Subsidiary Guarantors hereby agrees that its Guarantee set forth in Section 11.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Guarantee. If an Officer of a Subsidiary Guarantor whose signature is on this Indenture or a Guarantee no longer holds that office at the time the Trustee authenticates the Note on which such Guarantee is endorsed or at any time thereafter, such Subsidiary Guarantor's Guarantee of such Note shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of any Guarantee set forth in this Indenture on behalf of each Subsidiary Guarantor. SECTION 11.04. Release of a Subsidiary Guarantor. (a) If no Default exists or would exist under this Indenture, upon the sale or disposition of all of the Capital Stock of a Subsidiary Guarantor by the Company or a Subsidiary of the Company in a transaction constituting an Asset Sale the Net Cash Proceeds of which are applied in accordance with Section 4.15, or upon the consolidation or merger of a Subsidiary Guarantor with or into any Person in compliance with Article Five (in each case, other than to the Company or an Affiliate of the Company), or if any Subsidiary Guarantor is dissolved or liquidated in accordance with this Indenture, such Subsidiary Guarantor and each Subsidiary of such Subsidiary Guarantor that is also a Subsidiary Guarantor shall be deemed released from all obligations under this Article Eleven without any further action required on the part of the Trustee or any Holder; provided, however, that each such Subsidiary Guarantor is sold or disposed of in accordance with this Indenture. Any Subsidiary Guarantor not so released or the entity surviving such Subsidiary Guarantor, as applicable, shall remain or be liable under its Guarantee as provided in this Article Eleven. (b) The Trustee shall deliver an appropriate instrument evidencing the release of a Subsidiary Guarantor upon receipt of a request by the Company or such Subsidiary Guarantor accompanied by an Officers' Certificate and an Opinion of Counsel certifying as to the compliance with this Section 11.04, provided the legal counsel delivering such Opinion of Counsel may rely as to matters of fact on one or more Officers' Certificates. 91 100 The Trustee shall execute any documents reasonably requested by the Company or a Subsidiary Guarantor in order to evidence the release of such Subsidiary Guarantor from its obligations under its Guarantee endorsed on the Notes and under this Article Eleven. Except as set forth in Articles Four and Five and this Section 11.04, nothing contained in this Indenture or in any of the Notes shall prevent any consolidation or merger of a Subsidiary Guarantor with or into the Company or another Subsidiary Guarantor or shall prevent any sale or conveyance of the property of a Subsidiary Guarantor as an entirety or substantially as an entirety to the Company or another Subsidiary Guarantor. SECTION 11.05. Waiver of Subrogation. Until this Indenture is discharged and all of the Notes are discharged and paid in full, each Subsidiary Guarantor hereby irrevocably waives and agrees not to exercise any claim or other rights which it may now or hereafter acquire against the Company that arise from the existence, payment, performance or enforcement of the Company's obligations under the Notes or this Indenture and such Subsidiary Guarantor's obligations under this Guarantee and this Indenture, in any such instance including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, and any right to participate in any claim or remedy of the Holders against the Company, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Company, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Subsidiary Guarantor in violation of the preceding sentence and any amounts owing to the Trustee or the Holders of Notes under the Notes, this Indenture, or any other document or instrument delivered under or in connection with such agreements or instruments, shall not have been paid in full, such amount shall have been deemed to have been paid to such Subsidiary Guarantor for the benefit of, and held in trust for the benefit of, the Trustee or the Holders and shall forthwith be paid to the Trustee for the benefit of itself or such Holders to be credited and applied to the obligations in favor of the Trustee or the Holders, as the case may be, whether matured or unmatured, in accordance with the terms of this Indenture. Each Subsidiary Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the waiver set forth in this Section 11.05 is knowingly made in contemplation of such benefits. SECTION 11.06. No Set-Off. Each payment to be made by a Subsidiary Guarantor hereunder in respect of the Obligations shall be payable in the currency or currencies in which such Obligations are denominated, and shall be made without set-off, counterclaim, reduction or diminution of any kind or nature. 92 101 SECTION 11.07. Obligations Absolute. The obligations of each Subsidiary Guarantor hereunder are and shall be absolute and unconditional and any monies or amounts expressed to be owing or payable by each Subsidiary Guarantor hereunder which may not be recoverable from such Subsidiary Guarantor on the basis of a Guarantee shall be recoverable from such Subsidiary Guarantor as a primary obligor and principal debtor in respect thereof. SECTION 11.08. Obligations Continuing. The obligations of each Subsidiary Guarantor hereunder shall be continuing and shall remain in full force and effect until all the obligations have been paid and satisfied in full. Each Subsidiary Guarantor agrees with the Trustee that it will from time to time deliver to the Trustee suitable acknowledgments of this continued liability hereunder and under any other instrument or instruments in such form as counsel to the Trustee may advise and as will prevent any action brought against it in respect of any default hereunder being barred by any statute of limitations now or hereafter in force and, in the event of the failure of a Subsidiary Guarantor so to do, it hereby irrevocably appoints the Trustee the attorney and agent of such Subsidiary Guarantor to make, execute and deliver such written acknowledgment or acknowledgments or other instruments as may from time to time become necessary or advisable, in the judgment of the Trustee on the advice of counsel, to fully maintain and keep in force the liability of such Subsidiary Guarantor hereunder. SECTION 11.09. Obligations Not Reduced. The obligations of each Subsidiary Guarantor hereunder shall not be satisfied, reduced or discharged solely by the payment of such principal, premium, if any, interest, fees and other monies or amounts as may at any time prior to discharge of this Indenture pursuant to Article 8 be or become owing or payable under or by virtue of or otherwise in connection with the Notes or this Indenture. SECTION 11.10. Obligations Reinstated. The obligations of each Subsidiary Guarantor hereunder shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment which would otherwise have reduced the obligations of any Subsidiary Guarantor hereunder (whether such payment shall have been made by or on behalf of the Company or by or on behalf of a Subsidiary Guarantor) is rescinded or reclaimed from any of the Holders upon the insolvency, bankruptcy, liquidation or reorganization of the Company or any Subsidiary Guarantor or otherwise, all as though such payment had not been made. If demand for, or acceleration of the time for, payment by the Company is stayed upon the insolvency, bankruptcy, liquidation or reorganization of the Company, all such Indebtedness otherwise subject to demand for payment or acceleration shall 93 102 nonetheless be payable by each Subsidiary Guarantor as provided herein. SECTION 11.11. Obligations Not Affected. The obligations of each Subsidiary Guarantor hereunder shall not be affected, impaired or diminished in any way by any act, omission, matter or thing whatsoever, occurring before, upon or after any demand for payment hereunder (and whether or not known or consented to by any Subsidiary Guarantor or any of the Holders) which, but for this provision, might constitute a whole or partial defense to a claim against any Subsidiary Guarantor hereunder or might operate to release or otherwise exonerate any Subsidiary Guarantor from any of its obligations hereunder or otherwise affect such obligations, whether occasioned by default of any of the Holders or otherwise, including, without limitation: (a) any limitation of status or power, disability, incapacity or other circumstance relating to the Company or any other person, including any insolvency, bankruptcy, liquidation, reorganization, readjustment, composition, dissolution, winding up or other proceeding involving or affecting the Company or any other person; (b) any irregularity, defect, unenforceability or invalidity in respect of any indebtedness or other obligation of the Company or any other person under this Indenture, the Notes or any other document or instrument; (c) any failure of the Company, whether or not without fault on its part, to perform or comply with any of the provisions of this Indenture or the Notes, or to give notice thereof to a Subsidiary Guarantor; (d) the taking or enforcing or exercising or the refusal or neglect to take or enforce or exercise any right or remedy from or against the Company or any other Person or their respective assets or the release or discharge of any such right or remedy; (e) the granting of time, renewals, extensions, compromises, concessions, waivers, releases, discharges and other indulgences to the Company or any other Person; (f) any change in the time, manner or place of payment of, or in any other term of, any of the Notes, or any other amendment, variation, supplement, replacement or waiver of, or any consent to departure from, any of the Notes or this Indenture, including, without limitation, any increase or decrease in the principal amount of or premium, if any, or interest on any of the Notes; 94 103 (g) any change in the ownership, control, name, objects, businesses, assets, capital structure or constitution of the Company or a Subsidiary Guarantor; (h) any merger or amalgamation of the Company or a Subsidiary Guarantor with any Person or Persons; (i) the occurrence of any change in the laws, rules, regulations or ordinances of any jurisdiction by any present or future action of any governmental authority or court amending, varying, reducing or otherwise affecting, or purporting to amend, vary, reduce or otherwise affect, any of the Obligations or the obligations of a Subsidiary Guarantor under its Guarantee; and (j) any other circumstance, including release of the Subsidiary Guarantor pursuant to Section 11.04 (other than by complete, irrevocable payment) that might otherwise constitute a legal or equitable discharge or defense of the Company under this Indenture or the Notes or of a Subsidiary Guarantor in respect of its Guarantee hereunder. SECTION 11.12. Waiver. Without in any way limiting the provisions of Section 11.01 hereof, each Subsidiary Guarantor hereby waives notice of acceptance hereof, notice of any liability of any Subsidiary Guarantor hereunder, notice or proof of reliance by the Holders upon the obligations of any Subsidiary Guarantor hereunder, and diligence, presentment, demand for payment on the Company, protest, notice of dishonor or non-payment of any of the Obligations, or other notice or formalities to the Company or any Subsidiary Guarantor of any kind whatsoever. SECTION 11.13. No Obligation To Take Action Against the Company. Neither the Trustee nor any other Person shall have any obligation to enforce or exhaust any rights or remedies or to take any other steps under any security for the Obligations or against the Company or any other Person or any property of the Company or any other Person before the Trustee is entitled to demand payment and performance by any or all Subsidiary Guarantors of their liabilities and obligations under their Guarantees or under this Indenture. SECTION 11.14. Dealing with the Company and Others. The Holders, without releasing, discharging, limiting or otherwise affecting in whole or in part the obligations and liabilities of any Subsidiary Guarantor hereunder and without the consent of or notice to any Subsidiary Guarantor, may (a) grant time, renewals, extensions, compromises, concessions, waivers, releases, 95 104 discharges and other indulgences to the Company or any other Person; (b) take or abstain from taking security or collateral from the Company or from perfecting security or collateral of the Company; (c) release, discharge, compromise, realize, enforce or otherwise deal with or do any act or thing in respect of (with or without consideration) any and all collateral, mortgages or other security given by the Company or any third party with respect to the obligations or matters contemplated by this Indenture or the Notes; (d) accept compromises or arrangements from the Company; (e) apply all monies at any time received from the Company or from any security upon such part of the Obligations as the Holders may see fit or change any such application in whole or in part from time to time as the Holders may see fit; and (f) otherwise deal with, or waive or modify their right to deal with, the Company and all other Persons and any security as the Holders or the Trustee may see fit. SECTION 11.15. Default and Enforcement. If any Subsidiary Guarantor fails to pay in accordance with Section 11.01 hereof, the Trustee may proceed in its name as trustee hereunder in the enforcement of the Guarantee of any such Subsidiary Guarantor and such Subsidiary Guarantor's obligations thereunder and hereunder by any remedy provided by law, whether by legal proceedings or otherwise, and to recover from such Subsidiary Guarantor the obligations. SECTION 11.16. Amendment, Etc. No amendment, modification or waiver of any provision of this Indenture relating to any Subsidiary Guarantor or consent to any departure by any Subsidiary Guarantor or any other Person from any such provision will in any event be effective unless it is signed by such Subsidiary Guarantor and the Trustee. SECTION 11.17. Acknowledgment. Each Subsidiary Guarantor hereby acknowledges communication of the terms of this Indenture and the Notes and consents to and approves of the same. SECTION 11.18. Costs and Expenses. Each Subsidiary Guarantor shall pay on demand by the Trustee any and all costs, fees 96 105 and expenses (including, without limitation, legal fees) incurred by the Trustee, its agents, advisors and counsel or any of the Holders in enforcing any of their rights under any Guarantee. SECTION 11.19. No Merger or Waiver; Cumulative Remedies. No Guarantee shall operate by way of merger of any of the obligations of a Subsidiary Guarantor under any other agreement, including, without limitation, this Indenture. No failure to exercise and no delay in exercising, on the part of the Trustee or the Holders, any right, remedy, power or privilege hereunder or under this Indenture or the Notes, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or under this Indenture or the Notes preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges in the Guarantee and under this Indenture, the Notes and any other document or instrument between a Subsidiary Guarantor and/or the Company and the Trustee are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. SECTION 11.20. Survival of Obligations. Without prejudice to the survival of any of the other obligations of each Subsidiary Guarantor hereunder, the obligations of each Subsidiary Guarantor under Section 11.01 shall survive the payment in full of the Obligations and shall be enforceable against such Subsidiary Guarantor without regard to and without giving effect to any defense, right of offset or counterclaim available to or which may be asserted by the Company or any Subsidiary Guarantor. SECTION 11.21. Guarantee in Addition to Other Obligations. The obligations of each Subsidiary Guarantor under its Guarantee and this Indenture are in addition to and not in substitution for any other obligations to the Trustee or to any of the Holders in relation to this Indenture or the Notes and any guarantees or security at any time held by or for the benefit of any of them. SECTION 11.22. Severability. Any provision of this Article Eleven which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction unless its removal would substantially defeat the basic intent, spirit and purpose of this Indenture and this Article Eleven. SECTION 11.23. Successors and Assigns. Each Guarantee shall be binding upon and inure to the benefit of each Subsidiary 97 106 Guarantor and the Trustee and the other Holders and their respective successors and permitted assigns, except that no Subsidiary Guarantor may assign any of its obligations hereunder or thereunder. ARTICLE TWELVE SUBORDINATION OF GUARANTEE SECTION 12.01. Obligations of Guarantors Subordinated to Guarantor Senior Indebtedness. Anything herein to the contrary notwithstanding, each of the Subsidiary Guarantors, for itself and its successors, and each Holder, by his or her acceptance of Guarantees, agrees that the payment of all Obligations owing to the Holders in respect of its Guarantee (collectively, as to any Subsidiary Guarantor, its "Guarantee Obligations") is subordinated, to the extent and in the manner provided in this Article Twelve, to the prior payment in full in cash or Cash Instruments, or such payment duly provided for to the satisfaction of the holders of Guarantor Senior Indebtedness, of all Obligations on Guarantor Senior Indebtedness of such Subsidiary Guarantor, including without limitation, the Subsidiary Guarantors' obligations under the Credit Agreement. This Article Twelve shall constitute a continuing offer to all Persons who become holders of, or continue to hold, Guarantor Senior Indebtedness, and such provisions are made for the benefit of the holders of Guarantor Senior Indebtedness and such holders are made obligees hereunder and any one or more of them may enforce such provisions. SECTION 12.02. Suspension of Guarantee Obligations When Guarantor Senior Indebtedness is in Default. (a) No direct or indirect payment by or on behalf of any Subsidiary Guarantor of Obligations on the Notes whether pursuant to the terms of the Notes or upon acceleration or otherwise shall be made if, at the time of such payment, there exists a default in the payment of all or any portion of principal of, premium, if any, or interest on, any Designated Senior Indebtedness which constitutes Guarantor Senior Indebtedness of such Subsidiary Guarantor (and the Trustee has received written notice thereof), and such default shall not have been cured or waived in writing or the benefits of this sentence waived in writing by or on behalf of the holders of such Designated Senior Indebtedness. In addition, if any other event of default occurs and is continuing with respect to any Designated Senior Indebtedness which is Guarantor Senior Indebtedness, as such event of default is defined in the instrument creating or evidencing such Guarantor Senior Indebtedness, permitting the holders of such Guarantor Senior Indebtedness then outstanding to accelerate the maturity thereof and if the Representative for the respective issue of Guarantor Senior Indebtedness gives notice of the event of default to the Trustee (a 98 107 "Default Notice"), then, unless and until all events of default have been cured or waived in writing or have ceased to exist or the Trustee receives notice thereof from the Representative for the respective issue of Guarantor Senior Indebtedness terminating the Blockage Period (as defined below), during the 180 days after the delivery of such Default Notice (the "Blockage Period"), neither any Subsidiary Guarantor nor any other Person on its behalf shall (x) make any payment of any kind or character with respect to any Obligations on the Notes or (y) acquire any of the Notes for cash or property or otherwise. Notwithstanding anything herein to the contrary, in no event will a Blockage Period extend beyond 180 days from the date the payment on the Notes was due and only one such Blockage Period may be commenced within any 360 consecutive days. No event of default which existed or was continuing on the date of the commencement of any Blockage Period with respect to the Designated Senior Indebtedness shall be, or be made, the basis for commencement of a second Blockage Period by the Representative of such Designated Senior Indebtedness whether or not within a period of 360 consecutive days, unless such event of default shall have been cured or waived in writing for a period of not less than 90 consecutive days (it being acknowledged that any subsequent action, or any breach of any of the financial covenants for a new accounting period commencing after the date of such Blockage Period that, in either case, would give rise to an event of default pursuant to any provisions under which an event of default previously existed or was continuing shall constitute a new event of default for this purpose). (b) In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee or any Holder when such payment is prohibited by Section 12.02(a), such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Designated Senior Indebtedness of a Subsidiary Guarantor (pro rata to such holders on the basis of the respective amounts of Designated Senior Indebtedness held by such holders) or such holders' respective Representatives upon written instruction of the Company or a court of competent jurisdiction. The Trustee shall be entitled to rely on written information regarding amounts then due and owing on the Designated Senior Indebtedness of a Subsidiary Guarantor, if any, received from the Company and only amounts included in the information provided to the Trustee shall be paid to the holders of such Designated Senior Indebtedness. Nothing contained in this Article Twelve shall limit the right of the Trustee or the Holders of Notes to take any action to accelerate the maturity of the Notes pursuant to Section 6.02 or to pursue any rights or remedies hereunder; provided that all Guarantor Senior Indebtedness thereafter due or declared to be due shall first be paid in full in cash or Cash Instruments before the Holders are entitled to receive any payment of any kind or character with respect to Obligations on the Notes. SECTION 12.03. Guarantee Obligations Subordinated to Prior Payment of All Guarantor Senior Indebtedness on Dissolution, Liquidation or Reorganization of Such Subsidiary Guarantor. 99 108 Upon any payment or distribution of assets of any Subsidiary Guarantor of any kind or character, whether in cash, property or securities to creditors upon any liquidation, dissolution, winding up, reorganization, assignment for the benefit of creditors or marshaling of assets of such Subsidiary Guarantor, whether voluntary or involuntary, or in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding relating to any Subsidiary Guarantor or its property, whether voluntary or involuntary, but excluding any liquidation or dissolution of a Subsidiary Guarantor into the Company or into another Subsidiary Guarantor: (a) the holders of all Guarantor Senior Indebtedness of such Subsidiary Guarantor shall first be entitled to receive payments in full in cash or Cash Instruments, or such payment duly provided for to the satisfaction of the holders of Guarantor Senior Indebtedness, of all amounts payable under Guarantor Senior Indebtedness before the Holders will be entitled to receive any payment or distribution of any kind or character on account of the Guarantee of such Subsidiary Guarantor, and until all Obligations with respect to the Guarantor Senior Indebtedness are paid in full in cash or Cash Instruments, or such payment duly provided for to the satisfaction of the holders of Guarantor Senior Indebtedness, any distribution to which the Holders would be entitled shall be made to the holders of Guarantor Senior Indebtedness of such Subsidiary Guarantor; (b) any payment or distribution of assets of such Subsidiary Guarantor of any kind or character, whether in cash, property or securities, to which the Holders or the Trustee on behalf of the Holders would be entitled except for the provisions of this Article Twelve shall be paid by the liquidating trustee or agent or other Person making such a payment or distribution, directly to the holders of Guarantor Senior Indebtedness of such Subsidiary Guarantor or their Representatives, ratably according to the respective amounts of such Guarantor Senior Indebtedness remaining unpaid held or represented by each, until all such Guarantor Senior Indebtedness remaining unpaid shall have been paid in full in cash or Cash Instruments, or such payment duly provided for to the satisfaction of the holders of Guarantor Senior Indebtedness, after giving effect to any concurrent payment or distribution to the holders of such Guarantor Senior Indebtedness; and (c) in the event that, notwithstanding the foregoing, any payment or distribution of assets of such Subsidiary Guarantor of any kind or character, whether such payment shall be in cash, property or securities, and such Subsidiary Guarantor shall have made payment to the Trustee or directly to the Holders or any Paying Agent in respect of payment of the Guarantees before all Guarantor Senior Indebtedness of such Subsidiary Guarantor is paid in full in cash or Cash Instruments, or such payment duly provided for to the satisfaction of the holders of Guarantor Senior Indebtedness, such payment or distribution (subject to the provisions of Sections 12.06 and 12.07) shall be received, segregated from other funds, and held in trust by the Trustee or such Holder or Paying Agent for the benefit of, and shall immediately be paid over by the Trustee (if the notice required by Section 12.06 has been received by the Trustee) or by the Holder to, the holders of such Guarantor Senior Indebtedness or their representatives, ratably 100 109 according to the respective amounts of such Guarantor Senior Indebtedness held or represented by each, until all such Guarantor Senior Indebtedness remaining unpaid shall have been paid in full in cash or Cash Instruments, or such payment duly provided for to the satisfaction of the holders of Guarantor Senior Indebtedness, after giving effect to any concurrent payment or distribution to the holders of Guarantor Senior Indebtedness. Each Subsidiary Guarantor shall give prompt notice to the Trustee prior to any dissolution, winding-up, total or partial liquidation or total or reorganization (including, without limitation, in bankruptcy, insolvency, or receivership proceedings or upon any assignment for the benefit of creditors or any other marshaling of such Subsidiary Guarantor's assets and liabilities). SECTION 12.04. Holders of Guarantee Obligations To Be Subrogated to Rights of Holders of Guarantor Senior Indebtedness. Subject to the payment in full in cash or Cash Instruments, or such payment duly provided for to the satisfaction of the holders of Guarantor Senior Indebtedness, of all Guarantor Senior Indebtedness, the Holders of Guarantee Obligations of a Subsidiary Guarantor shall be subrogated to the rights of the holders of Guarantor Senior Indebtedness of such Subsidiary Guarantor to receive payments or distributions of assets of such Subsidiary Guarantor applicable to such Guarantor Senior Indebtedness until all amounts owing on or in respect of the Guarantee Obligations shall be paid in full in cash or Cash Instruments, and for the purpose of such subrogation no payments or distributions to the holders of such Guarantor Senior Indebtedness by or on behalf of such Subsidiary Guarantor, or by or on behalf of the Holders by virtue of this Article Twelve, which otherwise would have been made to the Holders shall, as between such Subsidiary Guarantor and the Holders, be deemed to be payment by such Subsidiary Guarantor to or on account of such Guarantor Senior Indebtedness, it being understood that the provisions of this Article Twelve are and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of such Guarantor Senior Indebtedness, on the other hand. If any payment or distribution to which the Holders would otherwise have been entitled but for the provisions of this Article Twelve shall have been applied, pursuant to the provisions of this Article Twelve, to the payment of all amounts payable under such Guarantor Senior Indebtedness, then the Holders shall be entitled to receive from the holders of such Guarantor Senior Indebtedness any such payments or distributions received by such holders of such Guarantor Senior Indebtedness in excess of the amount sufficient to pay all amounts payable under or in respect of such Guarantor Senior Indebtedness in full in cash or Cash Instruments, or such payment duly provided for to the satisfaction of the holders of Guarantor Senior Indebtedness. Each Holder by purchasing or accepting a Note waives any and all notice of the creation, 101 110 modification, renewal, extension or accrual of any Guarantor Senior Indebtedness of the Subsidiary Guarantors and notice of or proof of reliance by any holder or owner of Guarantor Senior Indebtedness of the Subsidiary Guarantors upon this Article Twelve and the Guarantor Senior Indebtedness of the Subsidiary Guarantors shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Article Twelve, and all dealings between the Subsidiary Guarantors and the holders and owners of the Guarantor Senior Indebtedness of the Subsidiary Guarantors shall be deemed to have been consummated in reliance upon this Article Twelve. SECTION 12.05. Obligations of the Subsidiary Guarantors Unconditional. Nothing contained in this Article Twelve or elsewhere in this Indenture or in the Guarantees is intended to or shall impair, as between the Subsidiary Guarantors and the Holders, the obligation of the Subsidiary Guarantors, which is absolute and unconditional, to pay to the Holders all amounts due and payable under the Guarantees as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Subsidiary Guarantors other than the holders of Guarantor Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article Twelve, of the holders of Guarantor Senior Indebtedness in respect of cash, property or securities of the Subsidiary Guarantors received upon the exercise of any such remedy. Upon any payment or distribution of assets of any Subsidiary Guarantor referred to in this Article Twelve, the Trustee, subject to the provisions of Sections 7.01 and 7.02, and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any liquidation, dissolution, winding-up or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidating trustee or agent or other Person making any payment or distribution to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of Guarantor Senior Indebtedness and other Indebtedness of any Subsidiary Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Twelve. Nothing in this Article Twelve shall apply to the claims of, or payments to, the Trustee under or pursuant to Section 7.07. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of any Guarantor Senior Indebtedness (or a trustee on behalf of, or other representative of, such holder) to establish that such notice has been given by a holder of such Guarantor Senior Indebtedness or a trustee or representative on behalf of any such holder. In the event that the Trustee determines in good faith that any evidence is required with respect to the right of any Person as a holder of Guarantor 102 111 Senior Indebtedness to participate in any payment or distribution pursuant to this Article Twelve, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Guarantor Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article Twelve, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 12.06. Trustee Entitled To Assume Payments Not Prohibited in Absence of Notice. The Trustee shall not at any time be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee unless and until the Trustee or any Paying Agent shall have received notice thereof from the Company or any Subsidiary Guarantor or from one or more holders of Guarantor Senior Indebtedness or from any Representative therefor and, prior to the receipt of any such notice, the Trustee, subject to the provisions of Sections 7.01 and 7.02, shall be entitled in all respects conclusively to assume that no such fact exists. SECTION 12.07. Application by Trustee of Assets Deposited with It. U.S. Legal Tender or U.S. Government Obligations deposited in trust with the Trustee pursuant to and in accordance with Sections 8.01 and 8.02 shall be for the sole benefit of Holders of the Notes and, to the extent allocated for the payment of Notes, shall not be subject to the subordination provisions of this Article Twelve. Otherwise, any deposit of assets or securities by or on behalf of a Subsidiary Guarantor with the Trustee or any Paying Agent (whether or not in trust) for payment of the Guarantees shall be subject to the provisions of this Article Twelve; provided, however, that if prior to the second Business Day preceding the date on which by the terms of this Indenture any such assets may become distributable for any purpose (including, without limitation, the payment of either principal of or interest on any Note) the Trustee or such Paying Agent shall not have received with respect to such assets the notice provided for in Section 12.06, then the Trustee or such Paying Agent shall have full power and authority to receive such assets and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary received by it on or after such date. The foregoing shall not apply to the Paying Agent if the Company or any Subsidiary or Affiliate of the Company is acting as Paying Agent. Nothing contained in this Section 12.07 shall limit the right of the holders of Guarantor Senior Indebtedness to recover payments as contemplated by this Article Twelve. SECTION 12.08. No Waiver of Subordination Provisions. (a) No right of any present or future holder of any Guarantor Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Subsidiary Guarantor or by any act or failure to act, by any such holder, or by any non-compliance by any Subsidiary Guarantor with the terms, 103 112 provisions and covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with. (b) Without limiting the generality of subsection (a) of this Section 12.08, the holders of Guarantor Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Notes, without incurring responsibility to the Holders of the Notes and without impairing or releasing the subordination provided in this Article Twelve or the obligations hereunder of the Holders of the Notes to the holders of Guarantor Senior Indebtedness, do any one or more of the following: (1) change the manner, place, terms or time of payment of, or renew or alter, Guarantor Senior Indebtedness or any instrument evidencing the same or any agreement under which Guarantor Senior Indebtedness is outstanding; (2) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Guarantor Senior Indebtedness; (3) release any Person liable in any manner for the collection or payment of Guarantor Senior Indebtedness; and (4) exercise or refrain from exercising any rights against the Subsidiary Guarantors and any other Person. SECTION 12.09. Holders Authorize Trustee To Effectuate Subordination of Guarantee Obligations. Each Holder of the Guarantee Obligations by its acceptance thereof authorizes and expressly directs the Trustee on its behalf to take such action as may be necessary or appropriate to effect the subordination provisions contained in this Article Twelve, and appoints the Trustee its attorney-in-fact for such purpose, including, in the event of any liquidation, dissolution, winding-up, reorganization, assignment for the benefit of creditors or marshaling of assets of any Subsidiary Guarantor tending towards liquidation or reorganization of the business and assets of any Subsidiary Guarantor, the immediate filing of a claim for the unpaid balance under its or his Guarantee Obligations in the form required in said proceedings and cause said claim to be approved. If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claim or claims, then any of the holders of the Guarantor Senior Indebtedness or their Representative is hereby authorized to file an appropriate claim for and on behalf of the Holders of said Guarantee Obligations. Nothing herein contained shall be deemed to authorize the Trustee or the holders of Guarantor Senior Indebtedness or their Representative to authorize or consent to or accept or adopt on behalf of any holder of Guarantee Obligations any plan of reorganization, arrangement, adjustment or composition affecting the Guarantee Obligations or the rights of any Holder thereof, or to authorize the Trustee or the holders of Guarantor Senior Indebtedness or their Representative to vote in respect of the claim of any holder of Guarantee Obligations in any such proceeding. 104 113 SECTION 12.10. Right of Trustee to Hold Guarantor Senior Indebtedness. The Trustee and any agent of the Company or the Trustee shall be entitled to all the rights set forth in this Article Twelve with respect to any Guarantor Senior Indebtedness which may at any time be held by it in its individual or any other capacity to the same extent as any other holder of Guarantor Senior Indebtedness and nothing in this Indenture shall deprive the Trustee or any such agent of any of its rights as such holder. With respect to the holders of Guarantor Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article Twelve, and no implied covenants or obligations with respect to the holders of Guarantor Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Guarantor Senior Indebtedness. Whenever a distribution is to be made or a notice given to holders or owners of Guarantor Senior Indebtedness, the distribution may be made and the notice may be given to their Representative, if any. SECTION 12.11. No Suspension of Remedies. The failure to make a payment in respect of the Guarantees by reason of any provision of this Article Twelve shall not be construed as preventing the occurrence of a Default or an Event of Default. Nothing contained in this Article Twelve shall limit the right of the Trustee or the Holders of Notes to take any action to accelerate the maturity of the Notes pursuant to Article Six or to pursue any rights or remedies hereunder or under applicable law, subject to the rights, if any, under this Article Twelve of the holders, from time to time, of Guarantor Senior Indebtedness. SECTION 12.12. No Fiduciary Duty of Trustee to Holders of Guarantor Senior Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Guarantor Senior Indebtedness, and it undertakes to perform or observe such of its covenants and obligations as are specifically set forth in this Article Twelve, and no implied covenants or obligations with respect to the Guarantor Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be liable to any such holders (other than for its willful misconduct or gross negligence) if it shall pay over or deliver to the holders of Guarantee Obligations or the Guarantors or any other Person, money or assets in compliance with the terms of this Indenture. Nothing in this Section 12.12 shall affect the obligation of any Person other than the Trustee to hold such payment for the benefit of, and to pay such payment over to, the holders of Guarantor Senior Indebtedness or their Representative. 105 114 ARTICLE THIRTEEN MISCELLANEOUS SECTION 13.01. TIA Controls. If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control; provided, however, that this Section 13.01 shall not of itself require that this Indenture or the Trustee be qualified under the TIA or constitute any admission or acknowledgment by any party hereto that any such qualification is required prior to the time this Indenture and the Trustee are required by the TIA to be so qualified. SECTION 13.02. Notices. Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by telex, by telecopier or overnight courier guaranteeing next-day delivery or registered or certified mail, postage prepaid, return receipt requested, addressed as follows: if to the Company or any Subsidiary Guarantor: GENERAL BINDING CORPORATION One GBC Plaza Northbrook, Illinois 60062 Telecopier Number: (847) 272-4763 Attn: Treasurer with a copy to: GENERAL BINDING CORPORATION One GBC Plaza Northbrook, Illinois 60062 Telecopier Number: (847) 272-4763 Attn: Vice President, Secretary and General Counsel if to the Trustee: FIRST UNION NATIONAL BANK Corporate Trust Department - 9th Floor 230 N. Tryon Street Charlotte, North Carolina 28288-1179 Telecopier Number: (704) 383-7316 Attention: Corporate Trust Department 106 115 Each of the Company and the Trustee by written notice to the other may designate additional or different addresses for notices to such Person. Any notice or communication to the Company or the Trustee shall be deemed to have been given or made as of the date so delivered if hand delivered; when receipt is acknowledged, if faxed; and five (5) calendar days after mailing if sent by registered or certified mail, postage prepaid (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee). Any notice or communication mailed to a Holder shall be mailed by first class mail, certified or registered return receipt requested, or by overnight courier guaranteeing next-day delivery to its address as it appears on the registration books of the Registrar. Any notice or communication shall be mailed to any Person as described in TIA Section 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. SECTION 13.03. Communications by Holders with Other Holders. Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and any other Person shall have the protection of TIA Section 312(c). SECTION 13.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate, in form and substance satisfactory to the Trustee, stating that, in the opinion of the signers, all conditions precedent to be performed by the Company, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent to be performed by the Company, if any, provided for in this Indenture relating to the proposed action have been complied with (which counsel, as to factual matters, may rely on an Officers' Certificate). SECTION 13.05. Statements Required in Certificate or Opinion. 107 116 Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture, other than the Officers' Certificate required by Section 4.06, shall include: (1) a statement that the Person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such Person, he has made such examination or investigation as is reasonably necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of each such Person, such condition or covenant has been complied with. SECTION 13.06. Rules by Trustee, Paying Agent, Registrar. The Trustee may make reasonable rules in accordance with the Trustee's customary practices for action by or at a meeting of Holders. The Paying Agent or Registrar may make reasonable rules for its functions. SECTION 13.07. Legal Holidays. A "Legal Holiday" used with respect to a particular place of payment is a Saturday, a Sunday or a day on which banking institutions in New York, New York, Charlotte, North Carolina or at such place of payment are not required to be open. If a payment date is a Legal Holiday at such place, payment may be made at such place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. SECTION 13.08. Governing Law. THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. Each of the parties hereto agrees to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to this Indenture. SECTION 13.09. No Adverse Interpretation of Other Agreements. 108 117 This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any of its Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 13.10. No Personal Liability. No director, officer, employee or stockholder, as such, of the Company or any Subsidiary Guarantor, as such, shall have any liability for any obligations of the Company or any Subsidiary Guarantor under the Notes, this Indenture, the Guarantees or the Registration Rights Agreement or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. SECTION 13.11. Successors. All agreements of the Company in this Indenture and the Notes shall bind their successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 13.12. Duplicate Originals. All parties may sign any number of copies of this Indenture in one or more counterparts. Each signed copy shall be an original, but all of them together shall represent the same agreement. SECTION 13.13. Severability. In case any one or more of the provisions in this Indenture or in the Notes shall be held invalid, illegal or unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law. SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the date first written above. GENERAL BINDING CORPORATION By: /s/ STEVEN RUBIN --------------------------------------- Name: Title: Vice President, Secretary and General Counsel 109 118 BAKER SCHOOL SPECIALTY COMPANY, INC., as a Subsidiary Guarantor By: /s/ STEVEN RUBIN --------------------------------------- Name: Steven Rubin Title: Vice President, Secretary and Clerk GBC BUSINESS EQUIPMENT, INC., as a Subsidiary Guarantor By: /s/ STEVEN RUBIN --------------------------------------- Name: Steven Rubin Title: Vice President and Secretary GBC INDIA HOLDINGS, INC., as a Subsidiary Guarantor By: /s/ STEVEN RUBIN --------------------------------------- Name: Steven Rubin Title: Vice President and Secretary 110 119 GBC INTERNATIONAL, INC., as a Subsidiary Guarantor By: /s/ STEVEN RUBIN --------------------------------------- Name: Steven Rubin Title: Vice President and Secretary GBC METALS CORP., as a Subsidiary Guarantor By: /s/ STEVEN RUBIN --------------------------------------- Name: Steven Rubin Title: Vice President and Secretary PRO-TECH ENGINEERING CO., INC., as a Subsidiary Guarantor By: /s/ STEVEN RUBIN --------------------------------------- Name: Steven Rubin Title: Vice President and Secretary SICKINGER COMPANY, as a Subsidiary Guarantor By: /s/ STEVEN RUBIN --------------------------------------- Name: Steven Rubin Title: Vice President and Secretary U.S. RING BINDER CORP., as a Subsidiary Guarantor By: /s/ STEVEN RUBIN --------------------------------------- Name: Steven Rubin Title: Vice President, Secretary and Clerk VELOBIND INCORPORATED, as a Subsidiary Guarantor By: /s/ STEVEN RUBIN --------------------------------------- Name: Steven Rubin Title: Vice President and Secretary 111 120 IBICO, INC., as a Subsidiary Guarantor By: /s/ STEVEN RUBIN ----------------------------------- Name: Steven Rubin Title: Vice President and Secretary FIRST UNION NATIONAL BANK as Trustee By: /s/ SHANNON SCHWARTZ ----------------------------------- Name: Shannon Schwartz Title: Assistant Vice President 112 121 EXHIBIT A FORM OF INITIAL NOTE [THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, PRIOR TO THE DATE THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THIS SECURITY AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY, RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR (AS DEFINED IN RULE 501 (a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o.: ______________ GENERAL BINDING CORPORATION 9 3/8% SENIOR SUBORDINATED NOTE DUE 2008 No. _________ $__________ GENERAL BINDING CORPORATION, a Delaware corporation (the "Company," which term includes any successor entities), for value received promises to pay to _________ or registered assigns the principal sum of __________ Dollars on June 1, 2008. Interest Payment Dates: June 1 and December 1, commencing December 1, 1998. Record Dates: May 15 and November 15. Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place. IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers. GENERAL BINDING CORPORATION By:________________________________ Name:_____________________________ Title:______________________________ By:________________________________ Name:_____________________________ Title:______________________________ Dated: May 27, 1998 A-3 124 Certificate of Authentication This is one of the ____% Senior Subordinated Notes due 2008, referred to in the within-mentioned Indenture. FIRST UNION NATIONAL BANK, as Trustee By: Authorized Signatory Date of Authentication:__________, 1998 A-4 125 (REVERSE OF SECURITY) ____% Senior Subordinated Note due 2008 Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Indenture, dated as of May ___, 1998 (the "Indenture"), and as amended from time to time, by and among General Binding Corporation, a Delaware corporation (the "Company"), the Subsidiary Guarantors named therein and First Union National Bank, as trustee (the "Trustee"). 1. Interest. The Company promises to pay interest on the principal amount of this Note at the rate per annum shown above. Interest on the Notes will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from May 27, 1998. The Company will pay interest semi-annually in arrears on each Interest Payment Date, commencing December 1, 1998. Interest will be computed on the basis of a 360-day year of twelve 30-day months and, in the case of a partial month, the actual number of days elapsed. The Company shall pay interest on overdue principal and on overdue installments of interest from time to time on demand at the rate borne by the Notes and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful. 2. Method of Payment. The Company shall pay interest on the Notes (except defaulted interest) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date even if the Notes are cancelled on registration of transfer or registration of exchange (including pursuant to an Exchange Offer) after such Record Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company shall pay principal and premium, if any, and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts ("U.S. Legal Tender"). However, the Company may pay principal and premium, if any, and interest by check payable in such U.S. Legal Tender. The Company may deliver any such interest payment to the Paying Agent or to a Holder at the Holder's registered address. 3. Paying Agent and Registrar. Initially, the Trustee will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to the Holders. 4. Indenture. The Company issued the Notes under the Indenture. This Note is one of a duly authorized issue of Notes of the Company designated as its ____% Senior Subordinated Notes due 2008 issued on the Issue Date (the "Initial Notes"), limited (except as otherwise provided in the Indenture) in aggregate principal amount to $225,000,000 which may be issued under the Indenture. The Notes include the Initial Notes, the Private Exchange Notes and the Unrestricted Notes, as defined below, issued in exchange for the Initial Notes pursuant to the Registration Rights A-5 126 Agreement or, with respect to Initial Notes issued after the Issue Date pursuant to Section 2.02 of the Indenture, a registration rights agreement substantially identical to the Registration Rights Agreement. The Initial Notes, the Private Exchange Notes and the Unrestricted Notes are treated as a single class of securities under the Indenture. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and the TIA for a statement of such terms. The Notes are general unsecured obligations of the Company. Payment on each Note is guaranteed on a senior subordinated basis by the Subsidiary Guarantors pursuant to Article 11 of the Indenture. Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time in accordance with its terms. 5. Redemption. (a) The Notes are redeemable, at the Company's option, in whole at any time or in part from time to time, on and after June 1, 2003, upon not less than 30 nor more than 60 days' notice, at the following Redemption Prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on June 1 of the years set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption: Year Percentage ---- ---------- 2003............................................ 104.688% 2004............................................ 103.125% 2005............................................ 101.563% 2006............................................ 100.000% (b) Notwithstanding the foregoing, at any time, or from time to time, on or prior to June 1, 2001, the Company may, at its option, redeem up to 35% of the aggregate principal amount of the Notes originally issued with the net cash proceeds of one or more Public Equity Offerings at a redemption price equal to 109.375% of the principal amount thereof plus accrued and unpaid interest to the date of redemption, provided, however, that at least 65% of the aggregate principal amount of the Notes originally issued remains outstanding immediately following such redemption. In order to effect the foregoing redemption with the proceeds of any Public Equity Offering, the Company shall make such redemption not more than 120 days after the consummation of any such Public Equity Offering. 6. Notice of Redemption. Notice of redemption will be mailed at least 30 but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part. Except as set forth in the Indenture, if monies for the redemption of the Notes called for redemption shall have been deposited with the Trustee or Paying Agent for redemption on such Redemption Date, then, unless the Company defaults in the payment of such Redemption Price plus A-6 127 accrued interest, if any, the Notes called for redemption will cease to bear interest from and after such Redemption Date and the only right of the Holders of such Notes will be to receive payment of the Redemption Price plus accrued interest, if any, to the Redemption Date. 7. Offers to Purchase. Section 4.14 of the Indenture provides that upon a Change of Control each Holder will have the right, subject to certain conditions set forth in the Indenture, to require the Company to purchase all or a portion of such Holder's Notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of purchase. Section 4.15 of the Indenture provides that, after certain Asset Sales, and subject to further limitations contained therein, the Company will make an offer to purchase certain amounts of the Notes in accordance with the procedures set forth in the Indenture. 8. Registration Rights. Pursuant to the Registration Rights Agreement among the Company, the Subsidiary Guarantors and the Initial Purchasers, the Company and the Subsidiary Guarantors will be obligated to consummate an exchange offer pursuant to which the Holder of this Note shall have the right to exchange this Note for the Company's 9 3/8% Senior Subordinated Notes due 2008 (the "Unrestricted Notes"), which will be registered under the Securities Act, in like principal amount and having terms identical in all material respects as the Initial Notes. The Holders of the Initial Notes shall be entitled to receive certain additional interest payments in the event such exchange offer is not consummated and upon certain other conditions, all pursuant to and in accordance with the terms of the Registration Rights Agreement. 9. Denominations; Transfer; Exchange. The Notes are in registered form, without coupons, and in denominations of $1,000 and integral multiples of $1,000. A Holder shall register the transfer of or exchange of Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as required by law or as permitted by the Indenture. The Registrar need not register the transfer of or exchange of any Notes or portions thereof selected for redemption during a period beginning 15 days before the mailing of a redemption notice, except for the unredeemed portion of any Note being redeemed in part. 10. Persons Deemed Owners. The registered Holder of a Note shall be treated as the owner of it for all purposes. 11. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for one year, the Trustee and the Paying Agent will pay the money back to the Company. After that, all liability of the Trustee and such Paying Agent with respect to such money shall cease. 12. Discharge Prior to Redemption or Maturity. If the Company at any time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the principal of and interest on the Notes to redemption or maturity and complies with the other provisions of the Indenture relating thereto, the Company will be discharged from certain provisions of the Indenture A-7 128 and the Notes (including certain covenants, but excluding its obligation to pay the principal of, premium and interest on the Notes). 13. Amendment; Supplement; Waiver. Subject to certain exceptions set forth in the Indenture, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding, and any past Default or Event of Default or noncompliance with any provision may be waived with the written consent of the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or inconsistency, provide for uncertificated Notes in addition to or in place of certificated Notes, comply with any requirements of the Commission in order to effect or maintain the qualification of the Indenture under the TIA or comply with Article Five of the Indenture or make any other change that does not adversely affect the rights of any Holder of a Note in any material respect. 14. Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, incur additional Indebtedness, make payments in respect of its Capital Stock or certain indebtedness, make certain Investments, create or incur Liens, enter into transactions with Affiliates, create dividend or other payment restrictions affecting the Company's Restricted Subsidiaries, issue Preferred Stock of certain of its Restricted Subsidiaries, and on the ability of the Company and the Subsidiary Guarantors to merge or consolidate with any other Person or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the Company's and its Subsidiaries' assets or adopt a plan of liquidation. Such limitations are subject to a number of important qualifications and exceptions. The Company must annually report to the Trustee on compliance with such limitations. 15. Subordination. The Notes are subordinated in right of payment, in the manner and to the extent set forth in the Indenture, to the prior payment in full in cash or Cash Instruments of all Obligations on Senior Indebtedness and Guarantor Senior Indebtedness, whether outstanding on the date of the Indenture or thereafter created, incurred, assumed or guaranteed. Each Holder by its acceptance hereof agrees to be bound by such provisions and authorizes and expressly directs the Trustee, on its behalf, to take such action as may be necessary or appropriate to effectuate the subordination provided for in the Indenture and appoints the Trustee its attorney-in-fact for such purposes. 16. Successors. When a successor assumes, in accordance with the Indenture, all the obligations of its predecessor under the Notes and the Indenture, the predecessor, subject to certain exceptions, will be released from those obligations. 17. Defaults and Remedies. Except as set forth in the Indenture, if an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of Notes then outstanding may declare all the Notes to be due and payable in the manner, at the time and with the effect provided in the Indenture. Holders of Notes may not enforce the Indenture or the Notes except A-8 129 as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Notes unless it has been offered indemnity or security reasonably satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal or interest when due (for any reason) or a Default in compliance with Article Five of the Indenture) if it determines that withholding notice is in their interest. 18. Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee. 19. No Recourse Against Others. No partner, director, officer, employee or stockholder, as such, of the Company or any Subsidiary Guarantor, as such, shall have any liability for any obligations of the Company or any Subsidiary Guarantor under the Notes, the Indenture, the Guarantees or the Registration Rights Agreement or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 20. Guarantees. This Note will be entitled to the benefits of certain Guarantees made for the benefit of the Holders. Reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and obligations thereunder of the Subsidiary Guarantors, the Trustee and the Holders. 21. Authentication. This Note shall not be valid until the Trustee or Authenticating Agent manually signs the certificate of authentication on this Note. 22. Governing Law. This Note and the Indenture shall be governed by and construed in accordance with the laws of the State of New York, as applied to contracts made and performed within the State of New York, without regard to principles of conflict of laws. Each of the parties hereto and the Holders agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to this Note. 23. Abbreviations and Defined Terms. Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 24. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to A-9 130 the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon. The Company will furnish to any Holder of a Note upon written request and without charge a copy of the Indenture, which has the text of this Note. Requests may be made to: GENERAL BINDING CORPORATION, One GBC Plaza, Northbrook, Illinois 60062, Attention: Vice President, Secretary and General Counsel. A-10 131 [FORM OF ASSIGNMENT] I or we assign to PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER ______________________________________ ______________________________________________________________________________ (please print or type name and address) ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints ______________________________________________________________________________ attorney to transfer the Note on the books of the Company with full power of substitution in the premises. Dated:_________________ __________________________________________ NOTICE: The signature on this assignment must correspond with the name as it appears upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever. Signature Guarantee:__________________________________________________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-11 132 In connection with any transfer of this Note occurring prior to the date of the declaration by the Commission of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the "Securities Act") covering resales of this Note (which effectiveness shall not have been suspended or terminated at the date of the transfer), the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer: [Check One] (1) _____ to the Company or a subsidiary thereof; or (2) _____ pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or (3) _____ to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended) that has furnished to the Trustee a signed letter containing certain representations and agreements (the form of which letter can be obtained from the Trustee); or (4) _____ outside the United States to a "foreign purchaser" in compliance with Rule 904 of Regulation S under the Securities Act of 1933, as amended; or (5) _____ pursuant to the exemption from registration provided by Rule 144 under the Securities Act of 1933, as amended; or (6) _____ pursuant to an effective registration statement under the Securities Act of 1933, as amended; or (7) _____ pursuant to another available exemption from the registration statement requirements of the Securities Act of 1933, as amended. and unless the box below is checked, the undersigned confirms that such Note is not being transferred to an "affiliate" of the Company as defined in Rule 144 under the Securities Act of 1933, as amended (an "Affiliate"): [ ] The transferee is an Affiliate of the Company. A-12 133 Unless one of the items is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered Holder thereof; provided, however, that if item (3), (4), (5) or (7) is checked, the Company or the Trustee may require, prior to registering any such transfer of the Notes, in its sole discretion, such written legal opinions, certifications (including an investment letter in the case of box (3) or (4)), and other information as the Trustee or the Company have reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended. If none of the foregoing items are checked, the Trustee or Registrar shall not be obligated to register this Note in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.17 of the Indenture shall have been satisfied. Dated:____________ Signed: __________________________________________ (Sign exactly as name appears on the other side of this Note) Signature Guarantee:_________________________________________________________ TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated:______________ ________________________________________________ NOTICE: To be executed by an executive officer A-13 134 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.14 or Section 4.15 of the Indenture, check the appropriate box: Section 4.14 [ ] Section 4.15 [ ] If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.14 or Section 4.15 of the Indenture, state the amount: $____________ Date:__________________ Your Signature:______________________________________ (Sign exactly as your name appears on the other side of this Note) Signature Guarantee:___________________________________________________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Trustee, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Trustee in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-14 135 EXHIBIT B FORM OF EXCHANGE NOTE CUSIP No.: ______________ GENERAL BINDING CORPORATION 9 3/8% SENIOR SUBORDINATED NOTE DUE 2008 No. _________ $__________ GENERAL BINDING CORPORATION, a Delaware corporation (the "Company," which term includes any successor entities), for value received promises to pay to _________ or registered assigns the principal sum of __________ Dollars on June 1, 2008. Interest Payment Dates: June 1 and December 1, commencing December 1, 1998. Record Dates: May 15 and November 15. Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place. IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers. GENERAL BINDING CORPORATION By:_______________________________ Name:_____________________________ Title:____________________________ By:_______________________________ Name:_____________________________ Title:____________________________ Dated: __________, 1998 B-1 136 B-2 137 Certificate of Authentication This is one of the 9 3/8% Senior Subordinated Notes due 2008, referred to in the within-mentioned Indenture. FIRST UNION NATIONAL BANK, as Trustee By: Authorized Signatory Date of Authentication:__________, 1998 B-3 138 (REVERSE OF SECURITY) 9 3/8% Senior Subordinated Note due 2008 Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Indenture, dated as of May 27, 1998 (the "Indenture"), and as amended from time to time, by and among General Binding Corporation, a Delaware corporation (the "Company"), the Subsidiary Guarantors named therein and First Union National Bank, as trustee (the "Trustee"). 1. Interest. The Company promises to pay interest on the principal amount of this Note at the rate per annum shown above. Interest on the Notes will accrue from the most recent date on which interest has been paid or, if no interest has been paid, from May 27, 1998. The Company will pay interest semi-annually in arrears on each Interest Payment Date, commencing December 1, 1998. Interest will be computed on the basis of a 360-day year of twelve 30-day months and, in the case of a partial month, the actual number of days elapsed. The Company shall pay interest on overdue principal and on overdue installments of interest from time to time on demand at the rate borne by the Notes and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful. 2. Method of Payment. The Company shall pay interest on the Notes (except defaulted interest) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date even if the Notes are cancelled on registration of transfer or registration of exchange (including pursuant to an Exchange Offer) after such Record Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company shall pay principal and premium, if any, and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts ("U.S. Legal Tender"). However, the Company may pay principal and premium, if any, and interest by check payable in such U.S. Legal Tender. The Company may deliver any such interest payment to the Paying Agent or to a Holder at the Holder's registered address. 3. Paying Agent and Registrar. Initially, the Trustee will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-Registrar without notice to the Holders. 4. Indenture. The Company issued the Notes under the Indenture. This Note is one of a duly authorized issue of Notes of the Company designated as its 9 3/8% Senior Subordinated Notes due 2008, limited (except as otherwise provided in the Indenture) in aggregate principal amount to $225,000,000 which may be issued under the Indenture. The Notes include the 9 3/8% Senior Subordinated Notes due 2008 issued on the Issue Date (the "Initial Notes"), the Private Exchange Notes and the Unrestricted Notes, as defined below, issued in exchange for the Initial B-4 139 Notes pursuant to the Registration Rights Agreement or, with respect to Initial Notes issued after the Issue Date pursuant to Section 2.02 of the Indenture, a registration rights agreement substantially identical to the Registration Rights Agreement. The Initial Notes, the Private Exchange Notes and the Unrestricted Notes are treated as a single class of securities under the Indenture. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders of Notes are referred to the Indenture and the TIA for a statement of such terms. The Notes are general unsecured obligations of the Company. Payment on each Note is guaranteed on a senior subordinated basis by the Subsidiary Guarantors pursuant to Article 11 of the Indenture. Each Holder, by accepting a Note, agrees to be bound by all of the terms and provisions of the Indenture, as the same may be amended from time to time in accordance with its terms. 5. Redemption. (a) The Notes are redeemable, at the Company's option, in whole at any time or in part from time to time, on and after June 1, 2003, upon not less than 30 nor more than 60 days' notice, at the following Redemption Prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on June 1 of the years set forth below, plus, in each case, accrued and unpaid interest thereon, if any, to the date of redemption: Year Percentage - ---- ---------- 2003....................................... 104.688% 2004....................................... 103.125% 2005....................................... 101.563% 2006....................................... 100.000% (b) Notwithstanding the foregoing, at any time, or from time to time, on or prior to June 1, 2001, the Company may, at its option, redeem up to 35% of the aggregate principal amount of the Notes originally issued with the net cash proceeds of one or more Public Equity Offerings at a redemption price equal to 109.375% of the principal amount thereof plus accrued and unpaid interest to the date of redemption, provided, however, that at least 65% of the aggregate principal amount of the Notes originally issued remains outstanding immediately following such redemption. In order to effect the foregoing redemption with the proceeds of any Public Equity Offering, the Company shall make such redemption not more than 120 days after the consummation of any such Public Equity Offering. 6. Notice of Redemption. Notice of redemption will be mailed at least 30 but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part. Except as set forth in the Indenture, if monies for the redemption of the Notes called for redemption shall have been deposited with the Trustee or Paying Agent for redemption on such Redemption Date, then, unless the Company defaults in the payment of such Redemption Price plus B-5 140 accrued interest, if any, the Notes called for redemption will cease to bear interest from and after such Redemption Date and the only right of the Holders of such Notes will be to receive payment of the Redemption Price plus accrued interest, if any, to the Redemption Date. 7. Offers to Purchase. Section 4.14 of the Indenture provides that upon a Change of Control each Holder will have the right, subject to certain conditions set forth in the Indenture, to require the Company to purchase all or a portion of such Holder's Notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of purchase. Section 4.15 of the Indenture provides that, after certain Asset Sales, and subject to further limitations contained therein, the Company will make an offer to purchase certain amounts of the Notes in accordance with the procedures set forth in the Indenture. 8. Denominations; Transfer; Exchange. The Notes are in registered form, without coupons, and in denominations of $1,000 and integral multiples of $1,000. A Holder shall register the transfer of or exchange of Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as required by law or as permitted by the Indenture. The Registrar need not register the transfer of or exchange of any Notes or portions thereof selected for redemption during a period beginning 15 days before the marking of a redemption notice, except for the unredeemed portion of any Note being redeemed in part. 9. Persons Deemed Owners. The registered Holder of a Note shall be treated as the owner of it for all purposes. 10. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for one year, the Trustee and the Paying Agent will pay the money back to the Company. After that, all liability of the Trustee and such Paying Agent with respect to such money shall cease. 11. Discharge Prior to Redemption or Maturity. If the Company at any time deposits with the Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the principal of and interest on the Notes to redemption or maturity and complies with the other provisions of the Indenture relating thereto, the Company will be discharged from certain provisions of the Indenture and the Notes (including certain covenants, but excluding its obligation to pay the principal of, premium and interest on the Notes). 12. Amendment; Supplement; Waiver. Subject to certain exceptions set forth in the Indenture, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding, and any past Default or Event of Default or noncompliance with any provision may be waived with the written consent of the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or B-6 141 inconsistency, provide for uncertificated Notes in addition to or in place of certificated Notes, comply with any requirements of the Commission in order to effect or maintain the qualification of the Indenture under the TIA or comply with Article Five of the Indenture or make any other change that does not adversely affect the rights of any Holder of a Note in any material respect. 13. Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, incur additional Indebtedness, make payments in respect of its Capital Stock or certain indebtedness, make certain Investments, create or incur Liens, enter into transactions with Affiliates, create dividend or other payment restrictions affecting the Company's Restricted Subsidiaries, issue Preferred Stock of certain of its Restricted Subsidiaries, and on the ability of the Company and the Subsidiary Guarantors to merge or consolidate with any other Person or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the Company's and its Subsidiaries' assets or adopt a plan of liquidation. Such limitations are subject to a number of important qualifications and exceptions. The Company must annually report to the Trustee on compliance with such limitations. 14. Subordination. The Notes are subordinated in right of payment, in the manner and to the extent set forth in the Indenture, to the prior payment in full in cash or Cash Instruments of all Obligations on Senior Indebtedness and Guarantor Senior Indebtedness, whether outstanding on the date of the Indenture or thereafter created, incurred, assumed or guaranteed. Each Holder by its acceptance hereof agrees to be bound by such provisions and authorizes and expressly directs the Trustee, on its behalf, to take such action as may be necessary or appropriate to effectuate the subordination provided for in the Indenture and appoints the Trustee its attorney-in-fact for such purposes. 15. Successors. When a successor assumes, in accordance with the Indenture, all the obligations of its predecessor under the Notes and the Indenture, the predecessor, subject to certain exceptions, will be released from those obligations. 16. Defaults and Remedies. Except as set forth in the Indenture, if an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of Notes then outstanding may declare all the Notes to be due and payable in the manner, at the time and with the effect provided in the Indenture. Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Notes unless it has been offered indemnity or security reasonably satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Notes then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default in payment of principal or interest when due (for any reason) or a Default in compliance with Article Five of the Indenture) if it determines that withholding notice is in their interest. B-7 142 17. Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or their respective Affiliates as if it were not the Trustee. 18. No Recourse Against Others. No partner, director, officer, employee or stockholder, as such, of the Company or any Subsidiary Guarantor, as such, shall have any liability for any obligations of the Company or any Subsidiary Guarantor under the Notes, the Indenture, the Guarantees or the Registration Rights Agreement or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 19. Guarantees. This Note will be entitled to the benefits of certain Guarantees made for the benefit of the Holders. Reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and obligations thereunder of the Subsidiary Guarantors, the Trustee and the Holders. 20. Authentication. This Note shall not be valid until the Trustee or Authenticating Agent manually signs the certificate of authentication on this Note. 21. Governing Law. This Note and the Indenture shall be governed by and construed in accordance with the laws of the State of New York, as applied to contracts made and performed within the State of New York, without regard to principles of conflict of laws. Each of the parties hereto and the Holders agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to this Note. 22. Abbreviations and Defined Terms. Customary abbreviations may be used in the name of a Holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 23. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon. The Company will furnish to any Holder of a Note upon written request and without charge a copy of the Indenture, which has the text of this Note. Requests may be made to: GENERAL BINDING CORPORATION, One GBC Plaza, Northbrook, Illinois 60062, Attention: Vice President, Secretary and General Counsel. B-8 143 [FORM OF ASSIGNMENT] I or we assign to PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER ______________________________________ ______________________________________________________________________________ (please print or type name and address) ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints ______________________________________________________________________________ attorney to transfer the Note on the books of the Company with full power of substitution in the premises. Dated:_________________ __________________________________________ NOTICE: The signature on this assignment must correspond with the name as it appears upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever. Signature Guarantee:__________________________________________________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. B-9 144 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.14 or Section 4.15 of the Indenture, check the appropriate box: Section 4.14 [ ] Section 4.15 [ ] If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.14 or Section 4.15 of the Indenture, state the amount: $____________ Date:__________________ Your Signature: ______________________________________ (Sign exactly as your name appears on the other side of this Note) Signature Guarantee:___________________________________________________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Trustee, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Trustee in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. B-10 145 EXHIBIT C FORM OF LEGEND FOR GLOBAL NOTE Any Global Note authenticated and delivered hereunder shall bear a legend (which would be in addition to any other legends required in the case of a Restricted Note) in substantially the following form: UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH SUCCESSOR DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT THEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.17 OF THE INDENTURE. C-1 146 EXHIBIT D Form of Certificate To Be Delivered in Connection with Transfers To Non-QIB Accredited Investors BT ALEX. BROWN INCORPORATED CIBC OPPENHEIMER CORP. ABN AMRO INCORPORATED FIRST CHICAGO CAPITAL MARKETS, INC. NESBITT BURNS SECURITIES INC. Initial Purchasers in connection with the Offering Memorandum Referred to Below FIRST UNION NATIONAL BANK Trustee in connection with the Offering Memorandum Referred to Below Ladies and Gentlemen: In connection with our proposed purchase of 9 3/8% Senior Subordinated Notes due 2008 (the "Notes") of General Binding Corporation, a Delaware corporation (the "Company"), we confirm that: 1. We have received a copy of the Offering Memorandum (the "Offering Memorandum"), dated May 21, 1998, relating to the Notes and such other information as we deem necessary in order to make our investment decision. We acknowledge that we have read and agreed to the matters stated in the section entitled "Transfer Restrictions" of such Offering Memorandum. 2. We understand that any subsequent transfer of Notes is subject to certain restrictions and conditions set forth in the Indenture relating to the Notes (the "Indenture") as described in the Offering Memorandum and the undersigned agrees to be bound by such restrictions and conditions, and agrees not to resell, pledge or otherwise transfer the Notes except in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and all applicable state securities laws. 3. We understand that the offer and sale of the Notes have not been registered under the Securities Act or pursuant to any state securities laws, and that the Notes may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell any Notes, we will do so only (i) D-1 147 to the Company or any subsidiary thereof, (ii) inside the United States in accordance with Rule 144A promulgated under the Securities Act to a "qualified institutional buyer" (as defined in Rule 144A promulgated under the Securities Act), (iii) inside the United States to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to the Trustee (as defined in the Indenture) a signed letter containing certain representations and agreements relating to the restrictions on transfer of the Notes (the form of which letter can be obtained from the Trustee), (iv) outside the United States in accordance with Rule 904 of Regulation S promulgated under the Securities Act to non-U.S. persons, (v) pursuant to the exemption from registration provided by Rule 144 promulgated under the Securities Act (if available), or (vi) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchase any of the Notes from us a notice advising such purchaser that resales of the Notes are restricted as stated herein. 4. We understand that, on any proposed resale of any Notes, we will be required to furnish to the Trustee and the Company such certification, written legal opinions and other information as the Trustee and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect. 5. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D promulgated under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or their investment, as the case may be, for an indefinite period of time. 6. We are acquiring the Notes purchased by us for our account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You, the Company, the Trustee and their respective counsel are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereto to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Transferee] By:__________________________________ Name: Title: D-2 148 EXHIBIT E Form of Certificate To Be Delivered in Connection with Transfers Pursuant to Regulation S [ ],[ ] [ ] [ ] [ ] Re: General Binding Corporation (the "Company") ____% Senior Subordinated Notes due 2008 (the "Notes") ----------------------------- Ladies and Gentlemen: In connection with our proposed sale of [$ ] aggregate principal amount of the Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent that: (1) the offer of the Notes was not made to a person in the United States; (2) either (a) at the time the buy offer was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been prearranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and E-1 149 (5) we have advised the transferee of the transfer restrictions applicable to the Notes. You, the Company, the Trustee and others are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferor] By:____________________________ Authorized Signature E-2 150 EXHIBIT F FORM OF GUARANTEE For value received, the undersigned hereby unconditionally guarantees, as principal obligor and not only as a surety, to the Holder of this Note the cash payments in United States dollars of principal of, premium, if any, and interest on this Note (and including Additional Interest payable thereon) in the amounts and at the times when due and interest on the overdue principal, premium, if any, and interest, if any, of this Note, if lawful, and the payment or performance of all other obligations of the Company under the Indenture or the Notes, to the Holder of this Note and the Trustee, all in accordance with and subject to the terms and limitations of this Note, Article Eleven of the Indenture and this Guarantee. This Guarantee will become effective in accordance with Article Eleven of the Indenture and its terms shall be evidenced therein. The validity and enforceability of any Guarantee shall not be affected by the fact that it is not affixed to any particular Note. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Indenture dated as of May 27, 1998, among General Binding Corporation, a Delaware corporation, as issuer (the "Company"), each of the Subsidiary Guarantors named therein and First Union National Bank, as trustee (the "Trustee"), as amended or supplemented (the "Indenture"). The obligations of the undersigned to the Holders of Notes and to the Trustee pursuant to this Guarantee and the Indenture are expressly set forth in Article Eleven of the Indenture and reference is hereby made to the Indenture for the precise terms of the Guarantee and all of the other provisions of the Indenture to which this Guarantee relates. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. The undersigned Subsidiary Guarantor hereby agrees to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to this Guarantee. This Guarantee is subject to release upon the terms set forth in the Indenture. F-1 151 IN WITNESS WHEREOF, each Subsidiary Guarantor has caused its Guaranty to be duly executed. Date:________________________________ [NAME OF SUBSIDIARY GUARANTOR], as a Subsidiary Guarantor By:____________________________ Name: Title: By:____________________________ Name: Title: F-2 EX-4.4 25 REGISTRATION RIGHTS AGREEMENT DATED MAY 27, 1998 1 EXHIBIT 4.4 _________________________________________________________________ REGISTRATION RIGHTS AGREEMENT Dated as of May 27, 1998 Among GENERAL BINDING CORPORATION and THE GUARANTORS NAMED HEREIN, as Issuers and BT ALEX. BROWN INCORPORATED, CIBC OPPENHEIMER CORP., ABN AMRO INCORPORATED, FIRST CHICAGO CAPITAL MARKETS, INC. and NESBITT BURNS SECURITIES INC., as Initial Purchasers 9 3/8% Senior Subordinated Notes due 2008 _________________________________________________________________ 2 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this "Agreement") is dated as of May 27, 1998, among GENERAL BINDING CORPORATION, a Delaware corporation (the "Company"), as issuer, the Guarantors named on the signature pages hereto (the "Guarantors," and together with the Company, the "Issuers") and BT ALEX. BROWN INCORPORATED, CIBC OPPENHEIMER CORP., ABN AMRO INCORPORATED, FIRST CHICAGO CAPITAL MARKETS, INC. and NESBITT BURNS SECURITIES INC., as initial purchasers (the "Initial Purchasers"). This Agreement is entered into in connection with the Purchase Agreement, dated as of May 21, 1998, among the Issuers and the Initial Purchasers (the "Purchase Agreement"), which provides for the sale by the Company to the Initial Purchasers of $150,000,000 aggregate principal amount of the Company's 9 3/8% Senior Subordinated Notes due 2008 (the "Notes"), guaranteed by the Guarantors (the "Guarantees" and, together with the Notes, the "Securities"). In order to induce the Initial Purchasers to enter into the Purchase Agreement, the Issuers have agreed to provide the registration rights set forth in this Agreement for the benefit of the Initial Purchasers and any subsequent holder or holders of the Notes. The execution and delivery of this Agreement is a condition to the Initial Purchasers' obligation to purchase the Securities under the Purchase Agreement. The parties hereby agree as follows: 1. Definitions: As used in this Agreement, the following terms shall have the following meanings: Additional Interest: See Section 4 hereof. Advice: See the last paragraph of Section 5 hereof. Agreement: See the introductory paragraphs hereto. Applicable Period: See Section 2 hereof. Company: See the introductory paragraphs hereto. Effectiveness Date: The 140th day after the Issue Date; provided, however, that with respect to any Shelf Registration, the Effectiveness Date shall be the 75th day after the Filing Date with respect thereto. Effectiveness Period: See Section 3 hereof. Event Date: See Section 4 hereof. 3 Exchange Act: The Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder. Exchange Notes: See Section 2 hereof. Exchange Offer: See Section 2 hereof. Exchange Offer Registration Statement: See Section 2 hereof. Filing Date: (A) In the case of an Exchange Offer Registration Statement, the 60th day after the Issue Date; or (B) in the case of a Shelf Registration (which may be applicable notwithstanding the consummation of the Exchange Offer), the 45th day after a Shelf Notice is required to be delivered pursuant to this Agreement. Guarantees: See the introductory paragraphs hereto. Guarantors: See the introductory paragraphs hereto. Holder: Any holder of a Registrable Note or Registrable Notes. Indemnified Person: See Section 7(c) hereof. Indemnifying Person: See Section 7(c) hereof. Indenture: The Indenture, dated as of May 27, 1998, by and among the Issuers and First Union National Bank, as Trustee, pursuant to which the Notes and the Guarantees are being issued, as the same may be amended or supplemented from time to time in accordance with the terms thereof. Initial Purchasers: See the introductory paragraphs hereto. Initial Shelf Registration: See Section 3(a) hereof. Inspectors: See Section 5(n) hereof. Issue Date: May 27, 1998, the date of original issuance of the Notes. Issuers: See the introductory paragraphs hereto. NASD: See Section 5(s) hereof. Notes: See the introductory paragraphs hereto. 2 4 Offering Memorandum: The final offering memorandum of the Company dated May 21, 1998, in respect of the offering of the Notes. Participant: See Section 7(a) hereof. Participating Broker-Dealer: See Section 2 hereof. Person: An individual, trustee, corporation, partnership, limited liability company, joint stock company, trust, unincorporated association, union, business association, firm or other legal entity. Private Exchange: See Section 2 hereof. Private Exchange Notes: See Section 2 hereof. Prospectus: The prospectus included in any Registration Statement (including, without limitation, any prospectus subject to completion and a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act and any term sheet filed pursuant to Rule 434 under the Securities Act), as amended or supplemented by any prospectus supplement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. Purchase Agreement: See the introductory paragraphs hereof. Records: See Section 5(n) hereof. Registrable Notes: Each Note upon its original issuance and at all times subsequent thereto, each Exchange Note as to which Section 2(c)(iv) hereof is applicable upon original issuance and at all times subsequent thereto and each Private Exchange Note upon original issuance thereof and at all times subsequent thereto, until (i) a Registration Statement (other than, with respect to any Exchange Note as to which Section 2(c)(iv) hereof is applicable, the Exchange Offer Registration Statement) covering such Note, Exchange Note or Private Exchange Note has been declared effective by the SEC and such Note, Exchange Note or such Private Exchange Note, as the case may be, has been disposed of in accordance with such effective Registration Statement, (ii) such Note has been exchanged pursuant to the Exchange Offer for an Exchange Note or Exchange Notes that may be resold without restriction under state and federal securities laws, (iii) such Note, Exchange Note or Private Exchange Note, as the case may be, ceases to be outstanding for purposes of the Indenture or (iv) such Note, Exchange Note or Private Exchange Note, as the case may be, may be resold without restriction pursuant to Rule 144 under the Securities Act. Registration Statement: Any registration statement of the Company and/or the Guarantors that covers any of the Notes, the Exchange Notes or the Private Exchange Notes (and 3 5 the related Guarantees) filed with the SEC under the Securities Act, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. Rule 144: Rule 144 promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule (other than Rule 144A) or regulation hereafter adopted by the SEC providing for offers and sales of securities made in compliance therewith resulting in offers and sales by subsequent holders that are not affiliates of the issuer of such securities being free of the registration and prospectus delivery requirements of the Securities Act. Rule 144A: Rule 144A promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule (other than Rule 144) or regulation hereafter adopted by the SEC. Rule 415: Rule 415 promulgated under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC. SEC: The Securities and Exchange Commission. Securities: See the introductory paragraphs hereto. Securities Act: The Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder. Shelf Notice: See Section 2 hereof. Shelf Registration: See Section 3(b) hereof. Subsequent Shelf Registration: See Section 3(b) hereof. TIA: The Trust Indenture Act of 1939, as amended. Trustee: The trustee under the Indenture and the trustee (if any) under any indenture governing the Exchange Notes and Private Exchange Notes. Underwritten registration or underwritten offering: A registration in which securities of one or more of the Issuers are sold to an underwriter for reoffering to the public. 2. Exchange Offer. (a) Unless the Exchange Offer (as hereinafter defined) shall not be permitted by applicable law, the Issuers shall file with the SEC, no later than the Filing Date, a Registration Statement (the "Exchange Offer Registration Statement") on an appropriate registration form with 4 6 respect to a registered offer (the "Exchange Offer") to exchange any and all of the Registrable Notes for a like aggregate principal amount of notes of the Company, guaranteed by the Guarantors, that are identical in all material respects to the Notes, except that the Exchange Notes shall contain no restrictive legend thereon (the "Exchange Notes"), and which are entitled to the benefits of the Indenture or a trust indenture which is identical in all material respects to the Indenture (other than such changes to the Indenture or any such identical trust indenture as are necessary to comply with the TIA) and which, in either case, has been qualified under the TIA. The Exchange Offer shall comply with all applicable tender offer rules and regulations under the Exchange Act and other applicable law. The Issuers shall use their best efforts to (x) cause the Exchange Offer Registration Statement to be declared effective under the Securities Act on or before the Effectiveness Date; (y) keep the Exchange Offer open for at least 20 business days (or longer if required by applicable law) after the date that notice of the Exchange Offer is mailed to Holders; and (z) consummate the Exchange Offer on or prior to the 45th day following the date on which the Exchange Offer Registration Statement is declared effective by the SEC. If, after the Exchange Offer Registration Statement is initially declared effective by the SEC, the Exchange Offer or the issuance of the Exchange Notes thereunder is interfered with by any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court, the Exchange Offer Registration Statement shall be deemed not to have become effective for purposes of this Agreement, unless such interference is removed within two business days of the occurrence thereof. Each Holder that wishes to participate in the Exchange Offer will be required, as a condition to its participation in the Exchange Offer, to represent to the Company in writing (which may be contained in the applicable letter of transmittal) that (i) any Exchange Notes to be received by it will be acquired in the ordinary course of such Holder's business, (ii) at the time of the consummation of the Exchange Offer such Holder will have no arrangement or understanding with any Person to participate in the distribution of the Exchange Notes in violation of the provisions of the Securities Act, (iii) such Holder is not an affiliate of the Company or any of the Guarantors within the meaning of the Securities Act or, if it is such an affiliate, that it will comply with the registration and prospectus delivery requirements of the Securities Act, to the extent applicable, and (iv) it is not acting on behalf of any Person who could not truthfully make the foregoing representations. Any broker-dealer that is the beneficial owner (as defined in Rule 13-3 under the Exchange Act) of Exchange Notes received by such broker-dealer in the Exchange Offer (a "Participating Broker-Dealer") will be required to acknowledge in writing that it (i) acquired the Notes for its own account as a result of market making activities or other trading activities, (ii) has not entered into any arrangement or understanding with the Company, any of the Guarantors or any of the Company's or the Guarantor's respective affiliates (within the meaning of the Securities Act) to distribute the Exchange Note to be received in the Exchange Offer and (iii) will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes. Upon consummation of the Exchange Offer in accordance with this Section 2, the provisions of this Agreement shall continue to apply, mutatis mutandis, solely with respect to Registrable Notes that are Private Exchange Notes, Exchange Notes as to which Section 2(c)(iv) is applicable and Exchange Notes held by Participating Broker-Dealers (as defined), and the Issuers 5 7 shall have no further obligation to register Registrable Notes (other than Private Exchange Notes and other than in respect of any Exchange Notes as to which clause 2(c)(iv) hereof applies) pursuant to Section 3 hereof. No securities other than the Exchange Notes and the Guarantees shall be included in the Exchange Offer Registration Statement. (b) The Issuers shall include within the Prospectus contained in the Exchange Offer Registration Statement a section entitled "Plan of Distribution," reasonably acceptable to the Initial Purchasers, which shall contain a summary statement of the positions taken or policies made by the staff of the SEC with respect to the potential "underwriter" status of any broker-dealer that is a Participating Broker-Dealer, whether such positions or policies have been publicly disseminated by the staff of the SEC or such positions or policies represent the prevailing views of the staff of the SEC. Such "Plan of Distribution" section shall also expressly permit, to the extent permitted by applicable policies and regulations of the SEC, the use of the Prospectus by all Persons subject to the prospectus delivery requirements of the Securities Act, including, to the extent permitted by applicable policies and regulations of the SEC, all Participating Broker-Dealers, and include a statement describing the means by which Participating Broker-Dealers may resell the Exchange Notes in compliance with the Securities Act. The Issuers shall use their best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the Prospectus contained therein in order to permit such Prospectus to be lawfully delivered by all Persons subject to the prospectus delivery requirements of the Securities Act for such period of time as is necessary to comply with applicable law in connection with any resale of the Exchange Notes covered thereby; provided, however, that such period shall not exceed 180 days after such Exchange Offer Registration Statement is declared effective (or such longer period if extended pursuant to the last paragraph of Section 5 hereof) (the "Applicable Period"). If, prior to consummation of the Exchange Offer, any Holder holds any Notes acquired by it that have, or that are reasonably likely to be determined to have, the status of an unsold allotment in an initial distribution, or any Holder is not entitled to participate in the Exchange Offer, the Company upon the request of any such Holder shall simultaneously with the delivery of the Exchange Notes in the Exchange Offer, issue and deliver to any such Holder, in exchange (the "Private Exchange") for such Notes held by any such Holder, a like principal amount of notes (the "Private Exchange Notes") of the Company, guaranteed by the Guarantors, that are identical in all material respects to the Exchange Notes except for the placement of a restrictive legend on such Private Exchange Notes. The Private Exchange Notes shall be issued pursuant to the same indenture as the Exchange Notes and bear the same CUSIP number as the Exchange Notes. Interest on the Exchange Notes will accrue (A) from the later of (i) the last interest payment date on which interest was paid on the Notes surrendered in exchange therefor, or (ii) if the Note is surrendered for exchange on a date in a period which includes the record date for an interest 6 8 payment date to occur on or after the date of such exchange and as to which interest will be paid, the date of such interest payment date or (B) if no interest has been paid on the Notes, from the Issue Date. In connection with the Exchange Offer, the Issuers shall: (1) mail, or cause to be mailed, to each Holder of record entitled to participate in the Exchange Offer a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; (2) use their best efforts to keep the Exchange Offer open for not less than 20 business days after the date that notice of the Exchange Offer is mailed to Holders (or longer if required by applicable law); (3) utilize the services of a depositary for the Exchange Offer with an address in the Borough of Manhattan, The City of New York; (4) permit Holders to withdraw tendered Notes at any time prior to the close of business, New York time, on the last business day on which the Exchange Offer shall remain open; and (5) otherwise comply in all material respects with all applicable laws, rules and regulations. As soon as practicable after the close of the Exchange Offer and the Private Exchange, if any, the Issuers shall: (1) accept for exchange all Registrable Notes validly tendered and not validly withdrawn pursuant to the Exchange Offer and the Private Exchange, if any; (2) deliver to the Trustee for cancellation all Registrable Notes so accepted for exchange; and (3) cause the Trustee to authenticate and deliver promptly to each Holder of Notes, Exchange Notes or Private Exchange Notes, as the case may be, equal in principal amount to the Notes of such Holder so accepted for exchange. The Exchange Offer and the Private Exchange shall not be subject to any conditions, other than that (i) the Exchange Offer or Private Exchange, as the case may be, does not violate applicable law or any applicable interpretation of the staff of the SEC, (ii) no action or proceeding shall have been instituted or threatened in any court or by any governmental agency which might materially impair the ability of the Issuers to proceed with the Exchange Offer or the Private 7 9 Exchange, and no material adverse development shall have occurred in any existing action or proceeding with respect to the Issuers and (iii) all governmental approvals shall have been obtained, which approvals the Issuers deem necessary for the consummation of the Exchange Offer or Private Exchange. The Exchange Notes and the Private Exchange Notes shall be issued under (i) the Indenture or (ii) an indenture identical in all material respects to the Indenture and which, in either case, has been qualified under the TIA or is exempt from such qualification and shall provide that the Exchange Notes shall not be subject to the transfer restrictions set forth in the Indenture. The Indenture or such indenture shall provide that the Exchange Notes, the Private Exchange Notes and the Notes shall vote and consent together on all matters as one class and that none of the Exchange Notes, the Private Exchange Notes or the Notes will have the right to vote or consent as a separate class on any matter. (c) If, (i) because of any change in law or in currently prevailing interpretations of the staff of the SEC, the Issuers are not permitted to effect the Exchange Offer, (ii) the Exchange Offer is not consummated within 185 days of the Issue Date, (iii) any holder of Private Exchange Notes so requests in writing to the Company within 45 days after the consummation of the Exchange Offer, or (iv) in the case of any Holder that participates in the Exchange Offer, such Holder does not receive Exchange Notes on the date of the exchange that may be sold without restriction under state and federal securities laws (other than due solely to the status of such Holder as an affiliate of any of the Issuers within the meaning of the Securities Act) and any such Holder so requests in writing to the Company, then in the case of each of clauses (i) to and including (iv) of this sentence, the Issuers shall promptly (and, in any event, within two business days) deliver to the Holders and the Trustee written notice thereof (the "Shelf Notice") and shall file a Shelf Registration pursuant to Section 3 hereof. 3. Shelf Registration. If at any time a Shelf Notice is delivered as contemplated by Section 2(c) hereof, then: (a) Shelf Registration. The Issuers shall file with the SEC a Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 covering all of the Registrable Notes not exchanged in the Exchange Offer, Private Exchange Notes and Exchange Notes as to which Section 2(c)(iv) is applicable (the "Initial Shelf Registration"). The Issuers shall use their best efforts to file with the SEC the Initial Shelf Registration on or before the applicable Filing Date. The Initial Shelf Registration shall be on an appropriate form permitting registration of such Registrable Notes for resale by Holders in the manner or manners designated by them (including, without limitation, one or more underwritten offerings). The Issuers shall not permit any securities other than the Registrable Notes to be included in the Initial Shelf Registration or any Subsequent Shelf Registration (as defined below). The Issuers shall use their best efforts to cause the Initial Shelf Registration to be 8 10 declared effective under the Securities Act on or prior to the Effectiveness Date and to keep the Initial Shelf Registration continuously effective under the Securities Act until the date which is two years from the Issue Date, subject to extension pursuant to the last paragraph of Section 5 hereof (the "Effectiveness Period"), or such shorter period ending when (i) all Registrable Notes covered by the Initial Shelf Registration have been sold in the manner set forth and as contemplated in the Initial Shelf Registration or (ii) a Subsequent Shelf Registration covering all of the Registrable Notes covered by and not sold under the Initial Shelf Registration or an earlier Subsequent Shelf Registration has been declared effective under the Securities Act; provided, however, that the Effectiveness Period in respect of the Initial Shelf Registration shall be extended to the extent required to permit dealers to comply with the applicable prospectus delivery requirements of Rule 174 under the Securities Act and as otherwise provided herein. (b) Subsequent Shelf Registrations. If the Initial Shelf Registration or any Subsequent Shelf Registration ceases to be effective for any reason at any time during the Effectiveness Period (other than because of the sale of all of the securities registered thereunder), the Issuers shall use their best efforts to obtain the prompt withdrawal of any order suspending the effectiveness thereof, and in any event shall within 30 days of such cessation of effectiveness amend the Initial Shelf Registration in a manner to obtain the withdrawal of the order suspending the effectiveness thereof, or file an additional "shelf" Registration Statement pursuant to Rule 415 covering all of the Registrable Notes covered by and not sold under the Initial Shelf Registration or an earlier Subsequent Shelf Registration (each, a "Subsequent Shelf Registration"). If a Subsequent Shelf Registration is filed, the Issuers shall use their best efforts to cause the Subsequent Shelf Registration to be declared effective under the Securities Act as soon as practicable after such filing and to keep such Subsequent Shelf Registration continuously effective for a period equal to the number of days in the Effectiveness Period less the aggregate number of days during which the Initial Shelf Registration or any Subsequent Shelf Registration was previously continuously effective, or such shorter period ending when all Registrable Notes covered by such Subsequent Shelf Registration have been sold in the manner set forth and as contemplated in such Subsequent Shelf Registration. As used herein the term "Shelf Registration" means the Initial Shelf Registration and any Subsequent Shelf Registration. (c) Supplements and Amendments. The Issuers shall promptly supplement and amend any Shelf Registration if required by the rules, regulations or instructions applicable to the registration form used for such Shelf Registration, if required by the Securities Act, or if reasonably requested by the Holders of a majority in aggregate principal amount of the Registrable Notes covered by such Registration Statement or by any underwriter of such Registrable Notes. 4. Additional Interest. (a) The Issuers and the Initial Purchasers agree that the Holders will suffer damages if the Issuers fail to fulfill their obligations under Section 2 or Section 3 hereof and that it would not be feasible to ascertain the extent of such damages with precision. Accordingly, the Company agrees to pay, as liquidated damages, additional interest on the Notes ("Additional 9 11 Interest") under the circumstances and to the extent set forth below (each of which shall be given independent effect): (i) if the Exchange Offer Registration Statement or any Shelf Registration is not filed with the SEC on or prior to the Filing Date applicable thereto, then, commencing on the day after any such Filing Date, Additional Interest shall accrue on the principal amount of the Notes at a rate of 0.50% per annum for the first 90 days immediately following each such Filing Date, and such Additional Interest rate shall increase by an additional 0.50% per annum at the beginning of each subsequent 90-day period; or (ii) if (A) the Exchange Offer Registration Statement is not declared effective by the SEC on or prior to the relevant Effectiveness Date or (B) notwithstanding that the Issuers have consummated or will consummate the Exchange Offer, the Issuers are required to file a Shelf Registration and such Shelf Registration is not declared effective by the SEC on or prior to the Effectiveness Date in respect of such Shelf Registration, then, commencing on the day after either such Effectiveness Date, Additional Interest shall accrue on the principal amount of the Notes at a rate of 0.50% per annum for the first 90 days immediately following the day after either such Effectiveness Date, and such Additional Interest rate shall increase by an additional 0.50% per annum at the beginning of each subsequent 90-day period; or (iii) if (A) the Issuers have not exchanged Exchange Notes for all Notes validly tendered in accordance with the terms of the Exchange Offer on or prior to the 45th day after the date on which the Exchange Offer Registration Statement relating thereto was declared effective or (B) if applicable, a Shelf Registration has been declared effective and such Shelf Registration ceases to be effective at any time during the Effectiveness Period, then Additional Interest shall accrue on the principal amount of the Notes at a rate of 0.50% per annum for the first 90 days commencing on the (x) 46th day after such effective date, in the case of (A) above, or (y) the day such Shelf Registration ceases to be effective in the case of (B) above, and such Additional Interest rate shall increase by an additional 0.50% per annum at the beginning of each subsequent 90-day period; provided, however, that the Additional Interest rate on the Notes as a result of the provisions of clauses (i), (ii) and (iii) above may not exceed at any one time in the aggregate 1.5% per annum; provided, further, however, that (1) upon the filing of the applicable Exchange Offer Registration Statement or the applicable Shelf Registration as required hereunder (in the case of clause (i) above of this Section 4(a)), (2) upon the effectiveness of the Exchange Offer Registration Statement or the applicable Shelf Registration Statement as required hereunder (in the case of clause (ii) of this Section 4(a)), or (3) upon the exchange of the applicable Exchange Notes for all Notes tendered (in the case of clause (iii)(A) of this Section 4(a)), or upon the effectiveness of the applicable Shelf Registration Statement which had ceased to remain effective (in the case of clause (iii)(B) of this Section 4(a)), Additional Interest on the Notes in respect of which such events relate as a result of such clause (or the relevant subclause thereof), as the case may be, shall cease to accrue. 10 12 (b) The Company shall notify the Trustee within three business days after each and every date on which an event occurs in respect of which Additional Interest is required to be paid (an "Event Date"). Any amounts of Additional Interest due pursuant to clause (i), (ii) or (iii) of Section 4(a) will be payable in cash semiannually on each June 1 and December 1 (to the holders of record on the May 15 and November 15 immediately preceding such dates), commencing with the first such date occurring after any such Additional Interest commences to accrue. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest rate by the principal amount of the Registrable Notes, multiplied by a fraction, the numerator of which is the number of days such Additional Interest rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months and, in the case of a partial month, the actual number of days elapsed), and the denominator of which is 360. 5. Registration Procedures. In connection with the filing of any Registration Statement pursuant to Sections 2 or 3 hereof, the Issuers shall effect such registrations to permit the sale of the securities covered thereby in accordance with the intended method or methods of disposition thereof, and pursuant thereto and in connection with any Registration Statement filed by the Issuers hereunder each of the Issuers shall: (a) Prepare and file with the SEC prior to the applicable Filing Date, a Registration Statement or Registration Statements as prescribed by Sections 2 or 3 hereof, and use its best efforts to cause each such Registration Statement to become effective and remain effective as provided herein; provided, however, that, if (1) such filing is pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period relating thereto, before filing any Registration Statement or Prospectus or any amendments or supplements thereto, the Issuers shall furnish to and afford the Holders of the Registrable Notes included in such Registration Statement or each such Participating Broker-Dealer, as the case may be, their counsel and the managing underwriters, if any, a reasonable opportunity to review copies of all such documents (including copies of any documents to be incorporated by reference therein and all exhibits thereto) proposed to be filed (in each case at least five days prior to such filing, or such later date as is reasonable under the circumstances). The Issuers shall not file any Registration Statement or Prospectus or any amendments or supplements thereto if the Holders of a majority in aggregate principal amount of the Registrable Notes included in such Registration Statement, or any such Participating Broker-Dealer, as the case may be, their counsel, or the managing underwriters, if any, shall reasonably object on a timely basis. (b) Prepare and file with the SEC such amendments and post-effective amendments to each Shelf Registration or Exchange Offer Registration Statement, as the case may be, as may be necessary to keep such Registration Statement continuously effective for the Effectiveness Period or the Applicable Period, as the case may be; cause the related Prospectus to be supplemented by any Prospectus supplement required by applicable law, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) promulgated under the 11 13 Securities Act; and comply with the provisions of the Securities Act and the Exchange Act applicable to each of them with respect to the disposition of all securities covered by such Registration Statement as so amended or in such Prospectus as so supplemented and with respect to the subsequent resale of any securities being sold by a Participating Broker-Dealer covered by any such Prospectus. (c) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period relating thereto from whom the Company has received written notice that it will be a Participating Broker-Dealer in the Exchange Offer, notify the selling Holders of Registrable Notes, or each such Participating Broker-Dealer, as the case may be, their counsel and the managing underwriters, if any, promptly (but in any event within one business day), and confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective under the Securities Act (including in such notice a written statement that any Holder may, upon request, obtain, at the sole expense of the Issuers, one conformed copy of such Registration Statement or post-effective amendment including financial statements and schedules, documents incorporated or deemed to be incorporated by reference and exhibits), (ii) of the issuance by the SEC of any stop order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of any preliminary prospectus or the initiation of any proceedings for that purpose, (iii) if at any time when a prospectus is required by the Securities Act to be delivered in connection with sales of the Registrable Notes or resales of Exchange Notes by Participating Broker-Dealers the representations and warranties of the Issuers contained in any agreement (including any underwriting agreement) contemplated by Section 5(m) hereof cease to be true and correct in all material respects, (iv) of the receipt by any Issuer of any notification with respect to the suspension of the qualification or exemption from qualification of a Registration Statement or any of the Registrable Notes or the Exchange Notes to be sold by any Participating Broker-Dealer for offer or sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose, (v) of the happening of any event, the existence of any condition or any information becoming known that makes any statement made in such Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in or amendments or supplements to such Registration Statement, Prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (vi) of the Issuers' determination that a post-effective amendment to a Registration Statement would be appropriate. 12 14 (d) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, use its best efforts to prevent the issuance of any order suspending the effectiveness of a Registration Statement or of any order preventing or suspending the use of a Prospectus or suspending the qualification (or exemption from qualification) of any of the Registrable Notes or the Exchange Notes to be sold by any Participating Broker-Dealer, for sale in any jurisdiction, and, if any such order is issued, to use its best efforts to obtain the withdrawal of any such order at the earliest possible moment. (e) If a Shelf Registration is filed pursuant to Section 3 and if requested by the managing underwriter or underwriters (if any), the Holders of a majority in aggregate principal amount of the Registrable Notes being sold in connection with an underwritten offering or any Participating Broker-Dealer, (i) as promptly as practicable incorporate in a prospectus supplement or post-effective amendment such information as the managing underwriter or underwriters (if any), such Holders, any Participating Broker-Dealer or counsel for any of them reasonably request to be included therein, (ii) make all required filings of such prospectus supplement or such post-effective amendment as soon as practicable after any Issuer has received notification of the matters to be incorporated in such prospectus supplement or post-effective amendment, and (iii) supplement or make amendments to such Registration Statement. (f) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, furnish to each selling Holder of Registrable Notes and to each such Participating Broker-Dealer who so requests and to their respective counsel and each managing underwriter, if any, at the sole expense of the Issuers, one conformed copy of the Registration Statement or Registration Statements and each post-effective amendment thereto, including financial statements and schedules, and, if requested, all documents incorporated or deemed to be incorporated therein by reference and all exhibits. (g) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, deliver to each selling Holder of Registrable Notes, or each such Participating Broker-Dealer, as the case may be, their respective counsel, and the underwriters, if any, at the sole expense of the Issuers, as many copies of the Prospectus or Prospectuses (including each form of preliminary prospectus) and each amendment or supplement thereto and any documents incorporated by reference therein as such Persons may reasonably request; and, subject to the last paragraph of this Section 5, the Issuers hereby consent to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders of Registrable Notes or each such Participating Broker-Dealer, as the case may be, and the underwriters or agents, if any, and dealers (if any), in connection with the offering and sale of the Registrable Notes covered by, or the sale by Participating Broker-Dealers of the Exchange Notes pursuant to, such Prospectus 13 15 and any amendment or supplement thereto. (h) Prior to any public offering of Registrable Notes or any delivery of a Prospectus contained in the Exchange Offer Registration Statement by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, use its best efforts to register or qualify, and to cooperate with the selling Holders of Registrable Notes or each such Participating Broker-Dealer, as the case may be, the managing underwriter or underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Notes for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any selling Holder, Participating Broker-Dealer, or the managing underwriter or underwriters reasonably request in writing; provided, however, that where Exchange Notes held by Participating Broker-Dealers or Registrable Notes are offered other than through an underwritten offering, the Issuers agree to cause their counsel to perform Blue Sky investigations and file registrations and qualifications required to be filed pursuant to this Section 5(h), keep each such registration or qualification (or exemption therefrom) effective during the period such Registration Statement is required to be kept effective and do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Exchange Notes held by Participating Broker-Dealers or the Registrable Notes covered by the applicable Registration Statement; provided, however, that no Issuer shall be required to (A) qualify generally to do business in any jurisdiction where it is not then so qualified, (B) take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or (c) subject itself to taxation in excess of a nominal dollar amount in any such jurisdiction where it is not then so subject. (i) If a Shelf Registration is filed pursuant to Section 3 hereof, cooperate with the selling Holders of Registrable Notes and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Notes to be sold, which certificates shall not bear any restrictive legends and shall be in a form eligible for deposit with The Depository Trust Company; and enable such Registrable Notes to be in such denominations and registered in such names as the managing underwriter or underwriters, if any, or Holders may request. (j) The Issuers shall cooperate in all reasonable respects with respect to all other filings and approvals required to enable the sellers of Registrable Notes to consummate the disposition of such Registrable Notes. (k) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, upon the occurrence of any event contemplated by Section 5(c)(v) or 5(c)(vi) hereof, as promptly as practicable prepare and (subject to Section 5(a) hereof) file with the SEC, at the sole expense of the Issuers, a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document 14 16 incorporated or deemed to be incorporated therein by reference, or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Notes being sold thereunder or to the purchasers of the Exchange Notes to whom such Prospectus will be delivered by a Participating Broker-Dealer, any such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, the Issuers shall not be required to amend or supplement a Registration Statement, any related Prospectus or any document incorporated therein by reference, in the event that, and for a period not to exceed an aggregate of 75 days in any calendar year if, (i) an event occurs and is continuing as a result of which the Shelf Registration would, in the Company's good faith judgment, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (ii) (a) the Company determines in its good faith judgment that the disclosure of such event at such time would have a material adverse effect on the business, operations or prospects of the Company or (b) the disclosure otherwise relates to a pending material business transaction that has not yet been publicly disclosed. In the event that any Registrable Notes included in a Shelf Registration remain unsold at the end of the period during which the Company is obligated to use its best efforts to maintain the effectiveness of such Shelf Registration, the Company may file a post-effective amendment to the Registration Statement for the purpose of removing such Notes from registered status. (l) Prior to the effective date of the first Registration Statement relating to the Registrable Notes, (i) provide the Trustee with certificates for the Registrable Notes in a form eligible for deposit with The Depository Trust Company and (ii) provide a CUSIP number for the Registrable Notes. (m) In connection with any underwritten offering of Registrable Notes pursuant to a Shelf Registration, enter into an underwriting agreement as is customary in underwritten offerings of debt securities similar to the Notes and take all such other actions as are reasonably requested by the managing underwriter or underwriters in order to expedite or facilitate the registration or the disposition of such Registrable Notes and, in such connection, (i) make such representations and warranties to, and covenants with, the underwriters with respect to the business of the Issuers and their respective subsidiaries (including any acquired business, properties or entity, if applicable) and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, as are customarily made by issuers to underwriters in underwritten offerings of debt securities similar to the Notes, and confirm the same in writing if and when requested; (ii) obtain the written opinions of counsel to the Issuers and written updates thereof in form, scope and substance reasonably satisfactory to the managing underwriter or underwriters, addressed to the underwriters covering the matters customarily covered in opinions requested in underwritten offerings of debt securities similar to the Notes and such other matters as may be reasonably requested by the managing underwriter or underwriters; (iii) obtain "cold comfort" letters and updates thereof in form, scope and substance reasonably satisfactory to the managing underwriter or underwriters from the independent public accountants of the Issuers (and, if necessary, 15 17 any other independent public accountants of any subsidiary of any of the Issuers or of any business acquired by any of the Issuers for which financial statements and financial data are, or are required to be, included or incorporated by reference in the Registration Statement), addressed to each of the underwriters, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings of debt securities similar to the Notes and such other matters as reasonably requested by the managing underwriter or underwriters as permitted by the Statement on Auditing Standards No. 72; and (iv) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures no less favorable to the sellers and underwriters, if any, than those set forth in Section 7 hereof (or such other provisions and procedures acceptable to Holders of a majority in aggregate principal amount of Registrable Notes covered by such Registration Statement and the managing underwriter or underwriters or agents) with respect to all parties to be indemnified pursuant to such Section. Delivery of any such opinion or comfort letter shall be subject to the recipient furnishing such written representations or acknowledgments as are customarily provided by selling securityholders who receive such comfort letters or opinions. The above shall be done at each closing under such underwriting agreement, or as and to the extent required thereunder. (n) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus contained in the Exchange Offer Registration Statement filed pursuant to Section 2 hereof is required to be delivered under the Securities Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, make available for inspection by any selling Holder of such Registrable Notes being sold, or each such Participating Broker-Dealer, as the case may be, any underwriter participating in any such disposition of Registrable Notes, and any attorney, accountant or other agent retained by any such selling Holder or each such Participating Broker-Dealer, as the case may be, or underwriter (collectively, the "Inspectors"), at the offices where normally kept, during reasonable business hours, all financial and other records, pertinent corporate documents and instruments of the Company and subsidiaries of the Company (collectively, the "Records") as shall be reasonably necessary to enable them to exercise any applicable due diligence responsibilities, and cause the officers, directors and employees of the Company and any of its subsidiaries to supply all information reasonably requested by any such Inspector in connection with such Registration Statement and Prospectus. Each Inspector shall agree in writing that it will keep the Records confidential and that it will not disclose any of the Records that the Company determines, in good faith, to be confidential and notifies the Inspectors in writing are confidential unless (i) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, or (ii) the information in such Records has been made generally available to the public; provided, however, that prior notice shall be provided as soon as practicable to the Company of the potential disclosure of any information by such Inspector pursuant to clause (i) of this sentence to permit the Company to obtain a protective order (or waive the provisions of this paragraph (n)) and that such Inspector shall take such actions as are reasonably necessary to protect the confidentiality of such information (if practicable) to the extent such action is otherwise not inconsistent with, an impairment of or in derogation of the rights and interests of the Holder or any Inspector. 16 18 (o) Provide an indenture trustee for the Registrable Notes or the Exchange Notes, as the case may be, and cause the Indenture or the trust indenture provided for in Section 2(a) hereof, as the case may be, to be qualified under the TIA not later than the effective date of the first Registration Statement relating to the Registrable Notes; and in connection therewith, cooperate with the trustee under any such indenture and the Holders of the Registrable Notes, to effect such changes to such indenture as may be required for such indenture to be so qualified in accordance with the terms of the TIA; and execute, and use its best efforts to cause such trustee to execute, all documents as may be required to effect such changes, and all other forms and documents required to be filed with the SEC to enable such indenture to be so qualified in a timely manner. (p) Comply with all applicable rules and regulations of the SEC and make generally available to its security holders with regard to any applicable Registration Statement, a consolidated earnings statement satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 60 days after the end of any fiscal quarter (or 120 days after the end of any 12-month period if such period is a fiscal year) (i) commencing at the end of any fiscal quarter in which Registrable Notes are sold to underwriters in a firm commitment or best efforts underwritten offering and (ii) if not sold to underwriters in such an offering, commencing on the first day of the first fiscal quarter of the Company after the effective date of a Registration Statement, which statements shall cover said 12-month periods. (q) Upon consummation of the Exchange Offer or a Private Exchange, obtain an opinion of counsel to the Company, in a form customary for underwritten transactions, addressed to the Trustee for the benefit of all Holders of Registrable Notes participating in the Exchange Offer or the Private Exchange, as the case may be, that the Exchange Notes or Private Exchange Notes, as the case may be, the related Guarantees and the related indenture constitute legal, valid and binding obligations of the Issuers, enforceable against them in accordance with their respective terms, subject to customary exceptions and qualifications. (r) If the Exchange Offer or a Private Exchange is to be consummated, upon delivery of the Registrable Notes by Holders to the Company (or to such other Person as directed by the Company) in exchange for the Exchange Notes or the Private Exchange Notes, as the case may be, the Company shall mark, or cause to be marked, on such Registrable Notes that such Registrable Notes are being canceled in exchange for the Exchange Notes or the Private Exchange Notes, as the case may be; in no event shall such Registrable Notes be marked as paid or otherwise satisfied (s) Cooperate with each seller of Registrable Notes covered by any Registration Statement and each underwriter, if any, participating in the disposition of such Registrable Notes and their respective counsel in connection with any filings required to be made with the National Association of Securities Dealers, Inc. (the "NASD"). (t) Use its best efforts to take all other steps reasonably necessary to effect the registration of the Exchange Notes and/or Registrable Notes covered by a Registration Statement 17 19 contemplated hereby. The Company may require each seller of Registrable Notes as to which any registration is being effected to furnish to the Company such information regarding such seller and the distribution of such Registrable Notes as the Company may, from time to time, reasonably request. The Company may exclude from such registration the Registrable Notes of any seller so long as such seller fails to furnish such information within a reasonable time after receiving such request. Each seller as to which any Shelf Registration is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such seller not materially misleading. If any such Registration Statement refers to any Holder by name or otherwise as the holder of any securities of the Company, then such Holder shall have the right to require (i) the insertion therein of language, in form and substance reasonably satisfactory to such Holder, to the effect that the holding by such Holder of such securities is not to be construed as a recommendation by such Holder of the investment quality of the securities covered thereby and that such holding does not imply that such Holder will assist in meeting any future financial requirements of the Company, or (ii) in the event that such reference to such Holder by name or otherwise is not required by the Securities Act or any similar federal statute then in force, the deletion of the reference to such Holder in any amendment or supplement to the Registration Statement filed or prepared subsequent to the time that such reference ceases to be required. Each Holder of Registrable Notes and each Participating Broker-Dealer agrees by its acquisition of such Registrable Notes or Exchange Notes to be sold by such Participating Broker-Dealer, as the case may be, that, upon actual receipt of any notice from the Company of the happening of any event of the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof, such Holder will forthwith discontinue disposition of such Registrable Notes covered by such Registration Statement or Prospectus or Exchange Notes to be sold by such Holder or Participating Broker-Dealer, as the case may be, until such Holder's or Participating Broker-Dealer's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 5(k) hereof, or until it is advised in writing (the "Advice") by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any amendments or supplements thereto. In the event that the Company shall give any such notice, the Applicable Period shall be extended by the number of days during such periods from and including the date of the giving of such notice to and including the date when each seller of Registrable Notes covered by such Registration Statement or Exchange Notes to be sold by such Participating Broker-Dealer, as the case may be, shall have received (x) the copies of the supplemented or amended Prospectus contemplated by Section 5(k) hereof or (y) the Advice. 6. Registration Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the Issuers (other than any underwriting discounts or commissions) shall be borne by the Company whether or not the Exchange Offer Registration Statement or any Shelf Registration 18 20 is filed or becomes effective or the Exchange Offer is consummated, including, without limitation, (i) all registration and filing fees (including, without limitation, (A) fees with respect to filings required to be made with the NASD in connection with an underwritten offering and (B) reasonable fees and expenses of compliance with state securities or Blue Sky laws (including, without limitation, fees and disbursements of counsel in connection with Blue Sky qualifications of the Registrable Notes or Exchange Notes and determination of the eligibility of the Registrable Notes or Exchange Notes for investment under the laws of such jurisdictions (x) where the holders of Registrable Notes are located, in the case of the Exchange Notes, or (y) as provided in Section 5(h) hereof, in the case of Registrable Notes or Exchange Notes to be sold by a Participating Broker-Dealer during the Applicable Period)), (ii) printing expenses, including, without limitation, expenses of printing certificates for Registrable Notes or Exchange Notes in a form eligible for deposit with The Depository Trust Company and of printing prospectuses if the printing of prospectuses is requested by the managing underwriter or underwriters, if any, by the Holders of a majority in aggregate principal amount of the Registrable Notes included in any Registration Statement or in respect of Registrable Notes or Exchange Notes to be sold by any Participating Broker-Dealer during the Applicable Period, as the case may be, (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Issuers and reasonable fees and disbursements of one special counsel for all of the sellers of Registrable Notes (exclusive of any counsel retained pursuant to Section 7 hereof), (v) fees and disbursements of all independent certified public accountants referred to in Section 5(m)(iii) hereof (including, without limitation, the expenses of any special audit and "cold comfort" letters required by or incident to such performance), (vi) Securities Act liability insurance, if the Company desires such insurance, (vii) fees and expenses of all other Persons retained by the Issuers, (viii) internal expenses of the Issuers (including, without limitation, all salaries and expenses of officers and employees of the Issuers performing legal or accounting duties), (ix) the expense of any annual audit, (x) any fees and expenses incurred in connection with the listing of the securities to be registered on any securities exchange, and the obtaining of a rating of the securities, in each case, if applicable, and (xi) the expenses relating to printing, word processing and distributing all Registration Statements, certificates, underwriting agreements, indentures and any other documents necessary in order to comply with this Agreement. 7. Indemnification. (a) Each of the Issuers, jointly and severally, agrees to indemnify and hold harmless each Holder of Registrable Notes and each Participating Broker-Dealer selling Exchange Notes during the Applicable Period, the affiliates, officers, directors, representatives, employees and agents of each such Person, and each Person, if any, who controls any such Person within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a "Participant"), from and against any and all losses, claims, damages, judgments, liabilities and expenses (including, without limitation, the reasonable legal fees and other expenses actually incurred in connection with any suit, action or proceeding or any claim asserted) caused by, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment thereto) or Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary 19 21 prospectus, or caused by, arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except insofar as such losses, claims, damages or liabilities are caused by any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information relating to any Participant furnished to the Company in writing by such Participant expressly for use therein and with respect to any preliminary prospectus, to the extent that any such loss, claim, damage or liability arises solely from the fact that any Participant sold Notes to a person to whom there was not sent or given a copy of the Prospectus (as amended or supplemented) at or prior to the written confirmation of such sale if the Company shall have previously furnished copies thereof to the Participant in accordance herewith and the Prospectus (as amended or supplemented) would have corrected any such untrue statement or omission. (b) Each Participant agrees, severally and not jointly, to indemnify and hold harmless the Issuers and their respective affiliates, officers, directors, representatives, employees and agents and each Person who controls each Issuer within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent (but on a several, and not joint, basis) as the foregoing indemnity from the Issuers to each Participant, but only with reference to information relating to such Participant furnished to the Company in writing by such Participant expressly for use in any Registration Statement or Prospectus, any amendment or supplement thereto, or any preliminary prospectus. The liability of any Participant under this paragraph shall in no event exceed the proceeds received by such Participant from sales of Registrable Notes or Exchange Notes giving rise to such obligations. (c) If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Person in respect of which indemnity may be sought pursuant to either of the two preceding paragraphs, such Person (the "Indemnified Person") shall promptly notify the Persons against whom such indemnity may be sought (the "Indemnifying Persons") in writing, and the Indemnifying Persons, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others the Indemnifying Persons may reasonably designate in such proceeding and shall pay the fees and expenses actually incurred by such counsel related to such proceeding; provided, however, that the failure to so notify any Indemnifying Person (i) will not relieve it from any liability under paragraph (a) or (b) above unless and to the extent such failure results in the forfeiture by the Indemnifying Person of substantial rights and defenses and (ii) will not, in any event, relieve the Indemnifying Person from any obligations to any Indemnified Person other than the indemnification obligation provided in paragraphs (a) and (b) above. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Persons and the Indemnified Person shall have mutually agreed to the contrary, (ii) the Indemnifying Persons shall have failed within a reasonable period of time to retain counsel reasonably satisfactory to the Indemnified Person or (iii) the named parties in any such proceeding (including any impleaded parties) include both any Indemnifying Person and the Indemnified Person or any affiliate thereof and 20 22 representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the Indemnifying Persons shall not, in connection with such proceeding or separate but substantially similar related proceedings in the same jurisdiction arising out of the same general allegations, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be reimbursed promptly as they are incurred. Any such separate firm for the Participants and such control Persons of Participants shall be designated in writing by Participants who sold a majority in interest of Registrable Notes and Exchange Notes sold by all such Participants and shall be reasonably acceptable to the Company, and any such separate firm for the Issuers, their affiliates, officers, directors, representatives, employees and agents and such control Persons of the Issuers shall be designated in writing by the Company and shall be reasonably acceptable to the Holders. The Indemnifying Persons shall not be liable for any settlement of any proceeding effected without its prior written consent (which consent shall not be unreasonably withheld or delayed), but if settled with such consent or if there be a final non-appealable judgment for the plaintiff for which the Indemnified Person is entitled to indemnification pursuant to this Agreement, each of the Indemnifying Persons agrees to indemnify and hold harmless each Indemnified Person from and against any loss or liability by reason of such settlement or judgment. No Indemnifying Person shall, without the prior written consent of the Indemnified Persons (which consent shall not be unreasonably withheld or delayed), effect any settlement or compromise of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party, or indemnity could have been sought hereunder by such Indemnified Person, unless such settlement (A) includes an unconditional written release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (B) does not include any statement as to an admission of fault, culpability or failure to act by or on behalf of such Indemnified Person. (d) If the indemnification provided for in paragraphs (a) and (b) of this Section 7 is for any reason unavailable to, or insufficient to hold harmless, an Indemnified Person in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraphs, in lieu of indemnifying such Indemnified Person thereunder and in order to provide for just and equitable contribution, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect (i) the relative benefits received by the Indemnifying Person or Persons on the one hand and the Indemnified Person or Persons on the other from the original offering of the Notes or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, not only such relative benefits but also the relative fault of the Indemnifying Person or Persons on the one hand and the Indemnified Person or Persons on the other in connection with the statements or omissions or alleged statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to 21 23 information supplied by the Issuers on the one hand or such Participant or such other Indemnified Person, as the case may be, on the other hand, the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission, and any other equitable considerations appropriate in the circumstances. (e) The parties agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Participants were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages, judgments, liabilities and expenses referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any reasonable legal or other expenses actually incurred by such Indemnified Person in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, in no event shall a Participant be required to contribute any amount in excess of the amount by which proceeds received by such Participant from sales of Registrable Notes or Exchange Notes, as the case may be, exceeds the amount of any damages that such Participant has otherwise been required to pay or has paid by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. (f) Any losses, claims, damages, liabilities or expenses for which an indemnified party is entitled to indemnification or contribution under this Section 7 shall be paid by the Indemnifying Person to the Indemnified Person as such losses, claims, damages, liabilities or expenses are incurred. The indemnity and contribution agreements contained in this Section 7 and the representations and warranties of the Issuers set forth in this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Holder or any person who controls a Holder, any Issuer, its directors, officers, employees or agents or any person controlling an Issuer, and (ii) any termination of this Agreement. (g) The indemnity and contribution agreements contained in this Section 7 will be in addition to any liability which the Indemnifying Persons may otherwise have to the Indemnified Persons referred to above. 8. Rules 144 and 144A. Each of the Issuers covenants and agrees that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder in a timely manner in accordance with the requirements of the Securities Act and the Exchange Act and, if at any time such Issuer is not required to file such reports, such Issuer will, upon the request of any Holder or beneficial owner of Registrable Notes, make available such information as is necessary to permit sales pursuant to Rule 144A under the Securities Act. Each of the Issuers further covenants and agrees, for so long as any Registrable Notes remain outstanding, that it will 22 24 take such further action as any Holder of Registrable Notes may reasonably request, all to the extent required from time to time to enable such holder to sell Registrable Notes without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144(k) and Rule 144A under the Securities Act, as such Rules may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC. 9. Underwritten Registrations. If any of the Registrable Notes covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will manage the offering will be selected by the Holders of a majority in aggregate principal amount of such Registrable Notes included in such offering and shall be reasonably acceptable to the Company. No Holder of Registrable Notes may participate in any underwritten registration hereunder unless such Holder (a) agrees to sell such Holder's Registrable Notes on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements. 10. Miscellaneous. (a) No Inconsistent Agreements. The Issuers have not, as of the date hereof, and the Issuers shall not, after the date of this Agreement, enter into any agreement with respect to any of its securities that is inconsistent with the rights granted to the Holders of Registrable Notes in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Issuers' other issued and outstanding securities under any such agreements. The Issuers will not enter into any agreement with respect to any of their securities which will grant to any Person piggy-back registration rights with respect to any Registration Statement. (b) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, otherwise than with the written consent of (i) the Company and (ii)(A) the Holders of not less than a majority in aggregate principal amount of the then outstanding Registrable Notes and (B) in circumstances that would adversely affect the Participating Broker-Dealers, the Participating Broker-Dealers holding not less than a majority in aggregate principal amount of the Exchange Notes held by all Participating Broker-Dealers; provided, however, that Section 7 and this Section 10(c) may not be amended, modified or supplemented without the prior written consent of each Holder and each Participating Broker-Dealer (including any person who was a Holder or Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case may be, disposed of pursuant to any Registration Statement) affected by any such amendment, modification or 23 25 supplement. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders of Registrable Notes whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect, impair, limit or compromise the rights of other Holders of Registrable Notes may be given by Holders of at least a majority in aggregate principal amount of the Registrable Notes being sold pursuant to such Registration Statement. (c) Notices. All notices and other communications (including, without limitation, any notices or other communications to the Trustee) provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, next-day air courier or facsimile: (i) if to a Holder of the Registrable Notes or any Participating Broker-Dealer, at the most current address of such Holder or Participating Broker-Dealer, as the case may be, set forth on the records of the registrar under the Indenture. 24 26 (ii) if to the Issuers, at the address as follows: c/o General Binding Corporation One GBC Plaza Northbrook, Illinois 60062 Attention: Vice President, Secretary & General Counsel with a copy to: Sidley & Austin One First National Plaza Chicago, Illinois 60603 Attention: Larry A. Barden All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; one business day after being timely delivered to a next-day air courier; and when receipt is acknowledged by the addressee, if sent by facsimile. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address and in the manner specified in such Indenture. (d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto, the Holders and the Participating Broker-Dealers. (e) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE FEDERAL AND STATE COURTS IN THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. 25 27 (h) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. (i) Securities Held by the Company or Its Affiliates. Whenever the consent or approval of Holders of a specified percentage of Registrable Notes is required hereunder, Registrable Notes held by the Company or its affiliates (as such term is defined in Rule 405 under the Securities Act) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. (j) Third-Party Beneficiaries. Holders of Registrable Notes and Participating Broker-Dealers are intended third-party beneficiaries of this Agreement, and this Agreement may be enforced by such Persons. (k) Entire Agreement. This Agreement, together with the Purchase Agreement and the Indenture, is intended by the parties as a final and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein and any and all prior oral or written agreements, representations, or warranties, contracts, understandings, correspondence, conversations and memoranda between the Holders on the one hand and the Issuers on the other, or between or among any agents, representatives, parents, subsidiaries, affiliates, predecessors in interest or successors in interest with respect to the subject matter hereof and thereof are merged herein and replaced hereby. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. THE COMPANY: GENERAL BINDING CORPORATION By: /s/ STEVEN RUBIN ------------------------------------ Name: Steven Rubin Title: Vice President, Secretary and General Counsel 26 28 THE GUARANTORS: BAKER SCHOOL SPECIALTY COMPANY, INC. By: /s/ STEVEN RUBIN ------------------------------------ Name: Steven Rubin Title: Vice President, Secretary and Clerk GBC BUSINESS EQUIPMENT, INC. By: /s/ STEVEN RUBIN ------------------------------------ Name: Steven Rubin Title: Vice President and Secretary GBC INDIA HOLDINGS, INC. By: /s/ STEVEN RUBIN ------------------------------------ Name: Steven Rubin Title: Vice President and Secretary GBC INTERNATIONAL, INC. By: /s/ STEVEN RUBIN ------------------------------------ Name: Steven Rubin Title: Vice President and Secretary GBC METALS CORP. By: /s/ STEVEN RUBIN ------------------------------------ Name: Steven Rubin Title: Vice President and Secretary PRO-TECH ENGINEERING CO., INC. By: /s/ STEVEN RUBIN ------------------------------------ Name: Steven Rubin Title: Vice President and Secretary SICKINGER COMPANY By: /s/ STEVEN RUBIN ------------------------------------ Name: Steven Rubin Title: Vice President and Secretary 29 U.S. RING BINDER CORP. By: /s/ STEVEN RUBIN ------------------------------------ Name: Steven Rubin Title: Vice President, Secretary and Clerk VELOBIND INCORPORATED By: /s/ STEVEN RUBIN ------------------------------------ Name: Steven Rubin Title: Vice President and Secretary IBICO, INC. By: /s/ STEVEN RUBIN ------------------------------------ Name: Steven Rubin Title: Vice President and Secretary The foregoing Agreement is hereby confirmed and accepted as of the date first above written. BT ALEX. BROWN INCORPORATED By: /s/ CHARLES G. DENISON ------------------------------------ Name: Charles G. Denison Title: Managing Director CIBC OPPENHEIMER CORP. By: /s/ NEAL THOMAS ------------------------------------ Name: Neal Thomas Title: Managing Director - High Yield Division ABN AMRO INCORPORATED By: /s/ LINDA A. DAWSON ------------------------------------ Name: Linda A. Dawson Title: Managing Director FIRST CHICAGO CAPITAL MARKETS, INC. By: /s/ KEVIN S. ROONEY ------------------------------------ Name: Kevin S. Rooney Title: Director NESBITT BURNS SECURITIES INC. By: /s/ WILLIAM J. MOSER, JR. ------------------------------------ Name: William J. Moser, Jr. Title: Director EX-5.1 26 OPINION OF STEVEN RUBIN 1 EXHIBIT 5.1 July 24, 1998 General Binding Corporation One GBC Plaza Northbrook, Illinois 60062 Re: 9 3/8% Senior Subordinated Notes Due 2008 Ladies and Gentlemen: I am the Vice President, Secretary and General Counsel of General Binding Corporation, a Delaware corporation (the "Company"), and General Counsel of Baker School Specialty Co., Inc., a Massachusetts corporation, GBC Business Equipment, Inc., a Florida corporation, GBC India Holdings Inc., a Nevada corporation, GBC International, Inc., a Nevada corporation, GBC Metals Corp., a Nevada corporation, Ibico Inc., an Illinois corporation, Pro-Tech Engineering Co., Inc., a Wisconsin corporation, Sickinger Company, a Michigan corporation, U.S. Ring Binder Corp., a Massachusetts corporation, and VeloBind, Incorporated, a Delaware corporation (collectively, the "Subsidiary Guarantors"). Reference is made to the Registration Statement on Form S-4 (the "Registration Statement") being filed by the Company and the Subsidiary Guarantors with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration of $150,000,000 aggregate principal amount of the Company's 9 3/8% Senior Subordinated Notes due 2008 (the "Exchange Notes") for the purpose of effecting an exchange offer (the "Exchange Offer") of the Exchange Notes for the Company's outstanding 9 3/8% Senior Subordinated Notes due 2008 (the "Old Notes"). The Subsidiary Guarantors will issue guarantees (collectively, the "Guarantees") of the obligations of the Company under the Exchange Notes. The Exchange Notes and the Guarantees are to be issued pursuant to the Indenture dated as of May 27, 1998 (the "Indenture") among the Company, the Subsidiary Guarantors and First Union National Bank, as trustee (the "Trustee"). I am familiar with the proceedings to date with respect to the Exchange Offer and the proposed issuance of the Exchange Notes and the Guarantees and have examined such records, documents and questions of law, and satisfied myself as to such matters of fact, as I have considered relevant and necessary as a basis for this opinion. Based on the foregoing, I am of the opinion that: 1. The Company and each of the Subsidiary Guarantors is a corporation existing and in good standing under the laws of its jurisdiction of incorporation. 2. The Company had corporate power and authority to execute and deliver the Indenture at the time of its execution and delivery and has corporate power and authority to authorize and issue the Exchange Notes. 2 3. Each of the Subsidiary Guarantors had corporate power and authority to execute and deliver the Indenture at the time of its execution and delivery and has corporate power and authority to authorize and issue the Guarantee to be issued by such Subsidiary Guarantor. 4. The Exchange Notes will be legally issued and binding obligations of the Company and each Guarantee will be the legally issued and binding obligation of the Subsidiary Guarantor issuing such Guarantee (except to the extent enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws affecting the enforcement of creditors' rights generally and by the effect of the general principles of equity, regardless of whether enforceability is considered in a proceeding in equity or at law) when (i) the Registration Statement, as finally amended, shall have become effective under the Securities Act and the Indenture shall have been qualified under the Trust Indenture Act of 1939, as amended, (ii) the Old Notes shall have been tendered to and accepted by the Company and (iii) the Exchange Notes shall have been duly executed and authenticated, and the Guarantees shall have been duly executed, as provided in the Indenture and the resolutions of the Board of Directors (or authorized committee thereof) of the Company and each of the Subsidiary Guarantors authorizing the foregoing. I do not find it necessary for purposes of this opinion to cover, and accordingly I express no opinion as to, the application of the securities or blue sky laws of the various states to the issuance of the Exchange Notes and the Guarantees. For purposes of the opinions in paragraph 1, I have relied exclusively upon recent certificates issued by the appropriate government official of the jurisdiction of incorporation of the Company and each Subsidiary Guarantor. I hereby consent to the filing of this opinion as an Exhibit to the Registration Statement and to all references to my name included in or made a part of the Registration Statement. Very truly yours, /s/ STEVE RUBIN EX-8.1 27 OPINION OF SIDLEY & AUSTIN 1 EXHIBIT 8.1 [SIDLEY & AUSTIN LETTERHEAD] July 24, 1998 General Binding Corporation One GBC Plaza Northbrook, Illinois 60062 Re: Certain Federal Income Tax Consequences of the Offer to Exchange 93/8% Senior Subordinated Notes Due 2008 Ladies and Gentlemen: We have acted as counsel to General Binding Corporation, Inc., a Delaware corporation (the "Company"), in connection with its offer (the "Exchange Offer") to exchange $1,000 principal amount of its 9 3/8% Senior Subordinated Notes due 2008, for each $1,000 principal amount of its outstanding 9 3/8% Senior Subordinated Notes due 2008, as described in the Registration Statement on Form S-4 (the "Registration Statement"), which is being filed by the Company with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended. The Registration Statement includes the prospectus (the "Prospectus") relating to the Exchange Offer. Capitalized terms not defined herein have the meanings specified in the Prospectus. In rendering the opinion expressed below, we have examined the Prospectus and such other documents as we have deemed relevant and necessary. Such opinion is conditioned, among other things, upon the accuracy and completeness of the facts, information and representations contained in the Prospectus as of the date hereof and the continuing accuracy and completeness thereof as of the date of the consummation of the Exchange Offer. We have assumed that the transactions contemplated by the Prospectus and such other documents will occur as provided therein and that there will be no material change to the Prospectus or any of such other documents between the date hereof and the date of the consummation of the Exchange Offer. Based upon and subject to the foregoing, we are of the opinion that the discussion set forth in the Prospectus under the caption "Certain United States Federal Tax Considerations" 2 [SIDLEY & AUSTIN LETTERHEAD] General Binding Corporation July 24, 1998 Page 2 constitutes, in all material respects, a fair and accurate summary of the matters addressed therein, based upon current law and the assumptions stated or referred to therein. We assume no obligation to update or supplement this letter to reflect any facts or circumstances which may hereafter come to our attention with respect to the opinion expressed above, including any changes in applicable law which may hereafter occur. We hereby consent to the filing of this letter as an Exhibit to the Registration Statement and to all references to our Firm included in or made a part of the Registration Statement. Very truly yours, /s/ SIDLEY & AUSTIN EX-10.1 28 MULTICURRENCY CREDIT AGREEMENT DATED 1/13/97 1 EXHIBIT 10.1 U.S. $400,000,000 MULTICURRENCY CREDIT AGREEMENT Dated as of January 13, 1997 Among GENERAL BINDING CORPORATION, THE BANKS PARTY HERETO, And HARRIS TRUST AND SAVINGS BANK, as Administrative Agent And Each of THE FIRST NATIONAL BANK OF CHICAGO, as Co-Syndication Agent and Co-Agent And THE BANK OF NEW YORK And CAISSE NATIONALE DE CREDIT AGRICOLE And LASALLE NATIONAL BANK as Co-Agents 2 CREDIT AGREEMENT To each of the Banks signatory hereto Ladies and Gentlemen: The undersigned, General Binding Corporation, a Delaware corporation (the "Company"), applies to you for your several commitments, subject to all the terms and conditions hereof and on the basis of the representations and warranties hereinafter set forth, to make available to the Company and each Borrowing Subsidiary (as defined in Section 5.10 hereof) a revolving credit available in the form of loans and letters of credit, all as more fully hereinafter set forth. Each of you is hereinafter referred to as a "Bank", all of you are hereinafter referred to collectively as the "Banks", Harris Trust and Savings Bank in its capacity as agent hereunder is hereinafter referred to as the "Administrative Agent", and LaSalle National Bank, The First National Bank of Chicago, The Bank of New York and Caisse Nationale de Credit Agricole in their respective capacities as Co-Agents hereunder are hereinafter referred to as the "Co-Agents". The Company and each Borrowing Subsidiary are hereinafter referred to individually as a "Borrower" and collectively as the "Borrowers". SECTION 1. THE COMMITTED FACILITY Section 1.1. The Revolving Credit Commitments. The Committed Loans. Subject to the terms and conditions hereof, each Bank, by its acceptance hereof, severally agrees, before the Revolving Credit Termination Date, to make a loan or loans (individually a "Committed Loan" and collectively "Committed Loans") to each and any Borrower from time to time on a revolving basis in U.S. Dollars and Alternative Currencies in an aggregate outstanding Original Dollar Amount for all the Borrowers (taken together) up to the amount of its commitment to make Committed Loans set forth on the applicable signature page hereof or pursuant to Section 17.12 hereof (its "Revolving Credit Commitment" and cumulatively for all the Banks the "Revolving Credit Commitments"), subject to any reductions thereof pursuant to the terms hereof. At no time shall the aggregate Original Dollar Amount of outstanding Loans (whether Committed Loans, Bid Loans or Swing Line Loans) and L/C Obligations to all Borrowers (taken together) exceed the Revolving Credit Commitments then in effect, which Revolving Credit Commitments on the date hereof total $400,000,000. Each Borrowing of Committed Loans shall be made ratably from the Banks in proportion to their respective Percentages. The relevant Borrower may elect, through the Company, that each Borrowing of Committed Loans denominated in U.S. Dollars be made available by means of either Domestic Rate Loans or Eurocurrency Loans. All Loans denominated in an Alternative Currency shall be Eurocurrency Loans. Section 1.2. Letters of Credit. (a) General Terms. Subject to the terms and conditions hereof, as part of the Revolving Credit, the Administrative Agent or Multicurrency Swing Line Bank (each an "Issuing Agent") shall from time to time issue commercial and standby letters of credit (each a "Letter of Credit") for the account of any one or more of the Borrowers (whether or not also for the account of any other Subsidiary of the Company as well) prior to the Revolving Credit Termination Date, provided that (x) the aggregate Original Dollar Amount of L/C Obligations at any time outstanding shall not exceed the difference between the Revolving Credit Commitments in effect at such time and the aggregate Original Dollar Amount of Loans (whether Committed Loans, Bid Loans or Swing Line Loans) then outstanding, (y) the aggregate Original Dollar Amount of Committed L/C Obligations at any time outstanding shall not exceed the L/C Commitment then in effect and (z) the aggregate Original Dollar Amount of Foreign Credit L/C Obligations and Multicurrency Swing Line Loans at any time outstanding shall not exceed the Multicurrency Swing Line Commitment in effect at such time. Notwithstanding anything herein to the contrary, that -2- 3 certain standby letter of credit dated April 17, 1996 issued by Harris Trust and Savings Bank to Comerica Bank, as Trustee under an Indenture of Trust dated April 1, 1996 between the Maryland Industrial Development Financing Authority and such Trustee (the "Maryland IRB Indenture"), in the original amount of $9,609,316 shall constitute a "Letter of Credit" herein for all purposes of this Agreement to the same extent, and with the same force and effect as if such Letter of Credit had been issued under this Agreement at the request of the Company. Each Letter of Credit shall be issued by an Issuing Agent, but each Bank (other than the Bank which issued such Letter of Credit) shall be obligated to reimburse the relevant Issuing Agent for its Percentage of the amount of each drawing thereunder and, accordingly, the undrawn face amount of each Letter of Credit shall constitute usage of the Revolving Credit Commitment of each Bank pro rata in accordance with each Bank's Percentage. (b) Term. Each Letter of Credit issued hereunder shall expire not later than the earlier of (i) one year from the date issued (or be cancelable not later than one year from the date of issuance and each renewal) and (ii) the Revolving Credit Termination Date. (c) General Characteristics. Each Letter of Credit issued hereunder by the Administrative Agent shall be payable in U.S. Dollars or an Alternative Currency, shall conform to the general requirements of the Administrative Agent for the issuance of commercial or standby letters of credit (as appropriate) as to form and substance and shall be a letter of credit which the Administrative Agent may lawfully issue. Each Letter of Credit issued hereunder by the Multicurrency Swing Line Bank shall be a standby letter of credit issued solely for the purpose of supporting credit extended by a foreign Affiliate of the Multicurrency Swing Line Bank to a Foreign Subsidiary (it being understood that the face amount of such a Letter of Credit may when issued exceed the U.S. Dollar Equivalent of the maximum amount of credit it is supporting to the extent the lender providing such credit so requires) and shall be payable in U.S. Dollars, shall conform to the general requirements of the Multicurrency Swing Line Bank for the issuance of standby letters of credit as to form and substance and shall be a letter of credit which the Multicurrency Swing Line Bank may lawfully issue. (d) Applications. At the time the Company (acting on behalf of the applicable Borrower) requests an Issuing Agent to issue a Letter of Credit (or prior to the first issuance of a Letter of Credit, in the case of a continuing application) for the account of any Borrower, such Borrower (jointly with any other Borrower if such other Borrower elects in its discretion) shall execute and deliver to such Issuing Agent an application for such Letter of Credit in the form customarily prescribed by such Issuing Agent for a Letter of Credit of the type requested (individually an "Application" and collectively the "Applications"). The current forms of each Issuing Agent's Applications are attached as Schedule 1.2 (Commercial) and Schedule 1.2 (Standby) hereto. Each Issuing Agent shall provide the Company and each Bank with copies of any new form of Application that may, from time to time, be adopted by such Issuing Agent. Notwithstanding anything contained in any Application to the contrary, (i) each Borrower executing the Application for a Letter of Credit shall be jointly and severally liable for all L/C Obligations in respect of such Letter of Credit (nothing herein contained to impair or otherwise affect the joint and several liability under Section 16 hereof of the Guarantors), (ii) the Borrowers shall pay fees in connection with each Letter of Credit as set forth in Section 6.3 hereof, (iii) before the occurrence of an Event of Default, neither Issuing Agent will call for the funding by a Borrower of any amount under a Letter of Credit, or any other form of collateral security for such Borrower's obligations in connection with such Letter of Credit, before being presented with a drawing thereunder, (iv) upon the occurrence of -3- 4 the Revolving Credit Termination Date, the full amount then available for drawing under all outstanding Letters of Credit shall be immediately due and payable in the manner described in Section 13.4 hereof, and (v) if an Issuing Agent is not timely reimbursed in accordance with Section 1.2(e) hereof (whether out of the proceeds of a Loan, including a Committed Loan made pursuant to Section 1.4(c) hereof or otherwise) for the amount of any drawing paid by such Issuing Agent under a Letter of Credit on the date such drawing is paid, the joint and several obligation of the applicable Borrowers (determined as set forth in clause (i) of this sentence) to reimburse such Issuing Agent for the amount of such drawing shall bear interest (which such Borrowers hereby promise to pay) from and after the date such drawing is paid at a rate per annum equal to (x) in the case of a drawing under a Letter of Credit denominated in U.S. Dollars or a Letter of Credit denominated in an Alternative Currency as to which the relevant Issuing Agent has requested reimbursement for such drawing in U.S. Dollars, (i) from the date such Issuing Agent paid such drawing to and including the date two (2) Business Days after such payment, the sum of the Domestic Rate Margin plus the Domestic Rate from time to time in effect and (ii) from the date two (2) Business Days after the date such Issuing Agent paid such drawing to the date such Issuing Agent is reimbursed by a Borrower therefor, the sum of 2% plus the Domestic Rate Margin plus the Domestic Rate from time to time in effect, and (y) in the case of a drawing under a Letter of Credit denominated in an Alternative Currency as to which such Issuing Agent has requested reimbursement for such drawing in such Alternative Currency, (i) from the date such Issuing Agent paid such drawing to and including the date two (2) Business Days after such payment, the sum of the Eurocurrency Margin plus the Overnight Foreign Currency Rate and (ii) from the date two (2) Business Days after the date such Issuing Agent paid such drawing to the date such Issuing Agent is reimbursed by a Borrower therefor, the sum of 2% plus the Eurocurrency Margin plus the Overnight Foreign Currency Rate. If an Issuing Agent issues any Letters of Credit with expiration dates that are automatically extended, unless such Issuing Agent gives notice that the expiration date will not so extend beyond its then scheduled expiration date, such Issuing Agent will give such notice of non-renewal before the time necessary to prevent such automatic extension if before such required notice date (i) the expiration date of such Letter of Credit if so extended would be after the Revolving Credit Termination Date, (ii) the Revolving Credit Commitments have been terminated or (iii) a Default or Event of Default exists and the Required Banks have given the Administrative Agent and relevant Issuing Agent instructions not to so permit the extension of the expiration date of such Letter of Credit. At least thirty (30) Business Days before the date on which an Issuing Agent is required to give notice of the non-renewal of such a Letter of Credit in order to prevent its automatic extension, the Issuing Agent (other than an Issuing Agent then serving as Administrative Agent) shall give notice to the Administrative Agent of such circumstance and the Administrative Agent shall promptly notify each Bank thereof. Each Issuing Agent agrees to issue amendments to the Letter(s) of Credit increasing the amount, or extending the expiration date, thereof at the request of the Company (acting on behalf of itself or pursuant to Section 5.10 hereof, a Borrowing Subsidiary) subject to the conditions of Section 11 and the other terms of this Section 1.2. Each Issuing Agent (other than an Issuing Agent then serving as Administrative Agent) shall promptly notify the Administrative Agent of each request received by such Issuing Agent for the issuance of a Letter of Credit or any extension, increase in the amount of or other modification to a Letter of Credit and promptly furnish the Administrative Agent with a copy of the completed Application for each Letter of Credit or in the case of any such modification, a copy of the written request therefor. Each Issuing Agent (other than an Issuing Agent then serving as Administrative Agent) shall promptly notify the -4- 5 Administrative Agent of the issuance of each Letter of Credit and each extension, increase in the amount or other modification of a Letter of Credit and promptly furnish the Administrative Agent with a copy of each Letter of Credit or modification thereof, as the case may be. The Administrative Agent will promptly notify each Bank of each issuance of a Letter of Credit and each extension or increase in the amount of a Letter of Credit. To the extent so required by any Bank, each Issuing Agent shall furnish to such Bank copies of Letters of Credit issued by such Issuing Agent and amendments thereof. In the case of each such issuance, or increase in the amount of, any Letter of Credit, the Administrative Agent shall determine and notify the relevant Issuing Agent whether such amount would exceed any restriction in this Section 1 on the aggregate face amount of Letters of Credit as set forth in Section 11.2 hereof. (e) The Reimbursement Obligations. Subject to Section 1.2(d) hereof, the joint and several obligations of the applicable Borrowers (determined as set forth in clause (i) of the fourth sentence of Section 1.2(d) hereof) to reimburse the relevant Issuing Agent for all drawings under a Letter of Credit (a "Reimbursement Obligation") shall be governed by the Application related to such Letter of Credit, except that (i) payments of drawings shall be made to the Administrative Agent, not the Issuing Agent, and the Administrative Agent shall promptly thereafter remit such payment in like funds as received to the relevant Issuing Agent, (ii) the reimbursement by such Borrowers of drawings made under a Letter of Credit denominated in U.S. Dollars shall be made in U.S. Dollars and (iii) the reimbursement by such Borrowers of drawings made under a Letter of Credit denominated in an Alternative Currency shall be made by payment in U.S. Dollars of the U.S. Dollar Equivalent, calculated on the date the relevant Issuing Agent paid such draws, of the amount paid by such Issuing Agent pursuant to such drawing, or, if such Issuing Agent shall elect by notice to the Company and the Administrative Agent, by payment in the Alternative Currency which was paid by such Issuing Agent pursuant to such drawing in an amount equal to such drawing and (iv) reimbursement in U.S. Dollars of a drawing paid shall be made by no later than 1:30 p.m. (Chicago time) on the date when each drawing is paid and reimbursement in an Alternative Currency of a drawing paid shall be made by no later than 12:00 noon local time at the place of payment or if earlier, such local time as is necessary for such funds to be received and transferred to the relevant Issuing Agent for same day value on the day such Reimbursement Obligation is due; any payment of a Reimbursement Obligation received after such time shall be deemed to have been received by the relevant Issuing Agent on the next Business Day. If the applicable Borrowers do not make any such reimbursement payment on the date due and the Participating Banks fund their participations therein in the manner set forth in Section 1.2(f) below, then all payments thereafter received by the Administrative Agent in discharge of any of the relevant Reimbursement Obligations shall be distributed in accordance with Section 1.2(f) below. The joint and several obligations of the applicable Borrowers to the Issuing Agents under this Section 1.2 shall be absolute, irrevocable and unconditional under any and all circumstances whatsoever (except, without limiting such Borrowers' joint and several obligations under each Application, to the extent that a Borrower is relieved under applicable law (including as such, to the extent applicable to a particular Letter of Credit, the then current Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce) from its obligation to reimburse an Issuing Agent for a drawing under a Letter of Credit because of such Issuing Agent's failure to determine that documents received under the Letter of Credit comply on their face with the terms thereof). (f) The Participating Interests. Each Bank (other than the Issuing Agent for the applicable Letter of Credit), by its acceptance hereof, severally agrees to purchase from the relevant Issuing Agent, -5- 6 and such Issuing Agent hereby agrees to sell to each such Bank (in this Section, a "Participating Bank"), an undivided percentage participating interest (a "Participating Interest"), to the extent of its Percentage, in each Letter of Credit issued by, and each Reimbursement Obligation owed to, such Issuing Agent. Upon any failure by the applicable Borrowers to pay any Reimbursement Obligation at the time required on the date the related drawing is paid, as set forth in Section 1.2(e) above, or if an Issuing Agent is required at any time to return to a Borrower or to a trustee, receiver, liquidator, custodian or other Person any portion of any payment of any Reimbursement Obligation, each Participating Bank shall, not later than the Business Day it receives a certificate in the form of Exhibit E hereto from the relevant Issuing Agent (given directly or through the Administrative Agent) to such effect, if such certificate is received before 1:00 p.m. (Chicago time), or not later than the following Business Day, if such certificate is received after such time, pay to the Administrative Agent for the account of the relevant Issuing Agent (i) in the case of a Reimbursement Obligation payable by the applicable Borrowers in U.S. Dollars (including a Reimbursement Obligation payable in U.S. Dollars by virtue of the Issuing Agent's election in Section 1.2(e) above to be reimbursed in U.S. Dollars for a drawing it paid in an Alternative Currency), an amount equal to such Participating Bank's Percentage of such unpaid or recaptured Reimbursement Obligation, such payment to be made in lawful money in the United States, in immediately available funds at the Administrative Agent's principal office in Chicago, Illinois, together with interest on such amount accrued from the date the related payment was made by the relevant Issuing Agent to the date of such payment by such Participating Bank at a rate per annum equal to (x) from the date the related payment was made by such Issuing Agent to and including the date two (2) Business Days after payment by such Participating Bank is due hereunder, the Federal Funds Rate for each such day and (y) from the date two (2) Business Days after the date such payment is due from such Participating Bank to the date such payment is made by such Participating Bank, the Domestic Rate in effect for each such day and (ii) in the case of a Reimbursement Obligation payable by the applicable Borrowers in an Alternative Currency, an amount equal to such Participating Bank's Percentage of such unpaid or recaptured Reimbursement Obligation, such payment to be made in such Alternative Currency in such funds which are then customary for the settlement of international transactions in such currency, together with interest on such amount accrued from the date the related payment was made by the relevant Issuing Agent to the date of such payment by the Participating Bank at a rate per annum equal to (x) from the date the related payment was made by such Issuing Agent to and including the date two (2) Business Days after payment by such Participating Bank is due hereunder, the Overnight Foreign Currency Rate for each such day and (y) from the date two (2) Business Days after the date such payment is due from such Participating Bank to the date such payment is made by such Participating Bank, the sum of 1% plus the Overnight Foreign Currency Rate for each such day. Each such Participating Bank shall thereafter be entitled to receive its Percentage of each payment received in respect of the relevant Reimbursement Obligation and of interest paid thereon, with the relevant Issuing Agent retaining its Percentage as a Bank hereunder. The several obligations of the Participating Banks to the Issuing Agents under this Section 1.2 shall be absolute, irrevocable and unconditional under any and all circumstances whatsoever (except, without limiting the applicable Borrowers' joint and several obligations under each Application, to the extent that such Borrowers are relieved under applicable law (including as such, to the extent applicable to a particular Letter of Credit, the then current Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce) from their obligation to reimburse an Issuing Agent for a -6- 7 drawing under a Letter of Credit because of such Issuing Agent's failure to determine that documents received under the Letter of Credit comply on their face with the terms thereof) and shall not be subject to any set-off, counterclaim or defense to payment which any Participating Bank may have or have had against the Borrowers, an Issuing Agent, the Administrative Agent, any other Bank or any other Person whatsoever. Without limiting the generality of the foregoing, such obligations shall not be affected by any Default or Event of Default or by the amount of any Commitment of any Bank, and each payment by a Participating Bank under this Section 1.2 shall be made without any offset, abatement, withholding or reduction whatsoever. The Administrative Agent and Issuing Agents shall be entitled to offset amounts received for the account of a Bank under this Agreement against unpaid amounts due from such Bank to the Administrative Agent hereunder (whether as fundings of participations or otherwise), but shall not be entitled to offset against amounts owed to the Administrative Agent or any Issuing Agent by any Bank arising outside the Credit Documents. (g) Indemnification. The Participating Banks shall, to the extent of their respective Percentages, indemnify each Issuing Agent (to the extent not reimbursed by the Borrowers and without in any way impairing or otherwise affecting the Borrowers' joint and several obligations to do so) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from the Issuing Agent's gross negligence or willful misconduct) that the Issuing Agent may suffer or incur in connection with any Letter of Credit. The obligations of the Participating Banks under this Section 1.2(g) and all other parts of this Section 1.2 shall survive termination of this Agreement and of all other L/C Documents. (h) Outstanding Amount of Letters of Credit. For all purposes of this Agreement, Letters of Credit shall be deemed outstanding as of any time in an amount equal to the aggregate undrawn amount then available thereunder (determined in accordance with Section 5.9 hereof) plus all unpaid Reimbursement Obligations then outstanding. For such purposes, the undrawn amount available under a Letter of Credit shall be the maximum amount which can be drawn thereunder under any circumstances and over any period of time. Section 1.3. Applicable Interest Rates. (a) Domestic Rate Loans. Each Domestic Rate Loan made by a Bank shall bear interest (computed on the basis of a 365 or 366 day year, as applicable, and actual days elapsed) on the unpaid principal amount thereof from the date such Loan is made until maturity (whether by acceleration or otherwise) at a rate per annum equal to the sum of the Domestic Rate Margin plus the Domestic Rate from time to time in effect, payable on the last day of the applicable Interest Period and at maturity (whether by acceleration or otherwise). "Domestic Rate" means for any day the greater of: (i) the rate of interest announced by the Administrative Agent from time to time as its prime commercial rate, or equivalent, as in effect on such day, with any change in the Domestic Rate resulting from a change in said prime commercial rate to be effective as of the date of the relevant change in said prime commercial rate; and (ii) the sum of (x) the rate determined by the Administrative Agent to be the prevailing rate per annum (rounded upward, if necessary, to the next higher 1/100 of 1%) at approximately 10:00 a.m. (Chicago time) (or as soon thereafter as is practicable) on such day (or, if such day -7- 8 is not a Business Day, on the immediately preceding Business Day) for the purchase at face value of overnight Federal funds in an amount comparable to the principal amount owed to the Administrative Agent for which such rate is being determined, plus (y) 1/2 of 1% (0.50%). "Domestic Rate Margin" means 0.0% per annum until the first Pricing Date and thereafter from one Pricing Date to the next a percentage determined in accordance with the following schedule:
Level: Domestic Rate Margin: ------ --------------------- Level I 0.00% Level II 0.00% Level III 0.00% Level IV 0.00% Level V 0.25%
(b) Eurocurrency Loans. Each Eurocurrency Loan made by a Bank shall bear interest during each Interest Period it is outstanding (computed on the basis of a year of 360 days and actual days elapsed) on the unpaid principal amount thereof from the date such Loan is made until maturity (whether by acceleration or otherwise) at a rate per annum equal to the sum of the LIBOR plus the Eurocurrency Margin applicable to such Loan, payable on the last day of the applicable Interest Period and at maturity (whether by acceleration or otherwise), and, if the applicable Interest Period is longer than three months, on each day occurring every three months after the date such Loan is made. A Eurocurrency Loan shall bear additional interest in the events, on the terms and in the amount set forth in the immediately following paragraph. In addition to the interest on a Eurocurrency Loan to a Borrower described in the immediately preceding paragraph, such Borrower shall pay to each affected Bank, so long as (a) such Bank shall be required under regulations of the Board of Governors of the Federal Reserve System to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency Loans and (b) as a result the cost to such Bank (or its applicable Lending Office) of making or maintaining its Eurodollar Loans is increased, additional interest on the unpaid principal amount of each affected Loan of such Bank from the date of such Loan until such principal amount is paid in full, at an interest rate per annum equal at all times to the remainder obtained by subtracting (a) the LIBOR for such Interest Period for such Eurocurrency Loan from (B) the rate obtained by dividing such LIBOR by a percentage equal to one hundred percent (100%) minus the Eurocurrency Reserve Percentage of such Bank for such Interest Period, payable on each date on which interest is payable on such Eurocurrency Loan. Any Bank wishing to require payment of such additional interest (x) shall so notify the Company and the Administrative Agent, in which case such additional interest on the Eurodollar Loans of such Bank shall be payable to the Administrative Agent for the account of such Bank at the place indicated in such notice with respect to each Interest Period commencing at least five (5) Business Days after the giving of such notice and (y) shall furnish to the Company at least five (5) Business Days prior to each date on which interest is payable on the Eurodollar Loans a certificate setting forth the amount to which such Bank is then entitled under this Section (which shall be consistent with such Bank's good faith estimate of the level at which the related reserves are maintained by it and generally consistent with such Bank's application of such requirement to other similarly situated borrowers obligated under similar provisions in their loan agreements to provide such compensation). Such certificate shall be conclusive and binding absent demonstrable error. -8- 9 "Eurocurrency Margin" means (a) for each Eurocurrency Bid Loan the percentage agreed to pursuant to Section 2.4 hereof and (b) for each Committed Eurocurrency Loan 0.375% per annum until the first Pricing Date and thereafter from, and including, one Pricing Date to, but not including, the next a rate per annum determined in accordance with the following schedule:
Level: Eurocurrency Margin: ------ -------------------- Level I 0.375% Level II 0.425% Level III 0.475% Level IV 0.625% Level V 0.750%
"LIBOR" means, for an Interest Period for a Borrowing of Eurocurrency Loans, (a) for a Committed Borrowing or Multicurrency Swing Line Borrowing in each case in an Original Dollar Amount of $10,000,000 or more or a Eurocurrency Bid Borrowing of any amount, the LIBOR Index Rate for such Interest Period, if such rate is available, and (b) for smaller Committed Borrowings and Multicurrency Swing Line Borrowings, or if the LIBOR Index Rate cannot be determined, the average rate of interest per annum (rounded upwards, if necessary, to the nearest one hundred-thousandth of a percentage point) at which deposits in U.S. Dollars or the relevant Alternative Currency, as appropriate, in immediately available and freely transferable funds are offered to the Reference Banks at 11:00 a.m. (London, England time) two (2) Business Days before the beginning of such Interest Period by major banks in the interbank eurocurrency market for delivery on the first day of and for a period equal to such Interest Period in an amount equal or similar to the principal amount of the Eurocurrency Loan scheduled to be made by (x) in the case of Committed Eurocurrency Loans, the relevant Reference Bank as part of such Borrowing, (y) in the case of the Bid Eurocurrency Loans, each Bank scheduled to make such Bid Loan and (z) in the case of Multicurrency Swing Line Loans, the Multicurrency Swing Line Bank. "LIBOR Index Rate" means, for any Interest Period, the rate per annum (rounded upwards, if necessary, to the next higher one hundred-thousandth of a percentage point) for deposits in U.S. Dollars or the relevant Alternative Currency, as appropriate, for a period equal to such Interest Period, which appears on the appropriate Telerate Page, as of 11:00 a.m. (London, England time) on the day two (2) Business Days before the commencement of such Interest Period. "Reference Banks" means (a) in the case of Committed Eurocurrency Loans, the Administrative Agent, Comerica Bank and The Bank of New York and (b) in the case of Multicurrency Swing Line Loans, the Multicurrency Swing Line Bank alone. "Telerate Page" means the page designated on the Telerate Service (or such other service as may be nominated by the British Bankers' Association as the information vendor) for the purpose of displaying British Bankers' Association Interest Settlement Rates for deposits of U.S. Dollars, currently displayed on Page 3750, or of the appropriate Alternative Currency. (c) Alternative Currencies. On the date the Company (acting on behalf of the applicable Borrower) requests a Borrowing of Eurocurrency Loans in an Alternative Currency to any Borrower, as provided in Section 1.4(a) below, the Administrative Agent shall promptly notify each Bank of the currency in which such Borrowing is requested. If such Alternative Currency is not available to a Bank in sufficient amount and for a sufficient term to enable it to make the Loan requested of it as part of such Eurocurrency Borrowing and such Bank so notifies the Administrative Agent no later than 3:00 p.m. (Chicago time) on the same day it receives notice from the Administrative Agent of such requested Loan, the -9- 10 Administrative Agent shall promptly so notify the Company. If the Company or any Borrowing Subsidiary nevertheless desires such Borrowing, the Company (acting on behalf of the applicable Borrower) must notify the Administrative Agent by no later than 4:00 p.m. (Chicago time) on such day. If the Administrative Agent does not receive such notice from the Company by 4:00 p.m. (Chicago time), the Company shall automatically be deemed to have revoked on behalf of such Borrower that Borrower's request for the Borrowing of Eurocurrency Loans and the Administrative Agent will promptly notify the Banks of such revocation. Such revocation shall not require any payment under the funding indemnity set forth in Section 5.8 hereof. If the Company (acting on behalf of the applicable Borrower) gives such notice by 4:00 p.m. (Chicago time), each Bank that did not notify the Administrative Agent by 3:00 p.m. (Chicago time) that the requested Alternative Currency is unavailable to it to fund the requested Loan shall, subject to Section 11 hereof, make its Loan in the requested Alternative Currency in accordance with Section 1.4(d) hereof. Each Bank that did so notify the Administrative Agent by 3:00 p.m. (Chicago time) that it would not be able to make the Loan requested from it shall, subject to Section 14 hereof, make a Eurocurrency Loan denominated in U.S. Dollars in the Original Dollar Amount of, and with the same Interest Period as, the Eurocurrency Loan such Bank was originally requested to make. Such Eurocurrency Loan denominated in U.S. Dollars shall be made by the affected Bank on the same day as the other Banks make their Eurocurrency Loans denominated in the applicable Alternative Currency as part of the relevant Borrowing of Eurocurrency Loans, but shall bear interest with reference to the LIBOR applicable to U.S. Dollars rather than the relevant Alternative Currency for the applicable Interest Period and shall be made available in accordance with the procedures for disbursing U.S. Dollar Loans under Section 1.4(d) hereof. Such an affected Bank's making of a Eurocurrency Loan in U.S. Dollars rather than in the Alternative Currency shall not require any payment under the funding indemnity set forth in Section 5.8 hereof. Any Loan made in an Alternative Currency shall be advanced in such currency, and all payments of principal and interest thereon shall be made in such Alternative Currency. (d) Rate Quotations. Each Reference Bank agrees to use its best efforts to furnish quotations to the Administrative Agent as contemplated by this Section. If any Reference Bank does not furnish a timely quotation, the Administrative Agent shall determine the relevant interest rate on the basis of the quotation or quotations furnished by each remaining Reference Bank or, if no such quotation is provided on a timely basis, the provisions of Section 14.2 shall apply. Section 1.4. Manner of Borrowing Committed Loans. (a) Notice to the Administrative Agent. In order for any Borrower to borrow any Committed Loans, the Company (acting on behalf of the applicable Borrower) shall give telephonic or telecopy notice to the Administrative Agent (which notice shall, except as provided in Section 1.3(c) hereof, be irrevocable once given and, if by telephone, shall, except as provided in Section 1.3(c) hereof, be promptly confirmed in writing) (i) by no later than 2:00 p.m. (Chicago time) on the date at least four (4) Business Days before the date of each requested Borrowing of Eurocurrency Loans denominated in an Alternative Currency, (ii) by no later than 2:00 p.m. (Chicago time) on the date at least three (3) Business Days before the date of each requested Borrowing of Eurocurrency Loans denominated in U.S. Dollars, and (iii) by no later than 10:00 a.m. (Chicago time) on the date of each requested Borrowing of Domestic Rate Loans. Each such notice shall specify the date of the requested Borrowing (which shall be a Business Day), the amount of the requested Borrowing, the type of Loans to comprise such Borrowing, if such Borrowing is to be comprised of Eurocurrency Loans, the Interest Period applicable thereto and the currency in which such Loan is to be denominated and, if such Borrowing is to -10- 11 be made by a Borrowing Subsidiary, the Borrowing Subsidiary for whose account such Loan shall be disbursed. Each Borrower agrees that the Administrative Agent may rely on any such telephonic or telecopy notice, and any notice under Section 2, given by any person who identifies himself or herself as being an Authorized Representative without the necessity of independent investigation and, in the event any telephonic notice conflicts with the written confirmation, such notice shall govern if the Administrative Agent has acted in reliance thereon. (b) Notice to the Banks. The Administrative Agent shall give prompt telephonic or telecopy notice to each Bank of any notice from the Company received pursuant to Section 1.4(a) above. The Administrative Agent shall give notice to the Company and each Bank by like means of the interest rate applicable to each Borrowing of Eurocurrency Loans and, if such Borrowing is denominated in an Alternative Currency, shall give notice by such means to the Company and each Bank of the Original Dollar Amount thereof. (c) Borrower's Failure to Notify. If the Company fails to give notice of the reborrowing of any outstanding principal amount of a Borrowing by any Borrower of Committed Loans denominated in U.S. Dollars before the last day of its Interest Period within the period required by Section 1.4(a) and has not notified the Administrative Agent by 10:00 a.m. (Chicago time) on such last day of the Interest Period that the Company or such Borrower intends to repay such Borrowing through funds not borrowed hereunder, such Borrowing shall automatically be repaid through a Borrowing by the same Borrower of Committed Domestic Rate Loans, subject to Section 11.2 hereof. If the Company fails to give notice pursuant to Section 1.4(a) above of the reborrowing of the outstanding principal amount of a Borrowing by any Borrower of Eurocurrency Loans denominated in an Alternative Currency before the last day of its Interest Period within the period required by Section 1.4(a) and has not notified the Administrative Agent within the period required by 10:00 a.m. (Chicago time) on the Business Day four (4) Business Days prior to the day such Borrowing matures that the Company or such Borrower intends to repay such Borrowing through funds not borrowed hereunder, such Borrowing shall automatically be repaid through a Borrowing by the same Borrower of Committed Eurocurrency Loans in the same Alternative Currency with an Interest Period of one month, subject to Section 11.2 hereof, including the application of Section 5.2 and of the restrictions contained in the definition of Interest Period. In the event the Company fails to give notice pursuant to Section 1.4(a) above of a Borrowing equal to the amount of a Reimbursement Obligation of any Borrower payable in U.S. Dollars and has not notified the Administrative Agent by 10:00 a.m. (Chicago time) on the day such Reimbursement Obligation becomes due that it intends to repay such Reimbursement Obligation through funds not borrowed under this Agreement, the Company shall be deemed to have requested a Borrowing by the Company of Domestic Rate Loans on such day in the amount of the Reimbursement Obligation then due, subject to Section 11 hereof, which Borrowing shall be applied to pay the Reimbursement Obligation then due. (d) Disbursement of Committed Loans. Not later than 12:00 noon (Chicago time) on the date of any Borrowing of Committed Loans (other than a Refunding Borrowing) denominated in U.S. Dollars, subject to Section 11 hereof, each Bank shall make available its Loan comprising part of such Borrowing in funds immediately available in Chicago, Illinois at the principal office of the Administrative Agent or, if such Borrowing is denominated in an Alternative Currency, each Bank shall, subject to Section 1.3(c) and Section 11 hereof, make available its Loan comprising part of such Borrowing at such office as the Administrative Agent has previously specified in a notice to each Bank, in such funds as are then customary -11- 12 for the settlement of international transactions in such currency and no later than such local time as is necessary for such funds to be received and transferred to the relevant Borrower for same day value on the date of the Borrowing. The Administrative Agent shall make Loans available to the relevant Borrower at such office as the Administrative Agent has previously agreed to with the Company (acting on behalf of such Borrower), in each case in the type of funds received by the Administrative Agent from the Banks. To the extent a Borrowing is a reborrowing, in whole or in part, of the principal amount of a maturing Borrowing by the same Borrower of Committed Loans (a "Refunding Borrowing"), each Bank shall record the Loan made by it as a part of such Refunding Borrowing on its books and records or on a schedule to its Committed Loan Note, as provided in Section 5.6(e) hereof, and shall effect the repayment, in whole or in part, as appropriate, of its maturing Loan through the proceeds of such new Loan. SECTION 2. THE COMPETITIVE BID FACILITY Section 2.1. The Bid Loans. At any time before the Revolving Credit Termination Date, the Company (acting on behalf of the applicable Borrower) may request the Banks to offer to make uncommitted loans denominated in U.S. Dollars or an Alternative Currency (each a "Bid Loan" and collectively the "Bid Loans") to the Company or any other Borrower in the manner set forth in this Section 2 and in amounts such that (i) the aggregate Original Dollar Amount of all Loans (whether Committed Loans, Bid Loans or Swing Line Loans) and L/C Obligations at any time outstanding hereunder shall not exceed the Revolving Credit Commitments then in effect and (ii) no Bid Loan shall be made if, at the time thereof or after giving effect thereto, the aggregate amount of Bid Loans would exceed the Bid Loan Limit then in effect. The Banks may, but shall have no obligation to, make such offers and the Company (acting on behalf of the applicable Borrower) may, but shall have no obligation to, accept any such offers in the manner set forth in this Section 2. Each Bank may offer to make Bid Loans in any amount (whether greater than, equal to, or less than its Revolving Credit Commitment), subject to (a) the limitations that (i) the aggregate Original Dollar Amount of all Loans and L/C Obligations outstanding at any time may not at any time exceed the Revolving Credit Commitments then in effect and (ii) no Bid Loan shall be made if, at the time thereof or after giving effect thereto, the aggregate amount of Bid Loans would exceed the Bid Loan Limit then in effect and (b) the other conditions of this Agreement. Bid Loans may bear interest either at a stated rate per annum ("Stated Rate Bid Loans") or at a margin above or below the applicable Adjusted LIBOR ("Eurocurrency Bid Loans"); provided that there may be no more than ten (10) different Interest Periods for both Stated Rate Bid Loans and Eurocurrency Bid Loans outstanding at the same time. Section 2.2. Requests for Bid Loans. (a) Requests and Confirmations. In order to request a Borrowing of Bid Loans (a "Bid Loan Request"), the Company (acting on behalf of the applicable Borrower) shall give telephonic notice to the Administrative Agent no later than (i) 10:00 a.m. (Chicago time) on the date at least five (5) Business Days before the date of the requested Bid Borrowing (the "Borrowing Date") in the case of a request for Eurocurrency Bid Loans or for both Eurocurrency Bid Loans and Stated Rate Bid Loans and (ii) 2:00 p.m. (Chicago time) on the date at least one (1) Business Day before the Borrowing Date in the case of a request solely for Stated Rate Bid Loans. Each such request may be for up to three maturities and shall be followed on the same day by a duly completed confirmation (a "Bid Loan Request Confirmation"), delivered by telecopy or other means of facsimile communication, substantially in the form of Exhibit F hereto or otherwise containing the information required by this Section 2.2, to be received by the Administrative Agent no later than 2:30 p.m. (Chicago time) on such day. Bid Loan Request Confirmations that do not conform substantially to the format of Exhibit F or otherwise contain -12- 13 the information required by this Section 2.2 shall be rejected by the Administrative Agent, and the Administrative Agent shall give telephonic notice to the Company of such rejection promptly after it determines (which determination shall be conclusive) that the Bid Loan Request Confirmation does not substantially conform to the format of Exhibit F or otherwise contain the information required by this Section 2.2. Requests for Bid Loans shall in each case refer to this Agreement and specify (i) the proposed Borrowing Date (which must be a Business Day), (ii) the currency of each Bid Loan (which shall be either U.S. Dollars or an Alternative Currency), (iii) the aggregate principal amount thereof (which shall not be less than an Original Dollar Amount of $3,000,000 and shall be in integral multiples of 100,000 units of the relevant currency) and (iv) each (up to three) proposed Interest Period therefor (the maturity date thereof), which in the case of Stated Rate Bid Loans shall be 1 to 180 days after the proposed Borrowing Date and in the case of Eurocurrency Bid Loans shall be 1, 2, 3, 4, 5 or 6 calendar months after the proposed Borrowing Date, but with no Interest Period (maturity) to extend beyond the Revolving Credit Termination Date, (v) the proposed Borrower and (vi) the jurisdiction in which such Loan is to be disbursed. (b) Invitation to Bid. Upon receipt by the Administrative Agent of a Bid Loan Request Confirmation that conforms substantially to the format of Exhibit F hereto or otherwise contains (in a manner acceptable to the Administrative Agent) the information required by this Section 2.2, the Administrative Agent shall, by a telecopy or other form of facsimile communication in the form of Exhibit G hereto (no later than 3:30 p.m. (Chicago time) on the same day the Administrative Agent receives a Bid Loan Request Confirmation), invite each Bank to bid, on the terms and conditions of this Agreement, to make Bid Loans pursuant to the Bid Loan Request; provided, however, that the Administrative Agent need not invite a Bank to bid if and so long as such Bank has notified the Administrative Agent that such Bank does not wish to make Bid Loans. (c) Bids. Each Bank may, in its sole discretion, offer to make a Bid Loan or Loans (a "Bid") to the relevant Borrower responsive to the Bid Loan Request. Each Bid by a Bank must be received by the Administrative Agent in the form of Exhibit H (each, a "Confirmation of Bid") delivered by telecopier not later than (i) 9:30 a.m. (Chicago time) on the proposed Borrowing Date in the case of a bid for a Stated Rate Bid Loan and (ii) 1:00 p.m. (Chicago time) four Business Days prior to the proposed Borrowing Date in the case of a bid for a Eurocurrency Bid Loan; provided, however, that any Bid made by the Administrative Agent must be made by telecopy to the Company by no later than fifteen minutes prior to the time that bids from the other Banks are required to be received. Each Bid and each Confirmation of Bid shall refer to this Agreement and specify (i) the principal amount of each Bid Loan that the Bank is willing to make to the applicable Borrower and the type of Bid Loan (i.e., Stated Rate or Eurocurrency), (ii) the interest rate (which shall be computed on the basis of a year of 365 or 366 days, as applicable, for the actual number of days elapsed in the case of Stated Rate Bid Loans and, in the case of a Eurocurrency Bid Loan, shall be computed on the basis of a year of 360 days and actual days elapsed and expressed in terms of a percentage margin to be added to or subtracted from the applicable LIBOR for the Interest Period to be applicable to such Eurocurrency Bid Loan) at which the Bank is prepared to make each Bid Loan, (iii) the currency of such Bid Loan (which shall be denominated in either U.S Dollars or an Alternative Currency), (iv) the Interest Period applicable thereto, (v) the jurisdiction in which such Bid Loan is to be disbursed and (vi) the jurisdiction in which payments on such Bid Loan are to be made. The Administrative Agent shall reject any Bid if such Bid (i) does not specify all of the information -13- 14 specified in the immediately preceding sentence, (ii) contains any qualifying, conditional, or similar language, (iii) proposes terms other than or in addition to those set forth in the Bid Loan Request to which it responds, or (iv) is received by the Administrative Agent later than the time required for such Bid Loan. Any Bid submitted by a Bank pursuant to this Section 2.2 shall be irrevocable. Each offer contained in a Bid to make a Bid Loan of a certain type in a certain amount, in a certain currency, to a certain Borrower, at a certain interest rate, and for a certain Interest Period is referred to herein as an "Offer". Section 2.3. Notice of Bids; Advice of Rate. The Administrative Agent shall give telecopy notice to the Company of the number of Bids made, the interest rate(s) and Interest Period(s) applicable to each Bid, the maximum principal amount bid at each interest rate for each Interest Period, and the identity of the Bank making such Bid such notice to be given by (i) 10:00 a.m. (Chicago time) on the Borrowing Date in the case of Bid Loan Requests solely for Stated Rate Bid Loans or (ii) 3:00 p.m. (Chicago time) four Business Days before the proposed Borrowing Date in the case of Bid Loan Requests for Eurocurrency Bid Loans or for both Stated Rate Bid Loans and Eurocurrency Bid Loans. Section 2.4. Acceptance or Rejection of Bids. The Company (acting on behalf of the relevant Borrower) may in its sole and absolute discretion, subject only to the provisions of this Section, irrevocably accept or reject, in whole or in part, any Offer contained in a Bid. The Company shall give telecopy notice to the Administrative Agent of whether and to what extent it has decided to accept or reject any Offers contained in the Bids made in response to a Bid Loan Request to be received by the Administrative Agent by no later than (i) 10:30 a.m. (Chicago time) on the proposed Borrowing Date, in the case of Stated Rate Bid Loans or (ii) 10:00 a.m. (Chicago time) three Business Days before the proposed Borrowing Date, in the case of Eurocurrency Bid Loans; provided, however, that (A) the Company shall accept offers for any particular maturity specified by the Company in the Bid Loan Request Confirmation solely on the basis of ascending interest rates for each such Interest Period for a particular currency, (B) if the Company declines to borrow, or if such Borrower is restricted by any other condition hereof from borrowing, the maximum principal amount of Bid Loans for which Offers at a particular interest rate for a particular Interest Period have been made, then the Company shall accept a pro rata portion of each such Offer, based as nearly as possible on the ratio of the maximum aggregate principal amounts of Bid Loans for which each such Offer was made by each Bank (provided that, if the available principal amount of Bid Loans to be so allocated is not sufficient to enable Bid Loans to be so allocated to each relevant Bank in integral multiples of not less than an Original Dollar Amount of $1,000,000, then the Administrative Agent may round allocations up or down in integral multiples of 100,000 units of the relevant currency as it shall deem appropriate), (C) the aggregate principal amount of all Offers accepted by the Company shall not exceed the maximum amount contained in the related Bid Loan Request Confirmation, (D) subject to clause (B) above no Offer of a Bid Loan shall be accepted in a principal amount less than an Original Dollar Amount of $3,000,000 and thereafter in integral multiples of 100,000 units of the relevant currency and (E) no offer of a Bid Loan shall be accepted if, at the time thereof or after giving effect thereto, (x) the aggregate principal amount of all outstanding Loans (whether Committed Loans, Swing Line Loans or Bid Loans) and L/C Obligations would exceed the Revolving Credit Commitments then in effect or (y) the aggregate amount of Bid Loans would exceed the Bid Loan Limit then in effect. -14- 15 Section 2.5. Notice of Acceptance or Rejection of Bids. (a) Notice to Banks Making Successful Bids. The Administrative Agent shall give telephonic notice to each Bank if any of the Offers contained in its Bid have been accepted (and if so, in what amount, in what currency, at what interest rate and for what Interest Period) no later than (i) 11:00 a.m. (Chicago time) on the proposed Borrowing date in the case of Stated Rate Bid Loans and (ii) 10:30 a.m. (Chicago time) three Business days before the proposed Borrowing Date in the case of Eurocurrency Bid Loans, and each successful bidder will thereupon become bound, subject to Section 11 and the other applicable conditions hereof, to make each Bid Loan in the amount for which its Offer has been accepted. As soon as practicable thereafter the Administrative Agent shall send written notice substantially in the form of Exhibit I hereto to each such successful bidder; provided, however, that failure to give such notice shall not affect the obligation of such successful bidder to disburse its Bid Loans as herein required. (b) Notice to all Banks. As soon as practicable after each Borrowing Date for Bid Loans, the Administrative Agent shall notify each Bank (whether or not any of its Offers were accepted) of the aggregate amount and types of Bid Loans advanced pursuant to a Bid Loan Request on such Borrowing Date, the maturities thereof, the currencies, and the lowest and highest interest rates at which Bid Loans were made for each maturity. (c) Disbursement of Bid Loans. Not later than 12:00 noon (Chicago time) on the Borrowing Date for each Borrowing of a Bid Loan(s), each Bank bound to make Bid Loan(s) in accordance with Section 2.5(a) shall, subject to Section 11, make available to the Administrative Agent the principal amount of each such Bid Loan in immediately available funds in Chicago, Illinois at the Administrative Agent's payment office in Chicago, Illinois, except that if such Bid Loan is denominated in an Alternative Currency each such Bank shall, subject to Section 11, make available its Bid Loan at such office in the jurisdiction specified in the relevant Confirmation of Bid as the Administrative Agent has previously specified in a notice to such Bank, in such funds as are then customary for the settlement of international transactions in such currency and no later than such local time as is necessary for such funds to be received and transferred in such jurisdiction to the applicable Borrower for same day value on the date of the Borrowing. The Administrative Agent shall make Loans available to the applicable Borrower at such office in the jurisdiction specified in the applicable Bid as the Administrative Agent has previously agreed to with the Company (acting on behalf of such Borrower) in the type of funds received by the Administrative Agent from the Banks. Section 2.6. Interest on Bid Loans. Each Stated Rate Bid Loan made by a Bank shall bear interest (computed on the basis of a year of 365 or 366 days, as applicable, for the actual number of days elapsed) on the unpaid principal amount thereof from time to time outstanding from the date of the Borrowing of such Loan to but excluding its maturity date (whether by acceleration or otherwise) at the rate per annum determined for such Stated Rate Bid Loan pursuant to Section 2.5 hereof, payable on its maturity date (whether by acceleration or otherwise) and if such Stated Rate Bid Loan has a maturity of longer than 90 days then on the day occurring every 90 days after the Borrowing Date for such Stated Rate Bid Loan. Each Eurocurrency Bid Loan made by a Bank shall bear interest, which interest shall be payable, as provided in Section 1.3(b) hereof. Section 2.7. Telephonic Notice. Each Bank's telephonic notice to the Administrative Agent of its Bid pursuant to Section 2.2(c), and the Company's telephonic acceptance of any Offer contained in a Bid pursuant to Section 2.4, shall be irrevocable and binding on such Bank and the Company and applicable Borrower and shall not be altered, modified, or in any other manner affected by any inconsistent terms contained in, or missing from, any telecopy or other confirmation of such telephonic notice. It is -15- 16 understood and agreed by the parties hereto that the Administrative Agent shall be entitled to act, or to fail to act, hereunder in reliance on its records of any telephonic notices provided for herein and that the Administrative Agent shall not incur any liability to any Person in so doing if its records conflict with any telecopy or other confirmation of a telephonic notice or otherwise, provided that the Administrative Agent has acted, or failed to act, in good faith. It is further understood and agreed by the parties hereto that the times of day as set forth in this Section 2 are for the convenience of all the parties for providing notices and that no party shall incur any liability or other responsibility for any failure to provide such notices within the specified times; provided, however, that the Administrative Agent shall have no obligation to notify the Company or any other Borrower of any Bid received by the Administrative Agent later than the deadline expressed in Section 2.2 hereof for the Administrative Agent's receipt of such Bid, and no acceptance by the Company or any Borrower of any Offer contained in a Bid shall be effective to bind any Bank to make a Bid Loan, nor shall the Administrative Agent be under any obligation to notify any Person of an acceptance, if notice of such acceptance is received by the Administrative Agent later than the deadline expressed in Section 2.4 hereof for such acceptance. SECTION 3. THE DOMESTIC SWING LINE LOANS Section 3.1. The Domestic Swing Line Loans. Subject to all of the terms and conditions hereof, the Bank then acting as Administrative Agent (the "Domestic Swing Line Bank") agrees to make loans in U.S. Dollars to each and any Borrower ("Domestic Swing Line Loans") which shall not in the aggregate (for all the Borrowers taken together) at any time outstanding exceed the lesser of (i) the Domestic Swing Line Commitment or (ii) the difference between (x) the Revolving Credit Commitments in effect at such time and (y) the aggregate Original Dollar Amount of all Loans (whether Committed Loans, Bid Loans or Swing Line Loans) and L/C Obligations then outstanding. The Domestic Swing Line Commitment shall be available to each and any Borrower and may be availed of by each Borrower from time to time and Borrowings thereunder may be repaid and used again during the period ending on the Revolving Credit Termination Date. Without regard to the face principal amount of the Domestic Swing Line Note issued by a given Borrower, the actual principal amount at any time outstanding and owing by such Borrower on account of such Domestic Swing Line Note on any date during the period ending on the Revolving Credit Termination Date shall be the sum of all Domestic Swing Line Loans then or theretofore made thereon through such date less all payments actually received thereon through such date. Section 3.2. Interest on Domestic Swing Line Loans. Each Domestic Swing Line Loan shall bear interest (computed on the basis of a year of 360 days and actual days elapsed) for the Interest Period selected therefor at the Domestic Swing Line Rate for such Interest Period, provided that if any Domestic Swing Line Loan is not paid when due (whether by lapse of time, acceleration or otherwise), such Domestic Swing Line Loan shall bear interest whether before or after judgment, until payment in full thereof through the end of the Interest Period then applicable thereto at the rate set forth in Section 5.5 hereof. Interest on each Domestic Swing Line Loan shall be due and payable on the last day of each Interest Period applicable thereto, and interest after maturity (whether by lapse of time, acceleration or otherwise) shall be due and payable upon demand. Section 3.3. Requests for Domestic Swing Line Loans. The Company (acting on behalf of the applicable Borrower) shall give the Domestic Swing Line Bank prior notice (which may be written or oral) no later than 12:00 Noon (Chicago time) on the Business Day upon which the applicable Borrower requests that any Borrowing of a Domestic Swing Line Loan be made to such Borrower, of the name of such Borrower, -16- 17 the amount and date (which must be a Business Day) of such Domestic Swing Line Loan and the Interest Period selected therefor. Within thirty (30) minutes after receiving such notice, the Domestic Swing Line Bank shall quote an interest rate per annum (computed on the basis of a year of 360 days and actual days elapsed) determined in its discretion (but in no event to be greater than the sum of the Federal Funds Rate then in effect plus the Applicable Eurocurrency Margin) to the Company at which the Domestic Swing Line Bank would be willing to make the Borrowing of such Domestic Swing Line Loan available to the applicable Borrower for such Interest Period (the rate so quoted for the Borrowing of a given Domestic Swing Line Loan being herein referred to as the "Domestic Swing Line Rate" for such Loan). Each Borrower acknowledges and agrees that the interest rate quote is given for immediate and irrevocable acceptance by the Company (acting on behalf of the applicable Borrower), and if the Company does not so immediately accept the Domestic Swing Line Rate for the full amount requested for the Borrowing of such Domestic Swing Line Loan, the Domestic Swing Line Rate shall be deemed immediately withdrawn and the Borrowing of such Domestic Swing Line Loan shall not be made. Subject to all of the terms and conditions hereof, the proceeds of each Borrowing of a Domestic Swing Line Loan shall be made available to the applicable Borrower on the date so requested at the offices of the Administrative Agent in Chicago, Illinois. Anything contained in the foregoing to the contrary notwithstanding, (i) the obligation of the Domestic Swing Line Bank to make Domestic Swing Line Loans shall be subject to all of the terms and conditions of this Agreement and (ii) the Domestic Swing Line Bank shall not be obligated to make more than one Domestic Swing Line Loan during any one day. Section 3.4. Refunding Domestic Swing Line Loans. In its sole and absolute discretion, the Domestic Swing Line Bank may at any time, on behalf of the applicable Borrower (each Borrower hereby irrevocably authorizing the Domestic Swing Line Bank to act on its behalf for such purpose), request each Bank to make a Committed Domestic Rate Loan to such Borrower (as the Domestic Swing Line Bank elects in its discretion) in an amount equal to such Bank's Percentage of the amount of the Domestic Swing Line Loans outstanding on the date such notice is given. Whether or not any of the conditions of Section 11.2 are fulfilled on such date, unless a Bank is legally precluded from doing so (because, for example, of the applicable Borrower's bankruptcy), such Bank shall make the proceeds of its requested Committed Domestic Rate Loan available to the Domestic Swing Line Bank, in immediately available funds, at the principal office of the Domestic Swing Line Bank in Chicago, Illinois, before 12:00 noon (Chicago time) on the Business Day following the day such notice is given. The proceeds of such Committed Domestic Rate Loans shall be immediately applied to repay the outstanding Domestic Swing Line Loans. Section 3.5. Participations. If any Bank (other than the Domestic Swing Line Bank) fails for any reason to make a Committed Domestic Rate Loan when requested by the Domestic Swing Line Bank pursuant to Section 3.4 above, or if the Domestic Swing Line Bank is required at any time to return to a Borrower or to a trustee, receiver, liquidator, custodian or other Person any portion of any payment of any Domestic Swing Line Loan, each such Bank (in this Section, a "Participating Bank") will, by the time and in the manner such Committed Loan was to have been funded to the Domestic Swing Line Bank, purchase from the Domestic Swing Line Bank an undivided participating interest in the outstanding Domestic Swing Line Loans in an amount equal to such Participating Bank's Percentage of the aggregate principal amount of Domestic Swing Line Loans that were to have been repaid with such Committed Loans or such recaptured Domestic Swing Line Loans, as the case may be. Each Participating Bank's obligation to fund such participation shall bear interest from the date due until funded at the rate per annum equal to (i) from the date the related payment was due from such Participating Bank to the date two (2) Business Days thereafter, the Federal Funds Rate -17- 18 for each such day and (ii) from the date two (2) Business Days after the date such payment is due from such Participating Bank to the date such payment is made by such Participating Bank, the Domestic Rate in effect for each such day. Each Participating Bank that so purchases a participation in a Domestic Swing Line Loan shall thereafter be entitled to receive its Percentage of each payment of principal received on the relevant Domestic Swing Line Loan and of interest received thereon accruing from the date such Participating Bank funded to the Domestic Swing Line Bank its participation in such Loan. The several obligations of the Participating Banks under this Section 3.5 shall be absolute, irrevocable and unconditional under any and all circumstances whatsoever and shall not be subject to any set-off, counterclaim or defense to payment which any Participating Bank may have or have had against any Borrower, any other Bank or any other Person whatever. Without limiting the generality of the foregoing, such obligations shall not be affected by any Default or Event of Default or by any reduction or termination of any Commitment of any Bank, and each payment made by a Participating Bank under this Section 3.5 shall be made without any offset, abatement, withholding or reduction whatsoever. The Domestic Swing Line Bank shall be entitled to offset amounts received for the account of a Bank under this Agreement against unpaid amounts due hereunder from such Bank to the Domestic Swing Line Bank or the Administrative Agent (whether as fundings of participations or otherwise), but shall not be entitled to offset against amounts owed to the Domestic Swing Line Bank or the Administrative Agent by any Bank arising outside the Credit Documents. Section 3.6. Indemnification. The Participating Banks shall, to the extent of their respective Percentages, indemnify the Domestic Swing Line Bank (to the extent not reimbursed by the Borrowers and without in any way impairing or otherwise affecting the Borrowers' joint and several obligations to do so) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from the Domestic Swing Line Bank's gross negligence or willful misconduct) that the Domestic Swing Line Bank may suffer or incur in connection with any Domestic Swing Line Loan. The obligations of the Participating Banks under this Section 3.6 and all other parts of this Section 3 shall survive termination of this Agreement. SECTION 4. THE MULTICURRENCY SWING LINE LOANS Section 4.1. The Multicurrency Swing Line Loans. Subject to all of the terms and conditions hereof, LaSalle National Bank (the "Multicurrency Swing Line Bank") agrees to make loans denominated in Alternative Swing Line Currencies to each and any Borrower ("Multicurrency Swing Line Loans") in amounts such that the Original Dollar Amount of (i) all Multicurrency Swing Line Loans and Foreign Credit L/C Obligations outstanding hereunder shall not exceed the Multicurrency Swing Line Commitment and (ii) all Loans (whether Committed Loans, Bid Loans or Swing Line Loans) and L/C Obligations at any time outstanding hereunder shall not exceed the Revolving Credit Commitments then in effect. The Multicurrency Swing Line Commitment shall be available to each and any Borrower and may be availed of by each Borrower from time to time and Borrowings thereunder may be repaid and used again during the period ending on the Revolving Credit Termination Date. Each Multicurrency Swing Line Loan shall be a Eurocurrency Loan subject to Section 1.3(b) hereof and the other terms and provisions hereof applicable to Eurocurrency Loans denominated in the same Alternative Swing Line Currency, other than the provisions of Section 1.1 applicable only to Committed Loans and the provisions of Section 1.4. Section 4.2. Requests for Multicurrency Swing Line Loans. No later than 9:00 a.m. (Chicago time) on the Business Day three (3) Business Days prior to any Borrowing of a Multicurrency Swing Line -18- 19 Loan, the Company (acting on behalf of the applicable Borrower) shall give telephonic or telecopy notice to the Administrative Agent and the Multicurrency Swing Line Bank (which notice, if by telephone, shall be promptly confirmed by telecopy or other written notice) of the currency and principal amount of such Multicurrency Swing Line Loan, the Borrower to whom such Multicurrency Swing Line Loan is to be made, the Interest Period of such Multicurrency Swing Line Loan and the date (which must be a Business Day) on which such Multicurrency Swing Line Loan is to be made. Promptly after receipt of such notice (but in no event later than 11:00 a.m. (Chicago time) on the date the Administrative Agent receives such notice), the Administrative Agent shall notify the Multicurrency Swing Line Bank whether such requested Multicurrency Swing Line Loan is permitted under the limitations on credit available hereunder expressed in the first sentence of Section 4.1 hereof. Subject to all of the terms and conditions hereof, the proceeds of the Borrowing of such Multicurrency Swing Line Loan shall be made available to the applicable Borrower on the date so requested at such office of the Multicurrency Swing Line Bank or Affiliate thereof as the Multicurrency Swing Line Bank has previously agreed to with the Company (acting on behalf of the applicable Borrower), in such funds as are then customary for the settlement of international transactions in such currency and no later than such local time as is necessary for such funds to be received and transferred to the applicable Borrower for same day value on the date of such Borrowing. The Multicurrency Swing Line Bank agrees to use reasonable efforts to make its Multicurrency Swing Line Loans from lending offices in jurisdictions in which the liability for taxes of the type described in Section 17.1(a) hereof will be eliminated or minimized, unless to do so would, in the judgment of the Multicurrency Swing Line Bank, be impractical or disadvantageous in any material respect to the Multicurrency Swing Line Bank. The parties hereto understand and agree that such agreement by the Multicurrency Swing Line Bank is an agreement by such Bank only and not binding on any Affiliates of such Bank. Anything contained in the foregoing to the contrary notwithstanding, (i) the obligation of the Multicurrency Swing Line Bank to make Multicurrency Swing Line Loans shall be subject to all of the terms and conditions of this Agreement and (ii) the Multicurrency Swing Line Bank shall not be obligated to make more than one Multicurrency Swing Line Loan during any one day Section 4.3. The Participating Interests. Each Bank (other than the Multicurrency Swing Line Bank), by its acceptance hereof, severally agrees to purchase from the Multicurrency Swing Line Bank, and the Multicurrency Swing Line Bank hereby agrees to sell to each such Bank (in this Section, a "Participating Bank"), an undivided percentage participating interest, to the extent of its Percentage, in each Multicurrency Swing Line Loan. Upon the occurrence of an Event of Default and (except in the case of any Event of Default described in Section 13.1(f) or 13.1(g) hereof) the acceleration of the maturity of the Notes pursuant to Section 13.2 or 13.3 hereof, or if the Multicurrency Swing Line Bank is required at any time to return to a Borrower or to a trustee, receiver, liquidator, custodian or other Person any portion of any payment of any Multicurrency Swing Line Loan, in each case if any Multicurrency Swing Line Loans are then outstanding, each Participating Bank shall, to the extent necessary, not later than the second Business Day after the date on which such Participating Bank receives written demand from the Multicurrency Swing Line Bank to such effect, if such demand is received before 12:00 noon (Chicago time), or not later than the third Business Day after the date on which such Participating Bank receives such demand, if such demand is received by it after 12:00 noon (Chicago time), pay to the Multicurrency Swing Line Bank an amount equal to such Participating Bank's Percentage of such unpaid or recaptured Multicurrency Swing Line Loan, in the currency of such Loans so that, after giving effect to such -19- 20 adjustment, the outstanding principal amount of Loans of all the Banks, calculated using quotations of the U.S. Dollar Equivalent of such Loans received on the date of acceleration, shall be pro rata based on the Banks' Percentages. Such purchase price shall be paid in the respective currencies of such outstanding Loans in such funds which are then customary for the settlement of international transactions in such currency, together with interest on such amount accrued from the date the related payment was due from such Participating Bank to the date of such payment by the Participating Bank at a rate per annum equal to (x) from the date the related payment was due from such Participating Bank to the date two (2) Business Days thereafter, the Overnight Foreign Currency Rate for each such day and (y) from the date two (2) Business Days after the date such payment is due from such Participating Bank to the date such payment is made by such Participating Bank, the sum of 1% plus the Overnight Foreign Currency Rate for each such day. Each such Participating Bank shall thereafter be entitled to receive its Percentage of each payment received in respect of the relevant Multicurrency Swing Line Loan and of interest paid thereon accruing from the date such Participating Bank funded to the Multicurrency Swing Line Bank its participation in such Loan. The several obligations of the Participating Banks to the Multicurrency Swing Line Bank under this Section 4.3 shall be absolute, irrevocable and unconditional under any and all circumstances whatsoever and shall not be subject to any set-off, counterclaim or defense to payment which any Participating Bank may have or have had against the Borrowers, the Multicurrency Swing Line Bank, any other Bank or any other Person whatsoever. Without limiting the generality of the foregoing, such obligations shall not be affected by any Default or Event of Default or by the amount of any Commitment of any Bank, and each payment by a Participating Bank under this Section 4.3 shall be made without any offset, abatement, withholding or reduction whatsoever. The Multicurrency Swing Line Bank shall be entitled to, or entitled to direct the Administrative Agent to, offset amounts received under this Agreement for the account of a Participating Bank against unpaid amounts due hereunder from such Participating Bank to the Multicurrency Swing Line Bank or the Administrative Agent (whether as fundings of participations or otherwise), but shall not be entitled to offset against amounts owed to the Multicurrency Swing Line Bank or the Administrative Agent by any Participating Bank arising outside these Credit Documents. Section 4.4. Indemnification. The Participating Banks shall, to the extent of their respective Percentages, indemnify the Multicurrency Swing Line Bank (to the extent not reimbursed by the Borrowers) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from the Multicurrency Swing Line Bank's gross negligence or willful misconduct) that the Multicurrency Swing Line Bank may suffer or incur in connection with any Multicurrency Swing Line Loan. The obligations of the Participating Banks under this Section 4.4 and all other parts of this Section 4 shall survive termination of this Agreement. SECTION 5. GENERAL PROVISIONS APPLICABLE TO ALL LOANS Section 5.1. Interest Periods. As provided in (w) Section 1.4 hereof, in the case of Committed Loans, (x) Section 2.2 hereof, in the case of Bid Loans, (y), Section 3.3 hereof, in the case of Domestic Swing Line Loans, and (z) Section 4.2 hereof, in the case of Multicurrency Swing Line Loans, at the time of each request for the Borrowing of Loans hereunder (other than Domestic Rate Loans) the Company (acting on behalf of the applicable Borrower) shall select the Interest Period applicable to such Loans from among the available options. The term "Interest Period" means the period commencing on the date a Borrowing of Loans is made and ending: (i) in the case of Domestic Rate Loans, on the last day of the -20- 21 calendar month in which such Loan is made or, if earlier, on the Revolving Credit Termination Date; (ii) in the case of Committed Eurocurrency Loans, the date, as the Company (acting on behalf of the applicable Borrower) may select, one, two, three or six calendar months thereafter or (unless any Bank notifies the Administrative Agent that deposits of the type, currency and maturity appropriate to match fund the Eurocurrency Loan in question are not available to it) the date, as the Company (acting on behalf of the applicable Borrower) may select, nine or twelve calendar months thereafter; (iii) in the case of Eurocurrency Bid Loans, the date, as the Company (acting on behalf of the applicable Borrower) may select, one, two, three, four, five or six calendar months thereafter; (iv) in the case of Stated Rate Bid Loans, the date, as the Company (acting on behalf of the applicable Borrower) may select, 1-180 days thereafter; (v) in the case of Domestic Swing Line Loans, the date as the Company (acting on behalf of the applicable Borrower) may select, 1 - 7 days thereafter; and (vi) in the case of Multicurrency Swing Line Loans, the date as the Company (acting on behalf of the applicable Borrower) may select, one, two, three or six calendar months thereafter; provided, however, that: (a) for any Borrowing of Fixed Rate Loans, the Company or applicable Borrower may not select an Interest Period that extends beyond the Revolving Credit Termination Date; (b) whenever the last day of any Interest Period would otherwise be a day that is not a Business Day, the last day of such Interest Period shall be extended to the next succeeding Business Day, provided that, in the case of an Interest Period for a Borrowing of Eurocurrency Loans, if such extension would cause the last day of such Interest Period to occur in the following calendar month, the last day of such Interest Period shall be the immediately preceding Business Day; and (c) for purposes of determining the Interest Period for a Borrowing of Eurocurrency Loans, a month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month; provided, however, that if there is no numerically corresponding day in the month in which such an Interest Period is to end or if such an Interest Period begins on the last Business Day of a calendar month, then such Interest Period shall end on the last Business Day of the calendar month in which such Interest Period is to end. Section 5.2. Minimum Borrowing Amounts. Each Borrowing of Domestic Rate Loans (other than a Borrowing of Domestic Swing Line Loans) shall be in an amount not less than $3,000,000 and in integral multiples of $1,000,000. Each Borrowing of Domestic Swing Line Loans shall be in a minimum amount of $100,000. Each Borrowing of Eurocurrency Loans (other than a Borrowing of Multicurrency Swing Line Loans) shall be (x) if denominated in U.S. Dollars, in an amount not less than $10,000,000 and in integral multiples of $1,000,000 and (y) if denominated in an Alternative Currency, in an amount not less than an Original Dollar Amount of $5,000,000 and in integral multiples of 100,000 units of the relevant currency. Each Borrowing of Multicurrency Swing Line Loans shall be in an amount not less than an Original Dollar Amount of $500,000 and in integral multiples of 100,000 units of the relevant currency. Each Borrowing of Bid Loans shall be in an amount not less than an Original Dollar Amount of $3,000,000 and shall be in integral multiples of 100,000 units of the relevant currency. Section 5.3. Maturity of Loans. Each Loan shall mature and become due and payable by the relevant Borrower on the last day of the Interest Period applicable thereto. Section 5.4. Prepayments. (a) Committed Loans. Each Borrower shall have the privilege of prepaying Committed Loans without premium or penalty and in whole or in part (but, if in part, then: (i) -21- 22 if such Committed Borrowing is of Domestic Rate Loans, in an amount not less than $3,000,000, (ii) if such Committed Borrowing is of Eurocurrency Loans denominated in U.S. Dollars, in an amount not less than $10,000,000, (iii) if such Committed Borrowing is denominated in an Alternative Currency, an amount for which the U.S. Dollar Equivalent is not less than $5,000,000 and (iv) in an amount such that the minimum amount required for a Borrowing of such type pursuant to Section 5.2 hereof remains outstanding) any Committed Borrowing at any time upon notice delivered to the Administrative Agent no later than 10:00 a.m. (Chicago time) on the date (x) in the case of a Committed Borrowing of Eurocurrency Loans denominated in U.S. Dollars, no later than three (3) Business Days' prior to the date of such prepayment or (y) in the case of a Committed Borrowing of Eurocurrency Loans denominated in an Alternative Currency, no later than four (4) Business Days prior to the date of such prepayment or (z) in the case of a Committed Borrowing of Domestic Rate Loans, on the date of such prepayment. Each such prepayment shall be made by the payment of the principal amount to be prepaid and accrued interest thereon to the date fixed for prepayment and, in the case of Committed Eurocurrency Loans, any compensation required by Section 5.8 hereof. The Administrative Agent will promptly advise each Bank of any such prepayment notice it receives from any Borrower. Any amount paid or prepaid before the Revolving Credit Termination Date may, subject to the terms and conditions of this Agreement, be borrowed, repaid and borrowed again. (b) Bid and Swing Line Loans. No Borrower may prepay any Bid or Swing Line Loan before the last day of its Interest Period, except as required pursuant to Section 5.4(c), Section 13 or Section 14.1 hereof, or in the case of a Swing Line Loan, as permitted in the discretion of the relevant Swing Line Bank, or in the case of a Bid Loan, as permitted in the discretion of the Bank that made the relevant Bid Loan. (c) Mandatory Prepayment. If the aggregate Original Dollar Amount of outstanding Loans and L/C Obligations shall at any time for any reason exceed the Revolving Credit Commitments then in effect, the Company shall, within two (2) Business Days, pay the amount of such excess to the Administrative Agent for the ratable benefit of the Banks as a prepayment of Loans (to be applied to such Loans as the Company shall direct at the time of such payment) and, if necessary, a prefunding of Letters of Credit. Immediately upon determining the need to make any such prepayment, the Company shall notify the Administrative Agent of such required prepayment. Each such prepayment shall be accompanied by a payment of all accrued and unpaid interest on the Loans prepaid and shall be subject to Section 5.8. Section 5.5. Default Rate. If any payment of principal on any Loan is not made when due (whether by acceleration or otherwise), the principal of such Loan shall bear interest (computed on the basis of a year of 360 days and actual days elapsed or, if based on the Domestic Rate, on the basis of a year of 365 or 366 days, as applicable, and the actual number of days elapsed) from the date such payment was due until paid in full, payable on demand, at a rate per annum equal to: (a) for any Domestic Rate Loan, the sum of two percent (2%) plus the Domestic Rate from time to time in effect; and (b) for any Fixed Rate Loan, the sum of two percent (2%) plus the rate of interest in effect thereon at the time of such default until the end of the Interest Period applicable thereto and, thereafter, if such Loan is denominated in U.S. Dollars, at a rate per annum equal to the sum of two percent (2%) plus the Domestic Rate from time to time in effect or, if such Loan is denominated in an Alternative Currency, at a rate per annum equal to the sum of two percent (2%) plus the Eurocurrency Margin plus the Overnight Foreign Currency Rate. -22- 23 Section 5.6. The Notes. (a) All Committed Loans made to a Borrower by a Bank shall be evidenced by a promissory note of such Borrower in the form of Exhibit A hereto (individually a "Committed Loan Note" and collectively the "Committed Loan Notes"), each such Committed Loan Note to be dated the date hereof (or, if issued by a Borrowing Subsidiary, the date of issuance thereof), payable to the order of the applicable Bank in the principal amount of all Committed Loans to each Borrower and otherwise in the form of Exhibit A hereto. (b) All Bid Loans made to a Borrower by a Bank shall be evidenced by a promissory note of such Borrower in the form of Exhibit B hereto (individually a "Bid Note" and collectively the "Bid Notes"), each such Bid Note to be dated the date hereof (or, if issued by a Borrowing Subsidiary, the date of issuance thereof), payable to the order of the applicable Bank in the principal amount of its outstanding Bid Loans to such Borrower and otherwise in the form of Exhibit B hereto. (c) All Domestic Swing Line Loans made to a Borrower by the Domestic Swing Line Bank shall be evidenced by a promissory note of such Borrower in the form of Exhibit C hereto (individually a "Domestic Swing Line Note" and collectively the "Domestic Swing Line Notes"), each such Domestic Swing Line Note to be dated the date hereof (or, if issued by a Borrowing Subsidiary, the date of issuance thereof), payable to the order of the Domestic Swing Line Bank in the principal amount of the Domestic Swing Line Commitment and otherwise in the form of Exhibit C hereto. (d) All Multicurrency Swing Line Loans made to a Borrower by the Multicurrency Swing Line Bank shall be evidenced by a promissory note of such Borrower in the form of Exhibit D hereto (individually a "Multicurrency Swing Line Note" and collectively, the "Multicurrency Swing Line Notes"), each such Multicurrency Swing Line Note to be dated the date hereof (or, if issued by a Borrowing Subsidiary, the date of issuance thereof), payable to the order of the Multicurrency Swing Line Bank in the principal amount of all Multicurrency Swing Line Loans to such Borrower and otherwise in the form of Exhibit D hereto. (e) Each Bank shall record on its books and records or on a schedule to the appropriate Note the amount of each Loan made by it to a Borrower, all payments of principal and interest and the principal balance from time to time outstanding thereon, the type of such Loan, for any Fixed Rate Loan, the Interest Period and interest rate applicable thereto and, for any Eurocurrency Loan, the currency in which such Loan is denominated; provided that prior to the transfer of any Note such information relating to any outstanding Loans made by such Bank shall be recorded on the back of such Note or on a schedule to such Note or otherwise provided in writing to the transferee. The record thereof, whether shown on such books and records of a Bank or on a schedule to any Note, shall be prima facie evidence as to all such matters; provided, however, that the failure of any Bank to record any of the foregoing or any error in any such record shall not limit or otherwise affect the obligation of each Borrower to repay all Loans made to it hereunder together with accrued interest thereon. At the request of any Bank and upon such Bank tendering to the relevant Borrower the Note to be replaced, such Borrower shall furnish a new Note to such Bank to replace any outstanding Note and at such time the first notation appearing on a schedule on the reverse side of, or attached to, such new Note shall set forth the aggregate unpaid principal amount of all Loans, if any, then outstanding thereon. Section 5.7. Commitment Terminations. The Company (acting on behalf of the applicable Borrower) shall have the right at any time and from time to time, upon five (5) Business Days' prior written notice to the Administrative Agent, to terminate without premium or penalty, in whole or in part, -23- 24 the Revolving Credit Commitments, any partial termination to be in an amount not less than $10,000,000 or any larger amount that is an integral multiple of $1,000,000, and to reduce ratably each Bank's Revolving Credit Commitment; provided, however, that (x) the Revolving Credit Commitments may not be reduced to an amount less than the sum of the Original Dollar Amount of all Loans (whether Committed Loans, Bid Loans or Swing Line Loans) and all L/C Obligations then outstanding and (y) any reduction of the Revolving Credit Commitments to an amount less than a Swing Line Commitment or L/C Commitment shall automatically reduce such Swing Line Commitment or L/C Commitment, as the case may be, to such amount as well. The Administrative Agent shall give prompt notice to each Bank of any such termination of Commitments. Any termination of Commitments pursuant to this Section 5.7 may not be reinstated. Section 5.8. Funding Indemnity. If any Bank shall incur any loss, cost or expense (including, without limitation, any loss, cost or expense incurred by reason of the liquidation or re-employment of deposits or other funds acquired by such Bank to fund or maintain any Fixed Rate Loan or the relending or reinvesting of such deposits or amounts paid or prepaid to such Bank, but in any event excluding loss of profit) as a result of: (a) any payment or prepayment of a Fixed Rate Loan on a date other than the last day of its Interest Period, (b) any failure (because of a failure to meet the conditions of Section 11 or otherwise) by any Borrower to borrow a Fixed Rate Loan on the date specified in a notice given pursuant to Section 1.4, 2.2, 3.3 or 4.2 hereof (other than any such failure due to timely revocation by the Company under Section 1.3(c) hereof of a Borrower's request for a Borrowing of Eurocurrency Loans denominated in an Alternative Currency), (c) any failure by any Borrower to make any payment of principal on any Fixed Rate Loan when due (whether by acceleration or otherwise), or (d) any acceleration of the maturity of a Fixed Rate Loan as a result of the occurrence of any Event of Default hereunder, then, upon the demand of such Bank, the relevant Borrower shall pay to such Bank such amount as will reimburse such Bank for such loss, cost or expense. If any Bank makes such a claim for compensation, it shall provide to the relevant Borrower, with a copy to the Administrative Agent, a certificate executed by an officer of such Bank setting forth the amount of such loss, cost or expense in reasonable detail (including an explanation of the basis for and the computation of such loss, cost or expense) and the amounts shown on such certificate shall be conclusive in the absence of demonstrable error. Section 5.9. Rate and Original Dollar Amount Determinations. The Administrative Agent shall determine each interest rate or other rate applicable to Obligations (other than interest rates applicable to Bid Loans) and the Original Dollar Amount of Loans and Letters of Credit denominated in Alternative Currencies, and its determination thereof shall be conclusive and binding except in the case of manifest error or willful misconduct. The Original Dollar Amount of each Eurocurrency Loan denominated in an Alternative Currency shall be determined effective as of the first day of the Interest Period applicable to such Loan. The Original Dollar Amount of a Reimbursement Obligation shall be calculated on the date of the Administrative Agent's payment of the drawing giving rise to such Reimbursement Obligation and subject to the last sentence of this Section, on the last day of each calendar quarter. The Original Dollar Amount of each Letter of Credit shall be determined or redetermined, as applicable, on the date of issuance, increase or extension of such Letter of Credit and subject to the last sentence of this Section, -24- 25 on the last day of each calendar quarter. At the request of any Bank or the Company, the Administrative Agent shall redetermine the Original Dollar Amount of any L/C Obligation at such additional times, and from time to time, as may be requested for such L/C Obligation. Section 5.10. (a) Designation of Borrowing Subsidiaries. Any Wholly-Owned Subsidiary may elect (with the Company's consent) to become a Borrower hereunder (each a "Borrowing Subsidiary") by delivering to the Administrative Agent an Election to Participate in the form of Exhibit L hereto executed by the Borrowing Subsidiary and, through an Authorized Representative, by the Company; provided, however, that if any such proposed Borrowing Subsidiary is incorporated under the laws of, or principally located in, any jurisdiction other than an Approved Jurisdiction, the consent of each Bank shall be required prior to the effectiveness of such designation. Each Borrowing Subsidiary shall cease to be a Borrower hereunder upon the delivery to the Administrative Agent of an Election to Terminate in the form of Exhibit M hereto or such Borrowing Subsidiary ceasing to be a Wholly-Owned Subsidiary. Upon ceasing to be a Borrower pursuant to the preceding sentence, a Borrower shall lose the right to request Borrowings hereunder (whether Refunding Borrowings or otherwise), but such circumstance shall not affect any obligation of a Borrowing Subsidiary theretofore incurred. The Administrative Agent shall promptly give notice to the Banks of the receipt of any Election to Participate or Election to Terminate. (b) Appointment of Company as Agent for Borrowing Subsidiaries. Each Borrowing Subsidiary irrevocably appoints the Company as its agent hereunder to issue requests for Borrowings and Letters of Credit on its behalf under Sections 1, 2, 3 and 4 hereof, to accept offers for Bid Loans on its behalf for Borrowings to be made by such Borrowing Subsidiary, to terminate the Revolving Credit Commitments and (subject to clause (iii) of Section 17.13 hereof) to take any other action contemplated by the Credit Documents with respect to credit extended hereunder to such Borrowing Subsidiary. SECTION 6. FEES Section 6.1. Facility Fees. The Company shall pay to the Administrative Agent for the ratable account of the Banks, based on their Revolving Credit Commitments, a facility fee (the "Facility Fee") on the average daily amount of the Revolving Credit Commitments hereunder (whether used or unused) at the rate (the "Facility Fee Rate") of 0.100% per annum from the Effective Date to, but not including, the first Pricing Date and thereafter from, and including, one Pricing Date to, but not including, the next at the rate per annum determined in accordance with the schedule below, payable in arrears on the last day of each March, June, September, and December, commencing on March 31, 1997, and on the Revolving Credit Termination Date unless the Revolving Credit Commitments are terminated in whole on an earlier date, in which event the Facility Fee for the period to the date of such termination in whole shall be paid on the date of such termination:
Level: Facility Fee Rate: ------ ------------------ I 0.100% II 0.125% III 0.150% IV 0.250% V 0.300%
-25- 26 Section 6.2. Letter of Credit Fees. On the date of issuance or extension, or increase in the amount, of any Standby Letter of Credit pursuant to Section 1.2 hereof, the Company and each Borrowing Subsidiary (if any) for whose account such Standby Letter of Credit was issued, jointly and severally, shall pay to the Administrative Agent for the account of the relevant Issuing Agent an issuance fee equal to 1/8 of 1% (0.125) per annum of the face amount of (or of the increase in the face amount of) such Standby Letter of Credit. Quarterly in arrears, on the last day of each calendar quarter, commencing on March 31, 1997, the Company and each Borrowing Subsidiary (if any) for whose account the relevant Letter of Credit was issued, jointly and severally, shall pay to the Administrative Agent, for the ratable benefit of the Banks in accordance with their Percentages, a letter of credit fee at a rate per annum equal to the Eurocurrency Margin in effect during each day of such quarter applied to the daily average undrawn face amount of each Letter of Credit (whether Standby or Commercial) outstanding during such quarter. In addition, the Company and each Borrowing Subsidiary (if any) for whose account the relevant Letter of Credit was issued, jointly and severally, shall pay to the Administrative Agent for the account of the relevant Issuing Agent (i) such Issuing Agent's standard issuance fee for each Commercial Letter of Credit issued by such Issuing Agent and (ii) such Issuing Agent's standard drawing, negotiation, amendment, and other administrative fees for each Letter of Credit issued by such Issuing Agent. Such standard fees referred to in the preceding clauses (i) and (ii) may be established by each such Issuing Agent from time to time. Section 6.3. Administrative Agent Fees. The Company shall pay to the Administrative Agent the fees agreed to in a letter exchanged between them. Section 6.4. Closing Fees. The Company shall pay to the Administrative Agent for the account of the Banks the closing fees agreed to in a letter or letters exchanged between them. Section 6.5. Fee Calculations. All fees payable hereunder shall be computed on the basis of a year of 365 or 366 days, as applicable, for the actual number of days elapsed. SECTION 7. PLACE AND APPLICATION OF PAYMENTS Section 7.1. Place of Payments. All payments of amounts payable under this Agreement to the Banks in U.S. Dollars shall be made to the Administrative Agent by no later than 12:00 noon (Chicago time) (or in the case of payments on Swing Line Loans, 2:00 p.m. (Chicago time)) at the principal office of the Administrative Agent in Chicago, Illinois (or such other location in the State of Illinois as the Administrative Agent may designate to the Company or the relevant Borrower) or, if such payment is to be made in an Alternative Currency, no later than 12:00 noon local time (or in the case of payments on Multicurrency Swing Line Loans, 2:00 p.m. local time, or in case of any Loan payable in an Alternative Currency, such earlier time as the Administrative Agent may notify to the Company as is necessary for such funds to be received for same day value on the date of such payment) at the place of payment to such office as the Administrative Agent has previously agreed to with the Company (acting on behalf of the applicable -26- 27 Borrower) for the benefit of the Person or Persons entitled thereto. Any payments received after such time shall be deemed to have been received by the Administrative Agent on the next Business Day and shall bear interest for such additional day or days, as the case may be, in accordance with the provisions of this Agreement. Section 7.2. Funds and Remittance. All such payments shall be made (i) if in U.S. Dollars, in immediately available funds at the place of payment, or (ii) if in an Alternative Currency, in such Alternative Currency in funds then customary for the settlement of international transactions in such currency, in each case without setoff or counterclaim. The Administrative Agent will promptly thereafter (and in any case, for U.S. Dollars, before the close of business on the day the Administrative Agent receives such funds, if timely received by the Administrative Agent) cause to be distributed like funds relating to the payment of principal or interest on Committed Loans, or Reimbursement Obligations in which the Banks have purchased participating interests, or Facility Fees or letter of credit participation fees, ratably to the Banks and like funds relating to the payment of any other amount payable to any Person to such Person, in each case to be applied in accordance with the terms of this Agreement. SECTION 8. DEFINITIONS; INTERPRETATIONS Section 8.1. Definitions. The following terms when used herein have the following meanings: "Account" is defined in Section 13.4(b) hereof. "Acquisition" means any transaction, or any series of related transactions, consummated after the date of this Agreement, by which the Company or any of the Subsidiaries (i) acquires any going business, line of business or all or substantially all of the assets of any firm, corporation or division thereof, whether through purchase of assets, merger or otherwise, or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation or other firm which have ordinary voting power for the election of the board of directors or similar governing body of such corporation or firm (other than securities having such power only by reason of the happening of a contingency). "Administrative Agent" means Harris Trust and Savings Bank and any successor pursuant to Section 15.7 hereof. "Affiliate" means, as to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, "control" (including, with their correlative meanings, "controlled by" and "under common control with") means possession, directly or indirectly, of power to direct or cause the direction of management or policies of a Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), provided that, in any event for purposes of this definition: (i) any Person which owns directly or indirectly 20% or more of the securities having ordinary voting power for the election of directors or other governing body of a corporation or 20% or more of the partnership or other ownership interests of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person; and (ii) each director and executive officer of the Company or any Subsidiary shall be deemed an Affiliate of the Company and each Subsidiary. "Agents" means the Administrative Agent, each Issuing Agent and each Swing Line Bank, in each case in its capacity as such. "Alternative Currency" means any of Belgian Francs, Deutsche Marks, Dutch Guilders, Japanese Yen, Pound Sterling, Spanish Pesetas, Australian Dollars, Canadian Dollars, French Francs, Italian Lira, Swiss -27- 28 Francs, Austrian Shillings and any other currency (each such other non-designated currency being hereinafter referred to as an "Other Alternative Currency") available to each Bank, in each case for so long as such designated Alternative Currency and Other Alternative Currency is freely transferable and freely convertible to U.S. Dollars and the Dow Jones Telerate Service or Reuters monitor Money Rates Service (or any successor to either) reports a LIBOR for such currency for interest periods of one, two, three and six calendar months; provided, however, that availability of each Other Alternative Currency is subject to the additional conditions that (a) none of the Banks has notified the Administrative Agent that in the judgment of such Bank, it is impossible, illegal or impracticable for such Bank to make or participate in Loans in such Other Alternative Currency or that in the judgment of such Bank, additional costs or expenses will be incurred by such Bank or additional taxes, charges or other impositions will be imposed on such Bank (such as withholding taxes of the type described in Section 17.1(a) hereof) as a result of making or participating in Loans in such Other Alternative Currency disbursed or payable in the United States or any Approved Jurisdiction and (b) such amendments, modifications or supplements are made to this Agreement as the Administrative Agent determines are necessary or appropriate to give effect to the borrowing and funding of Loans in such Other Alternative Currency. "Alternative Swing Line Currency" means any of Deutsche Marks, Dutch Guilders, Pound Sterling, French Francs, Swiss Francs and Austrian Shillings, in each case for so long as such currency constitutes an Alternative Currency; provided, however, that availability of each Alternative Swing Line Currency is subject to the additional conditions that (a) the Multicurrency Swing Line Bank has not notified the Administrative Agent that in the judgment of the Multicurrency Swing Line Bank, it is impossible, illegal or impracticable for such Bank to make Multicurrency Swing Line Loans in such Alternative Swing Line Currency or that in the judgment of the Multicurrency Swing Line Bank, additional costs or expenses will be incurred by such Bank or additional taxes, charges or other impositions will be imposed on such Bank (such as withholding taxes of the type described in Section 17.1(a) hereof) as a result of making Multicurrency Swing Line Loans in such Alternative Swing Line Currency disbursed or payable in the United States or any Approved Jurisdiction and (b) such amendments, modifications or supplements are made to this Agreement as the Administrative Agent and Multicurrency Swing Line Bank determine are necessary or appropriate to give effect to the borrowing and funding of Multicurrency Swing Line Loans in such Alternative Swing Line Currency. "Applications" is defined in Section 1.2(d) hereof. "Approved Jurisdictions" means Austria, Belgium, Germany, Holland, Italy, Japan, Spain, Switzerland and the United Kingdom. "Australian Dollars" means the lawful currency of Australia. "Austrian Shillings" means the lawful currency of Austria. "Authorized Representative" means any person shown on the list of officers provided by the Company pursuant to Section 11.1(f) hereof, or any other person shown on any updated such list provided by the Company to the Administrative Agent, or any further or different officer(s) or employee(s) of the Company so named by any Authorized Representative in a written notice to the Administrative Agent. "Bank" means each bank signatory hereto, and its successors, and any assignee of a Bank pursuant to Section 17.12 hereof and includes each Issuing Agent in its capacity as issuer of Letters of Credit and holder of L/C Obligations after giving effect to each Participating Bank's interest therein and also includes each Swing Line Bank in its capacity as the lender on its Swing Line Loans after giving effect to each Participating Bank's interest therein. -28- 29 "Base Outside Investment Amount" means $86,000,000 unless and until the Quartet Acquisition occurs, in which event the Base Outside Investment Amount shall be increased to $91,000,000 or such lesser amount as shall be reflected on the first Outside Investment List submitted in accordance herewith giving effect to the Quartet Acquisition. "Belgian Francs" means the lawful currency of the Kingdom of Belgium. "Bid" is defined in Section 2.2(c) hereof. "Bid Loan" is defined in Section 2.1 hereof. "Bid Loan Limit" shall mean an amount (x) equal to the Revolving Credit Commitments if and so long as Level I Status, Level II Status or Level III Status exists, (y) equal to 50% of the Revolving Credit Commitments if and so long as Level IV Status exists and (z) equal to $0 at all other times. "Bid Loan Request" is defined in Section 2.2(a) hereof. "Bid Loan Request Confirmation" is defined in Section 2.2(a) hereof. "Bid Note" is defined in Section 5.6(b) hereof. "Borrower" is defined in the introduction hereto. "Borrowing" means the total of Loans of a single type made by one or more Banks to the same Borrower on a single date and for a single Interest Period. Borrowings of Committed Loans are made ratably from each of the Banks according to their Revolving Credit Commitments. Borrowings of a Bid Loan or Bid Loans are made from a Bank or Banks in accordance with the procedures of Section 2 hereof. Borrowings of Domestic Swing Line Loans are made from the Domestic Swing Line Bank in accordance with the procedures of Section 3 hereof. Borrowings of Multicurrency Swing Line Loans are made from the Multicurrency Swing Line Bank in accordance with the procedures of Section 4 hereof. The term "Committed Borrowing" shall mean a Borrowing of Committed Loans advanced pursuant to Section 1.4 hereof, the term "Bid Borrowing" shall mean a Borrowing of Bid Loans advanced pursuant to Section 2 hereof and the term "Swing Line Borrowing" shall mean a Borrowing of Swing Line Loans advanced pursuant to Section 3 or Section 4 hereof. "Borrowing Date" is defined in Section 2.2(a) hereof. "Borrowing Subsidiary" is defined in Section 5.10 hereof. "Business Day" means any day other than a Saturday or Sunday on which banks are not authorized or required to close in Chicago, Illinois and, if the applicable Business Day relates to the borrowing or payment of a Eurocurrency Loan, on which banks are dealing in U.S. Dollar deposits or the relevant Alternative Currency in the interbank market in London, England and, if the applicable Business Day relates to the borrowing or payment of a Eurocurrency Loan denominated in an Alternative Currency, on which banks and foreign exchange markets are open for business in the city where disbursements of or payments on such Loan are to be made. "Canadian Dollars" means the lawful currency of Canada. "Capital Lease" of a Person means at any date any lease of property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with GAAP. "Capitalized Lease Obligations" of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with GAAP. "Change of Control Event" means that at any time Lane Industries, Inc., a Delaware corporation, fails to own and control, either directly or indirectly through one or more of its subsidiaries, a -29- 30 sufficient number of shares of the Company's outstanding Voting Stock to elect a majority of the Board of Directors of the Company. "Co-Agents" is defined in the introductory paragraph hereof. "Code" means the Internal Revenue Code of 1986, as amended. "Commercial Letter of Credit" means a Letter of Credit that finances a commercial transaction by paying part or all of the purchase price for goods against delivery of a document of title covering such goods and any other required documentation. "Committed L/C Obligations" means L/C Obligations owed to the Administrative Agent. "Committed Loan" is defined in Section 1.1 hereof. "Committed Loan Notes" is defined in Section 5.6(a) hereof. "Commitments" means the Revolving Credit Commitments, the L/C Commitment, the Domestic Swing Line Commitment and the Multicurrency Swing Line Commitment, and the term "Commitment" means any of the foregoing unless the context in which such term is used shall otherwise require. "Company" means General Binding Corporation, a Delaware corporation. "Compliance Certificate" means a duly completed certificate in the form of Exhibit H hereto. "Confirmation of Bid" is defined in Section 2.2(c) hereof. "Consolidated Current Ratio" means, at any time the same is to be determined, the ratio of current assets of the Company and its Subsidiaries to current liabilities of the Company and its Subsidiaries, all as determined on a consolidated basis in accordance with GAAP consistently applied, but in any event excluding the Loans from current liabilities for such purposes. "Consolidated Debt" means all Debt of the Company and its Subsidiaries determined (without duplication) on a consolidated basis in accordance with GAAP; provided, however, that it is understood that to avoid duplication in calculating Consolidated Debt, only Guaranties of third parties' obligations and of other obligations not otherwise included in the Debt of the Company or of a consolidated Subsidiary shall be included. "Consolidated EBITDA" means, for any period, determined on a consolidated basis for the Company and its Subsidiaries in accordance with GAAP, (i) earnings before income taxes for such period, plus (ii) Consolidated Interest Expense for such period, plus (iii) the amount of all depreciation and amortization expense deducted in determining earnings for such period, plus (iv) the amount (not to exceed $5,000,000) of any decrease in earnings during such period due solely to any write-up of inventory resulting from application of purchase accounting methods to account for the Quartet Acquisition, minus (v) net earnings for such period of any unconsolidated Person in which the Company or any Subsidiary has an ownership interest, unless such earnings are received in cash pursuant to a dividend distribution (or equivalent distribution in the event of one made by a Person other than a corporation) received by the Company, any Borrower or any Guarantor, plus (vi) net losses for such period of any unconsolidated Person in which the Company or any Subsidiary has an ownership interest to the extent such losses are deducted in determining earnings for such period in an amount in excess of any increase during such period in Investments of the Company and its Subsidiaries in such Person; provided, however, that if the Quartet Acquisition occurs at any time during such period, Consolidated EBITDA shall be calculated on a proforma basis to include earnings of Quartet for the entire period as if the Quartet Acquisition had taken place, and Quartet had been a Subsidiary, on the first day of such period, all as reasonably calculated by the Company based on historical operations (including, but not limited to, operations conducted during such quarter) and reasonably calculated adjustments due to anticipated operational changes. -30- 31 "Consolidated Interest Expense" means, for any period, an amount equal to interest expense during such period on Consolidated Debt, as determined on a consolidated basis in accordance with GAAP; provided, however, that if the Quartet Acquisition occurs at any time during such period, Consolidated Interest Expense shall be equal to the product of (x) interest expense on Consolidated Debt, as reasonably determined on a consolidated basis, from and including the date of such Acquisition through the close of such period, multiplied by (y) a fraction, the numerator of which is the number of days in such period and the denominator of which is the number of those days in such period including and following the date of such Acquisition. "Consolidated Shareholder's Equity" means, as of any date the same is to be determined, the total shareholder's equity (including capital stock, additional paid-in-capital and retained earnings after deducting treasury stock, but excluding minority interests in Subsidiaries) which would appear on a balance sheet of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP. "Consolidated Total Assets" shall mean as of the date of any determination thereof, the total amount of all assets of the Company and its Subsidiaries as determined on a consolidated basis in accordance with GAAP. "Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its Property is bound. "Controlled Group" means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Company, are treated as a single employer under Section 414 of the Internal Revenue Code. "Credit Documents" means this Agreement (including each Election to Participate and Election to Terminate issued hereunder), the L/C Documents and the Notes. "Credit Event" means the advancing of any Loan, or the issuance of, or extension of the expiration date or increase in the amount of, any Letter of Credit. "Debt" means, for any Person, any Indebtedness of such Person of the type described in clauses (i) through (vi) of the definition of such term. "Default" means any event or condition the occurrence of which would, with the passage of time or the giving of notice, or both, constitute an Event of Default. "Deutsche Marks" means the lawful currency of the Federal Republic of Germany. "Domestic Borrower" means each Borrower which is a Domestic Subsidiary. "Domestic Rate" is defined in Section 1.3(a) hereof. "Domestic Rate Loan" means a Loan bearing interest prior to maturity at the rate specified in Section 1.3(a) hereof. "Domestic Rate Margin" is defined in Section 1.3(a) hereof. "Domestic Subsidiary" means each Subsidiary of the Company which is organized under the laws of the United States of America or any State thereof. "Domestic Swing Line Bank" is defined in Section 3.1 hereof. -31- 32 "Domestic Swing Line Commitment" means $25,000,000, as such amount may be reduced pursuant to Section 5.7 hereof. "Domestic Swing Line Loans" is defined in Section 3.1 hereof. "Domestic Swing Line Note" is defined in Section 5.6(c) hereof. "Domestic Swing Line Rate" is defined in Section 3.3 hereof. "Dutch Guilder" means the lawful currency of the Kingdom of The Netherlands. "Effective Date" means the date on which the Administrative Agent has received signed counterpart signature pages of this Agreement from each of the signatories (or, in the case of a Bank, confirmation that such Bank has executed such a counterpart and dispatched it for delivery to the Administrative Agent) and the conditions in Section 11.1 hereof have been fulfilled. "Election to Participate" means a letter to the Administrative Agent in the form of Exhibit L hereto executed by a Borrowing Subsidiary and an Authorized Representative and acknowledged by the Administrative Agent. "Election to Terminate" means a letter in the form of Exhibit M hereto executed by a Borrowing Subsidiary and an Authorized Representative and acknowledged by the Administrative Agent. "Environmental and Health Laws" means any and all federal, state, local and foreign statutes, laws, regulations, ordinances, judgments, permits and other governmental rules or restrictions relating to human health, safety (including without limitation occupational safety and health standards), or the environment or to emissions, discharges or releases of pollutants, contaminants, hazardous or toxic substances, wastes or any other controlled or regulated substance into the environment, including without limitation ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous or toxic substances, wastes or any other controlled or regulated substance or the clean-up or other remediation thereof. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. "Eurocurrency Loan" means a Loan bearing interest prior to maturity at the rate specified in Section 1.3(b) hereof and "Committed Eurocurrency Loan" means a Eurocurrency Loan made pursuant to the provisions of Section 1.4 hereof and "Eurocurrency Bid Loan" means a Eurocurrency Loan made pursuant to the provisions of Section 2 hereof. A Multicurrency Swing Line Loan is a Eurocurrency Loan. "Eurocurrency Loans" shall include both Committed Eurocurrency Loans and Eurocurrency Bid Loans unless the context otherwise requires. "Eurocurrency Margin" is defined in Section 1.3(b) hereof. "Eurocurrency Reserve Percentage" means, for any Borrowing of Eurocurrency Loans, the daily average for the applicable Interest Period of the maximum rate, expressed as a decimal, at which reserves (including, without limitation, any supplemental, marginal and emergency reserves) are imposed during such Interest Period by the Board of Governors of the Federal Reserve System (or any successor) on "eurocurrency liabilities", as defined in such Board's Regulation D (or in respect of any other category of liabilities that includes deposits by reference to which the interest rate on Eurocurrency Loans is determined or any category of extensions of credit or other assets that include loans by non-United States offices of any Bank to United States residents), subject to any amendments of such reserve requirement by such Board or its successor, taking into account any transitional adjustments thereto. For purposes of this definition, the Eurocurrency Loans shall be deemed to be "eurocurrency liabilities" as defined in Regulation D without benefit or credit for any prorations, exemptions or offsets under Regulation D. "Event of Default" means any of the events or circumstances specified in Section 13.1 hereof. -32- 33 "Facility Fee" means any of the fees payable by the Company to the Banks under Section 6.1 hereof. "Facility Fee Rate" is defined in Section 6.1 hereof. "Federal Funds Rate" means the fluctuating interest rate per annum described in part (x) of clause (ii) of the definition of Domestic Rate in Section 1.3(a) hereof. "Fixed Rate Loans" means Eurocurrency Loans, Bid Loans and Swing Line Loans. "Foreign Borrower" means each Borrower which is a Foreign Subsidiary. "Foreign Credit L/C Obligations" means L/C Obligations owed to the Multicurrency Swing Line Bank. "Foreign Subsidiary" shall mean each Subsidiary that is not a Domestic Subsidiary. "French Francs" means the lawful currency of the Republic of France. "GAAP" means generally accepted accounting principles, from time to time in effect, consistently applied. "Guarantor" means the Company and each Domestic Subsidiary of the Company that is a signatory hereto or that executes and delivers to the Administrative Agent a Subsidiary Guarantee Agreement in the form of Exhibit O hereto along with the accompanying closing documents required by Section 12.1 hereof. "Guaranty" of a Person means any agreement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes liable upon, the obligation of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract or letter of credit. "Hazardous Material" means and includes (a) any asbestos, PCBs or dioxins or insulation or other material composed of or containing asbestos, PCBs or dioxins and (b) any petroleum product or derivative or other hydrocarbon, and any hazardous or toxic waste, substance or material defined as such in (or for purposes of) CERCLA, any so-called "Superfund" or "Superlien" law, or any other applicable federal, state, local or other statute, law, ordinance, code, rule, regulation, order or decree regulating or pertaining to any such waste, substance or material, as in effect now or at any time hereafter. "Incremental Outside Investment Amount" means as of any time, 10% of Consolidated Total Assets as of the close of the then most recent fiscal quarter of the Company for which a Compliance Certificate is available; provided, however, that if (i) Level I, Level II or Level III was in effect for the most recent Pricing Date, the Company wishes to make an Investment subsequent to such Pricing Date and the Company has demonstrated that on a proforma basis (as if such Investment had been made as of the close of the then most recent fiscal quarter of the Company for which a Compliance Certificate is available) Level I, Level II or Level III would have existed as of the end of such fiscal quarter or (ii) Level I, Level II or Level III was in effect for the two most recent Pricing Dates, the Incremental Outside Investment Amount shall then be set at 15% of Consolidated Total Assets as of close of the most recent fiscal quarter of the Company for which a Compliance Certificate is available. "Indebtedness" means and includes, for any Person, all obligations of such Person, without duplication, which are required by GAAP to be shown as liabilities on its balance sheet, and in any event shall include all of the following whether or not so shown as liabilities: (i) obligations of such Person for borrowed money, (ii) obligations of such Person representing the deferred purchase price of property or services other than accounts payable arising in the ordinary course of business on terms customary in the trade, (iii) obligations of such Person evidenced by notes, acceptances, or other instruments of such -33- 34 Person, (iv) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person, (v) Capitalized Lease Obligations of such Person and (vi) obligations for which such Person is obligated pursuant to a Guaranty. "Interest Coverage Ratio" means, for any period of four consecutive fiscal quarters of the Company ending with the most recently completed such fiscal quarter, the ratio of Consolidated EBITDA for such period to Consolidated Interest Expense for such period. "Interest Period" is defined in Section 5.1 hereof. "Investment" is defined in Section 12.14 hereof. "Issuing Agent" is defined in Section 1.2(a) hereof. "Italian Lira" means the lawful currency of Italy. "Japanese Yen" means the lawful currency of Japan. "L/C Commitment" means $25,000,000, as such amount may be reduced pursuant to Section 5.7 hereof. "L/C Documents" means the Letters of Credit, any draft or other document presented in connection with a drawing thereunder, the Applications and this Agreement. "L/C Obligations" means the aggregate undrawn face amounts of all outstanding Letters of Credit and all unpaid Reimbursement Obligations. "Lending Office" is defined in Section 14.4. "Letter of Credit" is defined in Section 1.2(a) hereof. "Level I" means the Borrower's Leverage Ratio as of the end of the Borrower's fiscal quarter ending immediately prior to the most recent Pricing Date is less than 2.00 to 1.00. "Level II" means the Borrower's Leverage Ratio as of the end of the Borrower's fiscal quarter ending immediately prior to the most recent Pricing Date is greater than or equal to 2.0 to 1.00 and less than 2.50 to 1.00. "Level III" means the Borrower's Leverage Ratio as of the end of the Borrower's fiscal quarter ending immediately prior to the most recent Pricing Date is greater than or equal to 2.50 to 1.00 and less than 3.00 to 1.00. "Level IV" means the Borrower's Leverage Ratio as of the end of the Borrower's fiscal quarter ending immediately prior to the most recent Pricing Date is greater than or equal to 3.00 to 1.00 and less than 3.50 to 1.00, or that Level IV is deemed to exist as set forth below in the definition of Pricing Date. "Level V" means the Borrower's Leverage Ratio as of the end of the Borrower's fiscal quarter ending immediately prior to the most recent Pricing Date is greater than or equal to 3.50 to 1.00. "Leverage Ratio" means, as of any time the same is to be determined, the ratio of Consolidated Debt at such time to Consolidated EBITDA for the four most recently completed fiscal quarters of the Company. "LIBOR" is defined in Section 1.3(b) hereof. "Lien" of a Person means any security interest, mortgage, pledge, lien, claim, charge, encumbrance, title retention agreement, lessor's interest under a capitalized lease or analogous instrument, in, of or on any property of such Person. "Loan" means and includes Committed Loans, Bid Loans, Domestic Swing Line Loans and Multicurrency Swing Line Loans, and each of them singly, and the term "type" of Loan refers to its status as a Committed Loan, Bid Loan, Domestic Swing Line Loan or Multicurrency Swing Line Loan or, if a Committed Loan, to its status as a Domestic Rate Loan or Eurocurrency Loan, or if a Bid Loan, to its status as a Stated Rate Bid Loan or Eurocurrency Bid Loan. -34- 35 "Loan Documents" means this Agreement (including each Election to Participate and Election to Terminate issued hereunder), the Subsidiary Guarantee Agreements, the L/C Documents and the Notes. "Maryland IRB Indenture" is defined in Section 1.3(a) hereof. "Material Adverse Effect" means (i) any materially adverse change in the business, operations, financial condition or Properties of the Company and its Subsidiaries, taken as a whole, or (ii) any fact or circumstance which singly or in the aggregate causes a materially adverse change described in clause (i) with respect to the Company and its Subsidiaries, taken as a whole, or (iii) the inability of any Borrower or Guarantor to perform in any material respect its obligations under the Credit Documents or the inability of any of the Banks or any Agent to enforce in any material respect their rights under the Loan Documents. "Material Domestic Subsidiary" means (i) each Domestic Subsidiary which is a Borrowing Subsidiary, (ii) each Domestic Subsidiary whose consolidated total assets (directly and together with its subsidiaries), as of the close of the current or any subsequent fiscal year of the Company for which audited financial statements are available, were greater than $5,000,000, (iii) each Domestic Subsidiary whose consolidated gross sales (directly and together with its subsidiaries), for the current or any subsequent fiscal year of the Company for which audited financial statements are available, were greater than $5,000,000 and (iv) each Domestic Subsidiary which becomes a Domestic Subsidiary by reason of the following proviso; provided, however, that each Domestic Subsidiary which would (but for the application of this proviso to such Subsidiary) constitute a Non-Material Domestic Subsidiary with the greatest total assets shall constitute a Material Domestic Subsidiary if (i) the consolidated gross sales of such Domestic Subsidiary (directly and together with its subsidiaries), when taken together with the consolidated gross sales of all other Non-Material Domestic Subsidiaries (directly and together with their respective subsidiaries), in each case for the most recently completed fiscal year of the Company for which audited financial statements are available, equal or exceed 3% of consolidated gross sales of the Company and its Subsidiaries for such fiscal year or (ii) the consolidated total assets of such Domestic Subsidiary (directly and together with its subsidiaries), when taken together with the consolidated total assets of all other Non-Material Domestic Subsidiaries (directly and together with their respective subsidiaries), in each case as of the date of such financial statements, equal or exceed 3% of Consolidated Total Assets as of such date. Once a Domestic Subsidiary is a Material Domestic Subsidiary, it shall remain a Material Domestic Subsidiary unless and until the Required Banks agree otherwise. "Material Plan" is defined in Section 13.1(i) hereof. "Multicurrency Swing Line Bank" is defined in Section 4.1 hereof. "Multicurrency Swing Line Commitment" means $25,000,000, as such amount may be reduced pursuant to Section 5.7 hereof. "Multicurrency Swing Line Loan" is defined in Section 4.1 hereof. "Multicurrency Swing Line Note" is defined in Section 5.6(d) hereof. "Multiemployer Plan" means a Plan maintained pursuant to a collective bargaining agreement or any other arrangement to which the Company or any member of the Controlled Group is a party to which more than one employer is obligated to make contributions. "Non-Material Domestic Subsidiary" means each Domestic Subsidiary that is not a Material Domestic Subsidiary. -35- 36 "Note" means and includes the Committed Loan Notes, the Bid Notes, the Domestic Swing Line Note and Multicurrency Swing Line Note and each individually, unless the context in which such term is used shall otherwise require. "Offer" is defined in Section 2.2(c) hereof. "Obligations" means all unpaid principal of and accrued and unpaid interest on the Loans and L/C Obligations, all accrued and unpaid facility fees and letter of credit fees and all other payment obligations of any one or more of the Borrowers to any one or more of the Agents or Banks in each case arising under any one or more of the Credit Documents. "Original Dollar Amount" means the amount of any Obligation denominated in U.S. Dollars and, in relation to any Loan denominated in an Alternative Currency, the U.S. Dollar Equivalent of such Loan on the first day of its Interest Period and, in relation to any L/C Obligation denominated in an Alternative Currency, the U.S. Dollar Equivalent of such L/C Obligation on the day such amount is being computed. "Outside Investment List" means a duly completed certificate from the Company in the form of Exhibit P hereto describing in reasonable detail (by item and amount) the Outside Investments as of a specified date. "Outside Investments" means Investments of the type permitted solely by reason of Section 12.14(h) hereof. "Overnight Foreign Currency Rate" shall mean for any amount payable in a currency other than U.S. Dollars, the rate of interest per annum as determined by the Administrative Agent (or in the case of any amount payable on a Multicurrency Swing Line Loan, the Multicurrency Swing Line Bank) (rounded upwards, if necessary, to the nearest whole multiple of one-hundredth of one percent (1/100 of 1%)) at which overnight or weekend deposits of the appropriate currency (or, if such amount due remains unpaid more than three Business Days, then for such other period of time not longer than six months as the Administrative Agent (or if applicable as aforesaid, the Multicurrency Swing Line Bank) may elect in its absolute discretion) for delivery in immediately available and freely transferable funds would be offered by the Administrative Agent (or if applicable as aforesaid, the Multicurrency Swing Line Bank) to major banks in the interbank market upon request of such major banks for the applicable period as determined above and in an amount comparable to the unpaid principal amount of the related Loan or Reimbursement Obligation (or, if the Administrative Agent (or if applicable as aforesaid, the Multicurrency Swing Line Bank) is not placing deposits in such currency in the interbank market, then the cost of funds to the Administrative Agent or Multicurrency Swing Line Bank, as applicable, in such currency for such period). "Participating Bank" is defined in Sections 1.2(f), 3.5 and 4.3 hereof. "PBGC" means the Pension Benefit Guaranty Corporation and its successors and assigns. "Percentage" means, for each Bank, the percentage of the Revolving Credit Commitments represented by such Bank's Revolving Credit Commitment or, if the Revolving Credit Commitments have been terminated, the percentage held by such Bank (including through participation interests as a Participating Bank in Swing Line Loans and Reimbursement Obligations) of the aggregate principal amount of all outstanding Committed Loans, Swing Line Loans and L/C Obligations. "Permitted Liquid Investments" means investments that would reasonably be considered cash equivalents or other short-term, high quality, liquid investments. "Person" means any corporation, natural person, firm, joint venture, partnership, limited liability company, trust, unincorporated organization, enterprise, government or any department or agency of any government. -36- 37 "Plan" means an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code as to which the Company or any Subsidiary may have any liability. "Pound Sterling" means the lawful currency of the United Kingdom. "Pricing Date" means, for any fiscal quarter of the Company ended after the date hereof (except for the last such fiscal quarter in each fiscal year of the Company), the sixtieth day after the last day of such fiscal quarter and for the last such fiscal quarter, the ninetieth day after the last day of such fiscal quarter; provided, however, that if the Quartet Acquisition occurs, the date of the closing of the Quartet Acquisition shall constitute an additional Pricing Date, at which time Level IV shall be deemed to exist until the next Pricing Date (unless the Company is then more than five (5) Business Days late in delivering the most recent Compliance Certificate required by this Agreement, in which event the following provisions of this paragraph shall govern). The Domestic Rate Margin, the Eurocurrency Margin and the Facility Fee Rate established on a Pricing Date shall remain in effect until the next Pricing Date (and for the next five (5) Business Days in the event set forth in the immediately following sentence). If the Company has not delivered a Compliance Certificate by the fifth Business Day following the date such Compliance Certificate is required to be delivered under Section 12.6(b) hereof, until a Compliance Certificate is delivered before the next Pricing Date, the Domestic Rate Margin, the Eurocurrency Margin and the Facility Fee Rate shall be set from (but not including) such fifth Business Day as if Level V existed. If the Company subsequently delivers such a Compliance Certificate before the next Pricing Date, the Domestic Rate Margin, the Eurocurrency Margin and the Facility Fee Rate established by such late-delivered Compliance Certificate shall take effect from the date of delivery until the next Pricing Date. In all other circumstances, the Domestic Rate Margin, the Eurocurrency Margin and the Facility Fee Rate established by a Compliance Certificate shall be in effect from the Pricing Date that coincides with the deadline for delivery of the corresponding Compliance Certificate until the next Pricing Date. "Property" means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, whether now owned or hereafter acquired. "Quartet" means Quartet Manufacturing Company, a Delaware corporation. "Quartet Acquisition" shall mean the Acquisition by the Company of certain assets of Quartet Manufacturing Company, a Delaware corporation, pursuant to the Quartet Purchase Agreement. "Quartet Purchase Agreement" shall mean the certain Asset Purchase Agreement dated as of November 12, 1996 between the Company and Quartet relating to the Quartet Acquisition. "Refunding Borrowing" is defined in Section 1.4(d) hereof. "Reimbursement Obligation" is defined in Section 1.2(e) hereof. "Reportable Event" means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such Section, with respect to a Plan, excluding, however, such events as to which the PBGC by regulation has waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event (provided that a failure to meet the minimum funding standard of Section 412 of the Code or of Section 302 of ERISA shall be a reportable event regardless of the issuance of any such waivers in accordance with Section 412(d) of the Code). "Required Banks" means, as of the date of determination thereof, those Banks holding at least 60% of the Percentages. -37- 38 "Responsible Officer" means the individuals (if any) holding the following offices in the Company or performing the following functions for the Company: chief executive officer, chief financial officer, chief operating officer, treasurer, assistant treasurer and general counsel. "Revolving Credit Commitments" is defined in Section 1.1 hereof. "Revolving Credit Termination Date" means January 13, 2002. "Set-off" is defined in Section 17.7 hereof. "Significant Subsidiary" means (i) each Subsidiary except a Subsidiary that neither (a) has (together with its subsidiaries) consolidated total assets that constitute more than 3% of Consolidated Total Assets as of the close of the current or any subsequent fiscal year of the Company for which audited financial statements are available, nor (b) has (together with its subsidiaries) consolidated gross sales that constitute more than 3% of consolidated gross sales of the Company and its Subsidiaries as of the close of the current or any subsequent fiscal year of the Company for which audited financial statements are available, (ii) each Borrowing Subsidiary and (iii) each Guarantor (other than the Company). Assets and sales of Foreign Subsidiaries shall be converted into U.S. Dollars at the U.S. Dollar Equivalent as of the date of the most recent audited financial statements furnished to the Banks pursuant to Section 12.6(a) hereof. Once a Subsidiary is a Significant Subsidiary, it shall remain a Significant Subsidiary unless and until the Required Banks agree otherwise. "Single Employer Plan" means a Plan maintained by the Company or any member of the Controlled Group for employees of the Company or any member of the Controlled Group. "Spanish Pesetas" means the lawful currency of Spain. "Standby Letter of Credit" means a Letter of Credit that is not a Commercial Letter of Credit. "Stated Rate Bid Loan" is defined in Section 2.1 hereof. "Subsidiary" means, as to the Company, any corporation or other Person of which more than fifty percent (50%) of the outstanding stock or comparable equity interests having ordinary voting power for the election of the Board of Directors of such corporation or similar governing body in the case of a non-corporation (irrespective of whether or not, at the time, stock or other equity interests of any other class or classes of such corporation or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned by the Company or by one or more of its Subsidiaries. "Subsidiary Guarantee Agreement" means a letter to the Administrative Agent in the form of Exhibit O hereto executed by a Domestic Subsidiary whereby it acknowledges it is party hereto as a Guarantor under Section 16 hereof. "Swing Line Banks" means the Domestic Swing Line Bank and the Multicurrency Swing Line Bank, and the term "Swing Line Bank" shall mean each of the Swing Line Banks individually, unless the context in which such term is used shall otherwise require. "Swing Line Loans" means the Domestic Swing Line Loans and the Multicurrency Swing Line Loans, and the term "Swing Line Loan" shall mean each of the Swing Line Loans individually, unless the context in which such term is used shall otherwise require. "Swiss Francs" means the lawful currency of Switzerland. "Unfunded Vested Liabilities" means, (i) in the case of Single Employer Plans, the amount (if any) by which the present value of all vested nonforfeitable benefits under such Plan exceeds the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent valuation -38- 39 date for such Plan, and (ii) in the case of Multiemployer Plans, the withdrawal liability of the Company or other member of the Controlled Group under such Multiemployer Plan. "Unused Revolving Credit Commitments" means as of any time, the difference between (x) the Revolving Credit Commitments then in effect and (y) the greater of the (i) Original Dollar Amount and (ii) U.S. Dollar Equivalent, as the case may be, of the aggregate principal amount of all Loans (whether Committed Loans, Swing Line Loans or Bid Loans) and L/C Obligations then outstanding. "U.S. Dollars" and "$" each means the lawful currency of the United States of America. "U.S. Dollar Equivalent" means the amount of U.S. Dollars which would be realized by converting a foreign currency into U.S. Dollars in the spot market at the exchange rate quoted by the Administrative Agent (or the Multicurrency Swing Line Bank, for the sole purpose of determining the amount of Multicurrency Swing Line Loans or Foreign Credit L/C Obligations if such determination would result in a larger amount and the Multicurrency Swing Line Bank so informs the Administrative Agent) at approximately 11:00 a.m. (London time) two Business Days prior to the date on which a computation thereof is required to be made, to major banks in the interbank foreign exchange market for the purchase of U.S. Dollars with such foreign currency. "Voting Stock" of any Person means capital stock of any class or classes or other equity interests (however designated) having ordinary voting power for the election of directors or similar governing body of such Person, other than stock or other equity interests having such power only by reason of the happening of a contingency. "Wholly-Owned" when used in connection with any Subsidiary of the Company means a Subsidiary of which all of the issued and outstanding shares of stock or other equity interests (other than directors' qualifying shares as required by law) shall be owned by the Company and/or one or more of its Wholly-Owned Subsidiaries. Section 8.2. Interpretation. The foregoing definitions shall be equally applicable to both the singular and plural forms of the terms defined. All references to times of day herein shall be references to Chicago, Illinois time unless otherwise specifically provided. Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, the same shall be done in accordance with GAAP except where such principles are inconsistent with the specific provisions of this Agreement. SECTION 9. REPRESENTATIONS AND WARRANTIES OF COMPANY The Company hereby represents and warrants to each Bank as to itself and, where the following representations and warranties apply to Subsidiaries, as to each of its Subsidiaries, as follows: Section 9.1. Corporate Organization and Authority. The Company is duly organized and existing in good standing under the laws of the State of Delaware; has all necessary corporate power to carry on its present business; and is duly licensed or qualified and in good standing in each jurisdiction in which the nature of the business transacted by it or the nature of the Property owned or leased by it makes such licensing, qualification or good standing necessary and in which the failure to be so licensed, qualified or in good standing would have a Material Adverse Effect. Section 9.2. Subsidiaries. Schedule 9.2 (as updated from time to time pursuant to Section 12.6(a)) hereto identifies, as of the date of the most recent such Schedule delivered to the Administrative Agent, each Subsidiary, the jurisdiction of its incorporation, the percentage of issued -39- 40 and outstanding shares of each class of its capital stock owned by the Company and the Subsidiaries and, if such percentage is not 100% (excluding directors' qualifying shares as required by law), a description of each class of its authorized capital stock and the number of shares of each class issued and outstanding. Each Subsidiary is duly incorporated and existing in good standing as a corporation under the laws of the jurisdiction of its incorporation, has all necessary corporate power to carry on its present business, and is duly licensed or qualified and in good standing in each jurisdiction in which the nature of the business transacted by it or the nature of the Property owned or leased by it makes such licensing or qualification necessary and in which the failure to be so licensed or qualified would have a Material Adverse Effect. All of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and outstanding and fully paid and nonassessable except as set forth on Schedule 9.2 hereto. All such shares owned by the Company are owned beneficially, and of record, free of any Lien. Each Subsidiary that is a Significant Subsidiary is so noted Schedule 9.2 hereto. Each Material Domestic Subsidiary is a Guarantor except to the extent (i) Section 12.1 does yet require such Subsidiary be a Guarantor and (ii) in the case of those Subsidiaries established or acquired after the date hereof, the Required Banks have agreed pursuant to Section 12.1 hereof that the same need not be Guarantors. Section 9.3. Corporate Authority and Validity of Obligations. The Company has full right and authority to enter into this Agreement and the other Credit Documents to which it is a party, to make the borrowings herein provided for, to issue its Notes in evidence thereof, to apply for the issuance of the Letters of Credit, and to perform all of its obligations under the Credit Documents to which it is a party. Each Guarantor has full right and authority to enter into this Agreement as a signatory hereto or pursuant to a Subsidiary Guarantee Agreement and to perform all of its obligations hereunder or thereunder. Each Credit Document to which the Company or any Guarantor is a party has been duly authorized, executed and delivered by the Company or such Guarantor, as the case may be, and constitutes a valid and binding obligation of the Company or such Guarantor, enforceable in accordance with its terms, subject to general principles of equity and bankruptcy, reorganization, insolvency and similar laws of general application to enforcement of creditors' rights. No Credit Document, nor the performance or observance by the Company or any Guarantor of any of the matters or things therein provided for, contravenes any provision of law or any charter or by-law provision of the Company or any Guarantor or any Contractual Obligation of or affecting the Company or any Guarantor or any of their respective Properties which if breached would reasonably be expected to have a Material Adverse Effect or results in or requires the creation or imposition of any Lien on any of the Properties or revenues of the Company or any Subsidiary. Section 9.4. Financial Statements. All audited financial statements heretofore delivered to the Banks showing historical performance of the Company for each of the Company's fiscal years ending on or before December 31, 1995, and the unaudited interim financial statements heretofore delivered to the Banks for the three fiscal quarters ending September 30, 1996, in each case, have been prepared in accordance with generally accepted accounting principles applied on a basis consistent, except as otherwise noted therein, with that of the previous fiscal year. Each of such financial statements fairly presents on a consolidated basis the financial condition of the Company and its Subsidiaries as of the dates thereof and the results of operations for the periods covered thereby. The Company and its Subsidiaries have no material contingent liabilities other than those disclosed in such financial statements referred to in this Section 9.4 or in comments or footnotes thereto, or in any report supplementary thereto, heretofore furnished to the Banks. The Company and its Subsidiaries have no -40- 41 material Outside Investments other than those disclosed in the most recent Outside Investment List furnished to the Banks. Since December 31, 1995, there has occurred no event which has had or would reasonably be expected to have a Material Adverse Effect. Section 9.5. No Litigation; No Labor Controversies. (a) There is no litigation or governmental proceeding pending, or to the knowledge of the Company or any Subsidiary threatened, against the Company or any Subsidiary which would reasonably be expected to be adversely determined and which, if adversely determined, would have a Material Adverse Effect. (b) There are no labor controversies pending or, to the best knowledge of the Company or any Subsidiary, threatened against the Company or any Subsidiary which would be reasonably expected to have a Material Adverse Effect. Section 9.6. Taxes. The Company and its Subsidiaries have filed all United States federal and state income tax returns, and all other material tax returns, required to be filed and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company or any Subsidiary, except (i) such taxes, if any, as are being contested in good faith and for which adequate reserves have been provided and (ii) the taxes listed on Schedule 9.6 hereto. The United States income tax returns of the Company and the Subsidiaries, on a consolidated basis, have been audited by the Internal Revenue Service through the fiscal year ended December 31, 1990. No tax liens have been filed and no claims are being asserted concerning any such taxes, which liens or claims are material to the financial condition of the Company and its Subsidiaries on a consolidated basis taken as a whole. To the best of the Company's knowledge, the charges, accruals and reserves on the books of the Company and its Subsidiaries for any taxes or other governmental charges are adequate. Section 9.7. Approvals. No authorization, consent, license, exemption, filing or registration with any court or governmental department, agency or instrumentality, nor any approval or consent of the stockholders of the Company or any Subsidiary or from any other Person, in either case which has not yet been made or obtained, is necessary for the valid execution, delivery or performance by the Company or any Subsidiary of any Credit Document to which it is a party. Section 9.8. ERISA. Except as set forth on Schedule 9.8 hereto, (i) each Plan complies in all material respects with all applicable requirements of law and regulations to the extent noncompliance therewith would reasonably be expected to create a liability to the Company or any Subsidiary aggregating in excess of $10,000,000, (ii) no Reportable Event has occurred with respect to any Plan, (iii) neither the Company nor any of its Subsidiaries has withdrawn from any Plan or initiated steps to do so, and (iv) no steps have been taken to terminate any Plan except as disclosed in writing by the Company to the Banks. Section 9.9. Government Regulation. Neither the Company nor any Subsidiary is an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. Section 9.10. Margin Stock. Neither the Company nor any Subsidiary is engaged principally, or as one of its primary activities, in the business of extending credit for the purpose of purchasing or carrying margin stock ("margin stock" to have the same meaning herein as in Regulation U of the Board of Governors of the Federal Reserve System). The Company will not use the proceeds of any Loan or Letter of Credit in a manner that violates any provision of Regulation U or X of the Board of Governors of the Federal Reserve System. -41- 42 Section 9.11. Licenses and Authorizations; Compliance with Environmental and Health Laws. (a) The Company and each of its Subsidiaries has all necessary licenses, permits and governmental authorizations to own and operate its Properties and to carry on its business as currently conducted and contemplated, except to the extent the failure to have such licenses, permits or authorizations would not have a Material Adverse Effect. (b) To the best of the Company's knowledge, the business and operations of the Company and each Subsidiary comply in all respects with all applicable Environmental and Health Laws, except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect. (c) Neither the Company nor any Subsidiary has given, nor is it required to give, nor has it received, any notice, letter, citation, order, warning, complaint, inquiry, claim or demand to or from any governmental entity or in connection with any court proceeding which would reasonably be expected to result in a Material Adverse Effect claiming that: (i) the Company or any Subsidiary has violated, or is about to violate, any Environmental and Health Law; (ii) there has been a release, or there is a threat of release, of Hazardous Materials from the Company's or any Subsidiary's Property, facilities, equipment or vehicles; (iii) the Company or any Subsidiary may be or is liable, in whole or in part, for the costs of cleaning up, remediating or responding to a release of Hazardous Materials; or (iv) any of the Company's or any Subsidiary's property or assets are subject to a Lien in favor of any governmental entity for any liability, costs or damages, under any Environmental and Health Law arising from, or costs incurred by such governmental entity in response to, a release of Hazardous Materials. Section 9.12. Ownership of Property; Liens. Schedule 9.12 lists all principal real property locations used as of the date hereof by the Company or any Subsidiary in the conduct of their respective businesses. The Company and each Subsidiary has good record and marketable title in fee simple to, or valid leasehold interests in, all such real property, as specified in Schedule 9.12, and good title to or valid leasehold interests in all its other Property. Section 9.13. No Burdensome Restrictions; Compliance with Agreements. Neither the Company nor any Subsidiary is (a) party or subject to any law, regulation, rule or order, or any Contractual Obligation that has a Material Adverse Effect or (b) in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement to which it is a party, which default has a Material Adverse Effect. Section 9.14. Full Disclosure. All information heretofore furnished by the Company or any Subsidiary to the Administrative Agent or any Bank for purposes of or in connection with the Credit Documents or any transaction contemplated thereby is, and all such information hereafter furnished by the Company or any Subsidiary to the Administrative Agent or any Bank will be, true and accurate in all material respects and not misleading on the date as of which such information is stated or certified. Notwithstanding the foregoing, the Administrative Agent and Banks acknowledge that as to any projections furnished to them, the Company only represents that the same were prepared on the basis of information and estimates the Company believed to be reasonable. Section 9.15. Quartet Acquisition. The Company has heretofore delivered to the Banks a true and correct copy of the Quartet Purchase Agreement and all exhibits thereto and the same has not been amended or modified in any material respect, except for such amendments and modifications for which true and correct copies have been furnished to the Banks. The Company has all necessary corporate right, power -42- 43 and authority to consummate the Quartet Acquisition and the other transactions contemplated by the Quartet Purchase Agreement and to perform and observe all of its obligations thereunder. Neither the Company nor Quartet is in default in any material respect in any of their respective representations or obligations under the Quartet Purchase Agreement. To the Company's knowledge, (i) the financial statements accompanying the annual audit report for Quartet for its fiscal year ended December 31, 1995 have been prepared in accordance with generally accepted accounting principles applied on a basis consistent, except as otherwise noted therein, with that of the previous fiscal year and (ii) such annual financial statements, and the interim unaudited balance sheet of Quartet as of September 30, 1996 and income statement of Quartet for the nine months then ended, in each case fairly present the financial condition of Quartet as of the dates thereof and the results of operations for the periods covered thereby. SECTION 10. REPRESENTATIONS AND WARRANTIES OF BORROWING SUBSIDIARIES By its execution and delivery of its Election to Participate, each Borrowing Subsidiary severally represents and warrants to each Bank as to itself as follows: Section 10.1. Corporate Organization and Authority. Such Borrowing Subsidiary is duly organized and existing in good standing under the laws of the jurisdiction of its incorporation; has all necessary corporate power to carry on its present business; and is duly licensed or qualified and in good standing in each jurisdiction in which the nature of the business transacted by it or the nature of the Property owned or leased by it makes such licensing, qualification or good standing necessary and in which the failure to be so licensed, qualified or in good standing would have a Material Adverse Effect. Section 10.2. Corporate Authority and Validity of Obligations. Such Borrowing Subsidiary has full right and authority to enter into this Agreement, its Election to Participate and the other Credit Documents to which it is a party, to make the borrowings herein provided for, to issue its Notes in evidence thereof, to apply for the issuance of the Letters of Credit, and to perform all of its obligations under the Credit Documents to which it is a party. Each Credit Document to which such Borrowing Subsidiary is a party has been duly authorized, executed and delivered by such Borrowing Subsidiary and constitutes a valid and binding obligation of such Borrowing Subsidiary enforceable in accordance with its terms, subject to general principles of equity and bankruptcy, reorganization, insolvency and similar laws of general application to enforcement of creditors' rights. No Credit Document, nor the performance or observance by such Borrowing Subsidiary of any of the matters or things therein provided for, contravenes any provision of law or of any charter or by-law (or any comparable constituent document) of such Borrowing Subsidiary or any Contractual Obligation of or affecting the Company or such Borrowing Subsidiary or any of their respective Properties which if breached would reasonably be expected to have a Material Adverse Effect or results in or requires the creation or imposition of any Lien on any of the Properties or revenues of the Company or any Borrowing Subsidiary. SECTION 11. CONDITIONS PRECEDENT The obligation of each Bank to make any Loan hereunder, or of an Issuing Agent to issue, extend the expiration date (including by not giving notice of non-renewal) of or increase the amount of any Letter of Credit, shall be subject to the following conditions precedent: Section 11.1. Initial Borrowing. Prior to the making of the initial Credit Event hereunder: (a) The Administrative Agent shall have received for each Bank the favorable written opinions of Steven Rubin, general counsel to the Company and each Domestic Subsidiary, and Sidley & Austin, outside counsel to the Company and each Domestic Subsidiary, in substantially the forms -43- 44 of Exhibits J-1 and J-2, respectively, hereto, and otherwise in form and substance satisfactory to the Required Banks; (b) The Administrative Agent shall have received for each Bank (i) certified copies of resolutions of the Board of Directors of the Company authorizing the execution, delivery and performance of this Agreement and the Company's Notes, indicating the authorized signers of this Agreement and the Company's Notes and all other documents relating thereto and the specimen signatures of such signers and (ii) copies of the Company's Certificate of Incorporation and by-laws certified by the Secretary or other appropriate officer of the Company together with a certificate of good standing certified by the appropriate governmental officer in the jurisdiction of the Company's incorporation; (c) The Administrative Agent shall have received for each Bank (i) certified copies of resolutions of the Board of Directors of each Material Domestic Subsidiary authorizing the execution, delivery and performance of this Agreement, indicating the authorized signers of this Agreement and all other documents relating thereto and the specimen signatures of such signers and (ii) copies of such Material Domestic Subsidiary's Certificate or Articles of Incorporation and by-laws certified by the Secretary or other appropriate officer of such Material Domestic Subsidiary together with a certificate of good standing certified by the appropriate governmental officer in the jurisdiction of such Material Domestic Subsidiary's incorporation; (d) The Administrative Agent shall have received for each Bank such Bank's duly executed Committed Loan Note and Bid Note of the Company dated the date hereof and otherwise in compliance with the relevant provisions of Section 5.6 hereof and shall have received for each Swing Line Bank its Swing Line Note of the Company dated the date hereof and otherwise in compliance with the relevant provisions of Section 5.6 hereof; (e) Each Material Domestic Subsidiary as of the Effective Date shall have executed this Agreement as a Guarantor; (f) The Administrative Agent shall have received an Outside Investment List completed as of the most recently completed fiscal quarter of the Company and such an Outside Investment List shall reflect Outside Investments as of such date to be not less than the Base Outside Investment Amount; and (g) The Administrative Agent shall have received from the Company a list of the Authorized Representatives. Section 11.2. All Credit Events. As of the time of each Credit Event hereunder (including the initial Credit Event): (a) In the case of a Borrowing, the Administrative Agent shall have received the notice required by Section 1.4 hereof (including any deemed notice under Section 1.4(c)) or 2.4 or 3.3 or 4.2 hereof, as applicable, and the Note of the relevant Borrower required by Section 5.6 hereof for a Borrowing of such type; in the case of the issuance of any Letter of Credit the relevant Issuing Agent shall have received a duly completed Application for a Letter of Credit; and in the case of an extension or increase in the amount of a Letter of Credit, a written request therefor, in a form acceptable to the relevant Issuing Agent; (b) In the case of a Credit Event other than a Refunding Borrowing, each of the representations and warranties of the Company and Borrowing Subsidiaries set forth in Sections -44- 45 9 (other than the last sentence of Section 9.4) and 10 hereof shall be and remain true and correct in all material respects as of said time, except that if any such representation or warranty relates solely to an earlier date it need only remain true as of such date; (c) In the case of a Credit Event other than (i) a Refunding Borrowing in Domestic Rate Loans and (ii) a Refunding Borrowing in Eurocurrency Loans (refunding a Borrowing denominated in an Alternative Currency) in the same Alternative Currency with an Interest Period not exceeding one (1) calendar month, no Default or Event of Default shall have occurred and be continuing or would occur as a result of such Credit Event; (d) In the case of a Credit Event (including a Refunding Borrowing), after giving effect to such Credit Event, (i) neither the Original Dollar Amount nor the U.S. Dollar Equivalent of the aggregate principal amount of all Loans (whether Committed Loans, Swing Line Loans or Bid Loans) and L/C Obligations outstanding hereunder shall exceed the Revolving Credit Commitments then in effect, (ii) the aggregate Original Dollar Amount of Committed L/C Obligations shall not exceed the L/C Commitment then in effect, (iii) the aggregate principal amount of Domestic Swing Line Loans outstanding hereunder shall not exceed the lesser of the Unused Revolving Credit Commitments and the Domestic Swing Line Commitment, (iv) neither the aggregate Original Dollar Amount nor the U.S. Dollar Equivalent of the aggregate principal amount of Multicurrency Swing Line Loans and Foreign Credit L/C Obligations outstanding hereunder shall exceed the lesser of the Unused Revolving Credit Commitments and the Multicurrency Swing Line Commitment, and (v) the aggregate Original Dollar Amount of all Bid Loans outstanding hereunder shall not exceed the lesser of the Unused Revolving Credit Commitments and the Bid Loan Limit; and (e) Such Borrowing shall not violate any order, judgment or decree of any court or other authority or any provision of law or regulation applicable to any Bank (including, without limitation, Regulation U of the Board of Governors of the Federal Reserve System) as then in effect. Each request for a Borrowing hereunder shall be deemed to be a representation and warranty by the Company on the date of such Borrowing as to the facts specified in paragraphs (b), (c) and (d) of this Section 11.2. Section 11.3. First Borrowing by Each Borrowing Subsidiary. In the case of the first Borrowing by each Borrowing Subsidiary hereunder: (a) The Administrative Agent shall have received an opinion of counsel for such Borrowing Subsidiary acceptable to the Administrative Agent, substantially in the form of Exhibit N hereto (with appropriate assumptions, exceptions and qualifications reasonably acceptable to the Administrative Agent reflecting the laws of the relevant jurisdiction) and covering such additional matters as the Required Banks may reasonably request; and (b) The Administrative Agent shall have received for each Bank (i) certified copies of resolutions of the Board of Directors (or comparable authorizing documents) of such Borrowing Subsidiary authorizing the execution, delivery and performance of this Agreement, including the execution and delivery of an Election to Participate, and the Borrowing Subsidiary's Notes, indicating the authorized signers of this Agreement, through the Election to Participate, and the Borrowing Subsidiary's Notes and all other documents relating thereto and the specimen signatures of such signers and (ii) copies of such Borrowing Subsidiary's charter and by-laws (or other -45- 46 comparable constituent documents) certified by the Secretary or other appropriate officer of such Borrowing Subsidiary together with (if available in the relevant jurisdiction) a certificate of good standing (or similar document) certified by the appropriate governmental officer in the jurisdiction of such Borrowing Subsidiary's incorporation. The documents referred to in this Section 11.3 shall be delivered to the Administrative Agent by the Borrower no later than the date of the first Borrowing by such Borrower. The opinion referred to in clause (a) above shall be dated on or prior to the date of the first Borrowing by such Borrower hereunder. Section 11.4. Additional Conditions to Credit Events other than Refunding Borrowings. In addition to the conditions set forth in Sections 11.1, 11.2 and 11.3 hereof, as of the time of each Credit Event other than a Refunding Borrowing, the representations and warranties set forth in the last sentence of Section 9.4 hereof shall be true as of said time, and the request for such Credit Event, as referred to in Section 11.2(a), shall be and constitute a representation and warranty as to such matters specified in the last sentence of Section 9.4 hereof; provided, however, that the reference in such sentence to financial statements shall be deemed a reference to the date of the most recent annual financial statements submitted pursuant to Sections 12.6(a)(ii) hereof. Section 11.5. Termination of Existing Credit Agreement. The Company and each of the Banks hereunder that is a party to the $140,000,000 Credit Agreement dated as of July 25, 1995 (the "Existing Credit Agreement") among General Binding Corporation, the Banks signatory thereto, and Harris Trust and Savings Bank, as agent, consent to the termination of the "Commitments" thereunder effective on the Effective Date, notwithstanding the notice requirements for such termination set forth in Section 3.6 of the Existing Credit Agreement. Because such Banks hereunder constitute the "Required Banks" under the Existing Credit Agreement, the Existing Credit Agreement shall terminate (but with this Agreement to constitute, for purposes only of the Maryland IRB Indenture, an amendment and restatement in its entirety of the Existing Credit Agreement) and except as set forth in the last sentence of this Section, all amounts payable thereunder, including accrued and unpaid facility fees payable under Section 4.1 thereof, shall be payable, and the Facility Fee payable under Section 4.1 hereof shall begin to accrue, on the Effective Date. If there are any "Eurodollar Loans" or "Bid Loans" (as such terms are defined in the Existing Credit Agreement) outstanding on the Effective Date which, if prepaid, would require the relevant Borrower to make a payment under the funding indemnity in Section 3.7 of the Existing Credit Agreement, then if and to that extent, such Eurocurrency and Bid Loans shall, upon the initial Credit Event, for all purposes be deemed to be Stated Rate Bid Loans outstanding hereunder made by the same Bank (but with an increase in the interest rate on each such Loan of 1/4 of 1% per annum from and after the date of the Quartet Acquisition and with interest (absent default) to be due and payable thereon on the dates set forth in the Existing Credit Agreement). SECTION 12. COVENANTS The Company covenants and agrees that, so long as any Note or any L/C Obligation is outstanding hereunder, or any Commitment is available to or in use by any Borrower hereunder, except to the extent compliance in any case is waived in writing by the Required Banks: Section 12.1. Corporate Existence; Subsidiaries. The Company shall, and shall cause each of its Subsidiaries to, preserve and maintain its corporate existence, subject to the provisions of Section 12.12 hereof. Within ten (10) days after establishing or acquiring any Material Domestic Subsidiary or any Domestic Subsidiary becoming a Material Domestic Subsidiary, unless the Required Banks -46- 47 otherwise agree or the Company elects otherwise as set forth in the immediately following sentence, the Company shall (i) cause such Material Domestic Subsidiary to execute a Subsidiary Guarantee Agreement and (ii) cause such Material Domestic Subsidiary to deliver documentation similar to that described in Section 11.1(a) through (c) relating to the authorization for, execution and delivery of, and validity of such Material Domestic Subsidiary's obligations as a Guarantor hereunder and under its Subsidiary Guarantee Agreement in form and substance satisfactory to the Required Banks. Notwithstanding anything in the immediately preceding sentence to the contrary, the Company need not cause a Material Domestic Subsidiary to provide a Subsidiary Guarantee Agreement and otherwise comply with such sentence if within such ten (10) day period, the Company so requests the Administrative Agent (which shall promptly inform the Banks) that such Material Domestic Subsidiary not be a Guarantor and no Default or Event of Default has occurred and is continuing (it being understood that, among other things, the Company's Investments in such Guarantor shall thereupon become Outside Investments subject to the limitations of Section 12.14(h) hereof). If concurrent with the closing of any sale or other disposition of a Guarantor (other than the Company) permitted by Section 12.12 hereof, the Company or such Guarantor fully pays all Loans (if any) made to such Guarantor and the Company pays or assumes in a manner acceptable to the Banks the liability for all L/C Obligations of such Guarantor and the Company requests the Administrative Agent (which shall promptly inform the Banks) that such Guarantor be released from its Obligations under its Subsidiary Guarantee Agreement and no Default or Event of Default has occurred and is continuing, the Banks will so release such Guarantor (it being understood and agreed that any Borrowing Subsidiary shall, as provided in Section 5.10(a) hereof, cease to be a Borrower hereunder upon ceasing to be a Wholly-Owned Subsidiary). Section 12.2. Maintenance. The Company will maintain, preserve and keep its plants, properties and equipment deemed by it necessary to the proper conduct of its business in reasonably good repair, working order and condition and will from time to time make all reasonably necessary repairs, renewals, replacements, additions and betterments thereto so that at all times such plants, properties and equipment shall be reasonably preserved and maintained, and the Company will cause each of its Subsidiaries to do so in respect of Property owned or used by it; provided, however, that nothing in this Section 12.2 shall prevent the Company or a Subsidiary from discontinuing the operation or maintenance of any such Properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of the business of the Company and its Subsidiaries taken as a whole and not disadvantageous to the Banks or the holders of the Notes. Section 12.3. Taxes. The Company will duly pay and discharge, and will cause each of its Subsidiaries duly to pay and discharge, all federal and state income taxes and other material taxes, rates, assessments, fees and governmental charges upon or against it or against its Properties, in each case before the same becomes delinquent and before penalties accrue thereon, unless and to the extent that the same is being contested in good faith by appropriate proceedings and reserves in conformity with GAAP have been provided therefor on the books of the Company. Section 12.4. ERISA. The Company will, and will cause each of its Subsidiaries to, promptly pay and discharge all obligations and liabilities arising under ERISA of a character which if unpaid or unperformed might result in the imposition of a Lien against any of its properties or assets and will promptly notify the Administrative Agent of (i) the occurrence of any reportable event (as defined in ERISA) affecting a Plan, other than any such event of which the PBGC has waived notice by regulation, -47- 48 (ii) receipt of any notice from PBGC of its intention to seek termination of any Plan or appointment of a trustee therefor, (iii) its or any of its Subsidiaries' intention to terminate or withdraw from any Plan, and (iv) the occurrence of any event affecting any Plan which could result in the incurrence by the Company or any of its Subsidiaries of any material liability, fine or penalty, or any material increase in the contingent liability of the Company or any of its Subsidiaries under any post-retirement Welfare Plan benefit. The Administrative Agent will promptly distribute to each Bank any notice it receives from the Company pursuant to this Section 12.4. Section 12.5. Insurance. The Company will insure, and keep insured, and will cause each of its Subsidiaries to insure, and keep insured, with good and responsible insurance companies, all insurable Property owned by it of a character usually insured by companies similarly situated and operating like Property. To the extent reasonably and in good faith deemed appropriate by the Company, the Company will also insure, and cause each of its Subsidiaries to insure, employers' and public and product liability risks with good and responsible insurance companies. The Company will upon request of any Bank furnish to such Bank a summary setting forth the nature and extent of the insurance maintained pursuant to this Section 12.5. Section 12.6. Financial Reports and Other Information. (a) The Company will maintain a system of accounting in accordance with GAAP and will furnish to the Banks and their respective duly authorized representatives such information respecting the business and financial condition of the Company and its Subsidiaries as any Bank may reasonably request; and without any request, the Company will furnish each of the following to each Bank: (i) Within 90 days after the close of each of its fiscal years, an audit report certified by independent certified public accountants acceptable to the Required Banks, unqualified as to scope or going concern, prepared in accordance with GAAP on a consolidated basis for itself and the Subsidiaries, including balance sheets as of the end of such period, related profit and loss and reconciliation of surplus statements, and a statement of cash flows, accompanied by a certificate of said accountants that, in the course of their examination necessary for their certification of the foregoing, they have obtained no knowledge of any Default or Event of Default or if, in the opinion of such accountants, any Default or Event of Default shall exist, stating the nature and status thereof; (ii) Within 60 days after the close of each quarterly period of each of its fiscal years (except for the last such quarterly period in each fiscal year), for itself and the Subsidiaries, consolidated unaudited balance sheets as at the close of each such period and consolidated profit and loss and reconciliation of surplus statements and a statement of cash flows in accordance with GAAP for the period from the beginning of such fiscal year to the end of such quarter, all certified by its chief financial officer; (iii) Within one year after the close of each fiscal year, a statement of the Unfunded Vested Liabilities of each Single Employer Plan, certified as correct by an actuary enrolled under ERISA; (iv) As soon as possible and in any event within 10 days after the Company knows that any Reportable Event has occurred with respect to any Plan, a statement, signed by the chief financial officer of the Company, describing said Reportable Event and the action the Company proposes to take with respect thereto; -48- 49 (v) As soon as possible and in any event within 10 days after any new Domestic Subsidiary is created or acquired, an updated Schedule 9.2 showing such Domestic Subsidiary; (vi) As soon as possible and in any event no later than 10 days following the close of each calendar quarter in which any new Foreign Subsidiary is created or acquired, an updated Schedule 9.2 showing such Foreign Subsidiary; and (vii) Promptly upon their becoming available, one copy of each financial statement, report, notice or proxy statement sent by the Company to stockholders generally and of each regular or periodic report, registration statement or prospectus filed by the Company or any Subsidiary with any securities exchange or the Securities and Exchange Commission or any successor agency, and copies of any orders in any proceedings to which the Company or any of its Subsidiaries is a party, issued by any governmental agency, federal or state, having jurisdiction over the Company or any of its Subsidiaries, which would reasonably be expected to have a Material Adverse Effect. (b) Each financial statement furnished to the Banks pursuant to subsection (i) or (ii) of this Section 12.6 shall be accompanied by (A) a written certificate signed by the Company's chief financial officer to the effect that (i) no Default or Event of Default has occurred during the period covered by such statements or, if any such Default or Event of Default has occurred during such period, setting forth a description of such Default or Event of Default and specifying the action, if any, taken or to be taken by the Company to remedy the same, (ii) the representations and warranties contained in Section 9 hereof are true and correct in all material respects as though made on the date of such certificate (other than those representations (x) made solely as of an earlier date, which need only remain true as of such date (y) contained in Section 9.5 or (z) contained in the last sentence of Section 9.4) taking into account any amendments to such Section (including without limitation any amendments to the Schedules referenced therein) made after the date of this Agreement in accordance with its provisions and except as otherwise described therein, (B) a Compliance Certificate showing the Company's compliance with the covenants set forth in Sections 12.14(h), 12.15, 12.16, 12.17, 12.18 and 12.21 hereof and (C) an Outside Investment List prepared as of the close of the relevant fiscal quarter. (c) The Company will promptly (and in any event within three Business Days after a Responsible Officer of the Company has knowledge thereof) give notice to the Administrative Agent and each Bank: (i) of the occurrence of any Change of Control Event, Default or Event of Default; (ii) of any default or event of default under any Contractual Obligation of the Company or any of its Subsidiaries, except for any such default or event of default which is not reasonably expected to have a Material Adverse Effect; (iii) of any event which has or would reasonably be expected to have a Material Adverse Effect; (iv) of any litigation or governmental proceeding of the type described in Section 9.5 hereof and of any notice of alleged noncompliance with any laws or regulations of the type described in Section 9.11 hereof which is reasonably expected to have a Material Adverse Effect; and (v) Within 30 days of becoming aware of such occurrence, notice of any occurrence of the type described in Section 13.1(f) or (g) hereof with respect to any Subsidiary that is not a Significant Subsidiary. -49- 50 Section 12.7. Bank Inspection Rights. Upon reasonable notice from the Administrative Agent, the Company will permit the Administrative Agent (and such Persons as the Administrative Agent may designate) or any Bank during normal business hours to visit and inspect, under the Company's guidance, any of the properties of the Company or any of its Subsidiaries, to examine all of their books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers, employees and, with the consent of Company (which consent shall not be unreasonably withheld), independent public accountants (and by this provision the Company authorizes such accountants to discuss with the Banks (and such Persons as any Bank may reasonably designate) the finances and affairs of the Company and its Subsidiaries) all at such reasonable times and as often as may be reasonably requested; provided, however, that except upon the occurrence and during the continuation of any Default or Event of Default, the Company shall not be liable for the costs and expenses of such visits and inspections, whether conducted by the Administrative Agent, the Banks or their designees. Nothing contained in this Section 12.7 shall be construed as an express or implied waiver or forfeiture by the Company or any Subsidiary of any accountant-client or other privilege belonging to or accruing to the Company and all information disclosed to any Bank pursuant to this Section or inspected by any such Bank shall be subject to the provisions of Section 17.23 of this Agreement. Section 12.8. Conduct of Business. Neither the Company nor any Subsidiary will engage in any line of business if, as a result, the general nature of the business of the Company and its Subsidiaries taken as a whole would be substantially changed from that conducted on the date hereof. Section 12.9. Liens. The Company will not, and will not permit any of its Subsidiaries to, create, incur, permit to exist or to be incurred any Lien of any kind on any Property owned by the Company or any Subsidiary; provided, however, that this Section 12.9 shall not apply to nor operate to prevent: (a) Liens arising by operation of law in connection with worker's compensation, unemployment insurance, social security obligations, taxes, assessments, statutory obligations or other similar charges, good faith deposits, pledges or Liens in connection with bids, tenders, contracts or leases to which the Company or any Subsidiary is a party (other than contracts for borrowed money), or other deposits required to be made in the ordinary course of business; provided that in each case the obligation secured is not more than 30 days overdue or, if more than 30 days overdue, is being contested in good faith by appropriate proceedings which prevent enforcement of the matter under contest and for which reserves in conformity with GAAP have been provided on the books of the Company; further provided, however, that in no event is any action taken to foreclose on or repossess or otherwise realize on the Property subject to such Lien; (b) mechanics', workmen's, materialmen's, landlords', carriers', repairmens' or other similar Liens arising in the ordinary course of business (or deposits to obtain the release of such Liens) securing obligations not more than 60 days overdue or, if more than 60 days overdue, being contested in good faith by appropriate proceedings which prevent enforcement of the matter under contest and for which reserves in conformity with GAAP have been provided on the books of the Company; provided, however, that in no event is any action taken to foreclose on or repossess or otherwise realize on the Property subject to such Lien; (c) Liens for taxes or assessments or other government charges or levies on the Company or any Subsidiary of the Company or their respective Properties, not yet due or delinquent, or which can thereafter be paid without penalty, or which are being contested in good faith by -50- 51 appropriate proceedings and for which reserves in conformity with GAAP have been provided on the books of the Company; (d) Liens arising out of judgments or awards against the Company or any Subsidiary of the Company, or in connection with surety or appeal bonds in connection with bonding such judgments or awards, the time for appeal from which or petition for rehearing of which shall not have expired or with respect to which the Company or such Subsidiary shall be prosecuting an appeal or proceeding for review, and with respect to which it shall have obtained a stay of execution pending such appeal or proceeding for review; provided that the aggregate amount of liabilities (including interest and penalties, if any) of the Company and its Subsidiaries secured by such Liens shall not exceed $10,000,000 at any one time outstanding; (e) Survey exceptions or encumbrances, easements or reservations, or rights of others for rights-of-way, utilities and other similar purposes, or rights of lessors or sublessors of real property leased by the Company or any Subsidiary, or zoning or other restrictions as to the use of real properties which are necessary for the conduct of the activities of the Company and any Subsidiary of the Company or which customarily exist on properties of corporations engaged in similar activities and similarly situated and which do not in any event materially impair their use in the operation of the business of the Company or any Subsidiary of the Company; (f) any Lien existing on any Property (other than receivables and inventory) prior to the acquisition thereof by the Company or any Subsidiary, provided that such Lien is not created in contemplation of or in connection with such acquisition and the aggregate principal amount of Indebtedness at any time outstanding, secured by such Liens, shall not exceed $15,000,000; (g) Any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part of any Lien referred to in the foregoing subsection (f), provided, however, that the principal amount of Indebtedness secured thereby shall not exceed the principal amount of Indebtedness so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement shall be limited to the Property which was subject to the Lien so extended, renewed or replaced; and (h) Liens not otherwise permitted under this Section 12.9 on Property (other than receivables and inventory) securing Indebtedness that, when combined with Capitalized Lease Obligations permitted under Section 12.11, is in an aggregate principal amount not exceeding 10% of Consolidated Total Assets as of the close of the most recent fiscal quarter of the Company; provided, further, that no Lien permitted under subsections (b), (e), (f), (g) and (h) above may apply to any capital stock of any Subsidiary. Section 12.10. Use of Proceeds; Regulation U. The proceeds of each Borrowing, and the credit provided by Letters of Credit, will be used by the Company for working capital, repayment of other Debt, and other general corporate purposes including Acquisitions and other Investments permitted by Section 12.14 hereof. The Company will not use any part of the proceeds of any of the Borrowings or of the Letters of Credit directly or indirectly to purchase or carry any margin stock (as defined in Section 9.10 hereof) or to extend credit to others for the purpose of purchasing or carrying any such margin stock. At no time will margin stock (as defined in Section 9.10 hereof) constitute 25% or more of the assets of the Company or of the Company and its Subsidiaries, taken as a whole. -51- 52 Section 12.11. Sales and Leasebacks. The Company will not, nor will it permit any Subsidiary to, enter into any arrangement with any bank, insurance company or other lender or investor providing for the leasing by the Company or any such Subsidiary of any Property theretofore owned by it and which has been or is to be sold or transferred by such owner to such lender or investor, except to the extent the aggregate principal amount of Capitalized Lease Obligations under such leases plus the outstanding principal amount of Indebtedness secured by Liens permitted by Section 12.9(h) (and not separately permitted by other provisions of Section 12.9) does not at any time exceed 10% of Consolidated Total Assets as of the close of the most recent fiscal quarter of the Company. Section 12.12. Mergers, Consolidations and Sales of Assets. (a) The Company will not, and will not permit any of its Subsidiaries to, (i) consolidate with or be a party to a merger with any other Person or (ii) sell, lease or otherwise dispose of all or a "substantial part" of the consolidated assets of the Company and its Subsidiaries; provided, however, that: (1) any Subsidiary of the Company may merge or consolidate with or into or sell, lease or otherwise convey all or a substantial part of its assets to the Company, any Wholly-Owned Subsidiary or any Subsidiary of which the Company or any Wholly-Owned Subsidiary holds at least the same percentage equity ownership after any such event as it did immediately prior to the consummation of such event; provided that in any such merger or consolidation involving the Company, the Company shall be the surviving or continuing corporation; and (2) The Company or any Subsidiary of the Company may consolidate or merge with any other Person if the Company or such Subsidiary or, in the case of such a transaction involving the Company, the Company is the surviving or continuing corporation and at the time of such consolidation or merger, and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing. As used in this Section 12.12, a sale, lease, transfer or disposition of assets shall be deemed to be of a "substantial part" of the consolidated assets of the Company and its Subsidiaries if the fair market value of such assets, when added to the fair market value of all other assets sold, leased, transferred or disposed of by the Company and its Subsidiaries (other than inventory in the ordinary course of business) during the 12-month period ending with the date of such sale exceeds 10% of Consolidated Total Assets determined as of the last day of the fiscal quarter most recently completed before the date of such sale; provided that during any 12-month period the Company and its Subsidiaries may sell, lease, transfer or otherwise dispose of up to 20% of Consolidated Total Assets determined as of the last day of the fiscal quarter most recently completed before the date of such sale if (i) all such assets sold, leased, transferred or otherwise disposed of in excess of 10% of Consolidated Total Assets at the end of the fiscal quarter most recently completed before the date of such sale are so disposed of at fair market value as determined by the Board of Directors of the Company, (ii) the proceeds from such disposition are received in cash or cash equivalents or in Property that is readily usable in the business of the Company and its subsidiaries or transferable in exchange for Property that is readily usable in the business of the Company and its Subsidiaries (provided that notes may be taken as deferred consideration for such sales or other dispositions provided the aggregate principal amount thereof does not exceed $10,000,000 at any one time outstanding), and (iii) all such proceeds from such disposition are reinvested into the business of the Company and its Subsidiaries and not used to pay dividends or make any other distributions to shareholders. -52- 53 (b) The Company will not sell, transfer or otherwise dispose of, and will not permit any Subsidiary to issue, sell, transfer or otherwise dispose of, any shares of stock of any class (including as "stock" for purposes of this Section, any warrants, rights or options to purchase or otherwise acquire stock or other securities exchangeable for or convertible into stock) of any Borrowing Subsidiary, (x) except to the Company or a Wholly-Owned Subsidiary of the Company and (y) except for the purpose of qualifying directors and (z) except for any such sale or other disposition not otherwise prohibited by this Section 12.12 if the Company or such Borrowing Subsidiary fully pays all Loans (if any) made to such Borrowing Subsidiary and the Company pays or assumes in a manner acceptable to the Banks the liability for all L/C Obligations of such Borrowing Subsidiary (it being understood and agreed that any Borrowing Subsidiary shall, as provided in Section 5.10(a) hereof, cease to be a Borrower hereunder upon ceasing to be a Wholly-Owned Subsidiary). Section 12.13. Use of Property and Facilities; Environmental and Health and Safety Laws. The Company will, and will cause each of its Subsidiaries to, comply with the requirements of all Environmental and Health Laws applicable to or pertaining to the Properties or business operations of the Company or any Subsidiary to the extent that noncompliance would reasonably be expected to have a Material Adverse Effect. Without limiting the foregoing, the Company will not, and will not permit any Person to, except in accordance with applicable law, dispose of any Hazardous Material into, onto or upon any real property owned or operated by the Company or any of its Subsidiaries if such disposal would reasonably be expected to have a Material Adverse Effect. Section 12.14. Investments, Acquisitions, Loans, Advances and Guaranties. The Company will not, nor will it permit any Subsidiary to, directly or indirectly, make, retain or have outstanding any investments (whether through purchase of stock or obligations or otherwise) in, or loans or advances to, any other Person, or effect any Acquisition, or be or become liable as endorser, guarantor, surety or otherwise (such as liability as a general partner) for any debt, obligation or undertaking of any other Person, or otherwise agree to provide funds for payment of the obligations of another, or supply funds thereto or invest therein or otherwise assure a creditor of another against loss, or apply for or become liable to the issuer of a letter of credit which supports an obligation of another (cumulatively, all of the foregoing, being "Investments"); provided, however, that the foregoing provisions shall not apply to nor operate to prevent: (a) Permitted Liquid Investments; (b) ownership of stock, obligations or securities received in settlement of debts (created in the ordinary course of business) owing to the Company or any Subsidiary; (c) endorsements of negotiable instruments for collection in the ordinary course of business; (d) loans and advances to employees in the ordinary course of business; (e) Acquisitions of all or any part of the assets or business of any other Person or division thereof engaged in a line of business related to that of the Company and its Subsidiaries, or of a majority of the Voting Stock of such a Person, or of equity interests in any partnership, joint venture or corporation which does not become a Subsidiary as a result of such Acquisition but is engaged (or promptly after such Acquisition will be engaged) in a line of business related to that of the Company and its Subsidiaries, provided that (i) no Default or Event of Default exists or would exist after giving effect to such Acquisition, (ii) the Board of Directors or other -53- 54 governing body of such Person whose Property, or Voting Stock or other interests in which, are being so acquired has approved the terms of such Acquisition, (iii) the Company can demonstrate that on a proforma basis after giving effect to such Acquisition it will continue to comply through the Revolving Credit Termination Date with all the terms and conditions of the Credit Documents and (iv) the Investments made to effect such Acquisition are permitted by the other subsections of this Section 12.14; (f) Obligations of Guarantors hereunder; (g) Investments (as defined above in this Section) in Guarantors not otherwise permitted by this Section 12.14, provided that Investments in each Guarantor that only becomes a Subsidiary and Guarantor in each case through such Investment must also comply with the provisions of Section 12.14(e) above; and (h) Investments (as defined above in this Section) not otherwise permitted by this Section 12.14, provided that (i) each such Investment when made, when taken together with all other Outside Investments then outstanding, does not exceed the sum of (x) the Base Outside Investment Amount and (y) the Incremental Outside Investment Amount and (ii) Investments in Subsidiaries that only become Subsidiaries through such Investment, and Acquisitions of other Persons, must also comply with the provisions of Section 12.14(e) above. In determining the amount of investments, acquisitions, loans, advances and guarantees permitted under this Section 12.14, investments and acquisitions shall always be valued at the net book value thereof (without giving effect to (x) any subsequent market appreciation or depreciation therein or (y) any non-cash adjustments), loans and advances shall be taken at the principal amount thereof then remaining unpaid, and guarantees shall be taken at the amount of obligations guaranteed thereby. Section 12.15. Consolidated Shareholder's Equity. The Company will, as of the close of each fiscal quarter of the Company, maintain a Consolidated Shareholder's Equity of not less than the Minimum Required Amount. For purposes of this section, the "Minimum Required Amount" shall mean $134,114,000 and shall increase (but not decrease) as of December 31, 1996 and each fiscal quarter thereafter, by an amount equal to 50% of the cumulative positive Consolidated Net Income earned for the fiscal quarter of the Company then ended (but with each such fiscal quarter taken separately, without reduction in the Minimum Required Amount for any negative Consolidated Net Income for any fiscal quarter). For purposes of this Section, Consolidated Shareholder's Equity shall be determined exclusive of changes from and after September 30, 1996 in the foreign currency translation adjustment under Financial Accounting Standards Board Statement No. 52 as in effect from time to time. Section 12.16. Current Ratio. The Company will at all times maintain the Consolidated Current Ratio of not less than 1.25 to 1.00. Section 12.17. Leverage Ratio. The Company shall not, as of the close of any fiscal quarter of the Company set forth below, permit the Leverage Ratio to be more than the amount set forth to the right of such quarter: -54- 55 As of Close of Each Fiscal Quarter:
Leverage Ratio Shall From and Including To and Including Not be More Than: ------------------ ---------------- ----------------- 4th fiscal quarter of 3rd fiscal quarter of 4.00 to 1 fiscal year 1996 fiscal year 1997 4th fiscal quarter of 3rd fiscal quarter of 3.50 to 1 fiscal year 1997 fiscal year 1998 4th fiscal quarter 3rd fiscal quarter of 3.00 to 1 of fiscal year 1998 fiscal year 1999 4th fiscal quarter of 3rd fiscal quarter of 2.75 to 1 fiscal year 1999 2000 fiscal year 4th fiscal quarter of each fiscal quarter 2.50 to 1 fiscal year 2000 thereafter
Section 12.18. Interest Coverage Ratio. The Company shall not, as of the close of any fiscal quarter of the Company set forth below, permit the Interest Coverage Ratio to be less than the amount set forth to the right of such period: As of Close of Each Fiscal Quarter:
Interest Coverage Ratio Shall From and Including To and Including Not be Less Than: ------------------ ---------------- ----------------- 4th fiscal quarter of 3rd fiscal quarter of 2.50 to 1 fiscal year 1996 fiscal year 1998 4th fiscal quarter of each fiscal quarter 3.50 to 1 fiscal year 1998 thereafter
Section 12.19. Dividends and Other Shareholder Distributions. The Company shall only declare or pay any dividends or make a distribution of any kind (including by redemption or purchase) on its outstanding capital stock, if no Event of Default exists prior to or would result after giving effect to such action. Section 12.20. Company as Domestic Operation. Notwithstanding Sections 12.12 and 12.14 or any other provision of this Agreement, the assets owned directly by the Company and its Wholly-Owned -55- 56 Subsidiaries which are Domestic Subsidiaries (without regard to their ownership of equity interests in Subsidiaries) shall at all times constitute the majority of the total consolidated assets of the Company and its Subsidiaries. Section 12.21. Subsidiary Debt. No Domestic Subsidiary shall have outstanding at any time any Debt other than: (a) Debt of Wholly-Owned Domestic Subsidiaries to the Company; (b) Obligations as Guarantors hereunder; and (c) Debt of Domestic Subsidiaries not otherwise permitted by this Section aggregating not more than 5% of Consolidated Total Assets as of the last day of the most recently completed fiscal quarter of the Company. Section 12.22. Transactions with Affiliates. Except as disclosed in the Company's periodic reports to the Securities and Exchange Commission, the Company will not, and will not permit any of its Subsidiaries to, enter into or be a party to any material transaction or arrangement (where "material" means material for the Company and its Subsidiaries taken as a whole) with any Affiliate of such Person (other than the Company or any of its Subsidiaries), including without limitation, the purchase from, sale to or exchange of Property with, any merger or consolidation with or into, or the rendering of any service by or for, any Affiliate, and except in the ordinary course of and pursuant to the reasonable requirements of the Company's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would obtain in a comparable arm's-length transaction with a Person other than an Affiliate to the extent that any such transaction or arrangement would have a Material Adverse Effect. Section 12.23. Compliance with Laws. Without limiting any of the other covenants of the Company in this Section 12, the Company will, and will cause each of its Subsidiaries to, conduct its business, and otherwise be, in compliance with all applicable laws, regulations, ordinances and orders of any governmental or judicial authorities; provided, however, that neither the Company nor any Subsidiary of the Company shall be required to comply with any such law, regulation, ordinance or order if (x) it shall be contesting such law, regulation, ordinance or order in good faith by appropriate proceedings and reserves in conformity with GAAP have been provided therefor on the books of the Company or such Subsidiary, as the case may be, or (y) the failure to comply therewith is not reasonably expected to have a Material Adverse Effect. SECTION 13. EVENTS OF DEFAULT AND REMEDIES Section 13.1. Events of Default. Any one or more of the following shall constitute an Event of Default: (a) default (x) in the payment when due of the principal amount of any Loan or of any Reimbursement Obligation or (y) for a period of ten (10) days in the payment when due of interest or of any other Obligation; (b) default by the Company or any Subsidiary in the observance or performance of any covenant set forth in Sections 12.1, 12.6(c)(i), 12.9 through 12.12. or 12.14 through 12.22 hereof; (c) default by the Company or any Subsidiary in the observance or performance of any provision hereof or of any other Credit Document not mentioned in (a) or (b) above, which is not remedied within thirty (30) days after notice thereof to the Company by the Administrative Agent; -56- 57 (d) (i) failure to pay when due Debt of the Company or any Subsidiary in an aggregate principal amount of $10,000,000 or more for the Company and its Subsidiaries, taken together, or (ii) default shall occur under one or more indentures, agreements or other instruments under which any Debt of the Company or any Subsidiary in an aggregate principal amount of $10,000,000 or more for the Company and its Subsidiaries, taken together, may be issued or created and such default shall continue for a period of time sufficient to permit the holder or beneficiary of such Debt or a trustee therefor to cause the acceleration of the maturity of any such Debt or any mandatory unscheduled prepayment, purchase or funding thereof; (e) any representation or warranty made herein or in any other Credit Document by the Company or any Subsidiary, or in any statement or certificate furnished pursuant hereto or pursuant to any other Credit Document by the Company or any Subsidiary, or in connection with any Credit Document, proves untrue in any material respect as of the date of the issuance or making, or deemed making or issuance, thereof; (f) the Company or any Significant Subsidiary shall (i) have entered involuntarily against it an order for relief under the United States Bankruptcy Code, as amended, or any analogous action is taken under any other applicable law of any country or any political subdivision thereof in each case relating to bankruptcy or insolvency, (ii) fail to pay, or admit in writing its inability to pay, its debts generally as they become due, (iii) make an assignment for the benefit of creditors, (iv) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property, (v) institute any proceeding seeking to have entered against it an order for relief under the United States Bankruptcy Code, as amended, or any analogous law of any country or any political subdivision thereof in each case to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) take any corporate action (such as the passage by the Company's board of directors of a resolution) authorizing any matter described in parts (i)-(v) above, or (vii) fail to contest in good faith any appointment or proceeding described in Section 13.1(g) hereof; (g) a custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for the Company or any Significant Subsidiary or any substantial part of any of their Property, or a proceeding described in Section 13.1(f)(v) shall be instituted against the Company or any Significant Subsidiary, and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of forty-five (45) days; (h) the Company or any Subsidiary shall fail within thirty (30) days to pay, bond or otherwise discharge any judgment or order for the payment of money (i) in an aggregate amount for the Company and its Subsidiaries, taken together, equal to or greater than $10,000,000 in excess of the amount covered by insurance from an insurer who has acknowledged its liability thereon and (ii) not stayed on appeal or otherwise being appropriately contested in good faith in a manner that stays execution thereon; -57- 58 (i) the Company or any other member of the Controlled Group shall fail to pay when due an amount or amounts aggregating in excess of $10,000,000 which it shall have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans having aggregate Unfunded Vested Liabilities in excess of $10,000,000 (collectively, a "Material Plan") shall be filed under Title IV of ERISA by the Company or any Subsidiary or any other member of the Controlled Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any Material Plan or a proceeding shall be instituted by a fiduciary of any Material Plan against the Company or any other member of the Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall not have been dismissed within thirty (30) days thereafter; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; (j) the Company or any Subsidiary, or any Person acting on behalf of the Company or a Subsidiary, or any governmental authority challenges the validity of any Credit Document or the Company's or a Subsidiary's obligations thereunder or any Credit Document ceases to be in full force and effect (other than by reason of action taken by the Administrative Agent or the Banks); or (k) a Change of Control Event shall occur. Section 13.2. Non-Bankruptcy Defaults. When any Event of Default other than those described in subsections (f) or (g) of Section 13.1 hereof has occurred and is continuing, the Administrative Agent shall, by written notice to the Company: (a) if so directed by the Required Banks, terminate the remaining Commitments and all other obligations of the Banks hereunder on the date stated in such notice (which may be the date thereof); (b) if so directed by the Required Banks, declare the principal of and the accrued interest on all outstanding Notes to be forthwith due and payable and thereupon all outstanding Notes, including both principal and interest thereon, shall be and become immediately due and payable together with all other amounts payable under the Credit Documents without further demand, presentment, protest or notice of any kind; and (c) if so directed by the Required Banks, demand that the Company and (subject to Section 17.19) the other Borrowers immediately pay to the Administrative Agent, subject to Section 13.4, the full amount then available for drawing under each or any Letter of Credit, and the Company and such Borrowers agree to immediately make such payment and acknowledge and agree that the Banks would not have an adequate remedy at law for failure by the Company and such Borrowers to honor any such demand and that the Administrative Agent, for the benefit of the Banks, shall have the right to require the Company and such Borrowers to specifically perform such undertaking whether or not any drawings or other demands for payment have been made under any Letter of Credit. The Administrative Agent, after giving notice to the Company pursuant to Section 13.1(c) or this Section 13.2, shall also promptly send a copy of such notice to the other Banks, but the failure to do so shall not impair or annul the effect of such notice. Section 13.3. Bankruptcy Defaults. When any Event of Default described in subsections (f) or (g) of Section 13.1 hereof has occurred and is continuing, then all outstanding Notes shall immediately become due and payable together with all other amounts payable under the Credit Documents without presentment, demand, protest or notice of any kind, the obligation of the Banks to extend further credit pursuant to any of the terms hereof shall immediately terminate and the Company and (subject to Section 17.19) the other Borrowers shall immediately pay to the Administrative Agent, subject to Section 13.4, the full amount then available for drawing under all outstanding Letters of Credit, the Company and such -58- 59 Borrowers acknowledging that the Banks would not have an adequate remedy at law for failure by the Company and such Borrowers to honor any such demand and that the Banks, and the Administrative Agent on their behalf, shall have the right to require the Company and such Borrowers to specifically perform such undertaking whether or not any draws or other demands for payment have been made under any of the Letters of Credit. Section 13.4. Collateral for Undrawn Letters of Credit. (a) If the payment or prepayment of the amount available for drawing under any or all outstanding Letters of Credit is required under Section 1.2(d) or Section 5.4(c) or under Section 13.2 or 13.3 above, the Company and (subject to Section 17.19) the other Borrowers shall forthwith pay the amount required to be so prepaid, to be held by the Administrative Agent as provided in subsection (b) below. (b) All amounts prepaid pursuant to subsection (a) above shall be held by the Administrative Agent in a separate collateral account (such account, and the credit balances, properties and any investments from time to time held therein, and any substitutions for such account, any certificate of deposit or other instrument evidencing any of the foregoing and all proceeds of and earnings on any of the foregoing being collectively called the "Account") as security for, and for application by the Administrative Agent (to the extent available) to, the reimbursement of any payment under any Letter of Credit then or thereafter made by an Issuing Agent, and thereafter to the payment of the unpaid balance of any Loans and all other Obligations. The Account shall be held in the name of and subject to the exclusive dominion and control of the Administrative Agent for the benefit of the Administrative Agent and the Banks. If and when requested by the Company, the Administrative Agent shall invest funds held in the Account from time to time in direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America with a remaining maturity of one year or less, provided that the Administrative Agent is irrevocably authorized to sell investments held in the Account when and as required to make payments out of the Account for application to Obligations then due and owing; provided, however, that if (i) all the obligations referred to in subsection (a) above shall have been paid and (ii) no Letters of Credit, Commitments, Loans or other Obligations remain outstanding hereunder, then the Administrative Agent shall repay to the Company any remaining amounts held in the Account. Section 13.5. Notice of Default. The Administrative Agent shall give notice to the Company under Section 13.1(c) hereof promptly upon being requested to do so by any Bank and shall thereupon notify all the Banks thereof. Section 13.6. Expenses. The Company and (subject to Section 17.19 hereof) the other Borrowers agree to pay to the Administrative Agent and each Bank, and any other holder of any Note outstanding hereunder, all reasonable out-of-pocket expenses incurred or paid by the Administrative Agent and such Bank or any such holder, including reasonable attorneys' fees (which in any event may include allocated costs of in-house counsel) and court costs, in connection with any Default or Event of Default or in connection with the enforcement of any of the Credit Documents. SECTION 14. CHANGE IN CIRCUMSTANCES Section 14.1. Change of Law. Notwithstanding any other provisions of this Agreement or any Note, if at any time after the date hereof any change in applicable law or regulation or in the interpretation thereof makes it unlawful for any Bank to make or continue to maintain Eurocurrency Loans or to perform its obligations as contemplated hereby, such Bank shall promptly give notice thereof to the -59- 60 Company (with a copy to the Administrative Agent) and such Bank's obligations to make or maintain Eurocurrency Loans under this Agreement shall terminate until it is no longer unlawful for such Bank to make or maintain Eurocurrency Loans. The Company and (subject to Section 17.19) the other Borrowers shall prepay on demand the outstanding principal amount of any such affected Eurocurrency Loans, together with all interest accrued thereon at a rate per annum equal to the interest rate applicable to such Loan; provided, however, subject to all of the terms and conditions of this Agreement, the Company or applicable Borrower may then elect to borrow the principal amount of the affected Eurocurrency Loans from such Bank by means of Domestic Rate Loans from such Bank, which Domestic Rate Loans shall not be made ratably by the Banks but only from such affected Bank. Section 14.2. Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR. If on or prior to the first day of any Interest Period for any Borrowing of Eurocurrency Loans: (a) the Administrative Agent (or in the case of a Multicurrency Swing Line Loan, the Multicurrency Swing Line Bank) determines that deposits in U.S. Dollars or the applicable Alternative Currency (in the applicable amounts) are not being offered to it in the eurocurrency interbank market for such Interest Period, or that by reason of circumstances affecting the interbank eurocurrency market adequate and reasonable means do not exist for ascertaining the applicable LIBOR, or (b) Banks having 25% or more of the aggregate amount of the Revolving Credit Commitments reasonably determine and so advise the Administrative Agent that LIBOR as reasonably determined by the Administrative Agent will not adequately and fairly reflect the cost to such Banks of funding their Eurocurrency Loans or Loan for such Interest Period, then the Administrative Agent shall forthwith give notice thereof to the Company and the Banks, whereupon until the Administrative Agent notifies the Company that the circumstances giving rise to such suspension no longer exist, the obligations of the Banks to make Eurocurrency Loans in the currency so affected shall be suspended. Section 14.3. Increased Cost and Reduced Return. (a) If, on or after the date hereof, the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Lending Office), including (if applicable) in its capacity as an Issuing Agent or Swing Line Bank hereunder, with any request or directive (whether or not having the force of law but, if not having the force of law, compliance with which is customary in the relevant jurisdiction) of any such authority, central bank or comparable agency: (i) shall subject any Bank (or its Lending Office) to any tax, duty or other charge with respect to its Fixed Rate Loans, its Notes, its Letter(s) of Credit, or its participation in any thereof, any Reimbursement Obligations owed to it or its obligation to make Fixed Rate Loans, issue a Letter of Credit, or to participate therein, or shall change the basis of taxation of payments to any Bank (or its Lending Office) of the principal of or interest on its Fixed Rate Loans, Letter(s) of Credit, or participations therein or any other amounts due under this Agreement in respect of its Fixed Rate Loans, Letter(s) of Credit, or participations therein, any Reimbursement Obligations owed to it, or its obligation to make Fixed Rate Loans, issue a Letter of Credit, or acquire participations therein (except for changes in the tax on the overall net -60- 61 income or profits of such Bank or its Lending Office imposed by the jurisdiction in which such Bank or its Lending Office is incorporated or in which such Bank's principal executive office or Lending Office is located); or (ii) shall impose, modify or deem applicable any reserve, special deposit or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System or with respect to Obligations denominated in Pound Sterling, the Bank of England, but excluding with respect to any Eurocurrency Loans any such requirement to the extent such Bank has already been compensated pursuant to the second paragraph of Section 1.3(b) hereof) against assets of, deposits with or for the account of, or credit extended by, any Bank (or its Lending Office) or shall impose on any Bank (or its Lending Office) or on the interbank market any other condition affecting its Fixed Rate Loans, its Notes, its Letter(s) of Credit, or its participation in any thereof, any Reimbursement Obligation owed to it, or its obligation to make Fixed Rate Loans, to issue a Letter of Credit, or to participate therein; and the result of any of the foregoing is to increase the cost to such Bank (or its Lending Office) of making or maintaining any Fixed Rate Loan, issuing or maintaining a Letter of Credit, or participating therein, or to reduce the amount of any sum received or receivable by such Bank (or its Lending Office) under this Agreement or under its Notes with respect thereto, by an amount deemed by such Bank to be material, then, within fifteen (15) days after demand by such Bank (with a copy to the Administrative Agent), the Company and (subject to Section 17.19 hereof) the other Borrowers shall be jointly and severally obligated to pay to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or reduction; provided, however, that (a) such Bank shall promptly notify the Company of an event which might cause it to seek compensation, and the Company shall be obligated to pay only such compensation which is incurred or which arises after the date ninety (90) days prior to the date such notice is given and (b) such Bank shall not be entitled to make such a claim for compensation if the Bank has not generally been making claims for compensation under similar circumstances from other borrowers similarly situated under loan agreements with provisions comparable to this Section entitling the Bank to make such a claim. In the event any law, rule, regulation or interpretation described above is revoked, declared invalid or inapplicable or is otherwise rescinded, and as a result thereof a Bank is determined to be entitled to a refund from the applicable authority for any amount or amounts which were paid or reimbursed by the Company to such Bank hereunder, such Bank shall refund such amount or amounts to the Company without interest. (b) If, after the date hereof, any Bank (including in its capacity as an Issuing Agent or Swing Line Bank hereunder) or the Administrative Agent shall have determined that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein (including, without limitation, any revision in the Final Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve System (12 CFR Part 208, Appendix A; 12 CFR Part 225, Appendix A) or of the Office of the Comptroller of the Currency (12 CFR Part 3, Appendix A), or in any other applicable capital rules heretofore adopted and issued by any governmental authority), or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Lending Office) with any request or directive regarding capital adequacy (whether or not having the force of law but, if not having the force of law, -61- 62 compliance with which is customary in the applicable jurisdiction) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Bank's capital, or on the capital of any corporation controlling such Bank, as a consequence of its obligations hereunder to a level below that which such Bank could have achieved but for such adoption, change or compliance (taking into consideration such Bank's policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within fifteen (15) days after demand by such Bank (with a copy to the Administrative Agent), the Company and (subject to Section 12.17 hereof) the other Borrowers shall pay to such Bank such additional amount or amounts as will compensate such Bank for such reduction; provided, however, that (a) such Bank shall promptly notify the Company of an event which might cause it to seek compensation, and the Company and (subject to Section 17.19 hereof) the other Borrowers shall be obligated to pay only such compensation which is incurred or which arises after the date ninety (90) days prior to the date such notice is given and (b) such Bank shall not be entitled to make such a claim for compensation if the Bank has not generally been making claims for compensation under similar circumstances from other borrowers similarly situated under loan agreements with provisions comparable to this Section entitling the Bank to make such a claim. (c) Each Bank that determines to seek compensation under this Section 14.3 shall notify the Company and the Administrative Agent of the circumstances that entitle the Bank to such compensation pursuant to this Section 14.3 and will designate a different Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Bank, be otherwise impractical or disadvantageous in any material respect to such Bank. A certificate of any Bank claiming compensation under this Section 14.3 and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of demonstrable error. In determining such amount, such Bank may use any reasonable averaging and attribution methods. The protection of this Section 14.3 shall be available to each Bank regardless of any possible contention of the invalidity or inapplicability of any law, regulation or other condition which shall give rise to any demand by such Bank for compensation. Section 14.4. Lending Offices. Subject to Sections 4.2, 14.3(c) and 17.1(d) hereof, each Bank may, at its option, elect to make its Loans hereunder at the branch office or affiliate specified on the appropriate signature page hereof (each a "Lending Office") for each type of Loan available hereunder or at such other of its branches, offices or affiliates as it may from time to time elect and designate in a written notice to the Company and the Administrative Agent. The Borrowers shall have no obligations under Section 14.3 to indemnify a Bank for any cost or loss incurred by it which results solely from such Bank's changing any applicable Lending Office other than any such change which, in the judgment of such Bank, is required by this Agreement. Section 14.5. Discretion of Bank as to Manner of Funding. Notwithstanding any other provision of this Agreement, each Bank shall be entitled to fund and maintain its funding of all or any part of its Loans in any manner it sees fit, it being understood, however, that for the purposes of this Agreement all determinations hereunder shall be made as if each Bank had actually funded and maintained each Eurocurrency Loan through the purchase of deposits of U.S. Dollars or the applicable Alternative Currency in the eurocurrency interbank market having a maturity corresponding to such Loan's Interest Period and bearing an interest rate equal to LIBOR for such Interest Period. -62- 63 SECTION 15. THE AGENTS Section 15.1. Appointment and Authorization of Agents. Each Bank hereby appoints Harris Trust and Savings Bank as the Administrative Agent under the Credit Documents and hereby appoints the Administrative Agent and LaSalle National Bank as Issuing Agents hereunder and hereby appoints each Swing Line Bank to act as such hereunder. Each Bank hereby authorizes each Agent to take such action as such Agent on its behalf and to exercise such powers under the Credit Documents as are delegated to such Agent by the terms thereof, together with such powers as are reasonably incidental thereto. Section 15.2. Agents and Its Affiliates. Each Agent shall have the same rights and powers under this Agreement and the other Credit Documents as any other Bank and may exercise or refrain from exercising the same as though it were not an Agent, and each Agent and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with any Borrower or any Affiliate of the Company as if it were not an Agent under the Credit Documents. The term "Bank" as used herein and in all other Credit Documents, unless the context otherwise clearly requires, includes each Agent in its individual capacity as a Bank. References in Sections 1, 2 or 3 hereof to an Agent's Loans, or to the amount owing to such Agent for which an interest rate is being determined, refer to such Agent in its individual capacity as a Bank. Section 15.3. Action by Agents. If the Administrative Agent receives from the Company a written notice of an Event of Default pursuant to Section 12.6(c)(i) hereof, the Administrative Agent shall promptly give each of the Banks written notice thereof. The obligations of each Agent under the Credit Documents are only those expressly set forth therein. Each Agent shall be acting as an independent contractor hereunder and nothing herein shall be deemed to impose on such Agent any fiduciary obligations to the Banks or the Borrowers. Without limiting the generality of the foregoing, no Agent shall be required to take any action hereunder with respect to any Default or Event of Default, except as expressly provided in Sections 13.2 and 13.5. In no event, however, shall any Agent be required to take any action in violation of applicable law or of any provision of any Credit Document, and each Agent shall in all cases be fully justified in failing or refusing to act hereunder or under any other Credit Document unless it shall be first indemnified to its reasonable satisfaction by the Banks against any and all costs, expense, and liability which may be incurred by it by reason of taking or continuing to take any such action. Each Agent shall be entitled to assume that no Default or Event of Default exists unless notified to the contrary by a Bank or the Company. In all cases in which this Agreement and the other Credit Documents do not require an Agent to take certain actions, such Agent shall be fully justified in using its discretion in failing to take or in taking any action hereunder and thereunder. Section 15.4. Consultation with Experts. Each Agent may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. Section 15.5. Liability of Agents; Credit Decision. Neither any Agent nor any of its directors, officers, agents, or employees shall be liable for any action taken or not taken by it in connection with the Credit Documents (i) with the consent or at the request of the Required Banks or (ii) in the absence of its own gross negligence or willful misconduct. Neither any Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with this Agreement, any other Credit Document or any Credit Event; (ii) the performance or observance of any of the covenants or -63- 64 agreements of any Borrower or Guarantor contained herein or in any other Credit Document; (iii) the satisfaction of any condition specified in Section 11 hereof, except receipt of items required to be delivered to any Agent; or (iv) the validity, effectiveness, genuineness, enforceability, perfection, value, worth or collectibility hereof or of any other Credit Document or of any other documents or writing furnished in connection with any Credit Document; and no Agent makes any representation of any kind or character with respect to any such matter mentioned in this sentence. Each Agent may execute any of its duties under any of the Credit Documents by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Banks, any Borrower, or any Guarantor or any other Person for the default or misconduct of any such agents or attorneys-in-fact selected with reasonable care. No Agent shall incur any liability by acting in reliance upon any notice, consent, certificate, other document or statement (whether written or oral) believed by it to be genuine or to be sent by the proper party or parties. In particular and without limiting any of the foregoing, no Agent shall have any responsibility for confirming the accuracy of any Compliance Certificate or other document or instrument received by it under the Credit Documents. The Administrative Agent may treat the Banks that are named herein as the holders of the Notes and the other Obligations contemplated herein unless and until the Administrative Agent receives notice of the assignment of the relevant Note and other Obligations held by a Bank hereunder pursuant to an assignment contemplated by Section 17.12 hereof. Each Bank acknowledges that it has independently and without reliance on any Agent or any other Bank, and based upon such information, investigations and inquiries as it deems appropriate, made its own credit analysis and decision to extend credit to the Borrowers in the manner set forth in the Credit Documents. It shall be the responsibility of each Bank to keep itself informed as to the creditworthiness of the Borrowers and the Guarantors, and no Agent shall have any liability to any Bank with respect thereto. Section 15.6. Indemnity. The Banks shall ratably, in accordance with their respective Percentages, indemnify and hold each Agent, and its directors, officers, employees, agents and representatives harmless from and against any liabilities, losses, costs or expenses suffered or incurred by it under any Credit Document or in connection with the transactions contemplated thereby, regardless of when asserted or arising, except to the extent they are promptly reimbursed for the same by the Borrowers (without in any way impairing or otherwise affecting the Borrowers' joint and several obligations to do so) and except to the extent that any event giving rise to a claim was caused by the gross negligence or willful misconduct of the party seeking to be indemnified. The obligations of the Banks under this Section 15.6 shall survive termination of this Agreement. Section 15.7. Resignation or Removal of Administrative Agent and Successor Administrative Agent. The Administrative Agent may resign at any time by giving written notice thereof to the Banks and the Company, and the Administrative Agent may be removed at any time by written notice of removal from the Required Banks to the Administrative Agent and the Company. Upon any such resignation or removal of the Administrative Agent, the Required Banks shall have the right to appoint a successor Administrative Agent with the consent of the Company (which shall not be unreasonably withheld); provided, however, the consent of the Company shall not be so required upon the occurrence and during the continuance of an Event of Default hereunder. If no successor Administrative Agent shall have been so appointed by the Required Banks, and shall have accepted such appointment, within thirty (30) days after the retiring Administrative Agent's giving of notice of resignation or the Required Banks giving notice of the retiring Administrative Agent's removal, then the retiring Administrative Agent may, on behalf of the Banks, with the consent of -64- 65 the Company (which shall not be unreasonably withheld) appoint a successor Administrative Agent, which shall be any Bank hereunder or any commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $200,000,000; provided, however, the consent of the Company shall not be so required upon the occurrence and during the continuance of an Event of Default hereunder. Upon the acceptance of its appointment as the Administrative Agent hereunder, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring or removed Administrative Agent under the Credit Documents, and the retiring Administrative Agent shall be discharged from its duties and obligations thereunder. After any retiring Administrative Agent's resignation or removal hereunder as an Agent, the provisions of this Section 15 and all protective provisions of the other Credit Documents shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent. Section 15.8. Payments. (a) To Administrative Agent. Unless the Administrative Agent shall have been notified by a Bank prior to the date on which such Bank is scheduled to make payment to the Administrative Agent of the proceeds of a Loan (which notice shall be effective upon receipt) that such Bank does not intend to make such payment, the Administrative Agent may assume that such Bank has made such payment when due and the Administrative Agent may in reliance upon such assumption (but shall not be required to) make available to the Borrower the proceeds of the Loan to be made by such Bank and, if any Bank has not in fact made such payment to the Administrative Agent, such Bank shall, on demand, pay to the Administrative Agent the amount made available to the Borrower attributable to such Bank together with interest thereon in respect of each day during the period commencing on the date such amount was made available to the Borrower and ending on (but excluding) the date such Bank pays such amount to the Administrative Agent at a rate per annum equal to the Federal Funds Rate. If such amount is not received from such Bank by the Administrative Agent immediately upon demand, the Borrower will, on demand, repay to the Administrative Agent the proceeds of the Loan attributable to such Bank with interest thereon at a rate per annum equal to the interest rate applicable to the relevant Loan, but without such payment being considered a payment or prepayment of a Loan, so that the Borrower will have no liability under Section 5.8 hereof with respect to such payment. (b) From Administrative Agent. On any Business Day that the Administrative Agent receives a payment from a Borrower by the time required by Section 7.1 hereof, the Administrative Agent shall be required to pay to each Bank for whose account such payment is received its share of such amount before the close of business on such day. If the Administrative Agent receives any such payment after the time required by Section 7.1 hereof, the Administrative Agent shall only be required to remit such payment to the Bank or Banks for whose account such payment was received on the following Business Day. If the Administrative Agent fails to remit a payment to a Bank on the Business Day required in this Section 15.8(b), the Administrative Agent shall pay to such Bank interest on the U.S. Dollar Equivalent of the amount it was required to remit (as determined as of the day the Administrative Agent was required to make such remittance) at the Federal Funds Rate for each day that such amount is not so remitted. Section 15.9. Co-Agents. Notwithstanding anything herein to the contrary, nothing in this Agreement shall impose any obligation whatsoever on any of LaSalle National Bank, The First National Bank of Chicago, The Bank of New York or Caisse Nationale de Credit Agricole in their capacity as Co-Agents. -65- 66 SECTION 16. THE GUARANTEES Section 16.1. The Guarantees. To induce the Banks to provide the credits described herein and in consideration of benefits expected to accrue to each Guarantor by reason of the Commitments and for other good and valuable consideration, receipt of which is hereby acknowledged, each Guarantor hereby unconditionally, irrevocably and jointly and severally guarantees to each Agent, the Banks, and each other holder of an Obligation, the due and punctual payment of all present and future indebtedness of the Borrowers and any one or more of them evidenced by or arising out of the Credit Documents, including, but not limited to, the due and punctual payment of principal of and interest on the Notes and the due and punctual payment of all other Obligations now or hereafter owed by the Borrowers and any one or more of them under the Credit Documents as and when the same shall become due and payable, whether at stated maturity, by acceleration or otherwise, according to the terms hereof and thereof. If any Borrower fails to pay punctually any indebtedness or other obligations guaranteed hereby, each Guarantor hereby unconditionally agrees jointly and severally to make such payment or to cause such payment to be made punctually as and when the same shall become due and payable, whether at stated maturity, by acceleration or otherwise, and as if such payment were made by such Borrower. Section 16.2. Guarantee Unconditional. The obligations of each Guarantor as a guarantor under this Section 16 shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: (a) any extension, renewal, settlement, compromise, waiver or release in respect of any indebtedness or other obligation of any Borrower or of any other Guarantor under this Agreement or any other Credit Document or by operation of law or otherwise; (b) any modification or amendment of or supplement to this Agreement or any other Credit Document; (c) any change in the corporate existence, structure or ownership of, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting, any Borrower, any other Guarantor, or any of their respective assets, or any resulting release or discharge of any obligation of any Borrower or of any other Guarantor contained in any Credit Document; (d) the existence of any claim, set-off or other rights which the Guarantor may have at any time against any Agent, any Bank or any other Person, whether or not arising in connection herewith; (e) any failure to assert, or any assertion of, any claim or demand or any exercise of, or failure to exercise, any rights or remedies against any Borrower, any other Guarantor or any other Person or Property; (f) any application of any sums by whomsoever paid or howsoever realized to any obligation of any Borrower, regardless of what obligations of any Borrower remain unpaid; (g) any invalidity or unenforceability relating to or against any Borrower or any other Guarantor for any reason of this Agreement or of any other Credit Document or any provision of applicable law or regulation purporting to prohibit the payment by any Borrower or any other Guarantor of the principal of or interest on any Loan or any other Obligations; or (h) any other act or omission to act or delay of any kind by any Agent, any Bank or any other Person or any other circumstance whatsoever that might, but for the provisions of this paragraph, constitute a legal or equitable discharge of the obligations of the Guarantor under this Section 16. -66- 67 Section 16.3. Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances. Each Guarantor's obligations under this Section 16 shall remain in full force and effect until the Commitments are terminated and the principal of and interest on the Loans and all other Obligations shall have been paid in full. If at any time any payment of the principal of or interest on any Loan or any other Obligations is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of a Borrower or of a Guarantor, or otherwise, each Guarantor's obligations under this Section 16 with respect to such payment shall be reinstated at such time as though such payment had become due but had not been made at such time. Section 16.4. Waivers. (a) General. Each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Agent, any Bank or any other Person against any Borrower, another Guarantor or any other Person. (b) Subrogation and Contribution. Unless and until the Obligations have been fully paid and satisfied and the Commitments have terminated, each Guarantor hereby agrees not to exercise or otherwise assert any claim or other right it may now or hereafter acquire against any Borrower or any other Guarantor that arises from the existence, payment, performance or enforcement of such Guarantor's obligations under this Section 16 or any other Credit Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, or any right to participate in any claim or remedy of any Agent, any Bank or any other holder of the indebtedness guaranteed hereby against any Borrower or any other Guarantor whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Borrower or any other Guarantor directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim or other right. Section 16.5. Limit on Recovery. Notwithstanding any other provision hereof, the right to recovery of the holders of the Obligations against each Guarantor under this Section 16 shall not exceed the amount which would render such Guarantor's obligations under this Section 16 void or voidable under applicable law, including without limitation fraudulent conveyance law less $1.00. Section 16.6. Stay of Acceleration. If acceleration of the time for payment of any amount payable by any Borrower under this Agreement or any other Credit Document is stayed upon the insolvency, bankruptcy or reorganization of any Borrower, all such amounts otherwise subject to acceleration under the terms of this Agreement or the other Credit Documents shall nonetheless be payable jointly and severally by the Guarantors hereunder forthwith on demand by the Administrative Agent made at the request of the Required Banks. Section 16.7. Benefit to Guarantors. The Company and all of the other Guarantors are engaged in related businesses and integrated to such an extent that the financial strength and flexibility of each Guarantor has a direct impact on the success of each other Guarantor. Each Guarantor will derive substantial direct and indirect benefit from the extension of credit hereunder. SECTION 17. MISCELLANEOUS Section 17.1. Withholding Taxes. (a) Payments Free of Withholding. Except as otherwise required by law and subject to Section 17.1(b) hereof, each payment by each Borrower and Guarantor under this Agreement or the other Credit Documents shall be made without withholding for or on account of any present or future taxes (other than overall net income taxes on the recipient) imposed by or within the -67- 68 jurisdiction in which such Borrower or Guarantor is domiciled, any jurisdiction from which such Borrower or Guarantor makes any payment, or (in each case) any political subdivision or taxing authority thereof or therein. If any such withholding is so required, the relevant Borrower or Guarantor shall make the withholding, pay the amount withheld to the appropriate governmental authority before penalties attach thereto or interest accrues thereon and forthwith pay such additional amount as may be necessary to ensure that the net amount actually received by each Bank (including the Swing Line Banks) and each Agent free and clear of such taxes (including such taxes on such additional amount) is equal to the amount which that Bank or any Agent (as the case may be) would have received had such withholding not been made. If any Agent or Bank pays any amount in respect of any such taxes, penalties or interest the relevant Borrower or Guarantor shall reimburse that Agent or Bank for that payment on demand in the currency in which such payment was made. If any Borrower or Guarantor pays any such taxes, penalties or interest, it shall deliver official tax receipts evidencing that payment or certified copies thereof to the Bank or Agent on whose account such withholding was made (with a copy to the Administrative Agent if not the recipient of the original) on or before the ninetieth day after payment. If any Bank or Agent determines it has received or been granted a credit against or relief or remission for, or repayment of, any taxes paid or payable by it because of any taxes, penalties or interest paid by any Borrower or Guarantor and evidenced by such a tax receipt, such Bank or Agent shall, to the extent it can do so without prejudice to the retention of the amount of such credit, relief, remission or repayment, pay to such Borrower or Guarantor as applicable, such amount as such Bank or Agent determines is attributable to such deduction or withholding and which will leave such Bank or Agent (after such payment) in no better or worse position than it would have been in if the relevant Borrower or Guarantor had not been required to make such deduction or withholding. Nothing in this Agreement shall interfere with the right of each Bank and Agent to arrange its tax affairs in whatever manner it thinks fit nor oblige any Bank or Agent to disclose any information relating to its tax affairs or any computations in connection with such taxes. (b) U.S. Withholding Tax Exemptions. (i) Each Bank that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) (a "Non-U.S. Person") shall submit to the Company and the Administrative Agent on or before the earlier of the date the initial Borrowing is made hereunder and thirty (30) days after the date hereof (or within thirty (30) days after such Person becomes a Bank), two duly completed and signed copies of either Form 1001 (relating to such Bank and entitling it to a complete exemption from withholding under the Code on all amounts to be received by such Bank, including fees, pursuant to the Credit Documents and the Loans) or Form 4224 (relating to all amounts to be received by such Bank, including fees, pursuant to the Credit Documents and the Loans) of the United States Internal Revenue Service or, in the case of any Bank exempt from United States Federal withholding tax pursuant to Sections 871(h) or 881(c) of the Code, a Form W-8 or any successor applicable form (a "Form W-8") together with a statement under penalty of perjury that such Bank is not a "bank" under Section 881(c)(3) of the Code. Thereafter and from time to time, each such Bank shall submit to any Borrower and the Administrative Agent such additional duly completed and signed copies of one or the other of such Forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may be (i) requested by the Company or such Borrower in a written notice, directly or through the Administrative Agent, to such Bank and (ii) required under then-current United States law or regulations to avoid or reduce United States withholding taxes on payments in respect of all amounts to be received by such Bank, including fees, pursuant to the Credit Documents or the Loans. Each Bank that is a Non-U.S. Person and -68- 69 that is a party hereto as of the Effective Date hereby represents and warrants that, as of the Effective Date, payments made to it hereunder are exempt from the withholding of United States Federal income taxes (i) because such payments are effectively connected with a United States trade or business conducted by such Non-U.S. Person; (ii) pursuant to the terms of an income tax treaty between the United States and such Non-U.S. Person's country of residence; or (iii) because such payments are portfolio interest exempt pursuant to Sections 871(h) or 881(c) of the Code. (ii) Each Bank agrees at the Company's expense to complete, accurately and in a manner reasonably satisfactory to the Company and the Administrative Agent, and to execute, arrange for any required certification of, and deliver to the Company and the Administrative Agent (or to such government or taxing authority as the Company or Administrative Agent reasonably directs), any other form or document that may be required under the laws of any jurisdiction outside the United States to allow any Borrower or Guarantor to make a payment under this Agreement or the other Credit Documents without any deduction or withholding for or on account of any taxes of the type described in Section 17.1 hereof or with any such deduction or withholding for or on account of such taxes at a reduced rate, in each case so long as such Bank is (i) legally entitled to provide such certification and deliver such form or document and (ii) such action is consistent with its overall tax policies and is not otherwise, in the judgment of such Bank, impractical or disadvantageous in any material respect to such Bank. (c) Inability of Bank to Submit Forms. If any Bank determines, as a result of any change in applicable law, regulation or treaty, or in any official application or interpretation thereof, that it is unable to submit to any Borrower or the Administrative Agent any form or certificate that such Bank is obligated to submit pursuant to subsection (b) of this Section 17.1 or that such Bank is required to withdraw or cancel any such form or certificate previously submitted or any such form or certificate otherwise becomes ineffective or inaccurate, such Bank shall promptly notify the Company or such Borrower and the Administrative Agent of such fact and the Bank shall to that extent not be obligated to provide any such form or certificate and will be entitled to withdraw or cancel any affected form or certificate, as applicable. (d) Lending Office. Each Bank will use reasonable efforts to make its Loans from its Lending Offices in jurisdictions in which liability for taxes with respect to the payments and remittances described in Section 17.1(a) above will be eliminated or minimized unless to do so would, in the judgment of such Bank, be impractical or disadvantageous to such Bank. The parties hereto understand and agree that such agreement by each Bank is an agreement by such Bank only and not binding on any Affiliates of such Bank. (e) Change of Office or Failure to Provide Tax Forms. Notwithstanding any provision of Section 17.1(a) above to the contrary, the Borrower shall not have any obligation to pay any taxes or to indemnify any Bank for such taxes pursuant to this Section 17.1 to the extent that such taxes result from (i) the failure of any Bank to comply with its obligations pursuant to Section 17.1(b) or (ii) any representation made on Form 1001, 4224 or W-8 or successor applicable form or certification by any Bank incurring such taxes proving to have been incorrect, false or misleading in any material respect when so made or deemed to be made or (iii) such Bank changing its Lending Office to a jurisdiction in which such taxes arise, except to the extent in the judgment of such Bank such change was required by the terms of this Agreement. Section 17.2. No Waiver of Rights. No delay or failure on the part of any Agent, Bank or Borrower or on the part of the holder or holders of any Note in the exercise of any power or right afforded -69- 70 such party under any Credit Document shall operate as a waiver thereof, nor as an acquiescence in any default, nor shall any single or partial exercise thereof preclude any other or further exercise of any other power or right, and the rights and remedies hereunder of the Agents, the Banks, the Borrowers and the holder or holders of any Notes are cumulative to, and not exclusive of, any rights or remedies which any of them would otherwise have. Section 17.3. Non-Business Day. If any payment of principal or interest on any Loan or of any other Obligation shall fall due on a day which is not a Business Day, interest or fees (as applicable) at the rate, if any, such Loan or other Obligation bears for the period prior to maturity shall continue to accrue on such Obligation from the stated due date thereof to and including the next succeeding Business Day, on which the same shall be payable. Section 17.4. Documentary Taxes. The Company and (subject to Section 17.19 hereof) the other Borrowers agree that they will pay any documentary, stamp or similar taxes payable in respect to any Credit Document, including interest and penalties, in the event any such taxes are assessed, irrespective of when such assessment is made and whether or not any credit is then in use or available hereunder. Section 17.5. Survival of Representations. All representations and warranties made herein or in certificates given pursuant hereto shall survive the execution and delivery of this Agreement and the other Credit Documents, and shall continue in full force and effect with respect to the date as of which they were made as long as any credit is in use or available hereunder. Section 17.6. Survival of Indemnities. All indemnities and all other provisions relative to reimbursement to the Banks of amounts sufficient to protect the yield of the Banks with respect to the Loans, including, but not limited to, Section 5.8, Section 14.3 and Section 17.15 hereof, shall survive the termination of this Agreement and the other Credit Documents and the payment of the Loans and all other Obligations. Section 17.7. Sharing of Set-Off. Each Bank agrees with each other Bank a party hereto that if such Bank shall receive and retain any payment, whether by set-off or application of deposit balances or otherwise ("Set-off"), on any of the Committed Loans or Reimbursement Obligations in excess of its ratable share (in accordance with its Percentage) of payments on all such Committed Obligations then outstanding to the Banks, then such Bank shall purchase for cash at face value, but without recourse, ratably from each of the other Banks such amount of the Committed Loans or Reimbursement Obligations, or participations therein, held by each such other Banks (or interest therein) as shall be necessary to cause such Bank to share such excess payment ratably with all the other Banks; provided, however, that if any such purchase is made by any Bank, and if such excess payment or part thereof is thereafter recovered from such purchasing Bank, the related purchases from the other Banks shall be rescinded ratably and the purchase price restored as to the portion of such excess payment so recovered, but without interest. For purposes of this Section 17.7, amounts owed to or recovered by, an Issuing Agent in connection with Reimbursement Obligations in which Banks have been required to fund their participation shall be treated as amounts owed to or recovered by such Issuing Agent as a Bank hereunder. Section 17.8. Notices. Except as otherwise specified herein, all notices under the Credit Documents shall be in writing (including telecopy or other electronic communication) and shall be given to a party hereunder at its address or telecopier number set forth below or such other address or telecopier number as such party may hereafter specify by notice to the Administrative Agent and the Company, given by courier, by United States certified or registered mail, or by other telecommunication -70- 71 device capable of creating a written record of such notice and its receipt. Notices under the Credit Documents to the Banks and the Administrative Agent shall be addressed to their respective addresses, telecopier or telephone numbers set forth on the signature pages hereof, and to the Borrowers and the Guarantors in all cases to: General Binding Corporation One GBC Plaza Northbrook, Illinois 60062 Telephone: (847) 272-3700 Telecopy: (847) 272-7680 Attention: Edward J. McNulty, Vice President and Chief Financial Officer cc: Steven Rubin, Vice President, Secretary and General Counsel Each such notice, request or other communication shall be effective (i) if given by telecopier, when such telecopy is transmitted to the telecopier number specified in this Section 17.8 or on the signature pages hereof and a confirmation of receipt of such telecopy has been received by the sender, (ii) if given by courier, when delivered, (iii) if given by mail, five (5) Business Days after such communication is deposited in the mail, registered with return receipt requested, addressed as aforesaid or (iv) if given by any other means, when delivered at the addresses specified in this Section 17.8 or on the signature pages hereof; provided that any notice given pursuant to Sections 1, 2, 3 or 4 hereof shall be effective only upon receipt and notices described in clauses (i), (ii) and (iv) above that are received after normal business hours will be deemed received at the opening of business on the next business day. Section 17.9. Counterparts. This Agreement may be executed in any number of counterpart signature pages, and by the different parties on different counterparts, each of which when executed shall be deemed an original but all such counterparts taken together shall constitute one and the same instrument. Section 17.10. Successors and Assigns. This Agreement shall be binding upon the Borrowers and their respective successors and assigns, and shall inure to the benefit of each of the Banks and the benefit of their respective successors and assigns, including any subsequent holder of any Note. No Borrower may assign any of its rights or obligations under any Credit Document without the written consent of all of the Banks. Section 17.11. Participants and Note Assignees. Each Bank shall have the right (with or without the Company's consent, which if requested shall not be unreasonably withheld) at its own cost to grant participations (to be evidenced by one or more agreements or certificates of participation) in the Loans made, and Reimbursement Obligations and/or Revolving Credit Commitments held, by such Bank at any time and from time to time, and to assign its rights under such Loans or Reimbursement Obligations or the Notes evidencing such Loans; provided, however, that no (a) such participation or assignment shall relieve any Bank of any of its obligations under this Agreement, and any agreement pursuant to which such participation or assignment of a Note or the rights thereunder is granted shall provide that the granting Bank shall retain the sole right and responsibility to enforce the obligations of the Borrowers under the Credit Documents, including, without limitation, the right to approve any amendment, modification or waiver of any provision thereof, except that if the Company consents to such participation, such agreement may provide that such Bank will not agree to any modification, amendment or waiver of this Agreement -71- 72 described in clause (i) of Section 17.13 hereof without the consent of such participant or assignee; and (b) no such assignee or participant shall have any rights under this Agreement except as provided in this Section 17.11, and no Agent shall have any obligation or responsibility to such participant or assignee, except that nothing herein provided is intended to affect the rights of an assignee of a Note to enforce the Note assigned. Any party to which such a participation or assignment has been granted shall have the benefits of Sections 5.8, 14.3 and 17.1 hereof but shall not be entitled to receive any greater payment under either such Section than the Bank granting such participation or assignment would have been entitled to receive with respect to the rights transferred. The Borrowers and Guarantors authorize each Bank to disclose to any purchaser or prospective purchaser of an interest in its Loans or Revolving Credit Commitment any financial or other information pertaining to the Company and its Subsidiaries, subject to Section 17.23 hereof. Nothing herein shall limit or otherwise affect the rights of a Bank to assign any of its rights hereunder and under its Notes to any Federal Reserve Bank. Section 17.12. Assignment of Revolving Credit Commitments by Banks. (a) Each Bank shall have the right at any time, with the prior written consent (which consent shall not be unreasonably withheld or delayed) of the Company and the Administrative Agent, to assign all or any part of its Revolving Credit Commitment (including the same percentage of its Committed Note, outstanding Committed Loans and participations in Letters of Credit and Swing Line Loans) to one or more other Persons; provided that each such assignment is in an amount of at least $7,500,000 (or $1,000,000 in the case of an assignment to another Bank) or the entire Revolving Credit Commitment of such assigning Bank, and if such assignment is not for such Bank's entire Revolving Credit Commitment, then such assigning Bank's Revolving Credit Commitment after giving effect to such assignment shall not be less than $10,000,000; provided further that no such consents from the Administrative Agent or Company shall be required if the assignee is another Bank or an Affiliate of the assigning Bank (provided that any such Affiliate of the assigning Bank complies with Section 17.1(b) hereof at the time of such assignment) and no such consent shall be required from the Company for any such assignment made during the continuance of any Event of Default. Each such assignment shall set forth the assignee's address for notices to be given under Section 17.8 hereof hereunder and its designated Lending Office pursuant to Section 14.4 hereof. Upon any such assignment, delivery to the Administrative Agent and the Company of an executed copy of such assignment agreement and the forms referred to in Section 17.1 hereof, if applicable, and, in the case of an assignment to a Person other than an Affiliate of the assigning Bank, the payment of a $3,000 recordation fee to the Administrative Agent, the assignee shall become a Bank hereunder, all Loans, participations in Letters of Credit and Swing Line Loans and the Revolving Credit Commitment it thereby holds shall be governed by all the terms and conditions hereof and the Bank granting such assignment shall have its Revolving Credit Commitment, and its obligations and rights in connection therewith, reduced by the amount of such assignment. At the time of the assignment the Company and other relevant Borrowers shall execute and deliver new Notes to the assignor and/or assignee. (b) Assignment of Commitments Under Certain Circumstances. If (a) the Company receives a notice or certificate from a Bank requesting an amount be paid to such Bank under Section 14.3 hereof and the Required Banks have not similarly made requests for payment arising out of the same circumstances or (b) the obligation of any Bank to make or maintain any Eurocurrency Loan has terminated under Section 14.1 hereof and the obligations of the Required Banks to make or maintain Eurocurrency Loans have not similarly terminated by reason of the same circumstances or (c) any Bank shall fail or refuse to make or participate -72- 73 in any Loan or L/C Obligation as and when required by the terms of this Agreement or (d) any Borrower shall be required to make additional payments to any Bank under Section 17.1 hereof (or would be required to make such additional payments with respect to any future interest payment) or (e) any Bank is unable to make or fund a participation in any Loan denominated in an Alternative Currency and the Required Banks have not similarly been unable to make or participate in Loans in the same Alternative Currency under the same circumstances or (f) any Bank fails to consent to an Approved Jurisdiction to which the Required Banks have consented, the Company shall have the right, but not the obligation, at its own expense, upon notice to such Bank and the Administrative Agent, to replace such Bank with an assignee (in accordance with and subject to the restrictions contained in Section 17.12(a) hereof), and such Bank hereby agrees to transfer and assign without recourse (in accordance with and subject to the restrictions contained in Section 17.12(a) hereof) all of such assigning Bank's interests, rights and obligations under this Agreement to such assignee; provided, however, that (A) no such assignment shall conflict with any law or any rule, regulation or order of any governmental authority, (B) such assignee Bank shall pay to the affected Bank in immediately available funds on the date of such assignment the principal of the Loans made and Reimbursement Obligations funded by such Bank hereunder, (C) the Company must exercise its right to replace such Bank within one hundred twenty (120) days of the event giving rise to the Company's right to so replace such Bank, and (D) the Borrowers shall pay to the affected Bank in immediately available funds on the date of such assignment the interest accrued to the date of payment on the Loans made by such Bank hereunder and all other amounts accrued for such Bank's account or owed to it hereunder. (c) The Administrative Agent, acting for this purpose as agent of each Borrower, shall maintain at one of its offices in Chicago, Illinois a copy of each assignment delivered to it pursuant to paragraphs (a) or (b) above and a register for the recordation of the names and addresses of the Banks, and the Revolving Credit Commitment of, and principal amount of the Loans and L/C Obligations owing to, each Bank pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive in the absence of manifest error, and the Borrowers, the Agents and the Banks shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Bank hereunder for all purposes of this Agreement. The Register shall be available for inspection by each Borrower, Issuing Agent and Bank, at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of a duly completed assignment executed by an assigning Bank and an assignee pursuant to paragraphs (a) or (b) above, the recordation fee referred to in paragraph (a) above and the written consent of the Administrative Agent (and if required, the Company) to such assignment, the Administrative Agent shall (i) accept such assignment, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Banks and other Agents. Section 17.13. Amendments. Any provision of the Credit Documents may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by (a) the Company (acting on behalf of all the Borrowers) , (b) the Required Banks, (c) if the rights or duties of any Agent are affected thereby, such Agent and (d) if the rights and duties of a Swing Line Bank are affected thereby, such Swing Line Bank; provided, however, that: (i) no amendment or waiver pursuant to this Section 17.13 shall (A) increase any Commitment or increase the obligations of any Bank without the consent of such Bank or (B) reduce the amount of or postpone any fixed date for payment of any principal of any Loan or Reimbursement Obligation or of any fee payable hereunder without the consent of each Bank or (C) reduce the -73- 74 stated rate at which any interest is calculated or postpone any fixed date for payment of interest without the consent of each Bank; (ii) no amendment or waiver pursuant to this Section 17.13 shall, unless signed by each Bank, change any provision of Section 11, this Section 17.13, or the definitions of Required Banks or Revolving Credit Termination Date, or affect the number of Banks required to take any action under the Credit Documents, or release any Borrower or Guarantor from its liability for any Obligations (except as permitted by Sections 12.1 or 12.12(b) hereof); and (iii) no amendment or waiver shall, unless signed by the relevant Borrowing Subsidiary, (w) subject such Borrowing Subsidiary to any additional obligation beyond its obligation as a Guarantor hereunder, (x) increase the principal of or rate of interest on any outstanding Loan of such Borrowing Subsidiary, (y) accelerate the stated maturity of any outstanding Loan of such Borrowing Subsidiary or (z) change this clause (iii). The Banks acknowledge and agree that the Company may from time to time request them to treat Acquisitions for purposes of determining Consolidated EBITDA (including, as used in such determination, Consolidated Interest Expense) in the same manner in which the Quartet Acquisition was treated in determining Consolidated EBITDA. The Banks further acknowledge and agree that such modifications to the computation of Consolidated EBITDA shall only require the approval of the Required Banks. Section 17.14. Headings. Section headings used in this Agreement are for reference only and shall not affect the construction of this Agreement. Section 17.15. Legal Fees, Other Costs and Indemnification. The Company and (to the extent permitted by Section 17.19 hereof) the other Borrowers agree, jointly and severally, to pay all reasonable out-of-pocket costs and expenses of the Administrative Agent (which in any event may include allocated costs of in-house counsel) in connection with the preparation and negotiation of the Credit Documents, including without limitation, the reasonable fees and disbursements of Chapman and Cutler, counsel to the Administrative Agent, in connection with the preparation and execution of the Credit Documents, and any amendment, waiver or consent related hereto, whether or not the transactions contemplated herein are consummated. The Company and (to the extent permitted by Section 17.19 hereof) the other Borrowers further agree, jointly and severally, to indemnify each Bank, each Agent, and their respective directors, officers and employees, against all losses, claims, damages, penalties, judgments, liabilities and reasonable out-of-pocket expenses (including, without limitation, all expenses of litigation or preparation therefor, whether or not the indemnified Person is a party thereto and in any event also including, without limitation, allocated costs of in-house counsel) which any of them may incur or pay arising out of or relating to any Credit Document or any of the transactions contemplated thereby or the direct or indirect application or proposed application of the proceeds of any Loan or Letter of Credit, other than those which arise from the gross negligence or willful misconduct of the party claiming indemnification. The Company and (to the extent permitted by Section 17.19 hereof) the other Borrowers, upon demand on any one or more of them by any Agent or Bank at any time, shall reimburse such Agent or Bank for any reasonable legal or other out-of-pocket expenses (which in any event may include allocated costs of in-house counsel) incurred in connection with investigating or defending against any of the foregoing except if the same is directly due to the gross negligence or willful misconduct of the party to be indemnified. -74- 75 Section 17.16. Set Off. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, during the continuance of any Event of Default and the acceleration of the maturity of the Notes or L/C Obligations pursuant to Section 13.2 or 13.3 hereof, each Bank and each subsequent holder of any Note is hereby authorized by each Borrower and Guarantor at any time or from time to time, without notice to the Borrowers, to the Guarantors or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts, and in whatever currency denominated) and any other Indebtedness at any time held or owing by that Bank or that subsequent holder to or for the credit or the account of any Borrower or Guarantor, whether or not matured, against and on account of the obligations and liabilities of any Borrower or Guarantor to that Bank or that subsequent holder under the Credit Documents, including, but not limited to, all claims of any nature or description arising out of or connected with the Credit Documents, irrespective of whether or not (a) that Bank or that subsequent holder shall have made any demand hereunder or (b) the principal of or the interest on the Loans or Notes and other Obligations shall have become due and payable pursuant to Section 13 and although said obligations and liabilities, or any of them, may be contingent or unmatured. Section 17.17. Currency. Each reference in this Agreement to U.S. Dollars or to an Alternative Currency (the "relevant currency") is of the essence. To the fullest extent permitted by law, the obligation of each Borrower and Guarantor in respect of any amount due in the relevant currency under this Agreement shall, notwithstanding any payment in any other currency (whether pursuant to a judgment or otherwise), be discharged only to the extent of the amount in the relevant currency that the Person entitled to receive such payment may, in accordance with normal banking procedures, purchase with the sum paid in such other currency (after any premium and costs of exchange) on the Business Day immediately following the day on which such Person receives such payment. If the amount of the relevant currency so purchased is less than the sum originally due to such Person in the relevant currency, the relevant Borrower or Guarantor agrees, as a separate obligation and notwithstanding any such judgment, to indemnify such Person against such loss, and if the amount of the specified currency so purchased exceeds the sum of (a) the amount originally due to the relevant Person in the specified currency plus (b) any amounts shared with other Banks as a result of allocations of such excess as a disproportionate payment to such Person under Section 17.7 hereof, such Person agrees to remit such excess to the Company. Section 17.18. Unlawful Interest. In no event shall the amount of interest due or payable hereunder or under the Notes or Applications exceed the maximum rate of interest allowed by applicable law in any jurisdiction, and if any such payment is inadvertently made to any Bank by any Borrower or inadvertently received by any Bank, then such excess sum shall be credited as a payment of principal, unless such Borrower shall notify such Bank in writing that it elects to have such excess sum returned. It is the express intent of the parties hereto that the Borrowers not pay and the Banks not receive, directly or indirectly in any manner whatsoever, interest in excess of that which may legally be paid by any Borrower under applicable law in any jurisdiction. Section 17.19. Several Liability of Foreign Borrowers. Notwithstanding anything in this Agreement to the contrary: (a) All Guarantors (including without limitation the Company and the Domestic Borrowing Subsidiaries) are unconditionally and absolutely liable for all Obligations, as set forth more fully in Section 16 hereof. -75- 76 (b) Each of the Foreign Borrowers shall be severally liable for its indebtedness and other Obligations under this Agreement and the other Credit Documents, and no Foreign Borrower shall be liable for the Obligations of any other Borrower under this Agreement and the other Credit Documents. Each Foreign Borrower shall be severally liable for all payments of the principal of and interest on Loans to and L/C Obligations of such Foreign Borrower, any amounts due with respect thereto pursuant to Sections 5.8 or 14.3 hereof and any other amount due hereunder that is specifically allocable to such Foreign Borrower or the Loans to or L/C Obligations of such Foreign Borrower. With respect to any other amount due hereunder, including fees, but excluding principal of and interest on any Loan or L/C Obligation, that is not specifically allocable to a particular Foreign Borrower, each Foreign Borrower shall be liable for such amount pro rata in the same proportion as such Foreign Borrower's outstanding Loans bear to the total of outstanding Loans to and L/C Obligations of all Borrowers (both Foreign and Domestic). Section 17.20. Entire Agreement. The Credit Documents constitute the entire understanding of the parties thereto with respect to the subject matter thereof and any prior or contemporaneous agreements, whether written or oral, with respect thereto are superseded thereby. Section 17.21. Governing Law. This Agreement and the other Credit Documents, and the rights and duties of the parties hereto, shall be construed and determined in accordance with the internal laws of the State of Illinois. Section 17.22. Submission to Jurisdiction; Waiver of Jury Trial. The Company and each Guarantor hereby submit to the nonexclusive jurisdiction of the United States District Court for the Northern District of Illinois and of any Illinois State court sitting in the City of Chicago for purposes of all legal proceedings arising out of or relating to this Agreement, the other Credit Documents or the transactions contemplated hereby or thereby. The Company and each Guarantor irrevocably waive, to the fullest extent permitted by law, any objection which any of them may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. THE COMPANY, EACH BORROWER, EACH GUARANTOR, EACH AGENT, AND EACH BANK HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO ANY CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY. Section 17.23. Confidentiality. Each Bank agrees to maintain in confidence and not to disclose without the Company's consent (other than to its employees, affiliates, auditors, counsel or other professional advisors, or to another Bank, each of which shall also be bound by this Section 17.23) any information concerning the Company or any of its Subsidiaries furnished pursuant to this Agreement which such Bank would reasonably expect to be confidential in nature; provided that any Bank may disclose any such information (a) that has become generally available to the public, (b) if required or appropriate in any report, statement or testimony submitted to any regulatory body having or claiming to have jurisdiction over such Bank, (c) if required or appropriate in response to any summons or subpoena or in connection with any litigation, (d) in order to comply with any law, order, regulation or ruling applicable to such Bank, or (e) to any prospective or actual participant or assignee under Sections 17.11 or 17.12 hereof in connection with any contemplated or actual transfer of an interest in such Bank's rights or obligations hereunder; provided, that (i) such actual or prospective transferee executes an agreement with such Bank containing provisions substantially identical to those contained in this Section 17.23 and (ii) in the case of any disclosure under subsection (c) above, such Bank shall (to the extent permitted -76- 77 by applicable law) notify the Company of such disclosure so that the Company may seek an appropriate protective order or waive such Bank's compliance with the provisions of this Section, it being understood that if the Company has no right to obtain such a protective order or if the Company does not commence procedures to obtain such a protective order within ten business days of the receipt of such notice, such Bank's compliance with this Section shall be deemed to have been waived with respect to such disclosure. Dated as of January 13, 1997. GENERAL BINDING CORPORATION By /s/ EDWARD J. McNULTY ----------------------------------- Name Edward J. McNulty Title Vice President and Chief Financial Officer GBC BUSINESS EQUIPMENT, INC. By /s/ EDWARD J. McNULTY ----------------------------------- Name Edward J. McNulty Title Vice President and Chief Financial Officer GBC INTERNATIONAL, INC. By /s/ EDWARD J. McNULTY ----------------------------------- Name Edward J. McNulty Title Vice President and Chief Financial Officer -77- 78 PRO-TECH ENGINEERING CO., INC. By /s/ EDWARD J. McNULTY ----------------------------------- Name Edward J. McNulty Title Vice President and Chief Financial Officer SICKINGER COMPANY By /s/ EDWARD J. McNULTY ----------------------------------- Name Edward J. McNulty Title Vice President and Chief Financial Officer U.S. RING BINDER CORP. By /s/ EDWARD J. McNULTY ----------------------------------- Name Edward J. McNulty Title Vice President and Chief Financial Officer VELOBIND, INCORPORATED By /s/ EDWARD J. McNULTY ----------------------------------- Name Edward J. McNulty Title Vice President and Chief Financial Officer -78- 79 Accepted and Agreed to as of the day and year last above written. 111 West Monroe Street HARRIS TRUST AND SAVINGS BANK, Chicago, Illinois 60690 in its individual capacity as a Bank and Telecopy: (312) 461-2591 as Administrative Agent Telephone: (312) 461-2800 Revolving Credit Commitment: $40,000,000.00 By /s/ RICHARD P. BOTT ----------------------------------- Name Richard P. Bott Title Vice President Lending Offices: Domestic Rate Loans: 111 West Monroe Street Chicago, Illinois 60690 Eurocurrency Loans: Nassau Branch c/o 111 West Monroe Street Chicago, Illinois 60690 Bid Loans: 111 West Monroe Street Chicago, Illinois 60690 Accepted and Agreed to as of the day and year last above written. 135 South LaSalle Street LASALLE NATIONAL BANK, Chicago, Illinois 60603 in its individual capacity as a Bank Telecopy: (312) 606-8423 and as Co-Agent Telephone: (312) 904-2121 Revolving Credit Commitment: $27,500,000.00 By /s/ JAMES M. MINICH ----------------------------------- James M. Minich Vice President Lending Offices: Domestic Rate Loans: 135 South LaSalle Street Chicago, Illinois 60603 Eurocurrency Loans: 135 South LaSalle Street Chicago, Illinois 60603 Bid Loans: 135 South LaSalle Street Chicago, Illinois 60603 -79- 80 Accepted and Agreed to as of the day and year last above written. One First National Plaza THE FIRST NATIONAL BANK OF CHICAGO, in its Mail Suite 0088 individual capacity as a Bank, as Co- Chicago, Illinois 60670-0088 Syndication Agent and as Co-Agent Telecopy: (312) 732-1117 By /s/ JERRY KANE Telephone: (312) 732-1614 ------------------------------- Jerry Kane Revolving Credit Senior Vice President Commitment: $35,000,000.00 Lending Offices: Domestic Rate Loans: One First National Plaza Mail Suite 0088 Chicago, Illinois 60670-0088 Eurocurrency Loans: One First National Plaza Mail Suite 0088 Chicago, Illinois 60670-0088 Bid Loans: One First National Plaza Mail Suite 0088 Chicago, Illinois 60670-0088 Accepted and Agreed to as of the day and year last above written. One Wall Street, 19th Floor THE BANK OF NEW YORK, Central Division in its individual capacity as a New York, New York 10286 Bank and as Co-Agent Telecopy: (212) 635-1208 Telephone: (212) 635-8204 Revolving Credit Commitment: $35,000,000.00 By /s/ JOHN C. LAMBERT ---------------------------------- John C. Lambert Vice President Lending Offices: Domestic Rate Loans: 101 Barclay Street New York, New York 10286 ABA # 021000018 Commercial Loan Servicing Department GLA#: 111556 Eurocurrency Loans: 101 Barclay Street New York, New York 10286 ABA # 021000018 Eurodollar/Cayman Funding Area GLA#: 111556 Bid Loans: 101 Barclay Street New York, New York 10286 ABA # 021000018 Special Financial Products Department Account # 803-329-7689 -80- 81 Accepted and Agreed to as of the day and year last above written. 55 East Monroe CAISSE NATIONALE DE CREDIT Chicago, Illinois 60608-5702 Agricole, in its individual Telecopy: (312) 372-2830 capacity as a Bank and as Co-Agent Telephone: (312) 917-7446 Revolving Credit Commitment: $30,000,000.00 By /s/ DEAN BALICE ---------------------------------- Dean Balice Senior Vice President Lending Offices: Domestic Rate Loans: 55 East Monroe Chicago, Illinois 60608-5702 Eurocurrency Loans: 55 East Monroe Chicago, Illinois 60608-5702 Bid Loans: 55 East Monroe Chicago, Illinois 60608-5702 -81- 82 Accepted and Agreed to as of the day and year last above written. 500 Woodward Avenue COMERICA BANK Mail Code 3241 Detroit, Michigan 48226 Telecopy: (313) 222-5759 Telephone: (313) 222-9175 By /s/ JEFFREY P. BRADLEY Revolving Credit ----------------------------------- Commitment: $35,000,000.00 Jeffrey P. Bradley Lending Offices: Vice President Domestic Rate Loans: 500 Woodward Avenue Mail Code 3241 Eurocurrency Loans: Detroit, Michigan 48226 500 Woodward Avenue Mail Code 3241 Bid Loans: Detroit, Michigan 48226 500 Woodward Avenue Mail Code 3241 Detroit, Michigan 48226 Accepted and Agreed to as of the day and year last above written. 227 West Monroe Street BANK OF TOKYO-MITSUBISHI (CHICAGO) Suite 2300 Chicago, Illinois 60606 Telecopy: (312) 696-4535 Telephone: (312) 696-4663 By /s/ NOBORU KOBAYASHI Revolving Credit ----------------------------------- Commitment: $22,500,000.00 Noboru Kobayashi Lending Offices: Senior Vice President Domestic Rate Loans: 227 West Monroe Street Suite 2300 Eurocurrency Loans: Chicago, Illinois 60606 227 West Monroe Street Suite 2300 Bid Loans: Chicago, Illinois 60606 227 West Monroe Street Suite 2300 Chicago, Illinois 60606 -82- 83 Accepted and Agreed to as of the day and year last above written. 25 Park Place, 24th Floor SUNTRUST BANK, ATLANTA Mail Code 124, P.O. Box 4418 Atlanta, Georgia 30303 Telecopy: (404) 588-8505 Telephone: (404) 658-4918 By /s/ SHELLEY BROWNE Revolving Credit ----------------------------------- Commitment: $22,500,000.00 Shelley Browne Lending Offices: Vice President Domestic Rate Loans: 25 Park Place, 24th Floor Mail Code 124, P.O. Box 4418 Eurocurrency Loans: Atlanta, Georgia 30303 25 Park Place, 24th Floor Mail Code 124, P.O. Box 4418 Bid Loans: Atlanta, Georgia 30303 25 Park Place, 24th Floor Mail Code 124, P.O. Box 4418 Atlanta, Georgia 30303 -83- 84 Accepted and Agreed to as of the day and year last above written. #1 Mercantile Center, 12th Floor MERCANTILE BANK NATIONAL St. Louis, Missouri 63101 ASSOCIATION Telecopy: (314) 425-2203 Telephone: (314) 425-1967 By /s/ DAVID HIGBEE Revolving Credit ----------------------------------- Commitment: $17,500,000.00 David Higbee Lending Offices: Vice President Domestic Rate Loans: #1 Mercantile Center, 12th Floor Eurocurrency Loans: St. Louis, Missouri 63101 #1 Mercantile Center, 12th Floor Bid Loans: St. Louis, Missouri 63101 #1 Mercantile Center, 12th Floor St. Louis, Missouri 63101 -84- 85 Accepted and Agreed to as of the day and year last above written. One First Union Center FIRST UNION NATIONAL BANK OF NC 0745 NORTH CAROLINA Charlotte, North Carolina 28288-0745 Telecopy: (314) 425-2203 Telephone: (704)383-1392 By /s/ THOMAS CAMBERN Revolving Credit ----------------------------------- Commitment: $17,500,000.00 Thomas Cambern Lending Offices: Vice President Domestic Rate Loans: One First Union Center NC 0745 Eurocurrency Loans: Charlotte, North Carolina 28288-0745 One First Union Center NC 0745 Bid Loans: Charlotte, North Carolina 28288-0745 One First Union Center NC 0745 Charlotte, North Carolina 28288-0745 -85- 86 Accepted and Agreed to as of the day and year last above written. 1900 East Ninth Street NATIONAL CITY BANK Cleveland, Ohio 44114 Diego Tobon Locator 2104 Telecopy: (216) 575-9396 Telephone: (216) 575-3115 By /s/ DIEGO TOBON Revolving Credit ----------------------------------- Commitment: $20,000,000.00 Diego Tobon Lending Offices: Vice President Domestic Rate Loans: 1900 East Ninth Street Cleveland, Ohio 44114 Diego Tobon Eurocurrency Loans: Locator 2104 1900 East Ninth Street Cleveland, Ohio 44114 Diego Tobon Bid Loans: Locator 2104 1900 East Ninth Street Cleveland, Ohio 44114 Diego Tobon Locator 2104 -86- 87 Accepted and Agreed to as of the day and year last above written. 227 West Monroe Street CREDIT LYONNAIS CHICAGO BRANCH Suite 3800 Chicago, Illinois 60606 Telecopy: (312) 641-0527 Telephone: (312) 220-7317 By /s/ MARY ANN KLEMM Revolving Credit ----------------------------------- Commitment: $17,500,000.00 Mary Ann Klemm Lending Offices: Vice President and Group Head Domestic Rate Loans: 227 West Monroe Street Suite 3800 Eurocurrency Loans: Chicago, Illinois 60606 227 West Monroe Street Suite 3800 Bid Loans: Chicago, Illinois 60606 227 West Monroe Street Suite 3800 Chicago, Illinois 60606 -87- 88 Accepted and Agreed to as of the day and year last above written. 181 West Madison Street THE BANK OF NOVA SCOTIA Suite 3700 Chicago, Illinois 60602 Telecopy: (312) 201-4108 Telephone: (312) 201-4125 By /s/ F.C.H. ASHBY Revolving Credit ----------------------------------- Commitment: $22,500,000.00 F.C.H. Ashby Lending Offices: Senior Manager, Loan Operations Domestic Rate Loans: Atlanta Agency 600 Peachtree Street NE, Suite 2700 Atlanta, Georgia 30308 Eurocurrency Loans: Attn: Vicki Gibson Atlanta Agency 600 Peachtree Street NE, Suite 2700 Atlanta, Georgia 30308 Bid Loans: Attn: Vicki Gibson New York Agency 1 Liberty Plaza New York, New York 10006 Attn: Sarah Schramm -88- 89 Accepted and Agreed to as of the day and year last above written. 181 West Madison SOCIETE GENERALE CHICAGO BRANCH Suite 3400 Chicago, Illinois 60602 Telecopy: (312) 578-5099 Telephone: (312) 578-5005 By /s/ JOSEPH A. PHILBIN Revolving Credit ----------------------------------- Commitment: $17,500,000.00 Joseph A. Philbin Lending Offices: Vice President Domestic Rate Loans: 181 West Madison Suite 3400 Eurocurrency Loans: Chicago, Illinois 60602 181 West Madison Suite 3400 Bid Loans: Chicago, Illinois 60602 181 West Madison Suite 3400 Chicago, Illinois 60602 -89- 90 Accepted and Agreed to as of the day and year last above written. 190 South LaSalle Street THE LONG-TERM CREDIT BANK OF JAPAN, Suite 800 LTD. CHICAGO BRANCH Chicago, Illinois 60603 Telecopy: (312) 704-8505 Telephone: (312) 704-5482 By /s/ RICHARD E. STAHL Revolving Credit ---------------------------------- Commitment: $17,500,000.00 Name Richard E. Stahl Lending Offices: -------------------------------- Domestic Rate Loans: Title Senior Vice President and Joint General Manager 190 South LaSalle Street Eurocurrency Loans: Suite 800 Chicago, Illinois 60603 190 South LaSalle Street Bid Loans: Suite 800 Chicago, Illinois 60603 190 South LaSalle Street Suite 800 Chicago, Illinois 60603 -90- 91 Accepted and Agreed to as of the day and year last above written. 425 Lexington Avenue CIBC, INC. New York, New York Telecopy: (212) 856-3991 Telephone: (212) 856-3650 By /s/ TIMOTHY E. DOYLE Revolving Credit ----------------------------------- Commitment: $22,500,000.00 Timothy E. Doyle Lending Offices: Managing Director Domestic Rate Loans: Two Paces West 2727 Paces Ferry Road Suite 1200 Eurocurrency Loans: Atlanta, Georgia 30339 Two Paces West 2727 Paces Ferry Road Suite 1200 Bid Loans: Atlanta, Georgia 30339 Carol Kizzia 425 Lexington Avenue New York, New York 10016 -91- 92 EXHIBIT A - Committed Loan Note EXHIBIT B - Bid Note EXHIBIT C - Domestic Swing Line Note EXHIBIT D - Multicurrency Swing Line Note EXHIBIT E - Notice of Payment Request EXHIBIT F - Bid Note Request Confirmation EXHIBIT G - Invitation to Bid EXHIBIT H - Confirmation of Bid EXHIBIT I - Notice of Acceptance of Bid EXHIBIT J - Opinion of Counsel EXHIBIT K - Compliance Certificate EXHIBIT L - Form Election to Participate EXHIBIT M - Form Election to Terminate EXHIBIT N - Opinion of Counsel EXHIBIT O - Subsidiary Guarantee Agreement EXHIBIT P - Outside Investment List SCHEDULE 9.2 - List of Subsidiaries SCHEDULE 9.6 - Taxes SCHEDULE 9.8 - ERISA SCHEDULE 9.12 - Real Property
-92- 93 EXHIBIT A COMMITTED LOAN NOTE _______ __, ____ FOR VALUE RECEIVED, the undersigned, [General Binding Corporation] [Borrowing Subsidiary], a ____________ corporation (the "Borrower"), promises to pay to the order of [Name of Bank] (the "Bank") on the Revolving Credit Termination Date of the hereinafter defined Credit Agreement, at the principal office of Harris Trust and Savings Bank (the "Administrative Agent"), in Chicago, Illinois, (or in the case of Committed Loans denominated in an Alternative Currency, at such office as the Administrative Agent has previously notified the Borrower) in the currency of such Committed Loan in accordance with Section 1.1 of the Credit Agreement, the aggregate unpaid principal amount of all Committed Loans made by the Bank to the Borrower pursuant to the Credit Agreement, together with interest on the principal amount of such Committed Loans from time to time outstanding hereunder at the rates, and payable in the manner and on the dates, specified in the Credit Agreement. The Bank shall record on its books or records or on a schedule attached to this Committed Loan Note, which is a part hereof, each Committed Loan made by it pursuant to the Credit Agreement, together with all payments of principal and interest and the principal balances from time to time outstanding hereon, whether the Committed Loan is a Domestic Rate Loan or a Eurocurrency Loan, the currency thereof and the interest rate and Interest Period applicable thereto, provided that prior to the transfer of this Committed Loan Note all such amounts shall be recorded on a schedule attached to this Committed Loan Note. The record thereof, whether shown on such books or records or on a schedule to this Committed Loan Note, shall be prima facie evidence of the same, provided, however, that the failure of the Bank to record any of the foregoing or any error in any such record shall not limit or otherwise affect the obligation of the Borrower to repay all Committed Loans made to it pursuant to the Credit Agreement together with accrued interest thereon. This Committed Loan Note is one of the Committed Loan Notes referred to in the Credit Agreement dated as of January 13, 1997, among General Binding Corporation, Harris Trust and Savings Bank, as Administrative Agent, and the Banks party thereto (the "Credit Agreement"), and this Committed Loan Note and the holder hereof are entitled to all the benefits provided for thereby or referred to therein, to which Credit Agreement reference is hereby made for a statement thereof. All defined terms used in this Committed Loan Note, except terms otherwise defined herein, shall have the same meaning as in the Credit Agreement. This Committed Loan Note shall be governed by and construed in accordance with the internal laws of the State of Illinois. Prepayments may be made hereon and this Committed Loan Note may be declared due prior to the expressed maturity hereof, all in the events, on the terms and in the manner as provided for in the Credit Agreement. The Borrower hereby waives demand, presentment, protest or notice of any kind hereunder. [BORROWER] [BORROWING SUBSIDIARY] By Its -93- 94 EXHIBIT B BID NOTE _____________, ____ FOR VALUE RECEIVED, the undersigned, [General Binding Corporation] [Borrowing Subsidiary], a ____________ corporation (the "Borrower"), promises to pay to the order of [Name of Bank] (the "Bank") on the Revolving Credit Termination Date of the hereinafter defined Credit Agreement, at the principal office of Harris Trust and Savings Bank (the "Administrative Agent"), in Chicago, Illinois, (or in the case of Bid Loans denominated in an Alternative Currency, at such office as the Administrative Agent has previously notified the Borrower) in the currency of such Bid Loan in accordance with Section 2.1 of the Credit Agreement, the aggregate unpaid principal amount of all Bid Loans made by the Bank to the Borrower pursuant to the Credit Agreement, together with interest on the principal amount of each Bid Loan from time to time outstanding hereunder at the rates, and payable in the manner and on the dates, specified in the Credit Agreement. The Bank shall record on its books or records or on a schedule attached to this Bid Note, which is a part hereof, each Bid Loan made by it pursuant to the Credit Agreement, together with all payments of principal and interest and the principal balances from time to time outstanding hereon, whether the Bid Loan is a Eurocurrency Bid Loan or a Stated Rate Bid Loan, the currency thereof and the interest rate and Interest Period applicable thereto, provided that prior to the transfer of this Bid Note all such amounts shall be recorded on a schedule attached to this Bid Note. The record thereof, whether shown on such books or records or on a schedule to this Bid Note, shall be prima facie evidence of the same, provided, however, that the failure of the Bank to record any of the foregoing or any error in any such record shall not limit or otherwise affect the obligation of the Borrower to repay all Bid Loans made to it pursuant to the Credit Agreement together with accrued interest thereon. This Bid Note is one of the Bid Notes referred to in the Credit Agreement dated as of January 13, 1997, among General Binding Corporation, Harris Trust and Savings Bank, as Administrative Agent, and the Banks party thereto (the "Credit Agreement"), and this Bid Note and the holder hereof are entitled to all the benefits provided for thereby or referred to therein, to which Credit Agreement reference is hereby made for a statement thereof. All defined terms used in this Bid Note, except terms otherwise defined herein, shall have the same meaning as in the Credit Agreement. This Bid Note shall be governed by and construed in accordance with the internal laws of the State of Illinois. Prepayments may be made hereon and this Bid Note may be declared due prior to the expressed maturity hereof, all in the events, on the terms and in the manner as provided for in the Credit Agreement. The Borrower hereby waives demand, presentment, protest or notice of any kind hereunder. [GENERAL BINDING CORPORATION] [BORROWING SUBSIDIARY] By Its -94- 95 EXHIBIT C DOMESTIC SWING LINE NOTE $25,000,000.00 January __, 1997 FOR VALUE RECEIVED, the undersigned, [General Binding Corporation] [Borrowing Subsidiary], a ____________ corporation (the "Borrower"), promises to pay to the order of Harris Trust and Savings Bank (the "Bank") on the Revolving Credit Termination Date of the hereinafter defined Credit Agreement, at the principal office of Harris Trust and Savings Bank, in Chicago, Illinois, the principal sum of (i) Twenty Five Million and 00/100 Dollars ($25,000,000.00), or (ii) such lesser amount as may at the time of the maturity hereof, whether by acceleration or otherwise, be the aggregate unpaid principal amount of all Domestic Swing Line Loans owing from the Borrower to the Bank under the Domestic Swing Line Commitment provided for in the Credit Agreement. The Bank shall record on its books or records or on a schedule attached to this Domestic Swing Line Note, which is a part hereof, each Domestic Swing Line Loan made by it pursuant to the Credit Agreement, together with all payments of principal and interest and the principal balances from time to time outstanding hereon and the interest rates and Interest Period applicable thereto, provided that prior to the transfer of this Domestic Swing Line Note all such amounts, interest rates and Interest Periods shall be recorded on a schedule attached to this Domestic Swing Line Note. The record thereof, whether shown on such books or records or on a schedule to this Domestic Swing Line Note, shall be prima facie evidence of the same; provided, however, that the failure of the Bank to record any of the foregoing or any error in any such record shall not limit or otherwise affect the obligation of the Borrower to repay all Domestic Swing Line Loans made to it pursuant to the Credit Agreement together with accrued interest thereon. This Domestic Swing Line Note is one of the Domestic Swing Line Notes referred to in the Credit Agreement dated as of January 13, 1997, among General Binding Corporation, Harris Trust and Savings Bank, as Administrative Agent, and the Banks party thereto (the "Credit Agreement"), and this Domestic Swing Line Note and the holder hereof are entitled to all the benefits provided for thereby or referred to therein, to which Credit Agreement reference is hereby made for a statement thereof. All defined terms used in this Domestic Swing Line Note, except terms otherwise defined herein, shall have the same meaning as in the Credit Agreement. This Domestic Swing Line Note shall be governed by and construed in accordance with the internal laws of the State of Illinois. Prepayments may be made hereon and this Domestic Swing Line Note may be declared due prior to the expressed maturity hereof, all in the events, on the terms and in the manner as provided for in the Credit Agreement. The Borrower hereby waives demand, presentment, protest or notice of any kind hereunder. [GENERAL BINDING CORPORATION] [BORROWING SUBSIDIARY] By Its -95- 96 EXHIBIT D MULTICURRENCY SWING LINE NOTE January __, 1997 FOR VALUE RECEIVED, the undersigned, [General Binding Corporation] [Borrowing Subsidiary], a ____________ corporation (the "Borrower"), promises to pay to the order of LaSalle National Bank (the "Bank") on the Revolving Credit Termination Date of the hereinafter defined Credit Agreement, at such office as the Bank has previously notified the Borrower, in the currency of such Multicurrency Swing Line Loan in accordance with Section 4.1 of the Credit Agreement, the aggregate unpaid principal amount of all Multicurrency Swing Line Loans made by the Bank to the Borrower pursuant to the Credit Agreement, together with interest on the principal amount of each Multicurrency Swing Line Loan from time to time outstanding hereunder at the rates, and payable in the manner and on the dates, specified in the Credit Agreement. The Bank shall record on its books or records or on a schedule attached to this Multicurrency Swing Line Note, which is a part hereof, each Multicurrency Swing Line Loan made by it pursuant to the Credit Agreement, together with all payments of principal and interest and the principal balances from time to time outstanding hereon, the currency thereof and the interest rate and Interest Period applicable thereto, provided that prior to the transfer of this Multicurrency Swing Line Note all such amounts, currencies, interest rates and Interest Periods shall be recorded on a schedule attached to this Multicurrency Swing Line Note. The record thereof, whether shown on such books or records or on a schedule to this Multicurrency Swing Line Note, shall be prima facie evidence of the same; provided, however, that the failure of the Bank to record any of the foregoing or any error in any such record shall not limit or otherwise affect the obligation of the Borrower to repay all Multicurrency Swing Line Loans made to it pursuant to the Credit Agreement together with accrued interest thereon. This Multicurrency Swing Line Note is one of the Multicurrency Swing Line Notes referred to in the Credit Agreement dated as of January 13, 1997, among General Binding Corporation, Harris Trust and Savings Bank, as Administrative Agent, and the Banks party thereto (the "Credit Agreement"), and this Multicurrency Swing Line Note and the holder hereof are entitled to all the benefits provided for thereby or referred to therein, to which Credit Agreement reference is hereby made for a statement thereof. All defined terms used in this Multicurrency Swing Line Note, except terms otherwise defined herein, shall have the same meaning as in the Credit Agreement. This Multicurrency Swing Line Note shall be governed by and construed in accordance with the internal laws of the State of Illinois. Prepayments may be made hereon and this Multicurrency Swing Line Note may be declared due prior to the expressed maturity hereof, all in the events, on the terms and in the manner as provided for in the Credit Agreement. The Borrower hereby waives demand, presentment, protest or notice of any kind hereunder. [GENERAL BINDING CORPORATION] [BORROWING SUBSIDIARY] By Its -96- 97 EXHIBIT E NOTICE OF PAYMENT REQUEST [Name of Bank] [Date] [Address] Attention: Reference is made to the Credit Agreement, dated as of January 13, 1997 among General Binding Corporation, Harris Trust and Savings Bank, as Administrative Agent, and the Banks party thereto (the "Credit Agreement"). Capitalized terms used herein and not defined herein have the meanings assigned to them in the Credit Agreement. [[General Binding Corporation] [Borrowing Subsidiary] has failed to pay its Reimbursement Obligation in the amount of $__________. Your Bank's Percentage of the unpaid Reimbursement Obligation is $____________] or [the Administrative Agent has been required to return a payment by [General Binding Corporation] [Borrowing Subsidiary] of a Reimbursement Obligation in the amount of $____________. Your Bank's Percentage of the returned Reimbursement Obligations is $____________.] Very truly yours, HARRIS TRUST AND SAVINGS BANK, as Administrative Agent for the Banks By Its -97- 98 EXHIBIT F BID LOAN REQUEST CONFIRMATION [Date] Harris Trust and Savings Bank, as Administrative Agent for the Banks party to the Credit Agreement referred to below 111 West Monroe Street Chicago, Illinois 60690 Attention: Agency Services The undersigned, [General Binding Corporation] [Borrowing Subsidiary] (the "Borrower") refers to the Credit Agreement dated as of January 13, 1997 (the "Credit Agreement"), among General Binding Corporation, the Banks named therein, Harris Trust and Savings Bank as Administrative Agent for the Banks. Capitalized terms used and not defined herein have the meanings assigned to them in the Credit Agreement. The Borrower hereby confirms that it has, on the date hereof, given you notice pursuant to Section 2.2 of the Credit Agreement that it requests a Bid Loan Borrowing under the Credit Agreement, and in that connection sets forth below the terms on which such Bid Loan Borrowing is requested to be made: (A) Type of Bid Loan Borrowing(1) -------------- (B) Date of Bid Loan Borrowing(2) [Business Day] -------------- (C) Currency -------------- (D) Borrower --------------
- ---------------- (1) Stated Rate or Eurocurrency. (2) The Bid Loan Request Confirmation must be received on a Business Day by the Agent not later than 2:30 p.m. (Chicago time) one (1) Business Day before the proposed Borrowing Date in the case of Stated Rate Bid Loans and five (5) Business Days before the proposed Borrowing Date in the case of Eurodollar Bid Loans. -98- 99 (E) Aggregate Principal Amount of Stated Rate Eurocurrency ----------- ------------ Bid Loan Borrowing(3) --------------- --------------- (F) Maturities(4) --------------- --------------- --------------- --------------- --------------- --------------- (G) If applicable, maximum amount requested for each maturity --------------- --------------- --------------- --------------- --------------- --------------- (H) Place of disbursement --------------- ---------------
Upon acceptance of any or all of the Bids offered by Banks in response to this request, the Borrower shall be deemed to affirm as of such date the representations and warranties made in the Credit Agreement to the extent specified in Section 8 thereof. Very truly yours, [GENERAL BINDING CORPORATION] [BORROWING SUBSIDIARY] By Its - ----------------- (3) Not less than an Original Dollar Amount of $3,000,000 and in integral multiples of 1,000,000 units of the relevant currency. (4) List up to 3 maturities of 1 to 180 days in the case of Stated Rate Bid Loans and 1, 2, 3, 4, 5 or 6 months in the case of Eurocurrency Bid Loans, but never beyond the Termination Date. -99- 100 EXHIBIT G INVITATION TO BID [Name of Bank] [Date] [Address] Attention: Reference is made to the Credit Agreement, dated as of January 13, 1997 (the "Credit Agreement") among General Binding Corporation, the Banks named therein, Harris Trust and Savings Bank as Administrative Agent for the Banks. Capitalized terms used and not defined herein have the meanings assigned to them in the Credit Agreement. [The Borrower] [Borrowing Subsidiary] made a Bid Loan Request on ______________, 19__ pursuant to Section 2.2 of the Credit Agreement, and in that connection you are invited to submit a Bid by [Date](5) . Your Bid must comply with Section 2.2 of the Credit Agreement and the terms set forth below on which the Bid Loan Request was made. (A) Type (Stated Rate or Eurocurrency) --------------------- (B) Date of Proposed Bid Loan Borrowing --------------------- (C) Currency --------------------- (D) Borrower --------------------- Stated Rate Eurocurrency ----------- ------------ (E) Aggregate Principal Amount of Bid Loan ----------------- --------------------- (F) Maturities and maximum amount, if different from (E), for any maturity ----------------- --------------------- (G) Place of disbursement ----------------- --------------------- (H) Place of payment ----------------- ---------------------
Very truly yours, HARRIS TRUST AND SAVINGS BANK, as Administrative Agent for the Banks By Its - ----------------- (5) The Bid must be received by the Agent not later than 10:00 a.m., Chicago time, on the proposed Borrowing Date for Stated Rate Bid Loans and 3:00 p.m., Chicago time, four (4) Business Days prior to the proposed Borrowing Date for Eurocurrency Bid Loans. -100- 101 EXHIBIT H CONFIRMATION OF BID [Date] Harris Trust and Savings Bank, as Administrative Agent for the Banks party to the Credit Agreement referred to below 111 West Monroe Street Chicago, Illinois 60690 Attention: Agency Services The undersigned, NAME OF BANK], refers to the Credit Agreement dated as of January 13, 1997 (the "Credit Agreement") among General Binding Corporation, the Banks named therein, Harris Trust and Savings Bank as Administrative Agent for the Banks. Capitalized terms used and not defined herein have the meanings assigned to them in the Credit Agreement. The undersigned hereby confirms that on the date hereof it has made a Bid pursuant to Section 2.2 of the Credit Agreement, in response to the Bid Loan Request made by [General Binding Corporation] [Borrowing Subsidiary] on _____________, 19__, and in that connection sets forth below the terms on which such Bid is made: Type (Stated Rate or Eurocurrency): ----------------------- Currency ----------------------- Date of proposed Bid Loan Borrowing: (6) ----------------------- Borrower ----------------------- Place of disbursement/payment / ------------ ---------
Interest Rate or spread Principal Amount(7) Maturity(8) above or below LIBOR(9) - ---------------- -------- --------------------
Very truly yours, [NAME OF BANK] By Its - ----------------- (6) As specified in the related Invitation to Bid. (7) Principal amount of bid for each maturity may not exceed the principal amount requested by the Company or the maximum amount requested for that maturity, whichever is less. Bids must be made in a minimum an Original Dollar Amount of $3,000,000 and in integral multiples of 1,000,000 units of the relevant currency. (8) List each maturity of 1 to 180 days in the case of Stated Rate Bid Loans and 1, 2, 3, 4, 5 or 6 months in the case of Eurocurrency Bid Loans. (9) Specify rate of interest per annum for Stated Rate Bid Loans and percentage to be added to or subtracted from LIBOR for Eurocurrency Bid Rate Loans. -101- 102 EXHIBIT I NOTICE OF ACCEPTANCE OF BID [Name of Bank] [Date] [Address] Attention: Reference is made to the Credit Agreement, dated as of January 13, 1997 (the "Credit Agreement") among General Binding Corporation, the Banks named therein, Harris Trust and Savings Bank as Administrative Agent for the Banks. Capitalized terms used and not defined herein have the meanings assigned to them in the Credit Agreement. [The Borrower] [Borrowing Subsidiary] made a Bid Loan Request on _____________, 19__ pursuant to Section 2.2 of the Credit Agreement, and in that connection you have submitted a Bid. Your Bid has been accepted as set forth below. (A) Type of Bid Loan --------------- (B) Date of Bid Loan Borrowing --------------- (C) Borrower --------------- (D) Place of disbursement/payment / ------- --------
(E) Aggregate principal amount Interest of each Bid maturity and Rate or interest rate Principal Spread above or Amount Currency Maturity below LIBOR ------- -------- -------- ---------------
Very truly yours, HARRIS TRUST AND SAVINGS BANK, as Administrative Agent for the Banks By Its -102- 103 EXHIBIT J-1 To each of the Banks named in the hereinafter defined Credit Agreement c/o HARRIS TRUST AND SAVINGS BANK, as Administrative Agent for the Banks party to the Credit Agreement referred to below 111 West Monroe Street Chicago, Illinois 60690 Ladies and Gentlemen: This opinion is furnished to you pursuant to Section 11.1(a) of the Credit Agreement, dated as of January 13, 1997 (the "Credit Agreement"), among General Binding Corporation, a Delaware corporation, the Banks named therein and Harris Trust and Savings Bank as Administrative Agent for the Banks. Unless otherwise defined herein, all capitalized terms used and not defined herein shall have the meanings assigned to them in the Credit Agreement. I am the Vice President and General Counsel of the Company and have acted as counsel for the Company and for GBC Business Equipment Inc., a Florida corporation; GBC International, Inc., a Nevada corporation; Pro-Tech Engineering Co., Inc., a Wisconsin corporation; Sickinger Company, a Michigan corporation; U.S. RingBinder Corp., a Massachusetts corporation; and VeloBind, Incorporated, a Delaware corporation (the "Guarantors") in connection with the preparation, execution and delivery of the Credit Agreement. In that connection, I have examined originals or copies, certified or otherwise identified to my satisfaction, of: (1) The Credit Agreement. (2) The Notes executed by the Company on the date hereof. (3) The Certificate or Articles of Incorporation of the Borrower and each Guarantor, and all amendments thereto (the "Charters"). (4) The by-laws of the Borrower and the Guarantors and all amendments thereto (the "By-laws"). (5) A Certificate of the Secretary of State of each jurisdiction in which the Company or any Guarantor is organized, dated no earlier than _________________, attesting to the continued corporate existence and good standing of the Company or such Guarantor, as the case may be, in such jurisdiction. The Credit Agreement and the Notes are hereinafter referred to as the "Loan Documents". I have also examined the originals, or copies certified to my satisfaction, of the documents listed in a certificate of the chief financial officer of the Company, dated the date hereof the "Certificate"), certifying that the documents listed in such certificate are all of the indentures, loan or credit agreements, leases, guarantees, mortgages, security agreements, bonds, notes and other agreements or instruments, and all of the orders, writs, judgments, awards, injunctions and decrees, that affect or purport to affect the Company's or any Guarantor's right to borrow money or the Company's or any Guarantor's obligations under the Loan Documents. In addition, I have 104 January 13, 1997 Page 2 examined the originals, or copies certified to my satisfaction, of such (i) certificates of public officials, (ii) certificates of officers and representatives of the Company, and (iii) other documents and records, and I have made such inquiries of officers and representatives of the Company and the Guarantors, as I have deemed relevant or necessary as the basis for the opinions expressed below. I have relied as to factual matters upon, and assumed the accuracy of, such certificates and other statements, documents and records supplied to me by the Company and the Guarantors, and I have assumed the genuineness of all signatures (other than signatures of officers of the Company and the Guarantors) and the authenticity of all documents submitted to me as originals and the conformity to original documents of all documents submitted to me as certified or photostatic copies. My opinions expressed below are limited to the laws of the State of Illinois, the General Corporation Law of the State of Delaware and the federal law of the United States. Based upon the foregoing and subject to the qualifications stated herein, I am of the opinion that, as of the date hereof: 1. The Company and each Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation, and has the corporate power to carry on its present business. 2. The execution, delivery and performance of the Loan Documents by the Company and each Guarantor, and the consummation of the transactions contemplated thereby, are within the Company's and each Guarantor's respective corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Charters or the By-laws, or (ii) any contractual or legal restriction contained in any document listed in the Certificate or, to my knowledge, contained in any other similar document. 3. No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance of the Loan Documents by the Company or any Guarantor. 4. The Loan Documents have been duly executed and delivered on behalf of the Company and each Guarantor. 5. To my knowledge, there are no pending or threatened actions or proceedings against the Company or any of its Subsidiaries before any court, governmental agency or arbitrator that purport to affect the legality, validity, binding effect or enforceability of the Credit Agreement or any of the Notes or the consummation of the transactions contemplated thereby, or that could reasonably be expected to result in a Material Adverse Effect. The opinions expressed herein are being delivered to you as of the date hereof and are solely for your benefit in connection with the transactions contemplated in the Credit Agreement and may not be relied on in any manner or for any purpose by any other person, nor any copies published, communicated or otherwise made available in whole or in part to any other person or entity without my express prior written consent, except that you may furnish copies thereof to each party that becomes a Bank after the date hereof pursuant to the Credit Agreement, and such parties may rely on this opinion as if it had been originally addressed to them. You may also furnish copies thereof to any prospective participant or assignee, provided that such disclosure is subject to Section 17.23 of the Credit Agreement. 105 January 13, 1997 Page 3 I do not express any opinion, either implicitly or otherwise, on any issue not expressly addressed in numbered Paragraphs 1 through 5. The opinions expressed above are based solely on facts, laws and regulations existing and in effect on the date hereof, and I assume no obligation to revise or supplement this opinion should such facts change or should such laws or regulations be changed by legislative or regulatory action, judicial decision or otherwise, notwithstanding that such changes may affect the legal analysis or conclusions contained in this opinion. I am an employee, officer and stockholder of the Company. Very truly yours, 106 EXHIBIT J-2 January 13, 1997 To each of the Banks named in the hereinafter defined Credit Agreement c/o HARRIS TRUST AND SAVINGS BANK, as Administrative Agent for the Banks party to the Credit Agreement referred to below 111 West Monroe Street Chicago, Illinois 60690 Re: General Binding Corporation Ladies and Gentlemen: We have acted as counsel to General Binding Corporation, a Delaware corporation (the "Company") and for GBC Business Equipment, Inc., a Florida corporation; GBC International, Inc., a Nevada corporation; Pro-Tech Engineering Co., Inc., a Wisconsin corporation; Sickinger Company, a Michigan corporation; U.S. RingBinder Corp., a Massachusetts corporation; and VeloBind, Incorporated, a Delaware corporation, in connection with the Credit Agreement of even date herewith (the "Credit Agreement") among the Company, the financial institutions parties thereto (the "Banks") and Harris Trust and Savings Bank, as Administrative Agent, and the transactions contemplated thereby. The Company and the Guarantors are collectively referred to herein as the "Loan Parties". This opinion is furnished to you at the request of the Company pursuant to Section 11.1(a) of the Credit Agreement. Capitalized terms used herein and not otherwise defined are used as defined in the Credit Agreement. In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of the Credit Agreement, and the Notes executed by the Company in favor of the Banks signatory to the Credit Agreement on the date hereof (the "Notes"; and collectively with the Credit Agreement, the "Loan Documents"). In rendering the opinions set forth herein, we have also examined originals or copies, certified to our satisfaction, of such (i) certificates of public officials, (ii) certificates of officers and representatives of the Loan Parties, and (iii) other documents and records, and we have made such inquiries of officers and representatives of the Loan Parties, as we have deemed relevant or necessary as the basis for such opinions. We have relied as to factual matters upon, and assumed the accuracy of, such certificates, the representations and warranties of the Loan Parties made in the Loan Documents and other statements, documents and records supplied to us by the Loan Parties, and we have assumed the genuineness of all signatures and the authenticity of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as certified or photostatic copies. 107 Harris Trust and Savings Bank, et al. January 13, 1997 Page 2 In rendering the opinions set forth herein, we have assumed that: (i) all the parties to the Loan Documents are duly organized, validly existing and in good standing under the laws of their respective jurisdictions of organization and have the requisite corporate power to enter into the Loan Documents; and (ii) the execution and delivery of the Loan Documents have been duly authorized by all necessary corporate action and proceedings on the part of all parties thereto; the Loan Documents have been duly executed and delivered by all parties thereto and constitute the valid and binding obligation of all parties thereto other than the Loan Parties, enforceable against such parties in accordance with their respective terms. To the extent that our opinions expressed below involve conclusions as to the matters set forth or in paragraphs 1, 2, 3 and 4 of the opinion addressed to you, of even date herewith, of Steven Rubin, the General Counsel of the Company, we have assumed without independent investigation the correctness of the matters set forth in such paragraphs, our opinion being subject to the assumptions, qualifications and limitations set forth in such opinions with respect thereto. Based upon the foregoing and subject to the qualifications stated herein, we are of the opinion that, as of the date hereof: 1. Each Loan Document constitutes the valid and binding obligation of the Loan Party executing the same, enforceable against each such party, respectively, in accordance with its terms. 2. The execution, delivery and performance of the Loan Documents by the Loan Parties, and the consummation of the transactions contemplated thereby, do not contravene any law, rule or regulation applicable to any Loan Party (including, without limitation, any usury laws or Regulation U or Regulation X of the Board of Governors of the Federal Reserve System). 3. Neither the Company nor any Guarantor is an "investment company" or a company "controlled" by an "investment company", as such terms are defined in the Investment Company Act of 1940, as amended. Our opinions above are subject to the following qualifications: (a) Our opinions relating to validity, binding effect and enforceability in Paragraph 1 above are subject to limitations imposed by any applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and similar laws affecting creditors' rights generally. In addition, our opinions relating to enforceability in paragraph 1 above are subject to (i) the effect of general principles of equity (regardless of whether considered in a proceeding in equity or at law) and (ii) limitations imposed by public policy under certain circumstances on the enforceability of provisions indemnifying a party against liability for its own wrongful or negligent acts. In applying principles of equity referred to in clause (i) above, a court, among other things, might not allow a creditor to accelerate maturity of a debt upon the occurrence of a default deemed immaterial. Such principles applied by a court might include a requirement that a creditor act reasonably and in good faith. 108 Harris Trust and Savings Bank, et al. January 13, 1997 Page 3 (b) Certain remedial and waiver provisions of the Loan Documents may be unenforceable in whole or in part, but the inclusion of such provisions does not affect the validity of the Loan Documents; however, the unenforceability of such provisions may result in delays in the enforcement of the Administrative Agent's and the Banks' rights and remedies under the Loan Documents (and we express no opinion as to the economic consequences, if any, of such delays). (c) We express no opinion as to the effect of the compliance or noncompliance of the Administrative Agent or any of the Banks with any state or federal laws or regulations applicable to the Administrative Agent or any of the Banks because of the Administrative Agent's or any of the Banks' legal or regulatory status, the nature of the business of the Administrative Agent or any of the Banks or the qualification of any such party to conduct business in any jurisdiction. The foregoing opinions are limited to the laws of the United States and the State of Illinois, and we express no opinion with respect to the laws of any other state or jurisdiction. In addition, except as otherwise specifically set forth herein, we express no opinion herein as to any of the topics listed under Section 19, "Specific Legal Issues," of the Third-Party Legal Opinion Report, Including the Legal Opinion Accord, of the Section of Business Law, American Bar Association, 47 Bus. Law. 167 (1991). The opinions expressed herein are being delivered to you as of the date hereof and are solely for your benefit in connection with the transactions contemplated in the Credit Agreement and may not be relied on in any manner or for any purpose by any other person, nor any copies published, communicated or otherwise made available in whole or in part to any other person or entity without our express prior written consent, except that you may furnish copies thereof to each party that becomes a Bank after the date hereof pursuant to the Credit Agreement, and such parties may rely on this opinion as if it had been originally addressed to them. You may also furnish copies thereof to any prospective participant or assignee, provided that such disclosure is subject to Section 17.23 of the Credit Agreement. We do not express any opinion, either implicitly or otherwise, on any issue not expressly addressed in numbered Paragraphs 1 through 3. The opinions expressed above are based solely on facts, laws and regulations existing and in effect on the date hereof, and we assume no obligation to revise or supplement this opinion should such facts change or should such laws or regulations be changed by legislative or regulatory action, judicial decision or otherwise, notwithstanding that such changes may affect the legal analysis or conclusions contained in this opinion. Very truly yours, 109 EXHIBIT K COMPLIANCE CERTIFICATE To: The Banks parties to the Credit Agreement described below This Compliance Certificate is furnished pursuant to that certain Credit Agreement dated as of January 13, 1997, among General Binding Corporation, the Banks signatory thereto and Harris Trust and Savings Bank, as Administrative Agent for the Banks. Unless otherwise defined herein, the terms used in this Compliance Certificate have the meanings ascribed thereto in the Credit Agreement. THE UNDERSIGNED HEREBY CERTIFIES THAT: 1. I am the duly elected _______________ of the Company; 2. I have reviewed the terms of the Credit Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Company and its Subsidiaries during the accounting period covered by the attached financial statements; 3. The examinations described in Paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Default or Event of Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth below; and 4. Schedule I attached hereto sets forth financial data and computations evidencing the Company's compliance with certain covenants of the Agreement, all of which data and computations are true, complete and correct. Described below are the exceptions, if any, to Paragraph 3 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Company has taken, is taking, or proposes to take with respect to each such condition or event: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this ____ day of ______________, 19__. Name: Title: -105- 110 SCHEDULE I TO COMPLIANCE CERTIFICATE GENERAL BINDING CORPORATION Compliance Calculations for Credit Agreement Dated as of January 13, 1997 Calculations as of ________________, 19__ A. CURRENT RATIO (SECTION 12.16 OF THE AGREEMENT) 1. Current Assets $ ----------------- A1 2. Current Liabilities (excluding Loans) $ ----------------- A2 3. Ratio of Line A1 to Line A2 ____: 1.0 A3 4. Line A3 Ratio must be greater than: 1.25: 1.0 5. Is Company in Compliance? (Circle Yes or No) Yes / No B. CONSOLIDATED SHAREHOLDER'S EQUITY (SECTION 12.15 OF THE AGREEMENT) 1. Consolidated Shareholder's Equity $ ----------------- B1 2. Line B1 must be greater than or equal to (the Minimum Required Amount): $ ----------------- 3. Is Company in Compliance? (Circle Yes or No) Yes / No C. LEVERAGE RATIO (SECTION 12.17 OF THE AGREEMENT) 1. Total Consolidated Debt $ ----------------- C1 2. Consolidated Net Income for the specified fiscal quarter or $ quarters of the Company most recently completed ----------------- C2
-106- 111 3. Interest Expense for the same period $ ----------------- C3 4. Federal, state and local income taxes for the same period $ ----------------- C4 5. Deprecation of fixed assets for the same period $ ----------------- C5 6. Amortization for the same period $ ----------------- C6 7. Add Lines C2-C6 (Consolidated EBITDA) $ ----------------- C7 8. Ratio of Line C1 to C7 _____ : 1.0 9. Line C8 Ratio must be less than or equal to: _____ : 1.0 10. Is Company in Compliance? (Circle Yes or No) Yes / No D. INTEREST COVERAGE RATIO (SECTION 12.18 OF THE AGREEMENT) 1. Interest Expense for the specified fiscal quarter or quarters of the $ Company most recently completed ----------------- D1 2. Consolidated EBITDA for the same period (from Line C7 above) $ ----------------- D2 3. Ratio of Line D2 to Line D1 _____ : 1.0 4. Line D3 ratio must not be less than: _____ : 1.0 5. Is Company in Compliance? (Circle Yes or No) Yes / No
-107- 112 E. LIMITATION ON OUTSIDE INVESTMENTS (SECTION 12.14(h) OF THE AGREEMENT) 1. Outside Investments as per Outside Investment List $ ----------------- E1 2. Base Outside Investment Amount $ ----------------- E2 3. Incremental Outside Investment Amount $ ----------------- E3 4. Line E2 plus Line E3 $ ----------------- E4 5. Is Company in Compliance (Is Line E1 less than Line E4)? (Circle Yes or No) Yes / No
-108- 113 EXHIBIT L FORM OF ELECTION TO PARTICIPATE ___________, 19__ HARRIS TRUST AND SAVINGS BANK, as Administrative Agent for the Banks party to the Credit Agreement referred to below 111 West Monroe Street Chicago, Illinois 60690 Dear Sirs: Reference is made to the Credit Agreement, dated as of January 13, 1997 (the "Credit Agreement") among General Binding Corporation, the Banks named therein, Harris Trust and Savings Bank as Administrative Agent for the Banks. Capitalized terms used and not defined herein have the meanings assigned to them in the Credit Agreement. The undersigned, [name of Borrowing Subsidiary], a [jurisdiction of incorporation] corporation, hereby elects to be a Borrowing Subsidiary for purposes of the Credit Agreement, effective from the date hereof until an Election to Terminate shall have been delivered on behalf of the undersigned in accordance with the Credit Agreement. The undersigned confirms that (i) it is a Wholly-Owned Subsidiary of the Borrower hereunder, (ii) it has irrevocably appointed the Borrower as its agent under Section 5.10 of the Credit Agreement; (iii) the execution, delivery and performance by it of the Credit Agreement, this Election to Participate and the Notes which it has executed and delivered are within its corporate powers, have been duly authorized by all necessary corporate action, requires no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of its charter or by-laws or of any agreement or instrument to which it is a party or is subject, or by which it, or its property, is bound, or of any judgment, injunction, order, decree or other instrument binding upon it or result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries, (iv) the Credit Agreement and the Notes constitute valid and binding obligations of the undersigned subject to general principles of equity and bankruptcy, reorganization, insolvency and similar laws of general application to enforcement of creditors' rights and (v) the representations and warranties set forth in Section 9 of the Credit Agreement are true and correct as to the undersigned as of the date hereof, and the undersigned hereby agrees to perform all the obligations of a Borrowing Subsidiary under, and to be bound in all respects by the terms of, the Credit Agreement, including without limitation Section 17.16 thereof, as if the undersigned were a direct signatory party thereto. All notices to the undersigned under the Credit Agreement should be directed to General Binding Corporation at its address for notices specified pursuant to Section 17.8 of the Credit Agreement. This instrument shall be construed in accordance with and governed by the internal laws of the State of Illinois. Very truly yours, [NAME OF BORROWING SUBSIDIARY] By Name Title -109- 114 The undersigned hereby confirms that [name of Borrowing Subsidiary] is a Borrowing Subsidiary for purposes of the Credit Agreement described above. GENERAL BINDING CORPORATION By Name Title Receipt of the above Election to Participate is hereby acknowledged on and as of _____________________. HARRIS TRUST AND SAVINGS BANK, as Administrative Agent for the Banks By Name Title -110- 115 EXHIBIT M FORM OF ELECTION TO TERMINATE ___________, 19__ HARRIS TRUST AND SAVINGS BANK, as Administrative Agent for the Banks party to the Credit Agreement referred to below 111 West Monroe Street Chicago, Illinois 60690 Dear Sirs: Reference is made to the Credit Agreement, dated as of January 13, 1997 (the "Credit Agreement") among General Binding Corporation, the Banks named therein, Harris Trust and Savings Bank as Administrative Agent for the Banks. Capitalized terms used and not defined herein have the meanings assigned to them in the Credit Agreement. The undersigned, [name of Borrowing Subsidiary], a [jurisdiction of incorporation] corporation, hereby elects to terminate its status as a Borrowing Subsidiary for purposes of the Credit Agreement, effective as of the date hereof. The undersigned hereby represents and warrants that all principal and interest on all Notes of the undersigned and all other amounts payable by the undersigned pursuant to the Credit Agreement have been paid in full on or prior to the date hereof. Notwithstanding the foregoing, this Election to Terminate shall not affect any obligation of the undersigned under the Credit Agreement or under any Note heretofore incurred. This instrument shall be construed in accordance with and governed by the internal laws of the State of Illinois. Very truly yours, [NAME OF BORROWING SUBSIDIARY] By Name Title -111- 116 The undersigned hereby confirms that the status of [name of Borrowing Subsidiary] as a Borrowing Subsidiary for purposes of the Credit Agreement described above is terminated as of the date hereof. GENERAL BINDING CORPORATION By Name Title Receipt of the above Election to Terminate is hereby acknowledged on and as of ______________________. HARRIS TRUST AND SAVINGS BANK, as Administrative Agent for the Banks By Name Title -112- 117 EXHIBIT N To each of the Banks named in the hereinafter defined Credit Agreement c/o HARRIS TRUST AND SAVINGS BANK, as Administrative Agent for the Banks party to the Credit Agreement referred to below 111 West Monroe Street Chicago, Illinois 60690 Gentlemen: We have acted as counsel to [Name of Borrowing Subsidiary], a _____________ corporation (the "Borrower"), in connection with the authorization of and the execution and delivery of the Credit Agreement, dated as of January 13, 1997 (the "Credit Agreement") among General Binding Corporation, the Banks named therein, Harris Trust and Savings Bank as Administrative Agent for the Banks. All capitalized terms used and not defined herein shall have the meanings assigned to them in the Credit Agreement. In our capacity as such counsel, we have made such investigations of fact and have considered such questions of law as we have deemed necessary for the purposes of this opinion, which is delivered to you pursuant to Section 11.3(a) of the Credit Agreement. Based on the foregoing, it is our opinion that: (i) the Borrower is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation; has the corporate power to carry on its present business; is duly licensed or qualified in all states and jurisdictions wherein the nature of the business carried on by it or the assets and properties owned or leased by it requires such qualification or licensing; and the Borrower has the corporate power and authority to enter into the Credit Agreement, to make the borrowings therein provided for, to issue its Notes, and to perform each and all of the matters and things therein provided for. (ii) The Credit Agreement and the Notes delivered on the date hereof have been duly authorized, executed, and delivered by and on behalf of the Borrower and all constitute legal, valid, and enforceable obligations of the Borrower, except to the extent affected by bankruptcy, insolvency or other similar laws relating to or affecting the enforcement of creditors' rights and remedies generally and general principles of equity. (iii) The Credit Agreement and the Notes, do not, nor will the performance or observance by the Borrower of any of the matters and things therein provided for, contravene any provision of law applicable to the Borrower, any judgment or decree applicable to the Borrower, the Articles of Incorporation, or By-laws of the Borrower, or, any indenture or material agreement to which the Borrower is a party or by which it or any of its properties is bound. (iv) All authorizations, consents, approvals, filings, registrations, exemptions and regulatory approvals necessary to permit execution of the Credit Agreement and performance of its obligations thereunder by the Borrower, and to permit borrowings by the Borrower under the Credit Agreement and the issuance of the Notes, have been obtained and remain in full force and effect. (v) There is no litigation or governmental proceeding pending or to the best of our knowledge threatened, against the Borrower which could reasonably be expected to (i) materially adversely affect the business and properties of the Borrower on a consolidated basis or (ii) impair the validity or enforceability of the Credit Agreement or the Notes or materially impair the ability of the Borrower to perform its obligations under the Credit Agreement or the Notes. -113- 118 [(vi) Except for ________, the execution and delivery of the Agreement and the Notes are not subject to any tax, duty, fee or other charge, including, without limitation, any registration or transfer tax, stamp duty or similar levy, imposed by or within [insert jurisdiction of incorporation] or any political subdivision or taxing authority thereof or therein. (vii) Neither the Borrower nor its property has any right of immunity on grounds of sovereignty or otherwise from jurisdiction, attachment (before or after judgment) or execution in respect of any action or proceeding relating in any way to the Agreement or the Notes that may be brought in the courts of [insert jurisdiction of incorporation]. (viii) There are no legal impediments to your access to the courts of [insert relevant jurisdiction] nor shall you be required to qualify under any statute or law or pay any franchise tax, stamp tax or similar fee to gain such access, whether in respect of a direct suit on the Credit Agreement or a proceeding to register a judgment obtained before a court in the United States, except for such fees as would be required of plaintiffs, both resident and non-resident, in seeking access to the courts of [insert relevant jurisdiction]; nor except for ________, will you be resident, domiciled, carrying on business or otherwise subject to taxation in [insert relevant jurisdiction] by reason only of your execution, delivery or performance the Credit Agreement or enforcement of the Credit Agreement or the Notes; (ix) The Borrower has the power to submit, and pursuant to the Credit Agreement has legally, validly, effectively and irrevocably submitted, to the jurisdiction of the courts of the State of Illinois and of the United States for the Northern District of Illinois in respect of any action or proceeding relating in any way to the Credit Agreement or the Notes. (x) The choice by the parties to the Credit Agreement of the law of the State of Illinois as governing law should be recognized by the courts of ___________ as legal, valid and binding.(10) In rendering the opinions expressed above, we have examined originals, or copies of originals certified to our satisfaction, of such agreements, documents, certificates and other statements of government officials and corporate officers and such other papers and evidence as we have deemed relevant and necessary as a basis for this opinion. Respectfully submitted, - ----------------- (10) Insert for Non-U.S. Borrowing Subsidiaries. -114- 119 EXHIBIT O SUBSIDIARY GUARANTEE AGREEMENT _____________, 19___ HARRIS TRUST AND SAVINGS BANK, as Administrative Agent for the Banks party to the Credit Agreement referred to below 111 West Monroe Street Chicago, Illinois 60690 Dear Sirs: Reference is made to the Credit Agreement, dated as of January 13, 1997 (the "Credit Agreement") among General Binding Corporation, the Banks named therein, Harris Trust and Savings Bank as Administrative Agent for the Banks. Capitalized terms used and not defined herein have the meanings assigned to them in the Credit Agreement. The undersigned, [name of Guarantor], a [jurisdiction of incorporation] corporation, hereby elects to be a "Guarantor" for all purposes of the Credit Agreement, effective from the date hereof and the undersigned hereby agrees to perform all the obligations of a Guarantor under, and to be bound in all respects by the terms of, the Credit Agreement, including without limitation Section 16 thereof, as if the undersigned were a direct signatory party thereto. The undersigned confirms that (i) it is a Domestic Material Subsidiary of the Company hereunder, (ii) the execution, delivery and performance by it of this Subsidiary Guarantee Agreement is within its corporate powers, have been duly authorized by all necessary corporate action, requires no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of its charter or by-laws or of any agreement or instrument to which the Company or it is a party or is subject, or by which the Company or it, or the Company's or its property, is bound, or of any judgment, injunction, order, decree or other instrument binding upon it or result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries and (iii) the representations and warranties set forth in Section 9 of the Credit Agreement are true and correct as to the undersigned as of the date hereof. -115- 120 This Agreement shall be construed in accordance with and governed by the internal laws of the State of Illinois. Very truly yours, [NAME OF GUARANTOR] By Name: Title: -116- 121 EXHIBIT P OUTSIDE INVESTMENT LIST To: The Banks parties to the Credit Agreement described below This Outside Investment List is furnished pursuant to that certain Credit Agreement dated as of January 13, 1997, among General Binding Corporation, the Banks signatory thereto and Harris Trust and Savings Bank, as Administrative Agent for the Banks. Unless otherwise defined herein, the terms used in this Compliance Certificate have the meanings ascribed thereto in the Credit Agreement.
Value Description ------ -----------
The undersigned hereby certifies that set forth below is an accurate summary of Outside Investments as of _______________________. ---------------------------------------- Name: ----------------------------------- Title: ---------------------------------- -117- EX-10.2 29 FIRST AMENDMENT TO MULTICURRENCY CREDIT 12/19/97 1 EXHIBIT 10.2 GENERAL BINDING CORPORATION FIRST AMENDMENT TO MULTICURRENCY CREDIT AGREEMENT This First Amendment to Multicurrency Credit Agreement (herein, the "Amendment") is entered into as of December 19, 1997, between General Binding Corporation, a Delaware corporation (the "Company"), each of the Banks party to the Credit Agreement (as such term is defined below), Harris Trust and Savings Bank, as a Bank and in its capacity as agent under the Credit Agreement (the "Administrative Agent") and LaSalle National Bank, The First National Bank of Chicago, The Bank of New York and Credit Agricole Indosuez, each as a Bank and in their respective capacities as Co-Agents under the Credit Agreement. PRELIMINARY STATEMENTS A. The Company and the Banks entered into a certain Multicurrency Credit Agreement, dated as of January 13, 1997 (the "Credit Agreement"). All capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Credit Agreement. B. The Company has requested that the Banks increase the Commitments, amend certain covenants, add Bankers Trust Company and The Sanwa Bank, Limited, Chicago Branch as Banks under the Credit Agreement, add and amend certain definitions and make certain other amendments to the Credit Agreement, and the Banks are willing to do so under the terms and conditions set forth in this Amendment. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: SECTION 1. INCREASE OF COMMITMENT AMOUNTS. Upon the satisfaction of the conditions precedent set forth in Section 5 hereof, the amount of each Bank's Revolving Credit Commitment set forth opposite its name on its signature page to the Credit Agreement (or on an assignment agreement pursuant to Section 17.12 of the Credit Agreement, as the case may be) shall be amended and as so amended shall be restated as follows:
AMOUNT OF REVOLVING BANK CREDIT COMMITMENT Harris Trust and Savings Bank $40,000,000 LaSalle National Bank $32,500,000 The First National Bank of Chicago $35,000,000 The Bank of New York $35,000,000
-1- 2 Credit Agricole Indosuez $30,000,000 Comerica Bank $35,000,000 Bank of Tokyo-Mitsubishi (Chicago) $22,500,000 SunTrust Bank, Atlanta $27,500,000 Mercantile Bank National Association $17,500,000 First Union National Bank $25,000,000 National City Bank $22,500,000 Credit Lyonnais Chicago Branch $25,000,000 The Bank of Nova Scotia $25,000,000 Societe Generale Chicago Branch $27,500,000 The Long-Term Credit Bank of Japan, Ltd. $17,500,000 CIBC, Inc. $22,500,000
Notwithstanding that the increase of the Revolving Credit Commitments contemplated by Section 1 hereof shall not become effective until the satisfaction of the conditions precedent set forth in Section 5 hereof, for purposes of calculating the Facility Fee payable under Section 6.1 of the Credit Agreement, the Revolving Credit Commitments of the Banks shall be deemed to have been so increased (and the Revolving Credit Commitments of each new Bank shall be deemed to have become effective) immediately upon the First Amendment Effective Date. SECTION 2. ADDITION OF NEW BANKS. Upon the satisfaction of the conditions precedent set forth in Section 5 hereof, the Credit Agreement shall be and hereby is amended as follows: (a) Each of Bankers Trust Company and The Sanwa Bank, Limited, Chicago Branch (collectively herein, the "New Banks") shall be deemed a Bank signatory to the Credit Agreement and shall have all the rights, benefits, duties and obligations of a Bank -2- 3 under the Credit Agreement and the Loan Documents. Each New Bank agrees that it will perform all of the duties and obligations which by the terms of the Credit Agreement and the Loan Documents are required to be performed by it as a Bank with a Revolving Credit Commitment as follows:
AMOUNT OF REVOLVING BANK CREDIT COMMITMENT Bankers Trust Company $20,000,000 The Sanwa Bank, Limited, Chicago Branch $15,000,000
Accordingly, all references in the Credit Agreement and the Loan Documents to the terms "Bank" and "Banks" shall be deemed to include, and be a reference to, each New Bank. (b) All references in the Credit Agreement and the Loan Documents to the Notes or any of them shall be deemed to include, and be a reference to, the Notes issued pursuant hereto by the Company to the New Banks. (c) The following address and Revolving Credit Commitment shall be deemed to appear on each Banks' signature page, respectively, in the Credit Agreement as so amended for New Bank: Bankers Trust Company 130 Liberty Street New York, New York 10006 Attention: Doug DiBella Revolving Credit Commitment: $20,000,000 The Sanwa Bank, Limited, Chicago Branch 10 South Wacker Drive, 31st Floor Chicago, Illinois 60606 Attention: David Buck Revolving Credit Commitment: $15,000,000 SECTION 3. AMENDMENTS. Section 3.1 Subject to the satisfaction of the conditions precedent set forth in Section 5 below, the Credit Agreement shall be and hereby is amended as follows: (a) Clause (B) of the first proviso of Section 2.4 of the Credit Agreement is hereby amended by striking the phrase "the Company shall accept a pro rata portion of each such Offer, based as nearly as possible on the ratio of the maximum aggregate principal amounts of Bid Loans for which each such Offer was made by each Bank" appearing therein and substituting therefor the following: the Company shall accept any one or more of such Offers in whole or in part in its sole discretion. (b) The definition of Consolidated EBITDA appearing in Section 8 of the Credit -3- 4 Agreement shall be amended by deleting the text appearing after the phrase "provided, however, that" and substituting therefore the following: if an Acquisition occurs at any time during such period, Consolidated EBITDA shall be calculated on a proforma basis to include earnings reasonably allocable to the acquired Person or business, as the case may be, for the entire period as if such Acquisition had taken place on the first day of such period, all as reasonably calculated by the Company based on historical operations (including, but not limited to, operations conducted during such quarter) and reasonably calculated adjustments due to anticipated operational changes. (c) The definition of Consolidated Interest Expense appearing in Section 8 of the Credit Agreement shall be amended by deleting the text appearing after the phrase "provided, however, that" and substituting therefore the following: if an Acquisition occurs at any time during such period, Consolidated Interest Expense shall be calculated on a proforma basis to include interest expense reasonably allocable to the acquired Person or business, as the case may be, for the entire period as if such Acquisition had taken place on the first day of such period and the Consolidated Debt incurred to finance or otherwise related to the relevant Acquisition had been incurred on the first day of such period, all as reasonably calculated by the Company. (d) The following definitions appearing in Section 8 of the Credit Agreement shall each be amended in its entirety and as so amended shall be restated to read as follows: "Consolidated Debt" means all Debt of the Company and its Subsidiaries determined (without duplication) on a consolidated basis in accordance with GAAP; provided, however, that it is understood that to avoid duplication in calculating Consolidated Debt, only Guaranties of third parties' obligations and of other obligations not otherwise included in the Debt of the Company or of a consolidated Subsidiary shall be included; provided further, however, that Consolidated Debt shall also not include any guarantees to the extent and only to the extent the obligations covered by such guarantees are secured by Permitted Liquid Investments segregated and held expressly for that purpose by or on behalf of the party to whom such obligations are owed. "Incremental Outside Investment Amount" means as of any time, the sum of (i) 15% of Consolidated Total Assets as of the close of the then most recent fiscal quarter of the Company for which a Compliance Certificate is available and (ii) the aggregate amount on a cumulative basis on and after January 1, 1998 of net proceeds -4- 5 received by the Company and its Subsidiaries from their issuance and sale of Subordinated Debt and equity securities. "Level V" means the Borrower's Leverage Ratio as of the end of the Borrower's fiscal quarter ending immediately prior to the most recent Pricing Date is greater than or equal to 3.50 to 1.00 and less than 4.00 to 1.00. "Pricing Date" means, for any fiscal quarter of the Company ended after the date hereof (except for the last such fiscal quarter in each fiscal year of the Company), the sixtieth day after the last day of such fiscal quarter and for the last such fiscal quarter, the ninetieth day after the last day of such fiscal quarter; provided, however, that if the Ibico Acquisition occurs, (i) the date of the closing of the Ibico Acquisition shall constitute an additional Pricing Date (unless the Company becomes more than five (5) Business Days late in delivering the Interim Ibico Certificate required by this sentence, in which event the following provisions of this paragraph shall govern) and (ii) within five (5) Business Days after such closing the Company shall provide each Bank a certificate (the "Interim Ibico Certificate") signed by the Borrower's chief financial officer setting forth a pro forma calculation of the Leverage Ratio as of the date of and immediately after giving effect to such Acquisition (such pro forma calculation to be made on the basis of the information contained in the then most recent Compliance Certificate required to be submitted to each Bank with the following adjustments: (i) Consolidated Debt shall include all indebtedness incurred directly or indirectly to finance the Ibico Acquisition and (ii) Consolidated EBITDA shall be computed as if such Acquisition had occurred at the commencement of the four-quarter period with reference to which the Leverage Ratio is being calculated). The Domestic Rate Margin, the Eurocurrency Margin and the Facility Fee Rate established on a Pricing Date shall remain in effect until the next Pricing Date (and for the next five (5) Business Days in the event set forth in the immediately following sentence). If the Company has not delivered a Compliance Certificate (or Interim Ibico Certificate, as the case may be) by the fifth Business Day following the date (the "Due Date") on which (x) such Compliance Certificate was required to be delivered under Section 12.6(b) hereof or (y) in the case of the Interim Ibico Certificate, the date the Interim Ibico Certificate was required to be delivered by this paragraph, then until a Compliance Certificate (or Interim Ibico Certificate, as the case may be) is delivered before the next Pricing Date, the Domestic Rate Margin, the Eurocurrency Margin and the Facility Fee Rate -5- 6 shall be set from (but not including) such Due Date as if Level VIII existed. If the Company subsequently delivers such a Compliance Certificate (or Interim Ibico Certificate, as the case may be) before the next Pricing Date, the Domestic Rate Margin, the Eurocurrency Margin and the Facility Fee Rate established by such late-delivered Compliance Certificate (or Interim Ibico Certificate) shall take effect from the date of delivery until the next Pricing Date. In all other circumstances, the Domestic Rate Margin, the Eurocurrency Margin and the Facility Fee Rate established by a Compliance Certificate (or Interim Ibico Certificate, as the case may be) shall be in effect from the Pricing Date that coincides with the deadline for delivery of the corresponding Compliance Certificate (or Interim Ibico Certificate) until the next Pricing Date. (e) The definition of Domestic Rate Margin appearing in Section 1.3(a) of the Credit Agreement is hereby amended in its entirety and as so amended is restated to read as follows: "Domestic Rate Margin" means 0.25% per annum from and including the First Amendment Effective Date until the next Pricing Date and thereafter from one Pricing Date to the next a percentage determined in accordance with the following schedule:
Level: Domestic Rate Margin: ------ --------------------- Level I 0.00% Level II 0.00% Level III 0.00% Level IV 0.00% Level V 0.25% Level VI 0.30% Level VII 0.375% Level VIII 0.50%
(f) The definition of Eurocurrency Margin appearing in Section 1.3(b) of the Credit Agreement is hereby amended in its entirety and as so amended is restated to read as follows: "Eurocurrency Margin" means (a) for each Eurocurrency Bid Loan the percentage agreed to pursuant to Section 2.4 hereof and (b) for each Committed Eurocurrency Loan 0.750% per annum from and including the First Amendment Effective Date until the next Pricing Date and thereafter from, and including, one Pricing Date to, but not including, the next a rate per annum determined in accordance with the following schedule:
Level: Eurocurrency Margin: ------ -------------------- Level I 0.375% Level II 0.425% Level III 0.475% Level IV 0.625% Level V 0.750% Level VI 0.900% Level VII 1.100% Level VIII 1.375%
-6- 7 (g) Section 6.1 of the Credit Agreement is hereby amended in its entirety and as so amended is restated to read as follows: Section 6.1. Facility Fees. The Company shall pay to the Administrative Agent for the ratable account of the Banks, based on their Revolving Credit Commitments, a facility fee (the "Facility Fee") on the average daily amount of the Revolving Credit Commitments hereunder (whether used or unused) at the rate (the "Facility Fee Rate") of 0.30% per annum from and including the First Amendment Effective Date to, but not including, next Pricing Date and thereafter from, and including, one Pricing Date to, but not including, the next at the rate per annum determined in accordance with the schedule below, payable in arrears on the last day of each March, June, September, and December, commencing on the first of such dates to follow the First Amendment Effective Date (on which date shall also be paid any unpaid Facility Fee which accrued prior to the First Amendment Effective Date), and on the Revolving Credit Termination Date unless the Revolving Credit Commitments are terminated in whole on an earlier date, in which event the Facility Fee for the period to the date of such termination in whole shall be paid on the date of such termination:
Level: Facility Fee Rate: ------ ------------------ I 0.100% II 0.125% III 0.150% IV 0.250% V 0.300% VI 0.350% VII 0.350% VIII 0.375%
-7- 8 (h) The following definitions shall be added to Section 8 of the Credit Agreement in the appropriate alphabetical locations: "First Amendment Effective Date" means December 19, 1997. "Ibico Acquisition" means the acquisition by the Company of the stock of Ibico AG, a corporation organized under the laws of Switzerland, pursuant to the terms of that certain Stock Purchase Agreement dated as of October 17, 1997, among Company and Dr. U. Wolfensberger. "Level VI" means the Borrower's Leverage Ratio as of the end of the Borrower's fiscal quarter ending immediately prior to the most recent Pricing Date is greater than or equal to 4.00 to 1.00 and less than 4.50 to 1.00. "Level VII" means the Borrower's Leverage Ratio as of the end of the Borrower's fiscal quarter ending immediately prior to the most recent Pricing Date is greater than or equal to 4.50 to 1.00 and less than 5.00 to 1.00. "Level VIII" means the Borrower's Leverage Ratio as of the end of the Borrower's fiscal quarter ending immediately prior to the most recent Pricing Date is greater than or equal to 5.00 to 1.00. "Senior Consolidated Debt" means all Debt (other than Subordinated Debt) of the Company and its Subsidiaries determined (without duplication) on a consolidated basis in accordance with GAAP; provided, however, that it is understood that to avoid duplication in calculating Senior Consolidated Debt, only Guaranties of third parties' obligations and of other obligations not otherwise included in the Debt of the Company or of a consolidated Subsidiary shall be included; provided, further, however, that Senior Consolidated Debt shall also not include any guarantees to the extent and only to the extent the obligations covered by such guarantees are secured by Permitted Liquid Investments segregated and held expressly for that purpose by or on behalf of the party to whom such obligations are owed. "Senior Leverage Ratio" means, as of any time the same is to be determined, the ratio of Senior Consolidated Debt at such time to -8- 9 Consolidated EBITDA for the four most recently completed fiscal quarters of the Company. "Subordinated Debt" means, as of any time the same is to be determined, Debt of the Company or any Subsidiary subordinated in right of payment to the Obligations, pursuant to documentation containing interest rates, payment terms, maturities, amortization schedules, covenants, defaults, remedies, subordination provisions and other material terms in form and substance reasonably satisfactory to the Required Banks. (i) Section 12.6(a)(i) of the Credit Agreement shall be amended by striking the phrase "including balance sheets as of the end of such period, related profit and loss and reconciliation of surplus statements, and a statement of cash flows" appearing in the fourth, fifth and sixth lines thereof and inserting therefor the phrase "including a balance sheet as of the end of such period, and an income statement and statement of cash flows for such period". (j) Section 12.6(a)(ii) of the Credit Agreement shall be amended by striking the phrase "consolidated unaudited balance sheets as at the close of each such period and consolidated profit and loss and reconciliation of surplus statements, and a statement of cash flows in accordance with GAAP" appearing in the third, fourth and fifth lines thereof and inserting therefor the phrase "a consolidated unaudited balance sheet as at the close of each such period, and a consolidated income statement and consolidated statement of cash flows for such period, in each case in accordance with GAAP". (k) Section 12.14 of the Credit Agreement is hereby amended by adding thereto the following sentence at the end thereof: Each Investment made to effect an Acquisition permitted by Section 12.14(e) above (whether such Investment is one made in a Subsidiary making such Acquisition or is the Investment by the Company or such Subsidiary resulting from such Acquisition) must also be permitted by the other subsections of this Section 12.14. (l) Sections 12.17 and 12.18 of the Credit Agreement shall be amended in their entirety to be and to read as follows: Section 12.17. Leverage Ratios. (a) Leverage Ratio. The Company shall not, as of the close of any fiscal quarter of the Company set forth below, permit the Leverage Ratio to be more than the amount set forth to the right of such quarter: As of Close of Each Fiscal Quarter: -9- 10
Leverage Ratio Shall From and Including To and Including Not be More Than: ------------------ ---------------- ----------------- 3rd fiscal quarter of same 3rd fiscal quarter of 4.00 to 1 fiscal year 1997 fiscal year 1997 4th fiscal quarter of 3rd fiscal quarter of 5.25 to 1 fiscal year 1997 fiscal year 1998 4th fiscal quarter of 3rd fiscal quarter of 4.50 to 1 fiscal year 1998 fiscal year 1999 4th fiscal quarter 3rd fiscal quarter of 4.00 to 1 of fiscal year 1999 fiscal year 2000 4th fiscal quarter of each fiscal quarter 3.75 to 1 fiscal year 2000 thereafter
(b) Senior Leverage Ratio. The Company shall not, as of the close of any fiscal quarter of the Company set forth below, permit the Senior Leverage Ratio to be more than the amount set forth to the right of such quarter: As of Close of Each Fiscal Quarter:
Leverage Ratio Shall From and Including To and Including Not be More Than: ------------------ ---------------- ----------------- 3rd fiscal quarter of same 3rd fiscal quarter of 4.00 to 1 fiscal year 1997 fiscal year 1997 4th fiscal quarter of 3rd fiscal quarter of 4.25 to 1 fiscal year 1997 fiscal year 1998 4th fiscal quarter 3rd fiscal quarter of 3.50 to 1 of fiscal year 1998 fiscal year 1999 4th fiscal quarter of 3rd fiscal quarter of 3.00 to 1 fiscal year 1999 2000 fiscal year 4th fiscal quarter of each fiscal quarter 2.75 to 1 fiscal year 2000 thereafter
-10- 11 Section 12.18. Interest Coverage Ratio. The Company shall not, as of the close of any fiscal quarter of the Company set forth below, permit the Interest Coverage Ratio to be less than the amount set forth to the right of such period: As of Close of Each Fiscal Quarter:
Interest Coverage Ratio Shall From and Including To and Including Not be Less Than: ------------------ ---------------- ----------------- 3rd fiscal quarter of 3rd fiscal quarter of 2.50 to 1 fiscal year 1997 fiscal year 1999 4th fiscal quarter of each fiscal quarter 3.50 to 1 fiscal year 1999 thereafter
(m) The address set forth in the second sentence of Section 17.8 of the Credit Agreement shall be amended and as so amended shall be restated in its entirety to read as follows: General Binding Corporation One GBC Plaza Northbrook, Illinois 60062 Telephone: (847) 272-3700 Telecopy: (847) 272-7680 Attention: Chief Financial Officer cc: Secretary and General Counsel (n) Section 5 of the Credit Agreement shall be amended by inserting the following new Section 5.11 immediately at the end thereof: Section 5.11. Additional Banks. The Company may request that the aggregate Revolving Credit Commitments be increased by up to $75,000,000 by offering such increase to one or more Banks already party hereto or new banks not already party hereto (each such Bank or bank being hereinafter referred to as an "Additional Bank") reasonably acceptable to the Administrative Agent. Each such increase in the Revolving Credit Commitments shall be subject to satisfaction of the following conditions in each case as of the -11- 12 date such increase is to be effective: (i) no Default or Event of Default shall occur or be continuing, (ii) such increase shall be at least $25,000,000, (iii) the Company shall have paid to each Bank any amount that will be due such Bank under Section 5.8 hereof as a result of any prepayment (pursuant to the last sentence of this Section) of any Fixed Rate Loans outstanding under this Agreement at the time of the effectiveness of such increase, (iv) the Administrative Agent shall have received an acknowledgment agreement providing for such increase in form and substance satisfactory to it executed by each Borrower, the Administrative Agent and each Additional Bank, and (v) the Administrative Agent shall have received Committed Loan Notes and Bid Notes executed by each Borrower in favor of each such Additional Bank. Upon the satisfaction of such conditions, effective as of the date set forth in such acknowledgment agreement, (i) each such Additional Bank shall thereafter be a "Bank" party to this Agreement and shall be entitled to all rights, benefits and privileges afforded a Bank hereunder and subject to the obligations of a Bank hereunder to the extent of its Revolving Credit Commitment and (ii) the aggregate Revolving Credit Commitments of all the Banks (including the Additional Banks) shall be increased by the amount of the Revolving Credit Commitments of the Additional Banks (without any increase in the Revolving Credit Commitment of any Bank other than an Additional Bank). Concurrently with the effectiveness of such increase, each Additional Bank shall fund its pro rata share of outstanding Committed Loans and overdue Reimbursement Obligations to the Administrative Agent in accordance with Section 1.4 hereof (which amount shall thereafter be distributed to the other Banks which originally made such Committed Loans or funded such Reimbursement Obligations) so that after giving effect thereto each Bank, including each Additional Bank, holds a pro rata share (in accordance with its Percentage) of the outstanding Committed Loans and L/C Obligations based on the amount of its respective Percentage. (o) Schedule 9.2 of the Credit Agreement shall be amended by adding thereto in the appropriate locations the following additional Investments: -12- 13
Percent Jurisdiction of Investment Owned By Ownership Organization ---------- -------- --------- ------------ Baker School Specialty General Binding Co., Inc. Corporation 100% Massachusetts Printing Wire Supplies GBC International, Inc. Limited 100% Ireland
(p) Section 11.4 of the Credit Agreement shall be amended by striking the words "financial statements" appearing in the eighth line thereof and substituting therefor the phrase "the date December 31, 1995". (q) Section 11.4 of the Credit Agreement shall be amended by striking the reference "Sections 12.6(a)(ii)" appearing in the ninth line thereof and substituting therefor the reference "Section 12.6(a)(i)". SECTION 4. LOANS BY NEW BANKS. If upon this Amendment becoming effective there are Loans outstanding under the Credit Agreement, then in that event anything contained in the Credit Agreement to the contrary notwithstanding, substantially concurrent with this Amendment becoming effective there shall be such nonratable Borrowings and repayments under the Credit Agreement, as amended hereby, so that, after giving effect thereto, the percentages of all Banks' Commitments in use are identical. Each relevant Borrower shall make such payment as is required under Section 5.8 of the Credit Agreement by reason of such repayments. SECTION 5. CONDITIONS PRECEDENT. The effectiveness of this Amendment is subject to the satisfaction of all of the following conditions precedent: (a) Each Borrower, each Guarantor and the Banks (including each new Bank) shall have executed and delivered this Amendment. (b) Each Borrower shall have executed and delivered Committed Loan Notes and Bid Notes to each New Bank. (c) The Administrative Agent shall have received 0.05% of the Revolving Credit Commitments (after giving effect to this Amendment) for the ratable account of the Banks as and for an amendment fee in consideration of the Banks' agreements in this Amendment, such fee to be nonrefundable and fully-earned upon the Banks' acceptance of this Amendment below. (d) The Administrative Agent shall have received for each Bank certified copies of resolutions of the Board of Directors of each Borrower authorizing the execution, delivery and performance of this Amendment and the Notes contemplated hereby, indicating the authorized signers of this Amendment and such Notes and all other documents relating thereto. (e) The Administrative Agent shall have received for each Bank the favorable written opinions of counsel to the Company covering such matters with respect to this Amendment as are analogous to those which were covered by the opinions attached to the Credit Agreement as Exhibits J-1 and J-2. -13- 14 SECTION 6. REPRESENTATIONS. In order to induce the Banks to execute and deliver this Amendment, the Company hereby represents to each Bank that as of the date hereof, after giving effect to this Amendment, the representations and warranties set forth in Section 9 of the Credit Agreement are and shall be and remain true and correct (except that the representations contained in Section 9.4 shall be deemed to refer to the most recent financial statements of the Company delivered to the Administrative Agent) and the Company is in full compliance with all of the terms and conditions of the Credit Agreement and no Default or Event of Default has occurred and is continuing under the Credit Agreement. SECTION 7. MISCELLANEOUS. (a) Except as specifically amended herein, the Credit Agreement shall continue in full force and effect in accordance with its original terms. Reference to this specific Amendment need not be made in the Credit Agreement, the Notes, or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to or with respect to the Credit Agreement, any reference in any of such items to the Credit Agreement being sufficient to refer to the Credit Agreement as amended hereby. (b) By executing this Amendment in the place provided for that purpose below, each Guarantor hereby consents to the Amendment to the Credit Agreement as set forth herein and confirms that its obligations thereunder remain in full force and effect. Each Guarantor further agrees that the consent of such Guarantor to any further amendments to the Credit Agreement shall not be required as a result of this consent having been obtained. (c) The Company agrees to pay on demand all reasonable costs and expenses of or incurred by the Administrative Agent in connection with the negotiation, preparation, execution and delivery of this Amendment, as and to the extent provided in Section 17.15 of the Credit Agreement. (d) This Amendment may be executed in any number of counterparts, and by the different parties on different counterpart signature pages, all of which taken together shall constitute one and the same agreement. Any of the parties hereto may execute this Amendment by signing any such counterpart and each of such counterparts shall for all purposes be deemed to be an original. This Amendment shall be governed by the internal laws of the State of Illinois. -14- 15 Dated as of December 19, 1997. GENERAL BINDING CORPORATION By: /s/ WILLIAM R. CHAMBERS, JR. ------------------------------ Name: William R. Chambers, Jr. Title: V.P. GBC BUSINESS EQUIPMENT, INC. By: /s/ WILLIAM R. CHAMBERS, JR. ------------------------------ Name: William R. Chambers, Jr. Title: V.P. GBC INTERNATIONAL, INC. By: /s/ WILLIAM R. CHAMBERS, JR. ------------------------------ Name: William R. Chambers, Jr. Title: V.P. PRO-TECH ENGINEERING CO., INC. By: /s/ WILLIAM R. CHAMBERS, JR. ------------------------------ Name: William R. Chambers, Jr. Title: V.P. -15- 16 SICKINGER COMPANY By: /s/ WILLIAM R. CHAMBERS, JR. ------------------------------ Name: William R. Chambers, Jr. Title: V.P. U.S. RING BINDER CORP. By: /s/ WILLIAM R. CHAMBERS, JR. ------------------------------ Name: William R. Chambers, Jr. Title: V.P. VELOBIND, INCORPORATED By: /s/ WILLIAM R. CHAMBERS, JR. ------------------------------ Name: William R. Chambers, Jr. Title: V.P. GBC GENERAL BINDING (NEDERLAND) B.V. By: GENERAL BINDING CORPORATION Its: Attorney-in-Fact By: /s/ WILLIAM R. CHAMBERS, JR. ------------------------------ Name: William R. Chambers, Jr. Title: V.P. Accepted and agreed to as of the date and year last above written. -16- 17 HARRIS TRUST AND SAVINGS BANK, in its individual capacity as a Bank and as Administrative Agent By: /s/ JOSEPH WHITNEY ---------------------------------- Name: Joseph Whitney Title: Vice President LASALLE NATIONAL BANK, in its individual capacity as a Bank and as Co-Agent By: /s/ JAMES M. MINICH ---------------------------------- Name: James M. Minich Title: Vice President THE FIRST NATIONAL BANK OF CHICAGO, in its individual capacity as a Bank, as Co-Syndication Agent and as Co-Agent By: /s/ JERRY J. KANE ---------------------------------- Name: Jerry J. Kane Title: Senior Vice President -17- 18 THE BANK OF NEW YORK, in its individual capacity as a Bank and as Co-Agent By: /s/ JOHN C. LAMBERT ---------------------------------- Name: John C. Lambert Title: Vice President CREDIT AGRICOLE INDOSUEZ By: /s/ DAVID BOUHL and ---------------------------------- /s/ KATHERINE L. ABBOTT ---------------------------------- Name: David Bouhl and Katherine L. Abbott Title: Head of Corporate Banking and First Vice President COMERICA BANK By: /s/ JEFFREY P. BRADLEY ---------------------------------- Name: Jeffrey P. Bradley Title: Vice President BANK OF TOKYO-MITSUBISHI (CHICAGO) By: /s/ HAJIME WATANABE ---------------------------------- Name: Hajime Watanabe Title: Senior Vice President SUNTRUST BANK, ATLANTA By: /s/ MARGARET A. JAKETIC ---------------------------------- Name: Margaret A. Jaketic Title: Vice President -18- 19 By: /s/ JARRETTE A. WHITE, III -------------------------------- Name: Jarrette A. White, III Title: GVP/Group Manager MERCANTILE BANK NATIONAL ASSOCIATION By: /s/ DAVID F. HIGBEE -------------------------------- Name: David F. Higbee Title: Vice President FIRST UNION NATIONAL BANK (formerly known as First Union National Bank of North Carolina) By: /s/ DAVID HALL -------------------------------- Name: David Hall Title: AVP NATIONAL CITY BANK By: /s/ DIEGO TOBON -------------------------------- Name: Diego Tobon Title: Vice President -19- 20 CREDIT LYONNAIS CHICAGO BRANCH By: /s/ MARY ANN KLEMM -------------------------------- Name: Mary Ann Klemm Title: Vice President THE BANK OF NOVA SCOTIA By: /s/ F.C.H. ASHBY -------------------------------- Name: F.C.H. Ashby Title: Senior Manager Loan Operations SOCIETE GENERALE CHICAGO BRANCH By: /s/ JOSEPH A. PHILBIN -------------------------------- Name: Joseph A. Philbin Title: Vice President THE LONG-TERM CREDIT BANK OF JAPAN, LTD. By: /s/ MARK A. THOMPSON -------------------------------- Name: Mark A. Thompson Title: Senior Vice President -20- 21 CIBC, INC. By: /s/ TIMOTHY DOYLE -------------------------------- Name: Timothy Doyle Title: Managing Director CIBC Oppenheimer as Agent BANKERS TRUST COMPANY By: /s/ ROBERT R. TELESCA -------------------------------- Name: Robert R. Telesca Title: Assistant Vice President THE SANWA BANK, LIMITED, CHICAGO BRANCH By: /s/ GORDON HOLTBY -------------------------------- Name: Gordon Holtby Title: Vice President and Manager -21- EX-10.3 30 SECOND AMENDMENT TO MULTICURRENCY CREDIT AGREEMENT 1 EXHIBIT 10.3 GENERAL BINDING CORPORATION SECOND AMENDMENT TO MULTICURRENCY CREDIT AGREEMENT This Second Amendment to Multicurrency Credit Agreement (herein, the "Amendment") is entered into as of May 18, 1998, between General Binding Corporation, a Delaware corporation (the "Company"), each of the Banks party to the Credit Agreement (as such term is defined below), Harris Trust and Savings Bank, as a Bank and in its capacity as agent under the Credit Agreement (the "Administrative Agent") and LaSalle National Bank, The First National Bank of Chicago, The Bank of New York and Credit Agricole Indosuez, each as a Bank and in their respective capacities as Co-Agents under the Credit Agreement. PRELIMINARY STATEMENTS A. The Company and the Banks entered into a certain Multicurrency Credit Agreement, dated as of January 13, 1997 (as amended, the "Credit Agreement"). All capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Credit Agreement. B. The Company has requested that the Banks consent to the issuance by the Company of certain Subordinated Debt, amend certain covenants, waive certain reporting requirements, add and amend certain definitions and make certain other amendments to the Credit Agreement, and the Banks are willing to do so under the terms and conditions set forth in this Amendment. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: SECTION 1. AMENDMENTS. Subject to the satisfaction of the conditions precedent set forth in Section 5 below, the Credit Agreement shall be and hereby is amended as follows: (a) The following definition appearing in Section 8 of the Credit Agreement shall be amended in its entirety and as so amended shall be restated to read as follows: "Change of Control Event" means (a) that at any time Lane Industries, Inc., a Delaware corporation, fails to own and control, either directly or indirectly through one or more of its subsidiaries, a sufficient number of shares of the Company's outstanding Voting Stock to elect a majority of the Board of Directors of the Company or (b) any "Change of Control" (or words of like import), as defined in any agreement or indenture relating to any issue of Subordinated Debt, shall occur, the effect of which is to cause the acceleration of any issue of Subordinated Debt or to enable any holder of Subordinated Debt to cause the Company or any Subsidiary to repurchase, redeem or retire if any Subordinated Debt held by it. (b) The following definitions shall be added to Section 8 of the Credit Agreement in the appropriate alphabetical locations: "1998 Senior Subordinated Debt" means the debt securities to be issued by the Company in an aggregate principal amount not exceeding $250,000,000 and otherwise on the terms or substantially the same terms but in no event more burdensome on the Company in any material respect than the terms contained in the Offering Memorandum dated May 7, 1998 for -1- 2 such debt securities which has previously been forwarded to the Banks; provided, however, that (i) such debt securities shall bear interest prior to maturity or default at a rate per annum not exceeding 12% per annum; and (ii) the proceeds of such debt securities are used in part to repay in full the Company's indebtedness to Lane Industries, Inc. on the Senior Subordinated Note Due 2002 issued by the Company pursuant to that certain Note Purchase Agreement dated as of February 25, 1998. (c) Section 12.1 of the Credit Agreement shall be amended by inserting the following immediately at the end of such Section: If (i) each Guaranty of the 1998 Senior Subordinated Debt by a given Subsidiary is released, (ii) such Subsidiary is not a Material Domestic Subsidiary and was required hereunder to deliver a Subsidiary Guarantee Agreement to the Administrative Agent solely to avoid noncompliance with the provisions added to Sections 12.14 and 12.21 of this Agreement by the Third Amendment hereto and (iii) no Default or Event of Default has occurred and is continuing, then the Banks will release such Subsidiary from its Obligations under such Subsidiary Guarantee Agreement. Each release by the Banks required by this Section of any Subsidiary Guarantee Agreement may be effected by an instrument executed by the Administrative Agent. (d) Sections 12.14 and 12.21 of the Credit Agreement shall be amended by inserting the following immediately at the end of each such Section: The foregoing to the contrary notwithstanding, this Section shall not prohibit Guaranties of the 1998 Senior Subordinated Debt by any Subsidiary if and so long as such Subsidiary is obligated on a Subsidiary Guarantee Agreement it has executed and delivered to the Administrative Agent. (e) Section 12 of the Credit Agreement shall be amended by adding thereto a new Section 12.24 which reads as follows: Section 12.24. Subordinated Indebtedness. The Company shall not, and shall not permit any Subsidiary to: (a) make any voluntary prepayment on, or effect any voluntary redemption of, any Subordinated Debt if (i) at the time of or immediately after giving effect to such prepayment or redemption, any Default or Event of Default would occur or be continuing or (ii) the Company shall not have previously provided the Administrative Agent (which will promptly distribute to the Banks) a Compliance Certificate or Certificates establishing to the reasonable satisfaction of the Administrative Agent that based on projections using reasonable assumptions, the Company will be in compliance with Sections 12.15, 12.16, 12.17 and 12.18 hereof on a proforma basis after giving effect to the relevant prepayment or redemption, as the case may be, as of the close of each of the four fiscal quarters of the Company following the date of -2- 3 such prepayment or redemption (provided that no such Compliance Certificates need be provided for any such prepayment or redemption in any calendar year unless at the time of such prepayment or redemption, and immediately after giving effect thereto, the aggregate amount of prepayments and redemptions of the Subordinated Debt during such year (excluding those made out of the proceeds of equity securities issued by the Company) would exceed $25,000,000 in such year); or (b) make any other payment on account of any Subordinated Debt which is prohibited under the terms of any instrument or agreement subordinating such indebtedness to the prior payment of any Obligations. (f) Schedule 9.2 of the Credit Agreement shall be amended and as so amended shall be restated to read as set forth on Exhibit A hereto. SECTION 2. NEW SUBORDINATED DEBT. Effective upon the acceptance hereof by the Required Banks, the 1998 Senior Subordinated Debt shall be deemed Subordinated Debt. SECTION 3. WAIVERS. The Company has requested that the Banks waive the effect on the Domestic Rate Margin, Eurocurrency Rate Margin and Facility Fee Rate resulting from the Company's failure to deliver the Interim Ibico Certificate within the time period set forth in the definition of "Pricing Date". Upon satisfaction of the conditions precedent set forth in Section 4 hereof, the Banks hereby waive the effect on the Domestic Rate Margin, Eurocurrency Rate Margin and Facility Fee Rate resulting from such late delivery of the Interim Ibico Certificate and agree that such amounts shall each be determined and retroactively effective as if the Interim Ibico Certificate had been timely delivered. The Company has also requested that the Banks waive the Company's noncompliance with Sections 12.6(v) and 12.6(vi) of the Credit Agreement resulting from the Company's failure to update Schedule 9.2 of the Credit Agreement by the deadlines set forth in such Sections to reflect the Subsidiaries added to such Schedule by the provisions of Section 1(f) above. Upon satisfaction of the conditions precedent set forth in Section 4 hereof, the Banks hereby waive such noncompliance with such Sections 12.6(v) and 12.6(vi) resulting from such failure to update Schedule 9.2 to reflect such Subsidiaries by the deadlines set forth in such Sections. The Company has also requested that the Banks waive the Company's noncompliance with Section 12.1 of the Credit Agreement resulting from the Company's failure to provide the Administrative Agent with a Subsidiary Guarantee Agreement executed by Ibico Inc., an Illinois corporation, by the deadline set forth in such Section. Upon satisfaction of the conditions precedent set forth in Section 4 hereof, the Banks hereby waive such noncompliance with such Section 12.1 resulting from such failure to provide such Subsidiary Guarantee Agreement by the deadline set forth in such Section. SECTION 4. CONDITIONS PRECEDENT. The effectiveness of this Amendment is subject to the satisfaction of all of the following conditions precedent: (a) Each Borrower, each Guarantor and the Required Banks shall have executed and delivered this Amendment. (b) The Administrative Agent shall have received a Subsidiary Guarantee Agreement duly -3- 4 executed by Ibico Inc. and the other related documentation described in clause (ii) of the second sentence of Section 12.1 of the Credit Agreement. (c) All legal matters with respect to this Amendment and the Subsidiary Guarantee Agreement contemplated hereby have been resolved in a manner reasonably satisfactory to the Administrative Agent. SECTION 5. REPRESENTATIONS. In order to induce the Banks to execute and deliver this Amendment, the Company hereby represents to each Bank that as of the date hereof, after giving effect to this Amendment, the representations and warranties set forth in Section 9 of the Credit Agreement are and shall be and remain true and correct (except that the representations contained in Section 9.4 shall be deemed to refer to the most recent financial statements of the Company delivered to the Administrative Agent) and the Company is in full compliance with all of the terms and conditions of the Credit Agreement and no Default or Event of Default has occurred and is continuing under the Credit Agreement. SECTION 6. MISCELLANEOUS. (a) Except as specifically amended herein or waived hereby, the Credit Agreement shall continue in full force and effect in accordance with its original terms. Reference to this specific Amendment need not be made in the Credit Agreement, the Notes, or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to or with respect to the Credit Agreement, any reference in any of such items to the Credit Agreement being sufficient to refer to the Credit Agreement as amended hereby. (b) By executing this Amendment in the place provided for that purpose below, each Guarantor hereby consents to the Amendment to the Credit Agreement as set forth herein and confirms that its obligations thereunder remain in full force and effect. Each Guarantor further agrees that the consent of such Guarantor to any further amendments to the Credit Agreement shall not be required as a result of this consent having been obtained. (c) The Company agrees to pay on demand all reasonable costs and expenses of or incurred by the Administrative Agent in connection with the negotiation, preparation, execution and delivery of this Amendment, as and to the extent provided in Section 17.15 of the Credit Agreement. (d) This Amendment may be executed in any number of counterparts, and by the different parties on different counterpart signature pages, all of which taken together shall constitute one and the same agreement. Any of the parties hereto may execute this Amendment by signing any such counterpart and each of such counterparts shall for all purposes be deemed to be an original. This Amendment shall be governed by the internal laws of the State of Illinois. -4- 5 GENERAL BINDING CORPORATION By: /s/ GOVI C. REDDY ------------------------- Name: Govi C. Reddy Title: President GBC BUSINESS EQUIPMENT, INC. By: /s/ GOVI C. REDDY ------------------------- Name: Govi C. Reddy Title: President GBC INTERNATIONAL, INC. By: /s/ GOVI C. REDDY ------------------------- Name: Govi C. Reddy Title: President PRO-TECH ENGINEERING CO., INC. By: /s/ GOVI C. REDDY ------------------------- Name: Govi C. Reddy Title: President SICKINGER COMPANY By: /s/ GOVI C. REDDY ------------------------- Name: Govi C. Reddy Title: President -5- 6 U.S. RING BINDER CORP. By: /s/ GOVI C. REDDY ------------------------- Name: Govi C. Reddy Title: President VELOBIND, INCORPORATED By: /s/ GOVI C. REDDY ------------------------- Name: Govi C. Reddy Title: President GBC GENERAL BINDING (NEDERLAND) B.V. By: GENERAL BINDING CORPORATION Its: Attorney-in-Fact By: /s/ GOVI C. REDDY ------------------------- Name: Govi C. Reddy Title: President Accepted and agreed to as of the date and year last above written. HARRIS TRUST AND SAVINGS BANK, in its individual capacity as a Bank and as Administrative Agent By: /s/ JOSEPH WHITNEY ------------------------- Name: Joseph Whitney Title: Vice President -6- 7 LASALLE NATIONAL BANK, in its individual capacity as a Bank and as Co-Agent By: /s/ JAMES M. MINICH: ---------------------------------- Name: James A. Minich Title: Vice President THE FIRST NATIONAL BANK OF CHICAGO, in its individual capacity as a Bank, as Co-Syndication Agent and as Co-Agent By: /s/ JERRY J. KANE ---------------------------------- Name: Jerry J. Kane Title: Senior Vice President THE BANK OF NEW YORK, in its individual capacity as a Bank and as Co-Agent By: /s/ JOHN C. LAMBERT ---------------------------------- Name: John C. Lambert Title: Vice President CREDIT AGRICOLE INDOSUEZ By: /s/ DAVID BOUHL AND ---------------------------------- KATHERINE L. ABBOTT -------------------------------------- Name: David Bouhl and Katherine L. Abbott Title: First Vice President, Head of Corporate Banking Chicago; and First Vice President -7- 8 COMERICA BANK By: /s/ JEFFREY P. BRADLEY --------------------------- Name: Jeffrey P. Bradley Title: Vice President BANK OF TOKYO-MITSUBISHI (CHICAGO) By: /s/ HAJIME WATANABE --------------------------- Name: Hajime Watanabe Title: Deputy General Manager SUNTRUST BANK, ATLANTA By: /s/ SHELLEY M. BROWNE --------------------------- Name: Shelley M. Browne Title: Vice President -8- 9 By: /s/ MARGARET A. JAKETIC ---------------------------- Name: Margaret A. Jaketic Title: Vice President MERCANTILE BANK NATIONAL ASSOCIATION By: /s/ DAVID F. HIGBEE ---------------------------- Name: David F. Higbee Title: Vice President FIRST UNION NATIONAL BANK (formerly known as First Union National Bank of North Carolina) By: /s/ JORGE GONZALEZ ---------------------------- Name: Jorge Gonzalez Title: Senior Vice President NATIONAL CITY BANK By: /s/ DIEGO TOBON ---------------------------- Name: Diego Tobon Title: Vice President -9- 10 CREDIT LYONNAIS CHICAGO BRANCH By: /s/ MARY ANN KLEMM ---------------------------- Name: Mary Ann Klemm Title: Senior Manager, Loan Operations THE BANK OF NOVA SCOTIA By: /s/ F.C.H. ASHBY ---------------------------- Name: F.C.H. Ashby Title: Senior Manager, Loan Operations SOCIETE GENERALE CHICAGO BRANCH By: /s/ JOSEPH A. PHILBIN ---------------------------- Name: Joseph A. Philbin Title: Vice President THE LONG-TERM CREDIT BANK OF JAPAN, LTD. By: /s/ MARK A. THOMPSON ---------------------------- Name: Mark A. Thompson Title: Senior Vice President and Team Leader -10- 11 CIBC, INC. By: CIBC Oppenheimer Corp., as agent By: /s/ TIMOTHY DOYLE ---------------------------- Name: Timothy Doyle Title: Managing Director BANKERS TRUST COMPANY By: /s/ ROBERT R. TELESCA ---------------------------- Name: Robert R. Telesca Title: Assistant Vice President THE SANWA BANK, LIMITED, CHICAGO BRANCH By: /s/ GORDON R. HOLTBY ---------------------------- Name: Gordon R. Holtby Title: Vice President and Manager -11- 12 EXHIBIT A SCHEDULE 9.2 LIST OF SUBSIDIARIES(1)
Percent Jurisdiction of Investment Owned By Ownership Organization ---------- -------- --------- --------------- Allfax UK, Ltd. GBC United Kingdom Holdings, 100 United Kingdom Ltd. Allfax Paper Products, Ltd. GBC United Kingdom Holdings, 100 United Kingdom Ltd. Anillos Plasticos de Mexico S.A. Ibico Inc. 100 Mexico Baker School Specialty Co., Inc. General Binding Corporation 100 Massachusetts Compania Papelera Marmo S.V. Grupo GBC S.A. de C.V. 96.44 Mexico U.S. RingBinder Corp. 1.78 GBC International, Inc. VeloBind, 0.89 Incorporated 0.89 Federbush de Mexico GBC Mexicana S.A. de C.V. 100 Mexico (2)GBC Australia Pty. Ltd. GBC International, Inc. 100 Australia GBC Handelsgesellschaft M.b.h. GBC International, Inc. 100 Austria
- ------------------ (1) (2) Denotes Significant Subsidiary -12- 13 GBC General Binding (Belgie) GBC Nederland B.V. 100 Belgium N.V. *GBC Business Equipment Inc. General Binding Corporation 100 Florida *GBC Canada, Inc. GBC International, Inc. 100 Canada GBC Deutschland GmbH General Binding Corporation 100 Germany *GBC/Fordigraph Pty. Ltd. GBC Australia Pty. Ltd. 100 Australia GBC France S.A. GBC Schweiz A.G. 100 France GBC India Holdings Corp. GBC International, Inc. 100 Nevada GBC International Export Sales GBC International, Inc. 100 Barbados Corp. *GBC International, Inc. GBC Business Equipment Inc. 100 Nevada GBC International Services GBC International, Inc. General 99 Belgium S.P.R.L. Binding Corporation 1 *GBC Japan K.K. GBC International, Inc. 100 Japan GBC Metals Corp. General Binding Corporation 100 Nevada GBC Mexicana S.A. de C.V. Grupo GBC S.A. de C.V. 96.44 Mexico U.S. RingBinder Corp. 1.78 GBC International, Inc. VeloBind, 0.89 Incorporated 0.89 *GBC Nederland B.V. GBC International, Inc. 100 Holland
-13- 14 GBC New Zealand Ltd. GBC Australia Pty. Ltd. 100 New Zealand GBC Poland GBC International, Inc. General 98.75 Poland Binding Italia S.p.A. 1.25 GBC Sales & Services GBC International, Inc. 100 Canada GBC Schweiz A.G. GBC International, Inc. 100 Switzerland GBC Services PTY Ltd. GBC Australia PTY Ltd. 100 Australia GBC Singapore Pte. Ltd. GBC International, Inc. 100 Singapore *GBC United Kingdom Holdings, GBC International, Inc. General 99.9 United Kingdom Ltd. Binding Corporation 0.1 *GBC United Kingdom, Ltd. GBC United Kingdom Holdings, 100 United Kingdom Ltd. *General Binding Italia S.p.A. GBC International, Inc. 100 Italy Grupo GBC S.A. de C.V. General Binding Corporation 38.455 Mexico GBC International, Inc. 20.517 U.S. RingBinder Corp. 20.517 VeloBind, Incorporated 20.511 Ibico AG GBC International, Inc. 100 Switzerland Ibico Benelux B.V. Ibico GmbH 100 Netherlands Ibico Canada Inc. Ibico Inc. 100 Canada Ibico Chile S.A. Ibico GmbH 100 Chile
-14- 15 Ibico Deutschland GmbH Ibico GmbH 100 Germany Ibico France S.A. Ibico GmbH 100 France *Ibico GmbH GBC International, Inc. 100 Switzerland Ibico Holdings Singapore Pte. Ibico GmbH 100 Singapore Ltd. Ibico Iberia, S.A. Ibico GmbH 100 Spain *Ibico Inc. Ibico GmbH 100 Illinois Ibico Italia S.r.l. Ibico GmbH 100 Italy Ibico Limited Ibico GmbH 100 United Kingdom Ibico Portguesa Lda. Ibico GmbH 100 Portugal Ibico Scandinavia AB Ibico GmbH 100 Sweden Ibico Singapore Pte. Ltd. Ibico Holdings Singapore Pte. 100 Singapore Ltd. Inter Binding GmbH Ibico GmbH 100 Germany Mirabeau Contract Sales, Ltd. GBC United Kingdom Holdings, 100 United Kingdom Ltd. PBB&R S.A de C.V. GBC International, Inc. 97 Mexico U.S. RingBinder Corp. VeloBind, 2 Incorporated 1 Printing Wire Supplies Limited GBC International, Inc. 100 Ireland
-15- 16 *Pro-Tech Engineering Co., Inc. General Binding Corporation 100 Wisconsin *Sickinger Company General Binding Corporation 100 Michigan *U.S. RingBinder Corp. General Binding Corporation 100 Massachusetts *VeloBind, Incorporated General Binding Corporation 100 Delaware
-16- EX-10.4 31 STOCK PURCHASE AGREEMENT DATED OCTOBER 17, 1997 1 EXHIBIT 10.4 STOCK PURCHASE AGREEMENT BETWEEN GENERAL BINDING CORPORATION AND DR. U. WOLFENSBERGER
Table of Content 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2 Sale and Purchase of Shares, Consideration . . . . . . . . . . . . 3 2.1 Sale and Purchase of Shares . . . . . . . . . . . . . . . . . . . 3 2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.3 Financial Statements; Audit of the Company's 1997 Financial Statements . . . . . . . . . . . ... . . . . . . . . . . 3 2.4 Payment of the Purchase Price; Escrow of the Holdback . . . . . . 4 2.5 Procedures for Final Determination of Net Working Capital Amount and Funded Debt at Closing . . . . . . . . . . . . 5 2.6 Net Working Capital Amount and Funded Debt Amount Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.7 The EBITDA Adjustment . . . . . . . . . . . . . . . . . . . . . 7 3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3.1 Closing Date of Transaction . . . . . . . . . . . . . . . . . . 8 3.2 Conditions Precedent to Closing . . . . . . . . . . . . . . . . 8 3.3 Transfer of Shares and Payment of Purchase Price . . . . . . . . 9 3.4 Right to Rescind the Agreement . . . . . . . . . . . . . . . . . 9 4 Representations and Warranties of Seller . . . . . . . . . . . . 10 4.1 Seller's Power and Authority . . . . . . . . . . . . . . . . . . 10
2 - 2 - 4.2 Organization and Qualification . . . . . . . . . . . . . . . . . 11 4.3 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . 11 4.4 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 4.5 Consolidated Financial Statement . . . . . . . . . . . . . . . . 11 4.6 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . 12 4.7 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . 12 4.8 Condition of Buildings, Machinery and Equipment . . . . . . . . 12 4.9 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 4.10 Absence of Adverse Changes . . . . . . . . . . . . . . . . . . . 13 4.11 Permits and Authorities . . . . . . . . . . . . . . . . . . . . 14 4.12 Claims and Litigation . . . . . . . . . . . . . . . . . . . . . 14 4.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 4.14 Agreements with Third Parties . . . . . . . . . . . . . . . . . 14 4.15 Intellectual Property/Know-how . . . . . . . . . . . . . . . . . 14 4.16 Pensions/Employees . . . . . . . . . . . . . . . . . . . . . . . 15 4.17 Compliance with the Law . . . . . . . . . . . . . . . . . . . . 15 4.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 15 4.19 Product Liability/Warranty Claims . . . . . . . . . . . . . . . 15 4.20 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . 16 4.21 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 4.22 Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . . 16 4.23 Seller's Costs . . . . . . . . . . . . . . . . . . . . . . . . . 16 4.24 No Further Warranties . . . . . . . . . . . . . . . . . . . . . 16 5 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 5.1 Term of Warranties and Representations . . . . . . . . . . . . . 16
3 - 3 - 5.2 Notification and Arbitration . . . . . . . . . . . . . . . . . . 17 5.3 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 5.4 Surety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 5.5 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . 17 5.5.1 De Minimis . . . . . . . . . . . . . . . . . . . . . . . 17 5.5.2 Maximum Amount . . . . . . . . . . . . . . . . . . . . . 18 5.5.3 Exempt Representations and Warranties . . . . . . . . . 18 5.5.4 Exclusion of Liability . . . . . . . . . . . . . . . . . 18 5.6 Procedure with Third Parties and Authorities . . . . . . . . . . 19 6 Resignations of Directors and Auditors . . . . . . . . . . . . . 19 7 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 7.1 Covenant not to Compete . . . . . . . . . . . . . . . . . . . . 19 7.2 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . 20 7.3 Termination of Agreements between the Companies and Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 7.4 Information of Employees . . . . . . . . . . . . . . . . . . . . 21 7.5 Employment of Seller . . . . . . . . . . . . . . . . . . . . . . 22 7.6 Seller's Cooperation . . . . . . . . . . . . . . . . . . . . . . 22 7.7 Transition Assistance . . . . . . . . . . . . . . . . . . . . . 22 7.8 Environmental Issues . . . . . . . . . . . . . . . . . . . . . . 22 8 Transfer of Management Responsibility . . . . . . . . . . . . . 23 9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 10 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 24 10.1 Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 10.2 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 10.3 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4 - 4 - 10.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 25 10.5 Binding on Successors . . . . . . . . . . . . . . . . . . . . . 25 10.6 Announcements . . . . . . . . . . . . . . . . . . . . . . . . . 25 10.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 11 Governing Law and Arbitration . . . . . . . . . . . . . . . . . 25 11.1 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 25 11.2 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5 - 1 - STOCK PURCHASE AGREEMENT between Dr. Ueli Wolfensberger, Seestrasse 79, CH-8803 Ruschlikon (Switzerland) "Seller" and General Binding Corporation, One GBC Plaza, Northbrook, Illinois 60062 (USA) "Purchaser" WHEREAS, IBICO, Seestrasse 346, CH 8038 Zurich (Switzerland) (hereinafter referred to as the "Company") has a share capital of CHF 2,000,000.--, divided into 400 bearer shares with a nominal value of CHF 5,000.-- each; WHEREAS, Seller owns all the shares of the Company and/or has the right to transfer full ownership in such shares; WHEREAS, Purchaser intends to purchase all the shares of the Company and Seller intends to sell or cause to be sold to Purchaser all of the Shares of the Company; WHEREAS, Purchaser, in a due diligence review, has analyzed the Due Diligence Material; NOW, THEREFORE, the Parties have come to the following agreement. 6 - 2 - ARTICLE 1 DEFINITIONS As used in this Agreement, the following terms have the following meaning unless the context requires otherwise: "AGREEMENT" shall mean this Agreement as amended from time to time pursuant to art. 10.4 of this Agreement. "CHF" shall mean Swiss Francs, being the lawful currency of Switzerland. "CLOSING" shall mean the consummation of the transactions described in art. 2 of this Agreement in accordance with art. 3 of this Agreement. "CLOSING DATE" shall mean the date defined in art. 3.1 of this Agreement. "COMPANIES" shall mean the Company and the Subsidiaries. "COMPANY" shall mean IBICO AG, Seestrasse 346, 8038 Zurich (Switzerland). "DUE DILIGENCE MATERIAL" shall mean the material set forth in Schedule 1.1 which has been submitted to Purchaser for the due diligence review. "PARTY" OR "PARTIES" shall mean one or both parties to this Agreement. "PURCHASE PRICE" shall mean the purchase price defined in art. 2.2 of this Agreement. "SELLER'S KNOWLEDGE" shall mean the knowledge of Seller after due and diligent consultation with Mr. Balmer, Mr. Houthuys, Mr. Loibl, Mr. Baumann, Mr. Frohlich, Mr. van den Nieuwenhof, Mr. Luety, Mr. Hedman and Mr. O. Wolfensberger. "SHARES" shall mean 400 bearer shares of the Company with a nominal value of CHF 5,000.-- each. "SUBSIDIARIES" shall mean the companies set forth in Schedule 1. 2. "SURETY" shall mean the surety ("Solidarburgschaft") as defined in art. 5.4 of this Agreement. 7 - 3 - "TAXES" shall mean all tax liabilities whether actual or deferred including but not limited to those measured by or referred to as income taxes, sales taxes, use taxes, VAT, gross receipts taxes, any turnover or cost-related taxes, franchise taxes, profits taxes, license taxes, withholding taxes, stamp duties and any other transfer duties, payroll taxes, social security taxes and contributions, ad valorem taxes, employment taxes, excise taxes, severance taxes, occupation taxes, premium taxes, windfall profit taxes, real estate capital gain taxes, real estate transfer taxes and property taxes and all other levies, customs, taxes and public duties, assessments or charges of any kind, together with any interest and any penalties, additions to tax or additional amounts imposed by any governmental authority. "TAX RETURN" shall mean any return, report or statement required to be filed with any governmental authority with respect to Taxes. ARTICLE 2 SALE AND PURCHASE OF SHARES, CONSIDERATION 2.1 SALE AND PURCHASE OF SHARES. Subject to the terms and conditions defined herein, Seller hereby agrees to sell to Purchaser and Purchaser agrees to buy from Seller the Shares, i.e. 400 bearer shares of the Company with a nominal value of CHF 5,000.-- each. 2.2 PURCHASE PRICE. The aggregate purchase price for the Shares (the "Purchase Price") paid by Purchaser to the Seller (which shall be subject to adjustment pursuant to this art. 2) shall be equal to CHF 188,400,000.-- (Swiss Francs One Hundred Eighty eight Million four hundred thousand) less the sum of (i) the amount of the Company's Funded Debt Amount (as defined below) at Closing, and (ii) the amount by which the Company's Net Working Capital Amount (as defined below) at Closing, as determined in accordance with art. 2.5 and 2.6 below, is less than CHF 59,000,000.-- and (iii) plus or minus the EBITDA adjustment as defined in art. 2.7 of this Agreement. 2.3 FINANCIAL STATEMENTS; AUDIT OF THE COMPANY'S 1997 FINANCIAL STATEMENTS. Seller shall cause the company's unaudited consolidated financial statements for the nine (9) months ended September 30, 1997 to be prepared on a basis consistent with the accounting principles employed in the preparation of the Company's consolidated financial statements for its 1996 fiscal year and deliver such 8 - 4 - statements to Purchaser by November 20, 1997. Further, Seller shall provide Purchaser by the 20th day of each month all monthly reports and other information concerning the Companies and their operations for the preceding month. Seller shall also cause the consolidated financial statements of the Company to be audited by KPMG Peat Marwick for the twelve (12) month period ended December 31, 1997 (the "1997 Audit"). Such audit shall be prepared using the accounting principles employed in the audit of the 1996 consolidated financial statements of the Company. The 1997 Audit shall be prepared at the Company's cost and expense and shall be disclosed to Purchaser upon receipt by Seller. 2.4 PAYMENT OF THE PURCHASE PRICE; ESCROW OF THE HOLDBACK a) Four (4) business days prior to the Closing, the Seller shall notify Purchaser in writing of its good faith estimate of (i) the Net Working Capital Amount as of the Closing Date (the "Estimated Net Working Capital Amount"), (ii) the Company's estimated consolidated Funded Debt Amount at Closing (the "Estimated Funded Debt Amount") and (iii) the EBITDA Adjustment (the "Estimated EBITDA Adjustment") . The Estimated Purchase Price shall be equal to CHF 188,400,000.-- less the sum of (i) the Estimated Funded Debt Amount and (ii) the amount, if any, by which CHF 59,000,000.-- exceeds the Estimated Net Working Capital Amount plus or minus, as the case may be, (iii) the Estimated EBITDA Adjustment. b) At the Closing, Purchaser shall pay the Estimated Purchase Price, less a holdback (the "Escrow Holdback") of CHF 8,000,000.-- (such amount being paid at Closing is hereinafter referred to as the "Closing Payment") by wire transfer to an account or accounts designated by the Seller at least two (2) business days prior to the Closing. At Closing, the Escrow Holdback shall be deposited with Seller's law firm, Baker & McKenzie (the "Escrow Agent") in escrow pending disposition as provided in the Escrow Instructions attached hereto as Schedule 2.4. Except as set forth in art. 2.4 c) , the economic benefit of such Escrow Holdback shall be for the account of the Seller with all earnings thereon accruing for his benefit. c) Upon the final determination of the Net Working Capital Amount and the Funded Debt Amount at Closing pursuant to art. 2.5 below and the EBITDA Adjustment pursuant to art. 2.7 below, the Purchaser and Seller shall 9 - 5 - recompute the Purchase Price based upon the actual net Working Capital Amount and actual Funded Debt amount at Closing and the actual EBITDA Adjustment, as finally determined. If the Purchase Price as so determined is greater than the Closing Payment but lower than the Estimated Purchase Price, within three (3) business days after such final determination the Parties shall cause the Escrow Agent to pay to Seller the amount by which the Purchase Price exceeds the Closing Payment, together with a pro-rata share of the earnings on the Escrow Holdback and to pay to Purchaser the amount by which the Estimated Purchase Price exceeds the Purchase Price together with a pro-rata share of the earnings on the Escrow Holdback. If the Purchase Price as so determined is greater than the Estimated Purchase Price within three (3) business days after such final determination the Parties shall cause the Escrow Agent to pay to Seller the Escrow Holdback plus earnings thereon and Purchaser shall pay to Seller the difference between Purchase Price and Estimated Purchase Price plus 5% interest (p.a.) on such additional payment (interest to be calculated from the Closing Date until the final determination of the Purchase Price) . If the Purchase Price as so determined is less than the Closing Payment within three (3) business days after such final determination, the Parties shall cause the Escrow Agent to pay to Purchaser the Escrow Holdback plus earnings thereon and Seller shall pay to Purchaser the amount by which the Closing Payment exceeds the Purchase Price together with 5% interest (p.a.) on the sum repaid (interest to be calculated from the Closing Date until the final determination of the Purchase Price) . Final determination and payment of the Purchase Price shall be made without regard to any claims or offsets that either Party may have asserted against the other. 2.5 PROCEDURES FOR FINAL DETERMINATION OF NET WORKING CAPITAL AMOUNT AND FUNDED DEBT AT CLOSING. Within forty-five (45) business days after the Closing Date, Purchaser shall prepare and deliver to the Seller at Purchaser's expense a consolidated balance sheet of the Company for the Seller as of the opening of business on the Closing Date, audited by Purchaser's independent certified public accountant, together with a statement setting forth Purchaser's determination of the Net Working Capital Amount and the Funded Debt Amount of the Company at Closing. Within twenty-one (21) days after receipt of such items, the Seller 10 - 6 - shall deliver to Purchaser a detailed written statement describing its objections, if any, to such balance sheet and determination of the Net Working Capital Amount and the Funded - Debt Amount at Closing. If the Seller does not raise any objections within the twenty-one (21) day period, the audited balance sheet and Purchaser's determination of the net Working Capital Amount and the Funded Debt Amount at Closing shall become final and binding upon all parties. Upon request by the Seller at any time after receipt of the aforementioned balance sheet and statement, Purchaser shall make available to the Seller and its accountants and other representatives the work papers used in preparing the balance sheet and in determining Purchaser's calculation of the Net Working Capital Amount and the Funded Debt Amount at Closing and such other documents as the Seller may reasonably request in connection with its review of the Net Working Capital Amount and the Funded Debt Amount at Closing. If the Seller raises any objections, Purchaser and Seller shall use reasonable efforts to resolve any such disputes. If a final resolution is not obtained within twenty-one (21) days after the Seller shall have submitted its objections to Purchaser, any remaining disputes shall be resolved by Deloitte Touche Tomahtsu, whose decision regarding the determination of Net Working Capital Amount and Funded Debt at Closing shall be final and binding upon the Parties as a "Schiedsgutachten". Each Party bears 50% of the costs and fees of Deloitte Touche Tomahtsu. 2.6 NET WORKING CAPITAL AMOUNT AND FUNDED DEBT AMOUNT DEFINITIONS. "Net Working Capital Amount" shall be determined as of opening of business on the Closing Date and shall be equal to the combined current assets of the Companies (excluding cash and cash equivalents) less the combined current liabilities of the Companies (excluding from current liabilities the current portion of any Funded Debt). The Company's Closing Balance Sheet shall be prepared, and the Net Working Capital Amount and Funded Debt Amount at Closing shall be determined in a manner consistent with those used in preparing the Company's consolidated balance sheet as of December 31, 1996 (the "1996 Balance Sheet") which is attached hereto as Schedule 4.5 except that any balance sheet item reflected on the Company's Closing Balance Sheet which was not reflected on the 1996 Balance Sheet shall be determined in accordance with generally accepted international accounting standards. "Funded Debt Amount" shall be determined as of opening of business on the Closing Date and shall be equal to all interest- bearing debt obligations of the Companies, including interest bearing 11 - 7 - obligations for borrowed money and US purchase-money mortgages and capitalized lease obligations (i.e. lease obligations which according to the accounting principles set forth in Schedule 4.5.a have to be capitalized) whether or not normally set forth on the Companies' balance sheets (but exclusive of inter-Companies debt) less the amount of cash and cash equivalents excluded in the determination of the Net Working Capital Amount. 2.7 THE EBITDA ADJUSTMENT. If EBITDA in the year 1997 deviates from CHF 15,600,000.-- by greater than CHF 800,000.(plus or minus), the Purchase Price will be adjusted in accordance with the following formula: Adjustment = 2 x (actual EBITDA - CHF 15,600,000.--). EBITDA is equal to the Company's consolidated Operating Profit (before interest and taxes) plus depreciation and amortization and the costs identified in art. 10.1 herein in excess of CHF 594,000.-- and without regard to (a) any losses which are covered by a warranty contained in art. 4 of this Agreement and (b) any non- operational expenses incurred through the restructuring of IBICO, Inc. ("Restructure Expense"). EBITDA is calculated by the Seller on the basis of the 1997 audited Financial Statement prepared in accordance with art. 2.3 of this Agreement except that (i) foreign currencies (currencies other than CHF) shall be expressed in CHF utilizing the exchange rates (the "Forecast 2 Rates") used by the Company in the preparation of the Management Profit and Loss Account and identified by IBICO Control / Finance as PL51297, 15-09-97, 19:12 see schedule 2.7 attached) and (ii) changes in IAS accounting standards effective after December 31, 1996 shall be disregarded and the financial results for the year 1997 and the calculation of the operating Profit (before interest and taxes) shall be presented in a format consistent with the 1996 audited IAS-consolidated financial statements. "Restructure Expense" shall be limited to those expenses incurred by IBICO, Inc. in connection with the termination of certain IBICO, Inc. management personnel, the retention or relocation of successors to such personnel, the termination of personnel employed in IBICO, Inc.'s Elk Grove office and other incidental and consequential expense related to the foregoing which totaled USD 1,146,000.-- as of August 31, 1997 and which shall not exceed USD 1,200,000.-- for the year ended December 31, 1997. Seller shall cause KPMG Fides to issue a statement describing the EBITDA and the EBITDA Adjustment and transmit such Statement of KPMG Fides together with the 1997 audited statement immediately after receipt to Purchaser. The dispute 12 - 8 - resolution mechanism described in art. 2.5 above shall also apply to the determination of the EBITDA Adjustment. ARTICLE 3 CLOSING 3.1 CLOSING DATE OF TRANSACTION. The transaction described in this Agreement shall be consummated at the offices of Baker & McKenzie, Zollikerstrasse 225, 8008 Zurich, on a date which is 10 days after the conditions precedent set forth in art. 3.2 of this Agreement have been met but not before January 9, 1998 unless extended pursuant to the terms hereof. 3.2 CONDITIONS PRECEDENT TO CLOSING. The obligation of Purchaser to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions on or before the Closing Date. a) All governmental filings, authorizations and approvals that are required for the consummation of the transactions contemplated hereby shall have been duly made and obtained on terms and conditions reasonably satisfactory to Purchaser, including all filings required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976 of the United States of America or the EC Merger Regulation as amended or under the law of any other jurisdiction in which Purchaser or Seller does business having authority over the transactions contemplated hereby, and the waiting period, if any, required by such statutes or regulations shall have terminated or expired. b) No proceeding brought by any third party or governmental entity shall be pending or threatened which seeks any injunction, restraining order or other order which would prohibit consummation of the transactions contemplated hereby or materially impair the ability of Purchaser to own and operate the business and the assets of the Company and its Subsidiaries after the Closing Date. The Parties shall use all reasonable efforts to take, or cause to be taken, and to do, or cause to be done, all things necessary, proper or advisable consistent with applicable law to cause the fulfillment on or prior to the Closing Date of all of the above conditions, including, in 13 - 9 - particular, making all necessary filings with any applicable governmental entity and cooperating with each other in connection with such filings and any other responses to governmental entities; provided, however, that in no event shall Purchaser be obligated to consider, or consummate, any sale, disposition, segregation or other arrangement affecting any assets or properties owned by either Purchaser or its affiliates, on the one hand, or by the Company and its Subsidiaries, on the other hand, on account of the transaction contemplated herein, or any other action which would limit the freedom of Purchaser and its affiliates to own and operate their business, assets and properties as they see fit. Seller shall assist Purchaser free of charge in the pertinent procedures and, in particular, provide the necessary information on the Companies for filings to be made by Purchaser. 3.3 TRANSFER OF SHARES AND PAYMENT OF PURCHASE PRICE. On the Closing Date Seller shall deliver to Purchaser: - 400 bearer shares of the Company with a nominal value of CHF 5,000.-- each; - the Surety; - a certificate in form reasonably satisfactory to Purchaser stating that (i) all representations and warranties made by Seller contained in this Agreement are true and correct at and as of the Closing Date, as though the Closing Date was substituted for the date of this Agreement, and (ii) that Seller has performed or complied with all covenants, agreements and conditions required by this Agreement to be performed and satisfied by him on or prior to Closing. At the Closing, Purchaser shall pay the Closing Payment to Seller and CHF 8,000,000.-- to Escrow Agent as provided in art. 2.4(b) of this Agreement and the parties shall take the additional actions called for by art. 2 above to be accomplished on the Closing Date. 3.4 RIGHT TO RESCIND THE AGREEMENT. a) Except in a situation where the Seller may rescind this Agreement due to Purchaser's unwillingness or inability to close the transactions contemplated by this Agreement as a result of the failure to satisfy any condition expressed in art. 3.2 a), or b), which gives 14 - 10 - rise to the rescission right of Seller set forth in art. 3.4 b) below, Seller may rescind this Agreement, if the Estimated Purchase Price is not paid on the Closing Date to Seller or if the other actions to be taken by Purchaser on or before the Closing Date as provided for in art. 2.4 and art. 3.3 of this Agreement do not occur, provided that all conditions to Purchaser's obligation to perform have been satisfied. In such case Purchaser shall pay to Seller CHF 4,000,000.-- (Swiss francs four million) and compensate Seller for any further damage in excess of such amount caused by the fact that the transaction described in this Agreement has not been consummated: provided, however, such additional compensation shall not exceed twenty percent (20%) of the Purchase Price. b) Seller or Purchaser may rescind this Agreement in the event the Closing does not occur by April 30, 1998, as a result of the failure to satisfy any condition expressed in art. 3.2 a) and b). In such case Purchaser shall pay to Seller CHF 7,250,000.-- (Swiss Francs seven millions two hundred fifty thousand) in the form of liquidated damages and this Agreement will forthwith become void and there will be no further obligation or liability on the part of any party hereto or any of their respective directors, officers, employees or stockholders as a result of such rescission. c) Purchaser may rescind this Agreement, if the Shares and the Surety are not remitted to Purchaser on the Closing Date as provided in art. 3.3 of this Agreement. In such case Seller shall pay to Purchaser CHF 4,000,000.-- (Swiss francs four million) and compensate Purchaser for any further damage in excess of such amount caused by the fact that the transaction described in this Agreement has not been consummated. ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants on his own behalf and for the Companies as of the date of this Agreement as follows: 4.1 SELLER'S POWER AND AUTHORITY. Seller has the legal right, and full power, authority and capacity to enter into this Agreement and to carry out his obligations hereunder without 15 - 11 - violating any agreement, legal provision, contract, property rights of a third person or obligations under law. 4.2 ORGANIZATION AND QUALIFICATION. The Companies are duly organized and validly existing under the laws under which they have been incorporated and have full right and authority to own and to operate their properties and to engage in the business in which they are now engaged. Schedule 4.2 contains the memorandum or articles of incorporation of the Companies as in force as of the date hereof. 4.3 CAPITAL STRUCTURE. As of the date hereof , the Companies have the capital set forth in Schedule 4.3. No further capital, non-voting stock, convertible securities warranties, options, subscription or similar rights in the Companies have been or will by the Closing Date be created or issued or agreed to be issued. All the Shares sold pursuant to art. 2.1 of this Agreement and all shares of the Subsidiaries have been validly issued and fully paid in and are non-assessable. 4.4 OWNERSHIP. Seller has full right and capacity to transfer and sell complete title to the Shares. Seller is not a party to any option, warrant, purchase right, or other contract or commitment that could require Seller to sell, transfer or otherwise dispose of any of the Shares. Upon the delivery of the Shares provided for in art. 3.3 of this Agreement, Purchaser will receive good and valid title to the Shares, free and clear of all liens, encumbrances or other rights of third parties. Seller warrants, furthermore, that the Company owns all of the shares of the Subsidiaries as set forth in Schedule 4.4, free and clear of all liens, encumbrances, options, charges, equities and claims arising from any privilege, pledge or security arrangement. 4.5 CONSOLIDATED FINANCIAL STATEMENT. Schedule 4.5 contains the audited consolidated balance sheet and the audited consolidated profit and loss statement of the Company as of December 31, 1996 (the Financial Statement) - This Financial Statements are in accordance with the accounting and consolidation principles described in Schedule 4.5a and in accordance with such principles show a true and fair view of the consolidated financial position of the Company as of December 31, 1996 and for their respective periods then 16 - 12 - ended and do not understate any liabilities, which have to be reported on the financial statements in accordance with the accounting and consolidation principles described in Schedule 4.5 a). Except as disclosed in the Notes to the Financial Statement set forth in Schedule 4.5 and except for intercompany transactions the Companies have not issued any guarantees, sureties or entered into similar transactions for the benefit of any third parties (excluding warranties for goods sold and services rendered as well as minimum purchase or sale obligations). 4.6 ACCOUNTS RECEIVABLE. Except to the extent of the reserve for bad debts shown in the Financial Statement and to the extent that accounts receivables have been written-off or written-down, all of the accounts receivable of the Companies constitute valid receivables, have been incurred in the ordinary course of business, are fully collectible in the stated amounts and are not subject to any set-off or counterclaim, other than set-off for counterclaims which have been recorded as liabilities in the Financial Statement set forth in Schedule 4.5 or which have come into existence after the date of such Financial Statement. 4.7 TITLE TO ASSETS. The Companies are the owners of all assets of any kind reflected in the Financial statement or reflected in the books of the Companies as being owned by them as of the respective account date, free and clear of any liens, encumbrances, restrictions and other rights of any kind, including any right of first refusal (financial leases which are recorded as assets on the Financial Statement are exempt from such warranty). The Companies have neither executed nor authorized the execution of any contract or option for the sale, leasing or other use of any kind, of any of its properties or assets other than in the ordinary course of their business as conducted at the date hereof. 4.8 CONDITION OF BUILDINGS, MACHINERY AND EQUIPMENT. The Company's and each Subsidiary's buildings, machinery, equipment and other tangible personal property are - their age properly taken into account - in good condition and repair in all material respects, have been maintained in accordance with normal industry standards and are usable in the ordinary course of business. The Company or its Subsidiaries own or lease under valid leases all buildings, 17 - 13 - machinery, equipment and other tangible assets necessary for the conduct of their business. 4.9 INVENTORY. All inventories consist of a quality and quantity usable and salable in the ordinary course of business or have been reserved for in accordance with the principles described in Schedule 4.5. Inventory is valued using the first-in, fist-out method of valuation. Except to the extent it has been reserved for, no inventory is obsolete or damaged or includes used, returned or previously leased or sold goods. If the stock of a particular item of finished goods (excluding replacement and repair parts) exceeds the projected sales for the next 18 months such excess amount shall be considered as obsolete. In such case Purchaser shall transfer such excess stock (against payment of warranty claim) to Seller who may sell such stock freely. For raw material and components the excess above 18 months of projected sales shall not be treated as obsolete but shall be written down to 50% of cost. 4.10 ABSENCE OF ADVERSE CHANGES. Seller represents and warrants that in the period between December 31, 1996, and the date hereof there has not been any material adverse change in the business, financial condition, operations, or results of operations of the Companies. Without limiting the generality of the foregoing, since that date, the Companies: - have conducted their business in the ordinary course and have not entered into any material contracts, contract changes or commitments and have not sold, assigned or transferred any tangible or intangible assets other than in the ordinary course of business, unless disclosed in Schedule 4.10; - have not suffered any material damage, destruction or loss by fire or other casualty whether or not covered by insurance unless disclosed in Schedule 4.10; - have not made any declaration or setting aside or payment of any dividend or any other distribution of profit or any direct or indirect redemption, purchase or other acquisition of any quotas or shares of the Companies, other than the payment"of dividends by the Subsidiaries to the Company; - have not increased the total compensation payable to their employees by more than 10% in local currencies (increases based on the existing profit sharing plan 18 - 14 - are excluded from this limit) and have neither adopted any new profit sharing plan, bonus plan, pension or benefit plan nor changed any existing plans; - the Companies have not committed to any of the foregoing. 4.11 PERMITS AND AUTHORIZATIONS. The Companies have all the permits and authorizations which are necessary to carry on their business. No governmental authority has threatened in writing to terminate any permit or authorization. 4.12 CLAIMS AND LITIGATION. Except as set forth in Schedule 4.12 as of the date hereof, there are no actions, suits or proceedings pending or threatened in writing against the Companies either in court or before any administrative board, agency or commission. 4.13 TAXES. All Taxes for periods and events before the date hereof and before the Closing Date have been paid or have been sufficiently provided for in the Financial Statement. As of the date hereof, the Companies are in compliance with all applicable laws, regulations or orders of any governmental entity with respect to Taxes and have timely filed all Tax Returns for all Taxes required by law to have been filed and all such Tax Returns are complete and accurate. The documentary evidence necessary to support such returns are at the disposition of the Companies or their tax advisors. The necessary records have been maintained and the necessary accounting methods have been adhered to. 4.14 AGREEMENTS WITH THIRD PARTIES. The Companies are not in, and the consummation of the transactions contemplated by this Agreement will not result in, any default under, or breach of, any agreement to which any of the Companies is a party or which might result in termination or liability or other loss which could materially affect its business, assets or condition, financially or otherwise. All third parties to these agreements are essentially in compliance therewith and not in material default thereunder. 4.15 INTELLECTUAL PROPERTY/KNOW-HOW. The Companies own or have sufficient right to use all the know-how and all the patents, trademarks, trade names, trade secrets, copyrights and other intellectual property rights (collectively the "Intellectual Property") which are necessary for the conduct 19 - 15 - of their business as it is now conducted. Furthermore, Seller warrants that the Intellectual Property and the Company's business practices to the best of Seller's Knowledge, do not conflict with the rights of any third party. The Companies have not granted any licenses to use any of the Intellectual Property to any third parties. 4.16 PENSIONS/EMPLOYEES. The pension plans and/or pension funds and other welfare plans of the Companies comply with all applicable legal provisions and have been administered in conformity with all applicable law. Seller warrants that all accrued pension claims and accrued claims under other welfare plans of the Companies' employees are covered by funds of special foundations, by insurance contracts or provisions the Companies have specifically established for such purpose. The Companies have not entered into any agreement which oblige them to make severance payments or grant other extraordinary privileges in excess of any statutory or customary requirements. Exempt from such warranty is the agreement with Mr. W. Berry, which provides for 6 months severance payment (calculated on Mr. Berry's previous salary). 4.17 COMPLIANCE WITH THE LAW. To the best of Seller's Knowledge, the Companies have not materially violated any applicable laws, ordinances, regulations, decrees or orders of any government entity. Seller, in particular, warrants that to the best of Seller's Knowledge the Companies and their plants, real estate and equipment comply with all applicable labor and occupational health and safety laws, regulations, decrees and orders and that the competent authorities have not informed the Companies in writing that they will issue any orders with which the Companies do not yet comply. 4.18 ENVIRONMENTAL MATTERS. To the best of Seller's Knowledge, all properties and facilities that are and have been operated by the Companies and their businesses as presently conducted comply with all applicable environmental laws, regulations, decrees and orders. 4.19 PRODUCT LIABILITY/WARRANTY CLAIMS. No third parties have any claims against the Companies in connection with any products delivered or services rendered by the Companies as of the date hereof which, or before the Closing Date which 20 - 16 - (i) exceed one percent of the Companies' total turnover for the year in which such products were delivered or services were rendered and (ii) are neither covered by provisions in the Financial Statement nor by insurance policies. 4.20 REAL ESTATE. The Companies have rightful title to the real estate listed in Schedule 4.20 free and clear of any mortgages other than the mortgages listed in Schedule 4.20. The Company identified on Schedule 4.20 has full legal and practical access to and good interest in such real estate. None of the buildings constructed thereon encroaches upon adjoining real estate. 4.21 LEASES. The real estate leases listed in Schedule 4.21 are in full force and effect and constitute a valid and existing leasehold interest under each of the leases for the term set forth on such Schedule. With the exception of financial leases recorded on the Company's Financial Statement set forth in Schedule 4.5 and any contracts over payments of less than CHF 50,000.per year, all lease agreements covering personal property the Companies have concluded are listed in Schedule 4.21a. 4.22 BROKERS' FEES. Neither the Seller nor the Companies have any liability or obligation to pay any fees or commissions to any Broker, finder or agent with respect to the transactions contemplated by this Agreement. 4.23 SELLER'S COSTS. The only costs of the Seller related to the transactions contemplated by this Agreement that have been paid by the Company or the Companies are those identified in art. 10.1 herein. 4.24 NO FURTHER WARRANTIES. Except as expressly provided in this Article 4, Seller makes no representation or warranty with respect to the Shares or the Companies. ARTICLE 5 REMEDIES 5.1 TERM OF WARRANTIES AND REPRESENTATIONS. The representations and warranties set forth in art. 4 of this Agreement shall continue in effect until the later of eighteen (18) months after the Closing Date or July 7,1999. The representations and warranties set forth in art. 4.13 of this Agreement shall, however, continue in effect until three months after the statute of limitation on the tax claims concerned has expired. 21 - 17 - 5.2 NOTIFICATION AND ARBITRATION. The Parties waive the notification and examination requirements of art. 201 of the Swiss Code of Obligations. However, Purchaser has to notify Seller within 30 days after Purchaser has detected a breach of warranties, describing in reasonable details such breach and any damage suffered by the Companies as a consequence of such breach. If Purchaser has notified Seller of a breach of representations and warranties, Purchaser has to commence arbitration in accordance with art. 11.2 of this Agreement within months after such notification has been made, unless the claim raised by Purchaser is either. settled before the expiry of such deadline or the Parties agree on an extension of such deadline. If Purchaser fails to meet such deadline, the claim concerned shall be forgone and unenforceable. 5.3 DAMAGES. In case of a breach of a warranty, representation, covenant or agreement of Seller, Seller shall within the limitations set forth in art. 5.5 of this Agreement indemnify Purchaser for any direct damage, e.g. pay as far as a particular state of a company is warranted to Purchaser an amount equal to the amount by which the actual state of the company concerned differs from the state described in such warranty. The right of Purchaser to rescind this Agreement ("Wandelung") pursuant to art. 205 CO which is hereby expressly excluded. 5.4 SURETY. In order to secure any claims which Purchaser may have pursuant to art. 5.3 of this Agreement, Seller shall provide Purchaser with a Surety ("Solidarburgschaft") issued by a first class Swiss bank in an amount equal to 20% of the Purchase Price substantially in the form attached hereto as Schedule 5.4. Two (2) years after the Closing Date, the amount of the Surety shall be reduced to an amount equal to (i) CHF 4,000,000.-- plus (ii) an amount equal to claims made until such date but not yet settled under art. 5.3 of this Agreement. Such reduced amount may, in any event, not be higher than the original amount of the Surety minus all claims paid under such Surety. On the 5th anniversary of the Closing, the Surety shall expire, except as and to the extent any claims in connection with breaches of warranties, representations, covenants or agreements are pending before the court of arbitration pursuant to art. 11.2. 5.5 LIMITATIONS. 5.5.1 DE MINIMIS. Seller shall have no obligation to pay any amounts under art. 5.3 of this Agreement unless: 22 - 18 - (i) the amount to be paid as indemnification for each individual breach exceeds CHF 100,000.-- (such amount not to be deducted from Purchaser's total indemnity claim under this art. 5) and, (ii) the aggregate amount of the amounts described in (i) above equals or surpasses CHF 1,000,000.-(such amount to be deducted from Purchaser's total indemnity claim under this art. 5). 5.5.2 MAXIMUM AMOUNT. Any payments of the Seller for breaches of representations of warranties set forth in this Agreement shall be limited to 20% of the Purchase Price in total. Claims of Purchaser under art. 4.13 and art. 9 (first paragraph) of this Agreement are not covered by the above limit; a separate limit of CHF 4,000,000.-- applies to such claims. to such claims only the de minimis of 5.1.1.(i) applies. 5.5.3 EXEMPT REPRESENTATIONS AND WARRANTIES. None of the limitations described in art. 5.5.1 and 5.5.2 shall apply to the representations and warranties set forth in art. 4.1, 4.2 and 4.3 and 4.4 of this Agreement. Claims regarding Swiss and German pension claims are also exempt from such limitations. 5.5.4 EXCLUSION OF LIABILITY. Seller shall not be liable in respect of a claim of Purchaser for breach of warranties, representations, covenants or agreements: (i) if, but only to the extent that any provision, reserve or expense for the matter giving rise to the claim was taken into account in the Financial Statement set forth in Schedule 4.5; (ii) if, but only to the extent that, the matter giving rise to a claim was disclosed in all material respects in one of the Schedules attached to this Agreement or in the Due Diligence Material; (iii) if, but only to the extent that, Purchaser or the Companies receive compensation of the respective loss or damages suffered by them under the terms of any insurance policy or from any other third party; 23 - 19 - (iv) if, but only to the extent that, any Tax for which Purchaser or the Companies are liable is reduced as a result of any matter giving rise to a claim of Purchaser under the above representations and warranties; (v) if, but only to the extent that, any damage or loss was caused by any act or omission of Purchaser occurring after the Closing Date or by the fact that Purchaser has failed to take reasonably necessary steps to mitigate the damage caused by a breach of a representation or warranty. 5.6 PROCEDURE WITH THIRD PARTIES AND AUTHORITIES. If a breach of a representation or warranty exists because any authorities or third parties raise claims against the Companies or if the Companies in connection with such a breach have to enforce any rights or claims against authorities or other third parties, the Parties shall cooperate in such negotiations and proceedings. The Companies in any event may not settle any such claims without Seller's consent, which consent shall not be unreasonably withheld. ARTICLE 6 RESIGNATIONS OF DIRECTORS AND AUDITORS At the Closing Date Seller shall remit to Purchaser resignations of the directors and auditors of the Companies, as requested in writing by Purchaser prior to December 1, 1997. Purchaser agrees to hold an extraordinary shareholders' meeting for the Company immediately after the Closing Date and to elect new directors at such meeting. For the Subsidiaries Purchaser shall take such action within 30 days after the Closing Date. Purchaser agrees to grant complete discharge to the present directors at such meeting. The consent of Purchaser to the Companies' financial statements and the discharge of the directors does not operate as a waiver of Purchaser's claims under art. 4 and 5 of this Agreement. ARTICLE 7 COVENANTS 7.1 COVENANT NOT TO COMPETE. Seller agrees not to engage directly or indirectly (including through partnerships or companies) in any activities which compete with activities 24 - 20 - the Companies are engaged in at the Closing Date. Such covenant shall be valid for a period of 3 years after the Closing Date. Any participations of less than 5% in publicly traded companies are exempt from this covenant. Furthermore, the interest of Seller in J.F. Pfeiffer AG or other retail and wholesale operations which deal with such products and a sale of inventory acquired pursuant to art. 4.9 of this Agreement are also exempt from this covenant. 7.2 CONDUCT OF BUSINESS. Prior to the Closing, without the prior written consent of Purchaser, Seller shall not, and shall cause the Companies to take action, or refrain from action, so that they shall not: - take any action that would require disclosure under this Agreement; - directly or indirectly (including through any agent, broker, finder or other third part), offer to sell, merge, consolidate or otherwise dispose of, negotiate for the sale, merger, consolidation or other disposition of, initiate or continue discussions concerning the sale, merger, consolidation or other disposition of, the Companies as a whole, or the sale or other disposition of any of its or their shares of capital stock or any of their assets (other than in the ordinary course of business); - take or omit to take any action which would reasonably be anticipated to have a material and adverse effect upon the business of the Companies; - redeem any stock, bonds or other securities or equity interests, or declare or pay any dividend or other distribution to its shareholders; - make any change in its articles or certificate of incorporation or bylaws that would interfere with or prevent the consummation of the transactions contemplated herein; - make any significant organizational or personnel changes; - pay any bonus or grant any salary or wage increase not in the ordinary course of business or consistent with past business practices; 25 - 21 - - make any capital expenditures in excess of CHF 300,000.-- per expenditure or CHF 1,000,000.-- in the aggregate; - create any security interest in or any lien or encumbrance on any property or interest of the Companies where the obligation is more than CHF 50,000.-- or cancel or compromise any debt or claims in excess of CHF 50,000.--; or - make or grant any loan. The conclusion and termination of the agreements described in art. 7.3 are exempt from this provision. 7.3 TERMINATION OF AGREEMENTS BETWEEN THE COMPANIES AND SELLER. With the exception of the agreements listed in Schedule 7.3Seller shall terminate on or before the Closing Date all agreements existing between (i) the Companies on the one hand and (ii) Seller or any persons, companies, partnerships or other legal or business entities with which Seller or a member of Seller's family is affiliated on the other hand. The termination of such agreements shall not oblige the Companies to make any payments in compensation of the termination such as for example severance payments or any payment for a notification period extending beyond the Closing Date. The parties intend to dissolve the lease agreement for the Del Rio facility against payment of lease balance if such transaction does not cause any excessive costs to one of the Parties (such as for example payment of prepayment penalties or negative tax effects). The Parties will after the execution hereof engage in negotiations on such transaction. Purchaser is entitle to terminate the lease agreements for the Zurich and the Elk Grove facilities by serving six months' notice for Zurich and 30 days notice for Elk Grove. 7.4 INFORMATION OF EMPLOYEES. Seller shall comply with the Closing Date with all legal requirements regarding information of and consultation with the Company's employees. Seller shall inform Purchaser on such requirements and on the form and content of the information to be disclosed to the employees and shall coordinate such. information with the Purchaser. 26 - 22 - 7.5 EMPLOYMENT OF SELLER. Seller shall conclude not later than at the Closing Date a consultancy agreement with Purchaser. Seller and Purchaser will negotiate such agreement after the execution hereof taking into account the needs of the business. 7.6 SELLER'S COOPERATION. Prior to the Closing Date, Seller shall make available to the Purchaser and its representatives during normal business hours all of its books and records in addition to its employees so that Purchaser may continue its investigation of the business and affairs of the Company. 7.7 TRANSITION ASSISTANCE. From the date hereof and until three (3) years after the closing Date, Seller shall not in any manner take any action which is designed, intended or might be reasonably anticipated to ave the effect of discouraging customers, suppliers, lessors and other business associates from maintaining the same business relationship with purchaser after the date of this Agreement as were maintained with the Companies prior to the date hereof. 7.8 ENVIRONMENTAL ISSUES. Seller shall until March 31, 1998 remove or remedy at his own cost: - the oil spill at the tank in Lottstetten; - the oil spill (out of barrels) in Del Rio. Seller shall - as the owner of the facility in Lottstetten - remain liable for the TCA contamination and hold the Companies and Purchaser harmless from any claims relating to or in connection with such contamination. If the Purchaser or Ibico Portuguesa Ltda. are ordered by competent authorities or directly compelled by statutory law to remove the roof tiles containing asbestos fibres at the Arcos de Valdevez facility, Seller shall pay to Purchaser the book value of such roof tiles existing at such date on the basis of the depreciation rates currently used by Ibico Portuguesa Ltda. Seller shall, furthermore, indemnify Purchaser for costs incurred in the disposal of such tiles as far as such costs are caused by the fact that the tiles contain asbestos fibres. The limitations set forth in art. 5.5 of this Agreement are not applicable to Seller's obligations under this article. 27 - 23 - ARTICLE 8 TRANSFER OF MANAGEMENT RESPONSIBILITY Immediately after the Closing, Purchaser takes over full responsibility for the Company's management and operations. ARTICLE 9 TAXES Any Swiss taxes or other charges which become due in connection with the transfer of the Shares by Seller to Purchaser under this agreement shall be at the charge of Seller. If Swiss stamp taxes are levied on the purchase price because Purchaser uses the services of a Swiss security dealer such stamp taxes, however, shall be borne by Purchaser. Seller shall be liable for and pay when due all Taxes to be paid by the Companies due to any reassessment of Taxes for any periods and events before the Closing Date. Seller is, in particular, liable for any Taxes to be paid on any constructive dividends paid by the Companies to Seller or to third parties before the Closing Date and for any Taxes to be paid due to any violation by any of the Companies prior to or on the Closing Date of agreements they have concluded with tax authorities. Seller, furthermore, shall be liable for any income taxes assessed on the capital gain he realizes in the sale of the Shares. However, until the fifth anniversary of the Closing Date, Purchaser shall not engage in any of the following transactions, unless written consent is given by Seller: - - payment of any dividends by the Company on the basis of earnings accrued before December 31, 1997; - - liquidation of the Company; - - merger of the Company into another company; - - payment of the Purchase Price, directly or indirectly, out of the funds of the Company or its Subsidiaries. Seller shall not withhold its consent to any of the above transactions if Purchaser can prove with a private ruling of the cantonal tax authorities of the canton in which Seller is domiciled (for income taxes) and of the Federal Tax Authorities (for withholding taxes) that the planned transaction will not result in a qualification of the gain realized by Seller in the 28 - 24 - sale of the Shares as being taxable income. Seller shall fully cooperate with Purchaser in order to obtain such ruling. ARTICLE 10 MISCELLANEOUS 10.1 COSTS. Each party bears the fees of its counsel and advisors. Purchaser consents, however, to the fact that the Company in 1997 but before the Closing Date has paid up to CHF 50,000.-- to Seller's Counsel for the preparation of alternative sale transactions (going public, participation of a financial investor, preparation due diligence etc.) and up to CHF 200,000.-- to Master Consulting AG for consultancy services rendered in connection with the evaluation of a financial investor and up to CHF 150,000.-- to Revisuisse Price Waterhouse and KPMG Fides for preparation of special audit statements and CHF 40,000.-- to BMG for an environmental audit. 10.2 NOTICE. Any notice, request, instruction or other document deemed by either Party to be necessary or desirable to be given to the other Party, shall be in writing and shall be telefaxed or mailed by registered mail addressed as follows: If to Purchaser: Copy to: General Binding Corp. Vedder, Price, Kaufmann & attn. President & CEO Kammholz One GBC Plaza attn. Robert J. Stucker Northbrook IL 60062 Chicago, IL 60601 USA USA If to Seller: Copy: Dr. U. Wolfensberger Dr. U. Schenker Seestrasse 79 Baker & McKenzie 8803 Ruschlikon Zollikerstrasse 225 Switzerland 8034 Zurich Switzerland Each Party may at any time change its address by giving notice to the other party in the manner described above. 10.3 NO WAIVER. The failure of any of the Parties to enforce a provision of this Agreement or any rights with respect thereto shall in no way be considered as a waiver of such 29 - 25 - provisions or rights or in any way to affect the validity of this Agreement. The waiver of any claim for breach of this Agreement by a Party hereto shall not operate as a waiver of any claim pertaining to another, prior or subsequent breach. 10.4 ENTIRE AGREEMENT. This instrument embodies the entire agreement between the Parties hereto with respect to the transaction contemplated herein and there have been and are no agreements or warranties between the Parties other than those set forth or provided for herein. This Agreement may be amended only in writing through a document signed by all the parties hereto. 10.5 BINDING ON SUCCESSORS. All of the terms, provisions and conditions of this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, successors and assigns. 10.6 ANNOUNCEMENTS. Seller and Purchaser shall consult before issuing press releases or otherwise making any public statements or any statements to the Company's employees with respect to this Agreement and shall not issue any such press release or statement without the prior approval of the other Party. 10.7 ASSIGNMENT. Purchaser may assign this Agreement to a wholly owned subsidiary of Purchaser. Purchaser, however, in such case remains fully liable for all liabilities under this Agreement. ARTICLE 11 GOVERNING LAW AND ARBITRATION 11.1 GOVERNING LAW. This Agreement shall be subject to and governed by Swiss Law. 11.2 ARBITRATION. All disputes arising out of this Agreement or in connection with this Agreement shall be solely and finally settled by a court of arbitration consisting of three arbitrators in accordance with the international arbitration rules of the Zurich Chamber of Commerce. The place of arbitration shall be Zurich. The court of arbitration shall conduct the proceedings and all awards shall be rendered in the English language. IN WITNESS WHEREOF, the parties thereto have executed this agreement as of the date and year first above written. 30 - 26 - Seller: Purchaser: General Binding /s/ U. WOLFENSBERGER /s/ ARTHUR J. SCHILLER - ----------------------- ----------------------- Dr. U. Wolfensberger Annexes 31 - 1 - AMENDMENT TO STOCK PURCHASE AGREEMENT BETWEEN GENERAL BINDING CORPORATION AND DR. U. WOLFENSBERGER WHEREAS, Ibico, under a license contract with Mr. von Rohrscheidt (the "License Agreement"), has had a license to use certain patents and know-how to produce PolyCombs; WHEREAS, on the day before the execution of the Stock Purchase Agreement, Ibico has purchased the patents and the know-how on which the License Agreement was based (the "Purchase Agreement"); NOW, THEREFORE, the Parties come to the following agreement: 1. CONSIDERATION PAID BY IBICO UNDER THE PURCHASE AGREEMENT The Parties herewith agree that the net present value (applying a discount rate of 6%) of the consideration to be paid by Ibico under the Purchase Agreement shall be considered as Funded Debt under the Stock Purchase Agreement. 2. PAYMENT TO SELLER Purchaser shall pay to Seller as a recovery of the reduction of the Purchase Price effected by the application of art. 1 of this Amendment 75% of the license fees Ibico would have had to pay under the License Agreement for ten years after the Closing Date up to an amount equal to the amount of Funded Debt taken into account in the purchase price calculation under the Stock Purchase Agreement pursuant to art. 1 of this Agreement (for the purpose of calculating these payments HK (alt) as defined in the License Agreement shall be calculated on the basis of actual production costs incurred by Purchaser). Seller shall, however, not have any of the other rights Mr. von Rohrscheidt had under the License Agreement than the right to such payments. 3. NO FURTHER CHANGES This amendment does not lead to any changes or amendments other than those described in art. 1 and 2 above in the Stock Purchase Agreement between the Parties. 4. APPLICATION OF PROVISIONS OF THE STOCK PURCHASE AGREEMENT 32 - 2 - Art. 1, 10 and 11 of the Purchase Agreement are applicable also to this amendment. Zurich, October 17, 1997 General Binding Corporation /s/ ARTHUR J. SCHILLER /s/ U. WOLFENSBERGER - ------------------------- ------------------------ Dr. U. Wolfensberger EX-10.5 32 GENERAL BINDING CORPORATION 1989 STOCK OPTION PLAN 1 EXHIBIT 10.5 GENERAL BINDING CORPORATION 1989 STOCK OPTION PLAN (AS AMENDED AND RESTATED) SECTION 1. PURPOSE OF THE PLAN. The purpose of the 1989 Stock Option Plan, as hereby amended and restated ("Plan") is to secure for General Binding Corporation ("GBC") and its stockholders the benefits of the incentive inherent in stock ownership by officers and other key employees of GBC and its Subsidiaries and to provide additional compensation to these executives based on the appreciation of GBC's Common Stock, $.125 par value (hereinafter the "Shares"). The Plan is intended to encourage executives to continue in the employ of GBC and its Subsidiaries; to attract new management personnel when needed for future operations; and to provide such persons with additional incentive for industry and efficiency through offering an opportunity to acquire a proprietary interest in GBC and its future growth. The terms of the options issued pursuant to the Plan will not cause them to be incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). SECTION 2. ELIGIBILITY. Subject to the terms and conditions of the Plan, the Board or committee (as defined in Section 4) may from time to time grant to such officers (including officers who are directors) and other key employees of GBC and its Subsidiaries as the Board or Committee may determine, options (hereinafter the "Options") to purchase shares on such terms and conditions 2 as the Board or Committee may determine and set forth in the Option Agreement (as defined in Section 5). SECTION 3. EFFECTIVE DATE AND DURATION. The Plan initially became effective on March 23, 1989. The amendment of the Plan by this amendment and restatement shall be effective on March 13, 1996, subject to approval by the stockholders of GBC. Neither such amendment nor any Option granted pursuant to the provisions of such amendment shall become binding until the amended and restated Plan is approved by a vote of a majority of GBC's outstanding voting stock. The Plan shall remain in effect, subject to the Board's right to earlier terminate the Plan pursuant to Section 17 hereof, until all Shares subject to the Plan have been purchased or acquired pursuant to the provisions hereof. SECTION 4. ADMINISTRATION. The Plan shall be generally administered by the Board of Directors of GBC (the "Board"). The Board shall have full authority to award Options under the Plan, to interpret the Plan, to determine the terms and provisions (which need not be identical) of the option agreements by which such options shall be evidenced, to require withholding from or payment in cash or with Shares by an optionee of any federal, state, or local taxes, and to make such rules and regulations and establish such procedures as it deems appropriate for the administration of the Plan. The Board may from time to time appoint a committee (the "Committee") to exercise the powers and authority of the Board with respect to the 2 3 administration of the Plan, including but not limited to, the authority to grant Options and SARs and to determine the terms and provisions thereof. The Committee shall consist of two or more Board members, each of whom shall qualify in all respects as a "disinterested person" under Rule 16b-3 of the General Rules and Regulations ("Rule 16b-3") under the Securities Exchange Act of 1934 (the "1934 Act") or any law or rule which may replace such Rule, and as an "outside director" within the meaning of Code Section 162(m) and regulations thereunder. In exercising its authority hereunder, the Committee shall be entitled to act as the Board may act hereunder, provided that in no event shall the Committee have any authority to take any actions required by the Board under Sections 16 and 17 hereof. All decisions made by the Board or the Committee on the matters referred to in this Section 4 shall be conclusive and binding. No member of the Board or Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Option or SAR granted thereunder. SECTION 5. GRANTING OF OPTIONS AND MINIMUM GRANT. The officers of GBC are authorized and directed upon receipt of notice from the Board or the Committee of the granting of an Option, to sign and deliver on behalf of GBC, by mail or otherwise, to the optionee an Option at the option price and upon the terms and conditions specified by the Board or Committee in the notice and in the form of an option agreement approved by the Board or Committee (hereinafter the "Option Agreement"). The Option Agreement shall be dated and signed by an officer of GBC as of the date of approval of the granting of an Option by the Board or Committee. No Option shall be granted for less than 500 shares. More than one Option may be granted to a single individual. 3 4 SECTION 6. EXERCISE PRICE FOR OPTIONS. The option price at which Options may be exercised shall be determined from time to time by the Board or Committee and be set forth in the Option Agreement, but in no event shall be less than 85% of the Fair Market Value on the date the Option is granted. Fair Market Value shall be deemed to be the last reported trade price on the NASDAQ National Market System for over-the- counter stocks on the date the Option is granted (unless the Shares are listed on any national securities exchange in which event Fair Market Value shall be the closing price of the shares on such exchange on the date the Option is granted), but in no case shall it be less than the par value of the Shares. If there is no last reported trade price, or closing price as the case may be, on the date the Option is granted the exercise price shall be the Fair Market Value on the next preceding day on which there was a sale reported on the NASDAQ National Market System or, if listed, on the national securities exchange where the Shares are listed. SECTION 7. EXERCISE OF OPTIONS. Unless otherwise determined by the Board or Committee and set forth in the Option Agreement, the time and extent to which an Option granted hereunder shall be exercisable will be as follows: (a) The total number of Shares for which an Option is granted shall be divided into four equal parts, each representing 25% of the total Option granted, each such part being hereinafter referred to as an "Annual Allotment." 4 5 (b) The initial Annual Allotment may be exercised after one year from the date of grant, and the second, third and final Annual Allotments may be exercised after the second, third and fourth years, respectively, but no later than eight years from the date of grant. (c) No more than one Annual Allotment may be exercised in any annual period, an annual period being any of the second through the eighth years after and beginning on the anniversary of the date of grant. SECTION 8. GENERAL TERMS AND CONDITIONS. (a) Except as provided in Section 13 hereof or as the Board or Committee may provide in the Option Agreement, (i) it shall be a condition of the right to exercise any part of any Option that the optionee remain in the employment of GBC, its Subsidiaries or Affiliates at the pleasure of such employer, and (ii) all rights under Options shall terminate on the date an optionee ceases to be employed by GBC, its Subsidiaries or Affiliates. (b) To the extent that the right to purchase Shares has accrued hereunder, Options may be exercised from time to time by written notice to GBC, stating the number of Shares being purchased and accompanied by the payment in full of the option price for such Shares. In no event shall GBC be required to issue a fractional Share upon the exercise of an Option. Such payment shall be made in cash or in previously owned Shares or in a combination of cash and such Shares. The payment in full of the option price need not accompany the written notice of exercise if the notice of exercise directs that the certificate for the Shares being purchased be delivered to a licensed broker acceptable to GBC as the agent for the optionee and, at the time the certificate for the Shares is delivered, the broker tenders to GBC cash (or cash equivalents acceptable to GBC) equal to the option price plus the amount, if any, of 5 6 withholding taxes required pursuant to paragraph (c) below. If Shares of common stock are used in part or full payment for the Shares to be acquired upon exercise of the Option, such Shares shall be valued for the purpose of such exchange as of the date of exercise of the Option in accordance with the determination of Fair Market Value provisions of Section 6 above. Any certificates evidencing Shares of outstanding common stock used to pay the option price shall be duly endorsed by the registered holder of the certificate, and if requested by GBC's counsel or transfer agent, with the signature thereon guaranteed. In the event the certificates tendered by the optionee in such payment cover more Shares than are required for such payment, the certificates shall also be accompanied by instructions from the optionee to GBC's transfer agent with regard to disposition of the balance of the Shares owned thereby. (c) Shares shall not be issued upon the exercise of any Option under the Plan unless and until any withholding tax, if any, or other withholding obligation, if any, imposed by any governmental entity have, in the opinion of the Company, been satisfied or provision for their satisfaction has been made. An optionee shall satisfy such withholding obligation by (a) depositing with GBC cash in the amount thereof within twenty (20) business days of any exercise of the Option; or, (b) by the withholding of Shares by the Company in the manner provided for in Section 8 hereinafter. (d) Unless earlier terminated pursuant to the terms and conditions thereof, each Option granted under the Plan shall terminate and all rights to purchase Shares thereunder shall cease upon the expiration of 10 years from the date of grant. 6 7 SECTION 9. USE OF SHARES FOR INCOME TAX WITHHOLDING. (a) The Board or Committee may, in their discretion and subject to rules as they may adopt consistent with the requirements of this Section 9 and Rule 16b-3 permit an Optionee to satisfy federal and state tax withholding obligations arising in connection with the exercise of an Option by electing (an "Election") to have GBC withhold Shares having a Fair Market Value equal to the amount of tax required to be withheld (the "Withholding Requirement"). Elections to have Shares withheld to satisfy the Withholding Requirement shall be: (i) made on or before the date that the amount of the Withholding Requirement is determined in accordance with Section 83 of the Internal Revenue Code of 1986, as amended, and applicable provisions of state law (the "Tax Date"); (ii) irrevocable when made; and (iii) made in writing; and (iv) subject to disapproval by the Board or Committee. (b) In addition to the foregoing requirements, an Election made by an Optionee whose transactions in Shares are subject to Section 16(b) of the Securities Exchange Act of 1934, as amended (an "Officer") shall to the extent required to comply with Rule 16b-3: (i) not be made within six months of the date of grant of an Option (except in the event of the death or permanent disability of the Optionee during such six month period); and (ii) be made either (A) six months or more prior to the Tax Date, or (B) on or prior to the Tax Date and during the period (the "Window Period") beginning on the third business day and ending on the twelfth business day following the date on which GBC has released for 7 8 publication its regularly quarterly (or, in the case of the fourth quarter of its fiscal year, annual) summary financial information. For purposes of the preceding sentence, "business day" shall mean any calendar day other than Saturday, Sunday or a national holiday. An election shall be deemed made on the date the election is received by GBC. "Fair Market Value" of the Shares to be withheld (or tendered pursuant to the following sentence of this Section 8) in payment of the Withholding Requirement shall be the "Fair Market Value" of the Shares on the Tax Date determined in accordance with Section 6 of this Plan. The value of any fractional share required to fulfill the Withholding Requirement will be paid by the Optionee in cash. SECTION 10. NO RIGHTS AS STOCKHOLDERS. An optionee shall have no rights as a stockholder with respect to any Shares covered by an Option until the date of issuance of a stock certificate to him for such Shares upon the due exercise of an Option. SECTION 11. EMPLOYMENT. Nothing contained in the Plan or in any Option granted pursuant to the Plan shall be construed as an agreement on the part of GBC, its Subsidiaries or Affiliates to employ any employee for any period of time whatsoever. SECTION 12. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided in Section 16 hereof, the maximum number of Shares which may be issued and sold or transferred upon the exercise of Options granted under this 8 9 Plan and accordingly the maximum number for which Options may be granted, shall be 1,347,275 which number of the authorized but unissued Shares shall be reserved for such purpose, and the total number of Shares which may be made subject to Options or SARs granted under the Plan, in any calendar year to any single person shall not exceed 250,000. Shares to be issued upon the exercise of Options under this Plan may be issued from the authorized but unissued Shares or from Treasury Shares in the hands of GBC or from Shares purchased by GBC on the open market for such purposes or from any combination of the foregoing as the Board may determine. If Treasury Shares or Shares purchased on the open market are issued upon the exercise of any Option, the number of authorized but unissued Shares reserved for this Plan shall be correspondingly reduced. If and to the extent an Option shall expire or terminate for any reason without having been exercised in full (including, without limitation, cancellation and re-grant), or in the event that an Option is exercised or settled in a manner such that some or all of the Shares related to the Option are not issued to the optionee (or beneficiary) (including as the result of the use of shares for withholding taxes), the shares of Stock subject thereto which have not become outstanding shall (unless the Plan shall have terminated) become available for issuance under the Plan; provided, however, that with respect to a share-for-share exercise, only the net shares issued shall be deemed to have become outstanding as a result thereof. SARs which expire or terminate for any reasons without having been earned in full, an equal number of SARs shall (unless the Plan shall have terminated) become available for issuance under the Plan. 9 10 SECTION 13. TERMINATION OF EMPLOYMENT, RETIREMENT, DEATH OR DISABILITY. Except to the extent determined by the Board or Committee as set forth in the Option Agreement: (a) upon the optionee's involuntary termination of employment with GBC, its Subsidiaries and Affiliates other than under circumstances constituting retirement, death, disability, or cause described below, all Options which were unexercised at the time of such termination of employment shall be exercisable during a period of three months after such termination, but only to the extent such Options were exercisable at the time of said termination; (b) all parts of all Options which were unexercised at the time of the optionee's retirement after attaining age 65 or pursuant to a retirement prior to attaining the age of 65 if approved by GBC, may be exercised during a period of 12 months after said retirement date; (c) All parts of all Options which were unexercised at the time of the death of an optionee may be exercised during a period of 12 months after his death by the person or persons to whom they shall have been transferred by will or the laws of descent or distribution, or if no such transfer has been made by the executor or administrator of the optionee's estate on behalf of said estate; (d) should any optionee become permanently disabled, all parts of all Options which were unexercised at the time of the disabled optionee's termination of employment may be exercised by the optionee or his legal guardian or other legal 10 11 representative on his behalf during a period of 12 months after said termination date; and (e) upon the (i) voluntary termination of the optionee's employment with GBC, its Subsidiaries and Affiliates other than under circumstances constituting retirement or disability, or (ii) termination of the optionee's employment with GBC, its Subsidiaries or Affiliates for cause (whether such termination is by GBC, its Subsidiary or Affiliate or by optionee at a time when condition circumstances constituting cause existed), all optionee's Options shall expire and all rights to purchase Shares thereunder shall terminate. For purposes of this Plan, "cause" shall mean the optionee's commission of a felony, or of any act or omission by optionee involving willful misconduct, dishonesty, disloyalty or fraud with respect to GBC, its Subsidiaries or Affiliates. SECTION 14. STOCK APPRECIATION RIGHTS. (a) The Board or Committee may, in its discretion, grant SARs to any optionee hereunder if he is then eligible to receive Options hereunder. Each SAR shall represent a right to receive cash in an amount equal to the excess of the Fair Market Value of one Share on the date the SAR is exercised over the Fair Market Value (as determined in Section 6) of such Share on the date the SAR was granted. Up to 1,347,275 SARs may be granted pursuant to the Plan. (b) The Board may grant SARs at any time and from time to time to any optionee, shall designate such SARs as related to Options then being granted or granted within six 11 12 months prior to the grant date of the SAR, and may set such terms and conditions upon the exercise of the SARs as it may determine in its discretion, provided that the written agreement evidencing such SARs shall comply with and be subject to the following terms and conditions: (i) SARs granted hereunder shall not be exercisable until the expiration of one-year from the date of the grant of such SAR unless the employment of the optionee shall terminate by reason of death, retirement or disability prior to the expiration of such one- year period. (ii) An optionee's right to exercise an SAR shall not be transferable during the lifetime of the optionee, and shall be exercisable only at such time and only to the extent that the Option to which the SARs relate may be exercised. (iii) In the event adjustments are made to the number of shares, exercise price or time or times of exercise of outstanding options upon the occurrence of an event described in Section 16 hereof, appropriate adjustments shall be made in the number of SARs available for future grant, the number of SARs under existing grants and the SAR price per share and time or times of exercise of the SARs. (iv) Unless the agreement evidencing the SAR provides otherwise, exercise of an SAR shall result in the extinguishment of the pro rata portion of the related Options and exercise of an Option shall result in the extinguishment of the pro rata portion of the related SARs. (v) SARs may be exercised only upon receipt by GBC of a written notice of election which shall be dated the date of such election, which shall be deemed to be the date when such notice is sent by registered or certified mail or the date upon which 12 13 receipt is acknowledged by GBC if hand delivered or sent other than by such mail; provided, however, that such notice shall only be sent or delivered during a Window Period. The purpose of the foregoing restriction on exercise of SARs is intended to comply with Rule 16b- 3(e) promulgated under the 1934 Act and in the event that such restrictions shall not be or remain consistent with the provisions of Section 16(b) of such Act or such rules and regulations thereunder which except from the operation of said Section 16(b) in whole or in part such SAR exercise, then such date of election and other restrictions upon exercise shall be determined by such method consistent with said Section 16(b) as the Board or Committee shall select and apply. SECTION 15. GOVERNMENTAL APPROVAL. No Option shall be granted under the Plan and no Shares shall be issued, transferred or delivered upon exercise of any Option granted under the Plan unless the Board is satisfied that there has been full compliance with all applicable requirements of the Securities Act of 1933, all applicable requirements of any national securities exchange on which the Shares are then listed, and all other requirements of law or of any regulatory bodies having jurisdiction over the granting of such Options or of the issuance, transfer or delivery of the Shares thereunder. SECTION 16. ADJUSTMENT. Section 6 notwithstanding, the Board shall make or provide for such adjustment in the exercise price of any Option or in the number or kinds of shares of GBC covered by Options or reserved for issuance under the Plan as it may deem to be equitable as a result of any 13 14 change in the number or kind of outstanding shares of GBC resulting from any reorganization, recapitalization, stock split, stock dividend, merger, consolidation, rights offering or other change in capital structure or like transaction. SECTION 17. AMENDMENT OF PLAN. Except as provided below, the Board may at any time and from time to time, with respect to Shares at the time not subject to Options, alter, amend, suspend or terminate the Plan, including, without limiting the generality of the foregoing, the making of such amendments as the Board shall deem advisable to conform this Plan to any change in any law or regulation applicable hereto. The Board may not, without approval by the stockholders of GBC as may then be required by Rule 16b-3 or any successor or comparable Rule or Regulation promulgated under the 1934 Act, any national securities exchange or system on which the Shares are then listed or reported, or any regulatory body having jurisdiction with respect thereto: (a) increase the aggregate number of Shares which may be issued pursuant to the Options granted under the Plan (except as may be permitted by Section 16 hereof); (b) decrease the minimum price at which Options may be granted under the Plan; (c) extend the option period with respect to any Option; (d) permit the granting of Options to anyone other than as provided in Section 2; or (e) provide for the administration of the Plan by the Board or by a committee appointed by the Board unless the membership of the Board or such committee, respectively, meets the requirements of Rule 16b-3 for such Board or committee as provided in Section 4 of the Plan. 14 15 No termination, suspension, modification or amendment of the Plan may, without the consent of a person to whom any Option shall theretofore have been granted, adversely affect the rights of such person under such Option. 15 EX-10.6 33 GENERAL BINDING CORPORATION SUPPL. DEFERRED COMP. 1 EXHIBIT 10.6 GENERAL BINDING CORPORATION SUPPLEMENTAL DEFERRED COMPENSATION PLAN (AS INITIALLY ESTABLISHED EFFECTIVE APRIL 1, 1994, AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1996, AND FURTHER AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1998) SECTION 1 1.1 PURPOSE. General Binding Corporation (the "Company") initially established this unfunded Supplemental Deferred Compensation Plan ("Plan") effective April 1, 1994 for the purpose of (a) providing a select group of highly compensated or management employees with the opportunity to defer a portion of their individual compensation to a future date including the date of retirement at the election of the covered employee ("Participant") and (b) restoring to a Participant the equivalent of the amount by which the Participant's benefits under the General Binding Corporation 401(k) Retirement Savings Plan (the "401(k) Plan") are reduced by reason of the operation of the Code Limitations (described in Section 1.5 below). The Plan was amended and restated effective January 1, 1996, and further amended and restated herein effective January 1, 1998. 1.2 THE PLAN. The Plan shall consist of two parts: an optional deferral of salary reduction amounts and a restoration of reduced 401(k) Plan benefits. 1.3 EFFECTIVE DATE. The effective date of this amendment and restatement of the Plan is January 1, 1998. 1.4 PARTICIPANT SELECTION. The Participants in the Plan shall be those highly compensated or management employees of the Company who are from time to time designated as eligible by the Chief Executive Officer of the Company. 1.5 CODE LIMITATIONS. The term "Code Limitations" as used in this Plan shall mean the limitations imposed on a Participant's 401(k) Plan benefit under Internal Revenue Code ("Code") Sections 415 (limitations on annual benefits), 401(k) and 401(m) (limitations resulting from discrimination in favor of highly compensated employees), 402(g) (the dollar limit on the amount of 401(k) contributions a participant may elect to make to the 401(k) Plan), and 401(a)(17) (the dollar limit on the amount of compensation that may be taken into account under the 401(k) Plan). For purposes of applying the provisions of this Plan, Participants' Compensation shall be determined by the Company under an Executive Salary Grade or other salary scale as established by the Company from time to time. Except for Participants in Executive Salary Grades 1, 2 or 3, notwithstanding any other provision of this Plan, the Code Section 401(a)(17) compensation limit shall be disregarded only to the extent of the first $250,000 of a Participant's compensation (such amount to be adjusted annually for changes in the cost of living as provided in Section 415(d) of the Code). 2 SECTION 2 2.1 PARTICIPANT ELECTIONS. Each Participant shall have the option to make the following elections each year: (a) If the Participant is making 401(k) Contributions under the 401(k) Plan, to defer receipt of the difference between (i) the amount of the 401(k) Contributions the Participant would have made under the 401(k) Plan if there were no Code Limitations, and (ii) the amount of 401(k) Contributions actually made on behalf of the Participant under the 401(k) Plan for such year (a "Basic Deferral") until separation from the service of the Company, disability, death or retirement; (b) To defer receipt of any part or all of his or her total compensation (a "Voluntary Deferral") until separation from the service of the Company, disability, death or retirement. 2.2 METHOD OF ELECTION. (a) Not later than December 31 of each year, each Participant shall have the right to elect in advance to make the deferrals described in Section 2.1 with respect to any portion of the Participant's total compensation, if any, earned the following year by executing an election form designating whether he or she wishes to make a Basic Deferral and the amount of any Voluntary Deferral either in a dollar amount or in a percentage amount. A Participant first becoming eligible under the Plan must make the deferral elections within 30 days after initial eligibility. (b) The Participant shall have the right to make a new and different election each year with respect to compensation for the succeeding year or, alternatively, may designate on the election form that the election shall continue to be effective with respect to succeeding years unless and until a changed election is made by the Participant in a timely manner with respect to one or more succeeding years. 2.3 WITHHOLDING OF DEFERRALS. The amount of the Basic Deferral and the Voluntary Deferral, if any, shall be deducted in uniform amounts from each salary or incentive compensation check of the Participant throughout the year, or, if the Participant so elects, from his or her bonus. 2.4 CREDITING OF DEFERRALS. All Basic Deferrals shall be credited to the Participant's Basic Deferral Account and all Voluntary Deferrals to the Participant's Voluntary Deferral Account. A Participant shall fully and immediately vest in his or her Basic Deferral Account and Voluntary Deferral Account. 2 3 SECTION 3 3.1 RESTORATION OF REDUCED 401(K) PLAN BENEFITS. An Employer Deferral Account shall be established for each Participant who makes a Basic Deferral. An Employer Deferral Account shall also be established for each Participant who has elected to make a Voluntary Deferral and who is making 401(k) Contributions under the 401(k) Plan, but who is not making a Basic Deferral. On the last day of each year in which a Participant makes such deferral (or deferrals), his Employer Deferral Account so established shall be credited with the difference between (i) the amount of the allocation of Matching Contributions the Participant would have received under the 401(k) Plan had he or she not elected to make any Basic or Voluntary Deferrals under the Plan and if there were no Code Limitations and (ii) the amount of the allocation of Matching Contributions actually made to the Participant's Employer Account in the 401(k) Plan for such year. A Participant shall be vested in his or her Employer Deferral Account in the same percentage as the Participant is vested in his or her Employer Account under the 401(k) Plan. SECTION 4 4.1 CREDITING OF INVESTMENT RETURN. (a) All amounts credited to a Participant's Basic Deferral and Employer Deferral Accounts under the Plan shall be credited monthly with interest at such rate as the Plan Committee in its sole discretion shall determine. The rate for each Plan Year shall be determined no later than 75 days after the last day of the Plan year. Such interest shall be credited to the Participant's Accounts as of the first day of each month. (b) All amounts credited to a Participant's Voluntary Deferral Account under the Plan shall be credited with interest monthly at the prime rate as quoted in the Midwest Edition of the Wall Street Journal on the last business day of each month. Such interest shall be credited to the Participant's Account on the first day of each month. 4.2 TIME OF PAYMENT. (a) All other amounts credited to a Participant's Accounts, to the extent then vested shall be payable to a Participant only upon the Participant's separation from the service of the Company, by early, normal or deferred retirement, the Participant's disability as defined in the 401(k) Plan or to the Participant's beneficiary in the event of the Participant's death. (b) Benefits shall be payable either in a lump sum or in installments to the Participant and a beneficiary over a period not longer than the life expectancy of the Participant or the Participant and a designated beneficiary. The method of payment shall be made as specified in writing by the Participant at the time of the deferral and as made or changed by the Participant in writing not later than one year prior to the date of expected payment or commencement of payments. Exception to the one year 3 4 advance election requirement may be made only with the approval of the Plan Committee upon application of the Participant for good cause shown. SECTION 5 5.1 ADMINISTRATION BY PLAN COMMITTEE. The Plan Committee, whose members shall be appointed from time to time by the Company's Board of Directors shall be the Plan Administrator with final and binding discretionary authority to control and manage the operation and administration of the Plan, including all rights and powers necessary or convenient to the carrying out of its functions hereunder. In executing its responsibilities hereunder, the Plan Committee may manage and administer the Plan through the use of agents who may include employees of the Company. Without limiting the generality of the foregoing, and in addition to the other powers set forth in this Plan, the Plan Committee shall have the powers of the Plan Committee under the 401(k) Plan and the following discretionary authorities: (a) to construe and interpret the Plan, decide all questions of eligibility and determine the amount, manner and time of payment of any benefits hereunder; (b) to prescribe procedures to be followed by Participants or beneficiaries filing applications for benefits; (c) to prepare and distribute, in such manner as the Plan Committee determines to be appropriate, information explaining the Plan; (d) to request and receive from the Company and from Participants such information as shall be necessary for the proper administration of the Plan; (e) to furnish the Company upon request such annual and other reports with respect to the administration of the Plan as are reasonable and appropriate; and (f) to receive, review and maintain on file reports of the financial condition and of the receipts and disbursements of the Trust Fund from the Trustee. 5.2 COMPLIANCE. The Plan Committee shall take all such action as it deems necessary or appropriate to comply with governmental laws and regulations relating to the maintenance of records, notifications to Participants, registrations with the Internal Revenue Service, reports to the U.S. Department of Labor and all other requirements applicable to the Plan. 5.3 CLAIMS PROCEDURE. The procedures for making of elections, application for benefits, filing of claims and for claim review as set forth in Article 7 of the 401(k) Plan or its successor, and as amended from time to time, are hereby incorporated in this Plan and shall be applicable hereunder 4 5 except that any reference therein to a Plan Committee shall mean the Plan Committee established under the Plan. 5.4 AMENDMENT AND TERMINATION. The Company reserves the right by resolution of its Board of Directors to amend this Plan retroactively or otherwise in any manner which it deems desirable including, but not by way of limitation, the right to increase or reduce benefits to be provided hereunder or to change any provision relating to the payment of benefits and to terminate this Plan at any time upon giving notice to Participants and beneficiaries. Except to the extent necessary to conform to the laws or regulations or the extent permitted by any applicable law and regulation, neither the termination nor any suspension or amendment of the Plan shall operate either directly or indirectly to deprive any Participant or beneficiary of a non-forfeitable accrued benefit as constituted at the time of termination, suspension or amendment. 5.5 GOVERNING LAW. Except to the extent preempted by the law of the United States, the plan shall be construed and administered in accordance with the laws of the State of Illinois. 5.6 NO CONTRACT OF EMPLOYMENT. The Plan does not constitute a contract of employment and nothing in this Plan shall give any employee or Participant the right to be retained in the employ of the Company or the right to any award or benefit except to the extent specifically provided in the Plan. 5.7 NON-ALIENATION. Benefits payable to, or on the account of, any Participant or beneficiary under the Plan may not be voluntarily or involuntarily assigned or alienated. 5.8 WITHHOLDING. Participants and beneficiaries shall make appropriate arrangements for the satisfaction of any applicable federal, state or local taxes. The Plan Committee shall be authorized to take such action as may be appropriate, including withholding from amounts due to Participants or beneficiaries under the Plan, compensation to Participants from the Company or otherwise in order to assure tax compliance. 5.9 NO REQUIREMENTS TO FUND. No provision in this Plan shall be construed to require, either directly or indirectly, the Company to reserve, or otherwise set aside, funds for the payment of benefits hereunder. 5 EX-10.7 34 GENERAL BINDING CORPORATION PHANTOM STOCK PLAN 1 EXHIBIT 10.7 GENERAL BINDING CORPORATION PHANTOM STOCK PLAN FOR DIRECTORS 1. Purpose. This Phantom Stock Plan for Directors (the "Plan") has been established by General Binding Corporation (the "Company") to enable the members of the Board of Directors of the Company to have flexibility with respect to the receipt of income earned for acting as Directors and to receive incentive compensation based on the appreciation of the common stock of the Company and on the dividends declared on such stock. The Plan will also promote a closer identity of interests between such directors and the shareholders of the Company. 2. Definitions. The following definitions are applicable to the Plan: (a) "COMPANY" means General Binding Corporation and any successor corporation or corporations with or into which General Binding Corporation may be consolidated or merged. (b) "BOARD" means the Board of Directors of the Company. (c) "PARTICIPANT" means any current member of the Board, or any former member of the Board who, while on the Board, elected to participate in the Plan. (d) "STOCK" means the common stock of the Company. (e) "PHANTOM STOCK UNIT" means the basic unit of benefits awarded under the Plan, corresponding to the value of, and the dividend rights associated with, a single share of Stock. (f) "PHANTOM STOCK UNIT ACCOUNT" means, with respect to each Participant, an account established and maintained by the Company for the purpose of recording the number of Phantom Stock Units with respect to which that Participant has rights under the Plan. 2 (g) "VALUE PER PHANTOM STOCK UNIT" as of a given date means the average of the high and low prices per share at which the Stock trades on the NASDAQ stock market on that date or, if there is no trading in the Stock on that date, on the most recent preceding date on which such trading occurred. (h) "DIVIDEND EQUIVALENT" means, with respect to Phantom Stock Units credited to a particular Participant, a dollar amount equal to the cash dividend which the Participant would have been entitled to receive if the Participant had been the owner, on the record date for a dividend paid on the Stock, of a number of shares of Stock equal to the number of Phantom Stock Units then properly credited to the Phantom Stock Unit Account of the Participant. (i) "DIVIDEND EQUIVALENT ACCUMULATION ACCOUNT" means, with respect to each Participant, an account established and maintained by the Company for the purpose of recording the amount of Dividend Equivalents attributable to Phantom Stock Units of the Participant. (j) "ANNUAL RETAINER" means the annual fee payable to a Participant as compensation for serving on the Board. (k) "MEETING FEE" means the fee payable to a Participant as compensation for attending a particular meeting of the Board or of a committee of the Board. 3. Administration. The authority to manage and control the operation and administration of the Plan shall be vested in the Board. Subject to the limitations of the Plan, the Board shall have the sole and complete authority: (a) to interpret the Plan and to adopt, amend and rescind administrative guidelines and other rules and regulations relating to the Plan; (b) to correct any defect or omission or to reconcile any inconsistency in the Plan or in any payment made hereunder; and (c) to make all other determinations and to take all other actions necessary or advisable for the 2 3 implementation and administration of the Plan. The Board's determinations on matters within its authority shall be conclusive and binding upon the Company and all other persons. All expenses associated with the Plan shall be borne by the Company. 4. Annual Election to Receive Phantom Stock Units. Any Participant may, by written notice to the Company, elect to receive Phantom Stock Units in lieu of the Annual Retainer and Meeting Fees which would otherwise be payable to the Participant in cash. A notice of election under this Section 4 shall be valid only if it is in writing, is signed by the Participant, designates the fiscal year of the Company to which it relates, and is filed with the Company prior to the fiscal year of the Company to which it relates; provided, however, that (a) a notice of election which is filed with the Company within ten (10) days after this Plan is adopted by the Board, or (b) in the case of a new member of the Board, a notice of election which is filed with the Company by the new member within ten (10) days after becoming a member of the Board, may (if so specified in the notice) be effective for the then current fiscal year of the Company, but only with respect to compensation earned through the performance of services after the filing of the notice of election. Any such notice of election shall be irrevocable for the fiscal year for which it is given. Any such election may apply either to the Annual Retainer only or to the Annual Retainer and all Meeting Fees, as specified in the notice of election. 5. Crediting of Elected Phantom Stock Units. Phantom Stock Units elected pursuant to Section 4, above, shall be credited to the Phantom Stock Unit Account of the electing Participant in the following manner: (a) Phantom Stock Units received in lieu of an Annual Retainer shall be credited as of the date of the annual meeting of stockholders of the Company during the fiscal year in question. 3 4 The number of Phantom Stock Units so credited shall be determined by dividing (i) the amount of the Annual Retainer by (ii) the Value per Phantom Stock Unit on that date. (b) Phantom Stock Units received in lieu of a Meeting Fee shall be credited as of the date that the Meeting Fee is earned by attending the applicable meeting. The number of Phantom Stock Units so credited shall be determined by dividing (i) the amount of the Meeting Fee by (ii) the Value per Phantom Stock Unit on that date. 6. Crediting of Dividend Equivalents. If, as of the record date for a cash dividend on the Stock, Phantom Stock Units have been (or should have been) properly credited to the Phantom Stock Unit Account of a Participant, the Company shall credit to the Dividend Equivalent Accumulation Account of that Participant, as of that record date, a Dividend Equivalent for such Phantom Stock Units. 7. Application of Accumulated Dividend Equivalents. As of the last day of each fiscal year of the Company, the balance in each Participant's Dividend Equivalent Accumulation Account shall be converted into additional Phantom Stock Units by: (a) Adding to the Participant's Phantom Stock Unit Account a number of Phantom Stock Units determined by dividing (i) the balance in the Dividend Equivalent Accumulation Account by (ii) the Value per Phantom Stock Unit as of that date; provided, however, that any fraction resulting from that division shall not be converted into a fractional Phantom Stock Unit, but the corresponding dollar amount shall be carried forward in the Participant's Dividend Equivalent Accumulation Account for inclusion in the next annual conversion; and 4 5 (b) Reducing the Dividend Equivalent Accumulation Account balance to the greater of (i) any dollar amount corresponding to a fraction resulting from the division performed pursuant to paragraph (a), above, or (ii) zero. 8. Adjustments. In the event of any change in the outstanding shares of Stock by reason of any stock dividend or split, recapitalization, merger, consolidation, combination or exchange of shares, or other similar corporate change, the Board shall make such adjustments in each Participant's Phantom Stock Unit Account, including the number of Phantom Stock Units, as it deems to be equitable under the Plan in order fairly to give effect to such change and to the purpose and intent of the Plan. 9. Redemption of Phantom Stock Units and Dividend Equivalents. A Participant's Phantom Stock Units and any balance in his Dividend Equivalent Accumulation Account shall be redeemed, within thirty (30) days after the Participant ceases to be a member of the Board, through a lump-sum cash payment which is the sum of: (a) The product of (i) the number of Phantom Stock Units properly credited to the Participant's Phantom Stock Unit Account on the last day the Participant was a member of the Board, times (ii) the Value per Phantom Stock Unit on that date; plus (b) The balance, if any, in the Participant's Dividend Equivalent Accumulation Account at the end of the last day the Participant was a member of the Board. 10. Designation of Beneficiary. Each Participant who is credited with Phantom Stock Units under the Plan may designate a beneficiary or beneficiaries to receive any amounts payable under the Plan after his death, and may change such designation from time to time, by filing a written designation of beneficiary or beneficiaries with the Board on a form to be prescribed by the Board, 5 6 provided that no such designation shall be effective unless so filed prior to the death of such Participant. 11. Discretion of Company and Board of Directors. Any decision made or action taken by the Board arising out of or in connection with the construction, administration, interpretation and effect of the Plan shall lie within the absolute discretion of the Board and shall be conclusive and binding upon all persons. 12. Absence of Liability. No member of the Board or officer of the Company or any subsidiary of the Company shall be liable for any act or action hereunder, whether of commission or omission, taken by any other member or by any other officer, agent or employee or, except in circumstances involving his bad faith, for anything done or omitted to be done by himself. 13. No Segregation of Cash or Shares. The Company shall not be required to segregate any cash or any shares of Stock in connection with any Phantom Stock Units credited under the Plan. No interest shall be allowable or payable at any time with respect to any Phantom Stock Units. 14. No Rights as a Shareholder. No Participant shall have voting or any other rights or privileges of a shareholder of Stock by reason of the crediting of Phantom Stock Units under the Plan. 15. Company Not Trustee. The Company shall not, by virtue of any provisions of the Plan, be deemed to be a trustee of any Stock or any other property. 16. No Property Interest. The crediting of Phantom Stock Units under the Plan shall not create any property interest for a Participant, and the liabilities of the Company to any Participant pursuant to the Plan shall be those of a debtor pursuant to such contractual redemption obligations as arise under the Plan when a Participant ceases to be a member of the Board. No such obligation 6 7 of the Company shall be deemed to be secured by any pledge of or other encumbrance on any property of the Company. 17. No Security for Phantom Stock Units. Amounts payable under the Plan cannot be sheltered from the Company's general creditors. There can be no posting of a bond, promissory note or any other safeguard to assure that the Participant will be paid. The sole security for payment under the terms of the Plan is the Company's promise to pay. 18. Assignments and Transfers. The rights and interests of a Participant under the Plan may not be assigned, encumbered, pledged or transferred except, in the event of the death of a Participant, to his designated beneficiary or, in the absence of such designation, by will or the laws of descent and distribution. Any such attempted action shall be void, and no such interest shall be in any manner liable for or subject to debts, contracts, liabilities, engagements or torts of any Participant. If any Participant shall become bankrupt or shall attempt to assign, encumber, pledge or transfer any interest in the Plan, then the Board in its discretion may hold or apply such interest or any part thereof to or for the benefit of such Participant or his designated beneficiary, his spouse, children, blood relatives, or other dependents, or any of them, in such manner and in such proportions as the Board may consider proper. 19. Director Status. The Plan does not, and will not, give any Participant the right to continue as a director of the Company, nor will the Plan confer any right to any benefit under the Plan unless such right has specifically accrued under the terms of the Plan. 20. Gender and Number. In construing the Plan, where the context makes it appropriate, words in any gender shall be deemed to include any other gender, words in the singular shall be deemed to include the plural, and words in the plural shall be deemed to include the singular. 7 8 21. Illinois Law to Govern. All questions pertaining to the construction, regulation, validity and effect of the provisions of the Plan shall be determined in accordance with the laws of the State of Illinois. 22. Amendment, Suspension or Termination of the Plan. The Board may from time to time amend, suspend or terminate in whole or in part (and if suspended or terminated may reinstate) any or all of the provisions of the Plan, except that without the consent of the Participant no amendment, suspension or termination of the Plan shall impair the rights of any Participant as to any Phantom Stock Unit previously credited to the Participant pursuant to the Plan. 23. Withholding Tax. The Company shall have the right to deduct from any cash payment to be made to any Participant, his designated beneficiary or his estate any taxes required by law to be withheld with respect thereto. 24. Effective Date. The Plan shall take effect upon approval and adoption by the Board. 5-9-95 8 EX-12.1 35 STATEMENT RE COMPUTATION OF RATIO OF EARNINGS 1 GENERAL BINDING CORPORATION EXHIBIT 12.1 COMPUTATION OF RATIO EARNINGS TO FIXED CHARGES (000 OMITTED, EXCEPT RATIOS)
Years ended December 31, ------------------------------------------------------------------------ 1993 1994 1995 1996 1997 ----- ------ ----- ------ ------ EARNINGS Income before income taxes $24,305 $25,700 $35,833 $42,554 $48,180 Undistributed (earnings) loss of equity investees (206) (240) (44) 589 577 Fixed charges deducted from income: Implicit interest in rents 2,481 2,564 2,745 2,751 3,119 Interest expense 3,609 3,776 4,259 6,172 24,577 ------------------------------------------------------------------------ Earnings available for fixed charges $30,189 $31,800 $42,793 $52,066 $76,453 ======================================================================== FIXED CHARGES Implicit interest in rents $2,481 $2,564 $2,745 $2,751 $3,119 Interest expense 3,609 3,776 4,259 6,172 24,577 ------------------------------------------------------------------------ Fixed charges $6,090 $6,340 $7,004 $8,923 $27,696 ======================================================================== RATIO OF EARNINGS TO FIXED CHARGES 5.0 5.0 6.1 5.8 2.8 ======================================================================== Three months ended March 31, --------------------------------- 1997 1998 ------ ------ EARNINGS Income before income taxes $11,286 $11,825 Undistributed (earnings) loss of equity investees 145 69 Fixed charges deducted from income Implicit interest in rents 815 $953 Interest expense 5,228 7,472 ---------------------------------- Earnings available for fixed charges $17,474 $20,319 ================================== FIXED CHARGES Implicit interest in rents $ 815 $953 Interest expense 5,228 7,472 --------------------------------- Fixed charges $ 6,043 $ 8,425 ================================= RATIO OF EARNINGS TO FIXED CHARGES 2.9 2.4 =================================
Year Ended December 31, 1997 PRO FORMA -------------------------------- EARNINGS Income before income taxes $38,495 Undistributed (earnings) loss of equity investees 577 Fixed charges deducted from income: Implicit interest in rents 3,623 Interest expense 39,848 ------------ Earnings available for fixed charges $82,543 ============ FIXED CHARGES Implicit interest in rents $3,623 Interest expense 39,848 ------------ Fixed charges $43,471 ============ RATIO OF EARNINGS TO FIXED CHARGES 1.9 ============
EX-21.1 36 SUBSIDIARIES OF THE ISSUER 1 EXHIBIT 21.1 SUBSIDIARIES OF THE ISSUER(9)
Corporate Name Incorporated In Ownership - -------------- --------------- --------- Allfax Paper Products, Ltd. England 100%(1) Allfax UK, Ltd. England 100%(1) Anillos Plasticos de Mexico Mexico 100%(2) GBC Australia Pty. Ltd. Australia 100%(3) GBC Business Equipment, Inc. Florida 100% GBC Canada, Inc. Canada 100%(3) GBC Deutschland GmbH Germany 100% GBC/Fordigraph Pty. Ltd. Australia 100%(4) GBC France S.A. France 100%(5) GBC International, Inc. Nevada 100%(6) GBC Japan K.K. Japan 100%(3) GBC Metals Corp. Nevada 100% GBC Nederland B.V. Netherlands 100%(3) GBC Schweiz A.G. Switzerland 100%(3) GBC United Kingdom Holdings, Ltd. England 100%(3) GBC United Kingdom Limited England 100%(1) General Binding Corporation Italia S.p.A. Italy 100%(3) Grupo GBC S.A. de C.V. (Mexico) Mexico 100% Ibico GmbH Switzerland 100%(3) Ibico Benelux Netherlands 100%(7) Ibico Canada Canada 100%(2) Ibico Chile Chile 100%(2) Ibico England, Ltd. England 100%(7) Ibico France, S.A. France 100%(7) Ibico Germany, GmbH Germany 100%(7)
2
Corporate Name Incorporated In Ownership - -------------- --------------- --------- Ibico Iberia S.A. Spain 100%(7) Ibico Inc. Illinois 100%(7) Ibico Italia, S.R.L. Italy 100%(7) Ibico Portuguesa, Ltd. Portugal 100%(7) Ibico Singapore Holding, Ltd. Singapore 100%(7) Ibico Singapore, Ltd. Singapore 100%(8) Interbinding GmbH Germany 100%(7) Mirabeau Contract Sales England 100%(1) PBB&R S.A. de C.V. Mexico 100%(3) Printing Wire Supplies, Ltd. Ireland 100%(3) Pro-Tech Engineering Co., Inc. Wisconsin 100% Sickinger Company Michigan 100% U.S. Ring Binder Corp. Massachusetts 100% VeloBind, Incorporated Delaware 100% Ibico Scandinavia Sweden 75%(7) GMP Co., Ltd. Korea 33%
(1) Subsidiary of GBC United Kingdom Holdings, Ltd. (2) Subsidiary of Ibico Inc. (3) Subsidiary of GBC International, Inc. (4) Subsidiary of GBC Australia Pty. Ltd. (5) Subsidiary of GBC Schweiz A.G. (6) Subsidiary of GBC Business Equipment Inc. (7) Subsidiary of Ibico GmbH (8) Subsidiary of Ibico Singapore Holding, Ltd. (9) Certain insignificant subsidiaries have been excluded from Exhibit No. 21.1 under Rule 1-02(w) of Regulation S-X. These excluded subsidiaries considered in the aggregate as a single subsidiary would not constitute a significant subsidiary. EX-23.1 37 CONSENT OF ARTHUR ANDERSEN LLP 1 Exhibit 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our report dated January 30, 1998 (except with respect to the Ibico acquisition as discussed in Note 14, as to which the date is February 27, 1998, and except with respect to the sale of the U.S. RingBinder business, the issuance of Senior Subordinated Notes and the condensed consolidating financial information as discussed in Notes 14 and 15, as to which the date is July 21, 1998) on the consolidated financial statements of General Binding Corporation and Subsidiaries as of December 31, 1997, 1996 and for each of the three years in the period ended December 31, 1997, and to all references to our Firm included in this registration statement. /s/ Arthur Andersen LLP - ------------------------------ Chicago, Illinois July 21, 1998 EX-23.2 38 CONSENT OF KPMG FIDES PEAT 1 Exhibit 23.2 INDEPENDENT AUDITORS' CONSENT The Board of Directors and Stockholders Ibico AG and its subsidiaries. We consent to the use of our report included herein and to the reference to our firm under the heading "EXPERTS" in the prospectus. /s/ KPMG Fides Peat Zurich, Switzerland July 22, 1998 EX-24.1 39 POWER OF ATTORNEY 1 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Govi C. Reddy and Steven Rubin and each of them, with full power to act alone, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities which such person serves or may serve with respect to (i) General Binding Corporation or (ii) Baker School Specialty Co., Inc., GBC Business Equipment, Inc., GBC India Holdings Inc., GBC International, Inc., GBC Metals Corp., Ibico Inc., Pro-Tech Engineering Co., Inc., Sickinger Company, U.S. Ring Binder Corp. and VeloBind, Incorporated (the "Subsidiary Guarantors"), to sign the Registration Statement on Form S-4 of General Binding Corporation and the Subsidiary Guarantors relating to the registration of $150,000,000 aggregate principal amount of 9 3/8% Senior Subordinated Notes due 2008 (the "Exchange Notes") to be issued by General Binding Corporation and the guarantees of the Exchange Notes by the Subsidiary Guarantors, and any or all amendments to such registration statement, whether filed prior or subsequent to the time such Registration Statement becomes effective, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or each of them, or such person's substitute or their substitutes, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 24th day of July, 1998. /s/ WILLIAM N. LANE III ----------------------------- William N. Lane III 2 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Govi C. Reddy and Steven Rubin and each of them, with full power to act alone, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities which such person serves or may serve with respect to (i) General Binding Corporation or (ii) Baker School Specialty Co., Inc., GBC Business Equipment, Inc., GBC India Holdings Inc., GBC International, Inc., GBC Metals Corp., Ibico Inc., Pro-Tech Engineering Co., Inc., Sickinger Company, U.S. Ring Binder Corp. and VeloBind, Incorporated (the "Subsidiary Guarantors"), to sign the Registration Statement on Form S-4 of General Binding Corporation and the Subsidiary Guarantors relating to the registration of $150,000,000 aggregate principal amount of 9 3/8% Senior Subordinated Notes due 2008 (the "Exchange Notes") to be issued by General Binding Corporation and the guarantees of the Exchange Notes by the Subsidiary Guarantors, and any or all amendments to such registration statement, whether filed prior or subsequent to the time such Registration Statement becomes effective, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or each of them, or such person's substitute or their substitutes, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 24th day of July, 1998. /s/ WILLIAM R. CHAMBERS, JR. ----------------------------- William R. Chambers, Jr. 3 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Govi C. Reddy and Steven Rubin and each of them, with full power to act alone, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities which such person serves or may serve with respect to General Binding Corporation to sign the Registration Statement on Form S-4 of General Binding Corporation and Baker School Specialty Co., Inc., GBC Business Equipment, Inc., GBC India Holdings Inc., GBC International, Inc., GBC Metals Corp., Ibico Inc., Pro-Tech Engineering Co., Inc., Sickinger Company, U.S. Ring Binder Corp. and VeloBind, Incorporated (the "Subsidiary Guarantors"), relating to the registration of $150,000,000 aggregate principal amount of 9 3/8% Senior Subordinated Notes due 2008 (the "Exchange Notes") to be issued by General Binding Corporation and the guarantees of the Exchange Notes by the Subsidiary Guarantors, and any or all amendments to such registration statement, whether filed prior or subsequent to the time such Registration Statement becomes effective, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or each of them, or such person's substitute or their substitutes, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 24th day of July, 1998. /s/ RICHARD U. DE SCHUTTER ------------------------------ Richard U. De Schutter 4 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Govi C. Reddy and Steven Rubin and each of them, with full power to act alone, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities which such person serves or may serve with respect to General Binding Corporation to sign the Registration Statement on Form S-4 of General Binding Corporation and Baker School Specialty Co., Inc., GBC Business Equipment, Inc., GBC India Holdings Inc., GBC International, Inc., GBC Metals Corp., Ibico Inc., Pro-Tech Engineering Co., Inc., Sickinger Company, U.S. Ring Binder Corp. and VeloBind, Incorporated (the "Subsidiary Guarantors"), relating to the registration of $150,000,000 aggregate principal amount of 9 3/8% Senior Subordinated Notes due 2008 (the "Exchange Notes") to be issued by General Binding Corporation and the guarantees of the Exchange Notes by the Subsidiary Guarantors, and any or all amendments to such registration statement, whether filed prior or subsequent to the time such Registration Statement becomes effective, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or each of them, or such person's substitute or their substitutes, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 24th day of July, 1998. /s/ THEODORE DIMITRIOU --------------------------- Theodore Dimitriou 5 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Govi C. Reddy and Steven Rubin and each of them, with full power to act alone, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities which such person serves or may serve with respect to General Binding Corporation to sign the Registration Statement on Form S-4 of General Binding Corporation and Baker School Specialty Co., Inc., GBC Business Equipment, Inc., GBC India Holdings Inc., GBC International, Inc., GBC Metals Corp., Ibico Inc., Pro-Tech Engineering Co., Inc., Sickinger Company, U.S. Ring Binder Corp. and VeloBind, Incorporated (the "Subsidiary Guarantors"), relating to the registration of $150,000,000 aggregate principal amount of 9 3/8% Senior Subordinated Notes due 2008 (the "Exchange Notes") to be issued by General Binding Corporation and the guarantees of the Exchange Notes by the Subsidiary Guarantors, and any or all amendments to such registration statement, whether filed prior or subsequent to the time such Registration Statement becomes effective, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or each of them, or such person's substitute or their substitutes, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 24th day of July, 1998. /s/ RUDOLPH GRUA ------------------- Rudolph Grua 6 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Govi C. Reddy and Steven Rubin and each of them, with full power to act alone, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities which such person serves or may serve with respect to General Binding Corporation to sign the Registration Statement on Form S-4 of General Binding Corporation and Baker School Specialty Co., Inc., GBC Business Equipment, Inc., GBC India Holdings Inc., GBC International, Inc., GBC Metals Corp., Ibico Inc., Pro-Tech Engineering Co., Inc., Sickinger Company, U.S. Ring Binder Corp. and VeloBind, Incorporated (the "Subsidiary Guarantors"), relating to the registration of $150,000,000 aggregate principal amount of 9 3/8% Senior Subordinated Notes due 2008 (the "Exchange Notes") to be issued by General Binding Corporation and the guarantees of the Exchange Notes by the Subsidiary Guarantors, and any or all amendments to such registration statement, whether filed prior or subsequent to the time such Registration Statement becomes effective, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or each of them, or such person's substitute or their substitutes, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 24th day of July, 1998. /s/ THOMAS V. KALEBIC ------------------------- Thomas V. Kalebic 7 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Govi C. Reddy and Steven Rubin and each of them, with full power to act alone, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities which such person serves or may serve with respect to General Binding Corporation to sign the Registration Statement on Form S-4 of General Binding Corporation and Baker School Specialty Co., Inc., GBC Business Equipment, Inc., GBC India Holdings Inc., GBC International, Inc., GBC Metals Corp., Ibico Inc., Pro-Tech Engineering Co., Inc., Sickinger Company, U.S. Ring Binder Corp. and VeloBind, Incorporated (the "Subsidiary Guarantors"), relating to the registration of $150,000,000 aggregate principal amount of 9 3/8% Senior Subordinated Notes due 2008 (the "Exchange Notes") to be issued by General Binding Corporation and the guarantees of the Exchange Notes by the Subsidiary Guarantors, and any or all amendments to such registration statement, whether filed prior or subsequent to the time such Registration Statement becomes effective, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or each of them, or such person's substitute or their substitutes, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 24th day of July, 1998. /s/ JAMES A. MILLER ----------------------- James A. Miller 8 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Govi C. Reddy and Steven Rubin and each of them, with full power to act alone, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities which such person serves or may serve with respect to General Binding Corporation to sign the Registration Statement on Form S-4 of General Binding Corporation and Baker School Specialty Co., Inc., GBC Business Equipment, Inc., GBC India Holdings Inc., GBC International, Inc., GBC Metals Corp., Ibico Inc., Pro-Tech Engineering Co., Inc., Sickinger Company, U.S. Ring Binder Corp. and VeloBind, Incorporated (the "Subsidiary Guarantors"), relating to the registration of $150,000,000 aggregate principal amount of 9 3/8% Senior Subordinated Notes due 2008 (the "Exchange Notes") to be issued by General Binding Corporation and the guarantees of the Exchange Notes by the Subsidiary Guarantors, and any or all amendments to such registration statement, whether filed prior or subsequent to the time such Registration Statement becomes effective, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or each of them, or such person's substitute or their substitutes, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 24th day of July, 1998. /s/ ARTHUR C. NIELSEN, JR. ---------------------------- Arthur C. Nielsen, Jr. 9 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Govi C. Reddy and Steven Rubin and each of them, with full power to act alone, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities which such person serves or may serve with respect to General Binding Corporation to sign the Registration Statement on Form S-4 of General Binding Corporation and Baker School Specialty Co., Inc., GBC Business Equipment, Inc., GBC India Holdings Inc., GBC International, Inc., GBC Metals Corp., Ibico Inc., Pro-Tech Engineering Co., Inc., Sickinger Company, U.S. Ring Binder Corp. and VeloBind, Incorporated (the "Subsidiary Guarantors"), relating to the registration of $150,000,000 aggregate principal amount of 9 3/8% Senior Subordinated Notes due 2008 (the "Exchange Notes") to be issued by General Binding Corporation and the guarantees of the Exchange Notes by the Subsidiary Guarantors, and any or all amendments to such registration statement, whether filed prior or subsequent to the time such Registration Statement becomes effective, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or each of them, or such person's substitute or their substitutes, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 24th day of July, 1998. /s/ WARREN R. ROTHWELL ------------------------ Warren R. Rothwell 10 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Govi C. Reddy and Steven Rubin and each of them, with full power to act alone, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities which such person serves or may serve with respect to General Binding Corporation to sign the Registration Statement on Form S-4 of General Binding Corporation and Baker School Specialty Co., Inc., GBC Business Equipment, Inc., GBC India Holdings Inc., GBC International, Inc., GBC Metals Corp., Ibico Inc., Pro-Tech Engineering Co., Inc., Sickinger Company, U.S. Ring Binder Corp. and VeloBind, Incorporated (the "Subsidiary Guarantors"), relating to the registration of $150,000,000 aggregate principal amount of 9 3/8% Senior Subordinated Notes due 2008 (the "Exchange Notes") to be issued by General Binding Corporation and the guarantees of the Exchange Notes by the Subsidiary Guarantors, and any or all amendments to such registration statement, whether filed prior or subsequent to the time such Registration Statement becomes effective, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or each of them, or such person's substitute or their substitutes, lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, I have hereunto set my hand this 24th day of July, 1998. /s/ ROBERT J. STUCKER ----------------------- Robert J. Stucker EX-25.1 40 STATEMENT OF ELIGIBILITY OF TRUSTEE T-1 1 EXHIBIT 25.1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________ FORM T-1 _________ STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE FIRST UNION NATIONAL BANK (Exact name of trustee as specified in its charter) United States National Bank 22-1147033 (State of incorporation if (I.R.S. employer not a national bank) identification no.) First Union National Bank 230 South Tryon Street, 9th Floor Charlotte, North Carolina 28288-1179 (Address of principal (Zip Code) executive offices)
Same as above (Name, address and telephone number, including area code, of trustee's agent for service) GENERAL BINDING CORPORATION (Exact name of obliger as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 36-0887470 (I.R.S. employer identification no.) See List of Subsidiary Guarantors on Schedule I hereto (Names of Guarantors) One GBC Plaza Northbrook, IL 60062 (Address, including zip code, of principal executive offices) _________ Senior Subordinated Notes (Title of the indenture securities) __________________________________________ 2 1. General information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject
- ---------------------------------------------------------------------- Name Address - ---------------------------------------------------------------------- Federal Reserve Bank of Richmond, VA Richmond, VA Comptroller of the Currency Washington, D.C. Securities and Exchange Commission Division of Market Regulation Washington, D.C. Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. 2. Affiliations with obligor and underwriters. If the obligor or any underwriter for the obligor is an affiliate of the trustee, describe each such affiliation. None. (See Note 1 on Page 4.) Because the obligor is not in default on any securities issued under indentures under which the applicant is trustee, Items 3 through 15 are not required herein. 16. List of Exhibits. All exhibits identified below are filed as a part of this statement of eligibility. 1. A copy of the Articles of Association of First Union National Bank as now in effect, which contain the authority to commence business and a grant of powers to exercise corporate trust powers. 2 3 2. A copy of the certificate of authority of the trustee to commence business, if not contained in the Articles of Association. 3. A copy of the authorization of the trustee to exercise corporate trust powers, if such authorization is not contained in the documents specified in exhibits (1) or (2) above. 4. A copy of the existing By-laws of First Union National Bank, or instruments corresponding thereto. 5. Inapplicable. 6. The consent of the trustee required by Section 321(b) of the Trust Indenture Act of 1939 is included at Page 4 of this Form T-1 Statement. 7. A copy of the latest report of condition of the trustee published pursuant to law or to the requirements of its supervising or examining authority is attached hereto. 8. Inapplicable. 9. Inapplicable. 3 4 NOTE Note 1: Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of all facts on which to base a responsive answer to Item 2, the answer to said Item is based on incomplete information. Item 2 may, however, be considered correct unless amended by an amendment to this Form T-1. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, First Union National Bank, a national association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Charlotte, and State of North Carolina, on the 24th day of July, 1998. FIRST UNION NATIONAL BANK (trustee) By: /s/ SHANNON SCHWARTZ ------------------------------- Its: Assistant Vice President --------------------------- CONSENT OF TRUSTEE Under section 321(b) of the Trust Indenture Act of 1939, as amended, and in connection with the proposed issuance by General Binding Corporation of its Senior Subordinated Notes, First Union National Bank as the trustee herein named, hereby consents that reports of examinations of said Trustee by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon requests therefor. FIRST UNION NATIONAL BANK By: /s/ SHANNON SCHWARTZ ------------------------------- Name: SHANNON SCHWARTZ -------------------------- Title: Assistant Vice President -------------------------- Dated: July 24, 1998 4 5 Schedule I List of Subsidiary Guarantors The address and telephone number of the executive offices of each of the Subsidiary Guarantors listed below are the same as set forth for General Binding Corporation. All of the Subsidiary Guarantors are direct or indirect wholly owned subsidiaries of General Binding Corporation.
Exact Name of Subsidiary Guarantor State of I.R.S. Employer as Specified in its Charter Incorporation Identification No. - --------------------------- ------------- ----------------- Baker School Specialty Co., Inc. Massachusetts 04-2431217 GBC Business Equipment, Inc. Florida 36-3047585 GBC India Holdings Inc. Nevada 36-3064670 GBC International, Inc. Nevada 36-3061171 GBC Metals Corp. Nevada 36-3838831 Ibico Inc. Illinois 36-2833397 Pro-Tech Engineering Co., Inc. Wisconsin 39-1565642 Sickinger Company Michigan 38-1714934 U.S. Ring Binder Corp. Massachusetts 36-2922009 VeloBind, Incorporated Delaware 94-1671377
6 Exhibit 1 Charter No. 22693 FIRST UNION NATIONAL BANK ARTICLES OF ASSOCIATION (as restated effective February 26, 1998) For the purpose of organizing an Association to carry on the business of banking under the laws of the United States, the undersigned do enter into the following Articles of Association: FIRST. The title of this Association shall be FIRST UNION NATIONAL BANK. SECOND. The main office of the Association shall be in Charlotte, County of Mecklenburg, State of North Carolina. The general business of the Association shall be conducted at its main office and its branches. THIRD. The Board of Directors of this Association shall consist of not less than five nor more than twenty-five directors, the exact number of directors within such minimum and maximum limits to be fixed and determined from time to time by resolution of a majority of the full Board of Directors or by resolution of the shareholders at any annual or special meeting thereof. Unless otherwise provided by the laws of the United States, any vacancy in the Board of Directors for any reason, including an increase in the number thereof, may be filled by action of the Board of Directors. FOURTH. The annual meeting of the shareholders for the election of directors and the transaction of whatever other business may be brought before said meeting shall be held at the main office or such other place as the Board of Directors may designate, on the day of each year specified therefor in the By-Laws, but if no election is held on that day, it may be held on any subsequent day according to the provisions of law; and all elections shall be held according to such lawful regulations as may be prescribed by the Board of Directors. Nominations for election to the Board of Directors may be made by the Board of Directors or by any stockholder of any outstanding class of capital stock of the bank entitled to vote for election of directors. Nominations, other than those made by or on behalf of the existing management of the bank, shall be made in writing and shall be delivered or mailed to the President of the bank and to the Comptroller of the Currency, Washington, D.C., not less than 14 days nor more than 50 days prior to any meeting of stockholders called for the election of directors, 7 provided, however, that if less than 21 days' notice of the meeting is given to shareholders, such nomination shall be mailed or delivered to the President of the Bank and to the Comptroller of the Currency not later than the close of business on the seventh day following the day on which the notice of meeting was mailed. Such notification shall contain the following information to the extent known to the notifying shareholder: (a) the name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the total number of shares of capital stock of the bank that will be voted for each proposed nominee; (d) the name and residence address of the notifying shareholder; and (e) the number of shares of capital stock of the bank owned by the notifying shareholder. Nominations not made in accordance herewith may, in his discretion, be disregarded by the Chairman of the meeting, and upon his instructions, the vote tellers may disregard all votes cast for each such nominee. FIFTH. (a) General. The amount of capital stock of this Association shall be (I) 25,000,000 shares of common stock of the par value of twenty dollars ($20.00) each (the "Common Stock") and (ii) 160,540 shares of preferred stock of the par value of one dollar ($ 1. 00) each (the "Non-Cumulative Preferred Stock"), having the rights, privileges and preferences set forth below, but said capital stock may be increased or decreased from time to time in accordance with the provisions of the laws of the United States. (b) Terms of the Non-Cumulative Preferred Stock. 1. General. Each share of Non-Cumulative Preferred Stock shall be identical in all respects with the other shares of Non-Cumulative Preferred Stock. The authorized number of shares of Non-Cumulative Preferred Stock may from time to time be increased or decreased (but not below the number then outstanding) by the Board of Directors. Shares of Non-Cumulative Preferred Stock redeemed by the Association shall be canceled and shall revert to authorized but unissued shares of Non-Cumulative Preferred Stock. 2. Dividends. (a) General. The holders of Non-Cumulative Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, but only out of funds legally available therefor, non-cumulative cash dividends at the annual rate of $83.75 per share, and no more, payable quarterly on the first days of December, March, June and September, 2 8 respectively, in each year with respect to the quarterly dividend period (or portion thereof) ending on the day preceding such respective dividend payment date, to shareholders of record on the respective date, not exceeding fifty days preceding such dividend payment date, fixed for that purpose by the Board of Directors in advance of payment of each particular dividend. Notwithstanding the foregoing, the cash dividend to be paid on the first dividend payment date after the initial issuance of Non-Cumulative Preferred Stock and on any dividend payment date with respect to a partial dividend period shall be $83.75 per share multiplied by the fraction produced by dividing the number of days since such initial issuance or in such partial dividend period, as the case may be, by 360. (b) Non-cumulative Dividends. Dividends on the shares of Non-cumulative Stock shall not be cumulative and no rights shall accrue to the holders of shares of Non-Cumulative Preferred Stock by reason of the fact that the Association may fail to declare or pay dividends on the shares of Non-Cumulative Preferred Stock in any amount in any quarterly dividend period, whether or not the earnings of the Association in any quarterly dividend period were sufficient to pay such dividends in whole or in part, and the Association shall have no obligation at any time to pay any such dividend. (c) Payment of Dividends. So long as any share of Non-Cumulative Preferred Stock remains outstanding, no dividend whatsoever shall be paid or declared and no distribution made on any junior stock other than a dividend payable in junior stock, and no shares of junior stock shall be purchased, redeemed or otherwise acquired for consideration by the Association, directly or indirectly (other than as a result of a reclassification of junior stock, or the exchange or conversion of one junior stock for or into another junior stock, or other than through the use of the proceeds of a substantially contemporaneous sale of other junior stock), unless all dividends on all shares of non-cumulative Preferred Stock and non-cumulative Preferred Stock ranking on a parity as to dividends with the shares of Non-Cumulative Preferred Stock for the most recent dividend period ended prior to the date of such payment or declaration shall have been paid in full and all dividends on all shares of cumulative Preferred Stock ranking on a parity as to dividends with the shares of Non-Cumulative Stock (notwithstanding that dividends on such stock are cumulative) for all past dividend periods shall have been paid in full. Subject to the foregoing, and not otherwise, such dividends (payable in cash, stock or otherwise) as may be determined by the Board of Directors may be declared and paid on any junior stock from time to time out of any funds legally available therefor, and the Non-Cumulative Preferred 3 9 Stock shall not be entitled to participate in any such dividends, whether payable in cash, stock or otherwise. No dividends shall be paid or declared upon any shares of any class or series of stock of the Association ranking on a parity (whether dividends on such stock are cumulative or non-cumulative) with the Non-Cumulative Preferred Stock in the payment of dividends for any period unless at or prior to the time of such payment or declaration all dividends payable on the Non-cumulative Preferred Stock for the most recent dividend period ended prior to the date of such payment or declaration shall have been paid in full. When dividends are not paid in full, as aforesaid, upon the Non-Cumulative Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends (whether dividends on such stock are cumulative or non-cumulative) with the Non-Cumulative Preferred Stock, all dividends declared upon the Non-Cumulative Preferred Stock and any other series of Preferred Stock ranking on a parity as to dividends with the Non-Cumulative Preferred Stock shall be declared pro rata so that the amount of dividends declared per share on the Non-cumulative Preferred Stock and such other Preferred Stock shall in all cases bear to each other the same ratio that accrued dividends per share on the Non-Cumulative Preferred Stock (but without any accumulation in respect of any unpaid dividends for prior dividend periods on the shares of Non-Cumulative Stock) and such other Preferred Stock bear to each other. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Non-Cumulative Preferred Stock which may be in arrears. 3. Voting. The holders of Non-Cumulative Preferred Stock shall not have any right to vote for the election of directors or for any other purpose. 4. Redemption. (a) Optional Redemption. The Association, at the option of the Board of Directors, may redeem the whole or any part of the shares of Non-Cumulative Preferred Stock at the time outstanding, at any time or from time to time after the fifth anniversary of the date of original issuance of the Non-Cumulative Preferred Stock, upon notice given as hereinafter specified, at the redemption price per share equal to $1,000 plus an amount equal to the amount of accrued and unpaid dividends from the immediately preceding dividend payment date (but without any accumulation for unpaid dividends for prior dividend periods on the shares of Non-Cumulative Preferred Stock) to the redemption date. 4 10 (b) Procedures. Notice of every redemption of shares of Non-Cumulative Preferred Stock shall be mailed by first class mail, postage prepaid, addressed to the holders of record of the shares to be redeemed at their respective last addresses as they shall appear on the books of the Association. Such mailing shall be at least 10 days and not more than 60 days prior to the date fixed for redemption. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the shareholder receives such notice, and failure duly to give such notice by mail, or any defect in such notice, to any holder of shares of Non-Cumulative Preferred Stock designated for redemption shall not affect the validity of the proceedings for the redemption of any other shares of Non-Cumulative Preferred Stock. In case of redemption of a part only of the shares of Non-Cumulative Preferred Stock at the time outstanding the redemption may be either pro rata or by lot or by such other means as the Board of Directors of the Association in its discretion shall determine. The Board of Directors shall have full power and authority, subject to the provisions herein contained, to prescribe the terms and conditions upon which shares of the Non- Cumulative Preferred Stock shall be redeemed from time to time. If notice of redemption shall have been duly given, and, if on or before the redemption date specified therein, all funds necessary for such redemption shall have been set aside by the Association, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares called for redemption, so as to be and continue to be available therefor, then, notwithstanding that any certificate for shares so called for redemption shall not have been surrendered for cancellation, all shares so called for redemption shall no longer be deemed outstanding on and after such redemption date, and all rights with respect to such shares shall forthwith on such redemption date cease and terminate, except only the right of the holders thereof to, receive the amount payable on redemption thereof, without interest. If such notice of redemption shall have been duly given or if the Association shall have given to the bank or trust company hereinafter referred to irrevocable authorization promptly to give such notice, and, if on or before the redemption date specified therein, the funds necessary for such redemption shall have been deposited by the Association with such bank or trust company in trust for the pro rata benefit of the holders of the shares called for redemption, then, notwithstanding that any certificate for shares so called for redemption shall not have been surrendered for 5 11 cancellation, from and after the time of such deposit, all shares so called for redemption shall no longer be deemed to be outstanding and all rights with respect to such shares shall forthwith cease and terminate, except only the right of the holders thereof to receive from such bank or trust company at any time after the time of such deposit the funds so deposited, without interest. The aforesaid bank or trust company shall be organized and in good standing under the laws of the United States of America or any state thereof, shall have capital, surplus and undivided profits aggregating at least $50,000,000 according to its last published statement of condition, and shall be identified in the notice of redemption. Any interest accrued on such funds shall be paid to the Association from time to time. In case fewer than all the shares of Non-Cumulative Preferred Stock represented by a stock certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder thereof. Any funds so set aside or deposited, as the case may be, and unclaimed at the end of the relevant escheat period under applicable state law from such redemption date shall, to the extent permitted by law, be released or repaid to the Association, after which repayment the holders of the shares so called for redemption shall look only to the Association for payment thereof. 5. Liquidation. (a) Liquidation Preference. In the event of any voluntary liquidation, dissolution or winding up of the affairs of the Association, the holders of Non-cumulative Preferred Stock shall be entitled, before any distribution or payment is made to the holders of any junior stock, to be paid in full an amount per share equal to an amount equal to $1,000 plus an amount equal to the amount of accrued and unpaid dividends per share from the immediately preceding dividend payment date (but without any accumulation for unpaid dividends for prior dividend periods on the shares of Non-cumulative Preferred Stock) per share to such distribution or payment date (the "liquidation amount"). In the event of any involuntary liquidation, dissolution or winding up of the affairs of the Association, then, before any distribution or payment shall be made to the holders of any junior stock, the holders of Non- Cumulative Preferred Stock shall be entitled to be paid in full an amount per share equal to the liquidation amount. If such payment shall have been made in full to all holders of shares of Non-Cumulative Preferred Stock, the remaining assets of the Association shall be distributed among the 6 12 holders of junior stock, according to their respective rights and preferences and in each case according to their respective numbers of shares. (b) Insufficient Assets. In the event that, upon any such voluntary or involuntary liquidation, dissolution or winding up, the available assets of the Association are insufficient to pay such liquidation amount on all outstanding shares of Non-cumulative Preferred Stock, then the holders of Non-Cumulative Preferred Stock shall share ratably in any distribution of assets in proportion to the full amounts to which they would otherwise be respectively entitled. (c) Interpretation. For the purposes of this paragraph 5, the consolidation or merger of the Association with any other corporation or association shall not be deemed to constitute a liquidation, dissolution or winding up of the Association. 6. Preemptive Rights. The Non-Cumulative Preferred Stock is not entitled to any preemptive, subscription, conversion or exchange rights in respect of any securities of the Association. 7. Definitions. As used herein with respect to the Non-Cumulative Preferred Stock, the following terms shall have the following meanings: (a) The term "junior stock" shall mean the Common Stock and any other class or series of shares of the Association hereafter authorized over which the Non-Cumulative Preferred Stock has preference or priority in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of the Association. (b) The term "accrued dividends", with respect to any share of any class or series, shall mean an amount computed at the annual dividend rate for the class or series of which the particular share is a part, from, if such share is cumulative, the date on which dividends on such share became cumulative to and including the date to which such dividends are to be accrued, less the aggregate amount of all dividends theretofore paid thereon and, if such share is noncumulative, the relevant date designated to and including the date to which such dividends are accrued, less the aggregate amount of all dividends theretofore paid with respect to such period. (c) The term "Preferred Stock" shall mean all outstanding shares of all series of preferred stock of the Association as defined in this Article Fifth of the Articles of Association, as amended, of the Association. 7 13 8. Restriction on Transfer. No shares of Non-Cumulative Preferred Stock, or any interest therein, may be sold, pledged, transferred or otherwise disposed of without the prior written consent of the Association. The foregoing restriction shall be stated on any certificate for any shares of Non-Cumulative Preferred Stock. 9. Additional Rights. The shares of Non-Cumulative Preferred Stock shall not have any relative, participating, optional or other special rights and powers other than as set forth herein. SIXTH. The Board of Directors shall appoint one of its members President of this Association, who shall be Chairman of the Board, unless the Board appoints another director to be the Chairman. The Board of Directors shall have the power to appoint one or more Vice Presidents; and to appoint a cashier or such other officers and employees as may be required to transact the business of this Association. The Board of Directors shall have the power to define the duties of the officers and employees of the Association, to fix the salaries to be paid to them; to dismiss them, to require bonds from them and to fix the penalty thereof; to regulate the manner in which any increase of the capital of the Association shall be made; to manage and administer the business and affairs of the Association; to make all By-Laws that it may be lawful for them to make; and generally to do and perform all acts that it may be legal for a Board of Directors to do and perform. SEVENTH. The Board of Directors shall have the power to change the location of the main office to any other place within the limits of Charlotte, North Carolina, without the approval of the shareholders but subject to the approval of the Comptroller of the Currency; and shall have the power to establish or change the location of any branch or branches of the Association to any other location, without the approval of the shareholders but subject to the approval of the Comptroller of the Currency. EIGHTH. The corporate existence of this Association shall continue until terminated in accordance with the laws of the United States. NINTH. The Board of Directors of this Association, or any three or more shareholders owning, in the aggregate, not less than 10 percent of the stock of this Association, may call a special meeting of shareholders at any time. Unless otherwise provided by the laws of the United States, a notice of the time, place, and purpose of every annual and special meeting of the shareholders shall be given by first-class mail, postage prepaid, mailed at least ten days prior to the date of such meeting to 8 14 each shareholder of record at his address as shown upon the books of this Association. TENTH. Each director and executive officer of this Association shall be indemnified by the association against liability in any proceeding (including without limitation a proceeding brought by or on behalf of the Association itself) arising out of his status as such or his activities in either of the foregoing capacities, except for any liability incurred on account of activities which were at the time taken known or believed by such person to be clearly in conflict with the best interests of the Association. Liabilities incurred by a director or executive officer of the Association in defending a proceeding shall be paid by the Association in advance of the final disposition of such proceeding upon receipt of an undertaking by the director or executive officer to repay such amount if it shall be determined, as provided in the last paragraph of this Article Tenth, that he is not entitled to be indemnified by the Association against such liabilities. The indemnity against liability in the preceding paragraph of this Article Tenth, including liabilities incurred in defending a proceeding, shall be automatic and self-operative. Any director, officer or employee of this Association who serves at the request of the Association as a director, officer, employee or agent of a charitable, not-for-profit, religious, educational or hospital corporation, partnership, joint venture, trust or other enterprise, or a trade association, or as a trustee or administrator under an employee benefit plan, or who serves at the request of the Association as a director, officer or employee of a business corporation in connection with the administration of an estate or trust by the Association, shall have the right to be indemnified by the Association, subject to the provisions set forth in the following paragraph of this Article Tenth, against liabilities in any manner arising out of or attributable to such status or activities in any such capacity, except for any liability incurred on account of activities which were at the time taken known or believed by such person to be clearly in conflict with the best interests of the Association, or of the corporation, partnership, joint venture, trust, enterprise, Association or plan being served by such person. In the case of all persons except the directors and executive officers of the Association, the determination of whether a person is entitled to indemnification under the preceding paragraph of this Article Tenth shall be made by and in the sole discretion of the Chief Executive Officer of the Association. In the case of the directors and executive officers of the Association, the indemnity against liability in the preceding 9 15 paragraph of this Article Tenth shall be automatic and self-operative. For purposes of this Article Tenth of these Articles of Association only, the following terms shall have the meanings indicated: (a) "Association" means First Union National Bank and its direct and indirect wholly-owned subsidiaries. (b) "Director" means an individual who is or was a director of the Association. (c) "Executive officer" means an officer of the Association who by resolution of the Board of Directors of the Association has been determined to be an executive officer of the Association for purposes of Regulation O of the Federal Reserve Board. (d) "Liability" means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), or reasonable expenses, including counsel fees and expenses, incurred with respect to a proceeding. (e) "Party" includes an individual who was, is, or is threatened to be made a named defendant or respondent in a proceeding. (f) "Proceeding" means any threatened, pending, or completed claim, action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal. The Association shall have no obligation to indemnify any person for an amount paid in settlement of a proceeding unless the Association consents in writing to such settlement. The right to indemnification herein provided for shall apply to persons who are directors, officers, or employees of banks or other entities that are hereafter merged or otherwise combined with the Association only after the effective date of such merger or other combination and only as to their status and activities after such date. The right to indemnification herein provided for shall inure to the benefit of the heirs and legal representatives of any person entitled to such right. No revocation of, change in, or adoption of any resolution or provision in the Articles of Association or By-laws of the Association inconsistent with, this Article Tenth shall adversely affect the rights of any director, officer, or employee of the 10 16 Association with respect to (i) any proceeding commenced or threatened prior to such revocation, change, or adoption, or (ii) any proceeding arising out of any act or omission occurring prior to such revocation, change, or adoption, in either case, without the written consent of such director, officer, or employee. The rights hereunder shall be in addition to and not exclusive of any other rights to which a director, officer, or employee of the Association may be entitled under any statute, agreement, insurance policy, or otherwise. The Association shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, or employee of the Association, or is or was serving at the request of the Association as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, trade association, employee benefit plan, or other enterprise, against any liability asserted against such director, officer, or employee in any such capacity, or arising out of their status as such, whether or not the Association would have the power to indemnify such director, officer, or employee against such liability, excluding insurance coverage for a formal order assessing civil money penalties against an Association director or employee. Notwithstanding anything to the contrary provided herein, no person shall have a right to indemnification with respect to any liability (i) incurred in an administrative proceeding or action instituted by an appropriate bank regulatory agency which proceeding or action results in a final order assessing civil money penalties or requiring affirmative action by an individual or individuals in the form of payments to the Association, (ii) to the extent such person is entitled to receive payment therefor under any insurance policy or from any corporation, partnership, joint venture, trust, trade association, employee benefit plan, or other enterprise other than the Association, or (iii) to the extent that a court of competent jurisdiction determines that such indemnification is void or prohibited under state or federal law. ELEVENTH. These Articles of Association may be amended at any regular or special meeting of the shareholders by the affirmative vote of the holders of a majority of the stock of this Association, unless the vote of holders of a greater amount of stock is required by law, and in that case, by the vote of the holders of such greater amount. 11 17 Exhibit 4 BY-LAWS OF FIRST UNION NATIONAL BANK Charter No. 22693 As Restated Effective February 26, 1998 18 BY-LAWS OF FIRST UNION NATIONAL BANK ARTICLE I Meetings of Shareholders Section 1.1 Annual Meeting. The annual meeting of the shareholders for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held on the third Tuesday of April in each year, commencing with the year 1998, except that the Board of Directors may, from time to time and upon passage of a resolution specifically setting forth its reasons, set such other date for such meeting during the month of April as the Board of Directors may deem necessary or appropriate; provided, however, that if an annual meeting would otherwise fall on a legal holiday, then such annual meeting shall be held on the second business day following such legal holiday. The holders of a majority of the outstanding shares entitled to vote which are represented at any meeting of the shareholders may choose persons to act as Chairman and as Secretary of the meeting. Section 1.2 Special Meetings. Except as otherwise specifically provided by statute, special meetings of the shareholders may be called for any purpose at any time by the Board of Directors or by any three or more shareholders owning, in the aggregate, not less than ten percent of the stock of the Association. Every such special meeting, unless otherwise provided by law, shall be called by mailing, postage prepaid, not less than ten days prior to the date fixed for such meeting, to each shareholder at his address appearing on the books of the Association, a notice stating the purpose of the meeting. Section 1.3 Nominations for Directors. Nominations for election to the Board of Directors may be made by the Board of Directors or by any stockholder of any outstanding class of capital stock of the bank entitled to vote for the election of directors. Nominations, other than those made by or on behalf of the existing management of the bank, shall be made in writing and shall be delivered or mailed to the President of the Bank and to the Comptroller of the Currency, Washington, D. C., not less than 14 days nor more than 50 days prior to any meeting of stockholders called for the election of directors, provided however, that if less than 21 days' notice of such meeting is given to shareholders, such nomination shall be mailed or delivered to the President of the Bank and to the Comptroller of the Currency not later than the close of business on the seventh day following the day on which the notice of meeting was mailed. Such notification shall contain the following information to the extent known to the notifying shareholder: (a) the name and address of each proposed nominee; (b) the principal occupation of 19 each proposed nominee; (c) the total number of shares of capital stock of the bank that will be voted for each proposed nominee; (d) the name and residence address of the notifying shareholder; and (e) the number of shares of capital stock of the bank owned by the notifying shareholder. Nominations not made in accordance herewith may, in his discretion, be disregarded by the chairman of the meeting, and upon his instructions, the vote tellers may disregard all votes cast for each such nominee. Section 1.4 Judges of Election. The Board may at any time appoint from among the shareholders three or more persons to serve as Judges of Election at any meeting of shareholders; to act as judges and tellers with respect to all votes by ballot at such meeting and to file with the Secretary of the meeting a Certificate under their hands, certifying the result thereof. Section 1.5 Proxies. Shareholders may vote at any meeting of the shareholders by proxies duly authorized in writing, but no officer or employee of this Association shall act as proxy. Proxies shall be valid only for one meeting, to be specified therein, and any adjournments of such meeting. Proxies shall be dated and shall be filed with the records of the meeting. Section 1.6 Quorum. A majority of the outstanding capital stock, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders, unless otherwise provided by law; but less than a quorum may adjourn any meeting, from time to time, and the meeting may be held, as adjourned, without further notice. A majority of the votes cast shall decide every question or matter submitted to the shareholders at any meeting, unless otherwise provided by law or by the Articles of Association. ARTICLE II Directors Section 2.1 Board of Directors. The Board of Directors (hereinafter referred to as the "Board"), shall have power to manage and administer the business and affairs of the Association. Except as expressly limited by law, all corporate powers of the Association shall be vested in and may be exercised by said Board. Section 2.2 Number. The Board shall consist of not less than five nor more than twenty-five directors, the exact number within such minimum and maximum limits to be fixed and determined from time to time by resolution of a majority of the full Board or by resolution of the shareholders at any meeting thereof; provided, however, that a majority of the full Board of Directors may not increase the number of directors to a number which, (1) exceeds by more than two the number of directors last elected by 2 20 shareholders where such number was fifteen or less, and (2) to a number which exceeds by more than four the number of directors last elected by shareholders where such number was sixteen or more, but in no event shall the number of directors exceed twenty-five. Section 2.3 Organization Meeting. The Secretary of the meeting upon receiving the certificate of the judges, of the result of any election, shall notify the directors-elect of their election and of the time at which they are required to meet at the Main Office of the Association for the purpose of organizing the new Board and electing and appointing officers of the Association for the succeeding year. Such meeting shall be held as soon thereafter as practicable. If, at the time fixed for such meeting, there shall not be a quorum present, the directors present may adjourn the meeting from time to time, until a quorum is obtained. Section 2.4 Regular Meetings. Regular meetings of the Board of Directors shall be held at such place and time as may be designated by resolution of the Board of Directors. Upon adoption of such resolution, no further notice of such meeting dates or the places or times thereof shall be required. Upon the failure of the Board of Directors to adopt such a resolution, regular meetings of the Board of Directors shall be held, without notice, on the third Tuesday in February, April, June, August, October and December, commencing with the year 1997, at the main office or at such other place and time as may be designated by the Board of Directors. When any regular meeting of the Board would otherwise fall on a holiday, the meeting shall be held on the next business day unless the Board shall designate some other day. Section 2.5 Special Meetings. Special meetings of the Board of Directors may be called by the President of the Association, or at the request of three (3) or more directors. Each member of the Board of Directors shall be given notice stating the time and place, by telegram, letter, or in person, of each such special meeting. Section 2.6 Quorum. A majority of the directors shall constitute a quorum at any meeting, except when otherwise provided by law; but a less number may adjourn any meeting, from time to time, and the meeting may be held, as adjourned, without further notice. Section 2.7 Vacancies. When any vacancy occurs among the directors, the remaining members of the Board, in accordance with the laws of the United States, may appoint a director to fill such vacancy at any regular meeting of the Board, or at a special meeting called for that purpose. 3 21 Section 2.8 Advisory Boards. The Board of Directors may appoint Advisory Boards for each of the states in which the Association conducts operations. Each such Advisory Board shall consist of as many persons as the Board of Directors may determine. The duties of each Advisory Board shall be to consult and advise with the Board of Directors and senior officers of the Association in such state with regard to the best interests of the Association and to perform such other duties as the Board of Directors may lawfully delegate. The senior officer in such state, or such officers as directed by such senior officer, may appoint advisory boards for geographic regions within such state and may consult with the State Advisory Boards prior to such appointments. ARTICLE III Committees of the Board Section 3.1 The Board of Directors, by resolution adopted by a majority of the number of directors fixed by these By-Laws, may designate two or more directors to constitute an Executive Committee and other committees, each of which, to the extent authorized by law and provided in such resolution, shall have and may exercise all of the authority of the Board of Directors and the management of the Association. The designation of any committee and the delegation thereto of authority shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility or liability imposed upon it or any member of the Board of Directors by law. The Board of Directors reserves to itself alone the power to act on (1) dissolution, merger or consolidation, or disposition of substantially all corporate property, (2) designation of committees or filling vacancies on the Board of Directors or on a committee of the Board (except as hereinafter provided), (3) adoption, amendment or repeal of By-laws, (4) amendment or repeal of any resolution of the Board which by its terms is not so amendable or repealable, and (5) declaration of dividends, issuance of stock, or recommendations to stockholders of any action requiring stockholder approval. The Board of Directors or the Chairman of the Board of Directors of the Association may change the membership of any committee at any time, fill vacancies therein, discharge any committee or member thereof either with or without cause at any time, and change at any time the authority and responsibility of any such committee. A majority of the members of any committee of the Board of Directors may fix such committee's rules of procedure. All action by any committee shall be reported to the Board of Directors at a meeting succeeding such action, except such actions as the Board may not require to be reported to it in the 4 22 resolution creating any such committee. Any action by any committee shall be subject to revision, alteration, and approval by the Board of Directors, except to the extent otherwise provided in the resolution creating such committee; provided, however, that no rights or acts of third parties shall be affected by any such revision or alteration. ARTICLE IV Officers and Employees Section 4.1 Officers. The officers of the Association may be a Chairman of the Board, a Vice Chairman of the Board, one or more Chairmen or Vice Chairmen (who shall not be required to be directors of the Association), a President, one or more Vice Presidents, a Secretary, a Cashier or Treasurer, and such other officers, including officers holding similar or equivalent titles to the above in regions, divisions or functional units of the Association, as may be appointed by the Board of Directors. The Chairman of the Board and the President shall be members of the Board of Directors. Any two or more offices may be held by one person, but no officer shall sign or execute any document in more than one capacity. Section 4.2 Election, Term of Office, and Qualification. Each officer shall be chosen by the Board of Directors and shall hold office until the annual meeting of the Board of Directors held next after his election or until his successor shall have been duly chosen and qualified, or until his death, or until he shall resign, or shall have been disqualified, or shall have been removed from office. Section 4.2(a) Officers Acting as Assistant Secretary. Notwithstanding Section 1 of these By-laws, any Senior Vice President, Vice President, or Assistant Vice President shall have, by virtue of his office, and by authority of the By-laws, the authority from time to time to act as an Assistant Secretary of the Bank, and to such extent, said officers are appointed to the office of Assistant Secretary. Section 4.3 Chief Executive Officer. The Board of Directors shall designate one of its members to be the President of this Association, and the officer so designated shall be an ex officio member of all committees of the Association except the Examining Committee, and its Chief Executive Officer unless some other officer is so designated by the Board of Directors. Section 4.4 Duties of Officers. The duties of all officers shall be prescribed by the Board of Directors. Nevertheless, the Board of Directors may delegate to the Chief Executive Officer the authority to prescribe the duties of other officers 5 23 of the corporation not inconsistent with law, the charter, and these By-laws, and to appoint other employees, prescribe their duties, and to dismiss them. Notwithstanding such delegation of authority, any officer or employee also may be dismissed at any time by the Board of Directors. Section 4.5 Other Employees. The Board of Directors may appoint from time to time such tellers, vault custodians, bookkeepers, and other clerks, agents, and employees as it may deem advisable for the prompt and orderly transaction of the business of the Association, define their duties, fix the salary to be paid them, and dismiss them. Subject to the authority of the Board of Directors, the Chief Executive Officer or any other officer of the Association authorized by him, may appoint and dismiss all such tellers, vault custodians, bookkeepers and other clerks, agents, and employees, prescribe their duties and the conditions of their employment, and from time to time fix their compensation. Section 4.6 Removal and Resignation. Any officer or employee of the Association may be removed either with or without cause by the Board of Directors. Any employee other than an officer elected by the Board of Directors may be dismissed in accordance with the provisions of the preceding Section 4.5. Any officer may resign at any time by giving written notice to the Board of Directors or to the Chief Executive Officer of the Association. Any such resignation shall become effective upon its being accepted by the Board of Directors, or the Chief Executive Officer. ARTICLE V Fiduciary Powers Section 5.1 Capital Management Group. There shall be an area of this Association known as the Capital Management Group which shall be responsible for the exercise of the fiduciary powers of this Association. The Capital Management Group shall consist of four service areas: Fiduciary Services, Retail Services, Investments and Marketing. The Fiduciary Services unit shall consist of personal trust, employee benefits, corporate trust and operations. The General Office for the Fiduciary Services unit shall be located in Charlotte, N.C., with City Trust Offices located in such cities within the State of North Carolina as designated by the Board of Directors. Section 5.2 Trust Officers. There shall be a General Trust Officer of this Association whose duties shall be to manage, supervise and direct all the activities of the Capital Management Group. Further, there shall be one or more Senior Trust Officers designated to assist the General Trust Officer in the performance of his duties. They shall do or cause to be done all things 6 24 necessary or proper in carrying out the business of the Capital Management Group in accordance with provisions of applicable law and regulation. Section 5.3 Capital Management/General Trust Committee. There shall be a Capital Management/General Trust Committee composed of not less than four (4) members of the Board of Directors or officers of this Association who shall be appointed annually or from time to time by the Board of Directors of the Association. The General Trust Officer shall serve as an ex-officio member of the Committee. Each member shall serve until his successor is appointed. The Board of Directors or the Chairman of the Board may change the membership of the Capital Management/General Trust Committee at any time, fill vacancies therein, or discharge any member thereof with or without cause at any time. The Committee shall counsel and advise on all matters relating to the business or affairs of the Capital Management Group and shall adopt overall policies for the conduct of the business of the Capital Management Group including but not limited to: general administration, investment policies, new business development, and review for approval of major assignments of functional responsibilities. The Committee shall meet at least quarterly or as called for by its Chairman or any three (3) members of the Committee. A quorum shall consist of three (3) members. In carrying out its responsibilities, the Capital Management/General Trust Committee shall review the actions of all officers, employees and committees utilized by this Association in connection with the activities of the Capital Management Group and may assign the administration and performance of any fiduciary powers or duties to any of such officers or employees or to the Investment Policy Committee, Personal Trust Administration Committee, Account Review Committee, Corporate and Institutional Accounts Committee, or any other committees it shall designate. One of the methods to be used in the review process will be the thorough scrutiny of the Report of Examination by the Office of the Comptroller of the Currency and the reports of the Audit Division of First Union Corporation, as they relate to the activities of the Capital Management Group. These reviews shall be in addition to reviews of such reports by the Audit Committee of the Board of Directors. The Chairman of the Capital Management/ General Trust Committee shall be appointed by the Chairman of the Board of Directors. He shall cause to be recorded in appropriate minutes all actions taken by the Committee. The minutes shall be signed by its Secretary and approved by its Chairman. Further, the Committee shall summarize all actions taken by it and shall submit a report of its proceedings to the Board of Directors at its next regularly scheduled meeting following a meeting of the Capital Management/General Trust Committee. As required by Section 9.7 of Regulation 9 of the Comptroller of the Currency, the Board of Directors retains responsibility for the proper exercise of the fiduciary powers of this Association. 7 25 The Fiduciary Services unit of the Capital Management Group will maintain a list of securities approved for investment in fiduciary accounts and will from time to time provide the Capital Management/General Trust Committee with current information relative to such list and also with respect to transactions in other securities not on such list. It is the policy of this Association that members of the Capital Management/General Trust Committee should not buy, sell or trade in securities which are on such approved list or in any other securities in which the Fiduciary Services unit has taken, or intends to take, a position in fiduciary accounts in any circumstances in which any such transaction could be viewed as a possible conflict of interest or could constitute a violation of applicable law or regulation. Accordingly, if any such securities are owned by any member of the Capital Management/General Trust Committee at the time of appointment to such Committee, the Capital Management Group shall be promptly so informed in writing. If any member of the Capital Management/General Trust Committee intends to buy, sell, or trade in any such securities while serving as a member of the Committee, he should first notify the Capital Management Group in order to make certain that any proposed transaction will not constitute a violation of this policy or of applicable law or regulation. Section 5.4 Investment Policy Committee. There shall be an Investment Policy Committee composed of not less than seven (7) officers and/or employees of this Association who shall be appointed annually or from time to time by the Board of Directors. Each member shall serve until his successor is appointed. Meetings shall be called by the Chairman or any two (2) members of the Committee. A quorum shall consist of five (5) members. The Investment Policy Committee shall exercise such fiduciary powers and perform such duties as may be assigned to it by the Capital Management/General Trust Committee. All actions taken by the Investment Policy Committee shall be recorded in appropriate minutes, signed by the Secretary thereof, approved by its Chairman and submitted to the Capital Management/General Trust Committee at its next ensuing regular meeting for its review and approval. Section 5.5 Personal Trust Administration Committee. There shall be a Personal Trust Administration Committee composed of not less than five (5) officers, who shall be appointed annually or from time to time by the Board of Directors. Each member shall serve until his successor is appointed. Meetings shall be called by the Chairman or any three (3) members of the Committee. A quorum shall consist of three (3) members. The Personal Trust Administration Committee shall exercise such fiduciary powers and perform such duties as may be assigned to it by the Capital Management/General Trust Committee. All action taken by the Personal Trust Administration Committee shall be recorded in appropriate minutes signed by the Secretary thereof, approved by 8 26 its Chairman, and submitted to the Capital Management/General Trust Committee at its next ensuing regular meeting for its review and approval. Section 5.6 Account Review Committee. There shall be an Account Review Committee composed of not less than four (4) officers and/or employees of this Association, who shall be appointed annually or from time to time by the Board of Directors. Each member shall serve until his successor is appointed. Meetings shall be called by the Chairman or any two (2) members of the Committee. A quorum shall consist of three (3) members. The Account Review Committee shall exercise such fiduciary powers and perform such duties as may be assigned to it by the Capital Management/General Trust Committee. All actions taken by the Account Review Committee shall be recorded in appropriate minutes, signed by the Secretary thereof, approved by its Chairman and submitted to the Capital Management/ General Trust Committee at its next ensuing regular meeting for its review and approval. Section 5.7 Corporate and Institutional Accounts Committee. There shall be a Corporate and Institutional Accounts Committee composed of not less than five (5) officers and/or employees of this Association, who shall be appointed annually, or from time to time, by the Capital Management/General Trust Committee and approved by the Board of Directors. Meetings may be called by the Chairman or any two (2) members of the Committee. A quorum shall consist of three (3) members. The Corporate and Institutional Accounts Committee shall exercise such fiduciary powers and duties as may be assigned to it by the General Trust Committee. All actions taken by the Corporate and Institutional Accounts Committee shall be recorded in appropriate minutes, signed by the Secretary thereof, approved by its Chairman and made available to the General Trust Committee at its next ensuing regular meeting for its review and approval. ARTICLE VI Stock and Stock Certificates Section 6.1 Transfers. Shares of stock shall be transferable on the books of the Association, and a transfer book shall be kept in which all transfers of stock shall be recorded. Every person becoming a shareholder by such transfer shall, in proportion to his shares, succeed to all rights and liabilities of the prior holder of such shares. Section 6.2 Stock Certificates. Certificates of stock shall bear the signature of the Chairman, the Vice Chairman, the President, or a Vice President (which may be engraved, printed, or impressed), and shall be signed manually or by facsimile 9 27 process by the Secretary, Assistant Secretary, Cashier, Assistant Cashier, or any other officer appointed by the Board of Directors for that purpose, to be known as an Authorized Officer, and the seal of the Association shall be engraved thereon. Each certificate shall recite on its face that the stock represented thereby is transferable only upon the books of the Association properly endorsed. ARTICLE VII Corporate Seal Section 7.1 The President, the Cashier, the Secretary, or any Assistant Cashier, or Assistant Secretary, or other officer thereunto designated by the Board of Directors shall have authority to affix the corporate seal to any document requiring such seal, and to attest the same. Such seal shall be substantially in the following form. ARTICLE VIII Miscellaneous Provisions Section 8.1 Fiscal Year. The fiscal year of the Association shall be the calendar year. Section 8.2 Execution of Instruments. All agreements, indentures, mortgages, deeds, conveyances, transfers, certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions, notices, applications, schedules, accounts, affidavits, bonds, undertakings, proxies, and other instruments or documents may be signed, executed, acknowledged, verified, delivered or accepted in behalf of the Association by the Chairman of the Board, the Vice Chairman of the Board, any Chairman or Vice Chairman, the President, any Vice President or Assistant Vice President, the Secretary or any Assistant Secretary, the Cashier or Treasurer or any Assistant Cashier or Assistant Treasurer, or any officer holding similar or equivalent titles to the above in any regions, divisions or functional units of the Association, or, if in connection with the exercise of fiduciary powers of the Association, by any of said officers or by any Trust Officer or Assistant Trust Officer (or equivalent titles); provided, however, that where required, any such instrument shall be attested by one of said officers other than the officer executing such instrument. Any such instruments may also be executed, acknowledged, verified, delivered or accepted in behalf of the Association in such other manner and by such other officers as the Board of Directors may from time to time direct. The provisions of this Section 8.2 are supplementary to any other provision of these By-laws. 10 28 Section 8.3 Records. The Articles of Association, the By-laws, and the proceedings of all meetings of the shareholders, the Board of Directors, standing committees of the Board, shall be recorded in appropriate minute books provided for the purpose. The minutes of each meeting shall be signed by the Secretary, Cashier, or other officer appointed to act as Secretary of the meeting. ARTICLE IX By-laws Section 9.1 Inspection. A copy of the By-laws, with all amendments thereto, shall at all times be kept in a convenient place at the Head Office of the Association, and shall be open for inspection to all shareholders, during banking hours. Section 9.2 Amendments. The By-laws may be amended, altered or repealed, at any regular or special meeting of the Board of Directors, by a vote of a majority of the whole number of Directors. 11 29 Exhibit A First Union National Bank Article X Emergency By-laws In the event of an emergency declared by the President of the United States or the person performing his functions, the officers and employees of this Association will continue to conduct the affairs of the Association under such guidance from the directors or the Executive Committee as may be available except as to matters which by statute require specific approval of the Board of Directors and subject to conformance with any applicable governmental directives during the emergency. OFFICERS PRO TEMPORE AND DISASTER Section 1. The surviving members of the Board of Directors or the Executive Committee shall have the power, in the absence or disability of any officer, or upon the refusal of any officer to act, to delegate and prescribe such officer's powers and duties to any other officer, or to any director, for the time being. Section 2. In the event of a state of disaster of sufficient severity to prevent the conduct and management of the affairs and business of this Association by its directors and officers as contemplated by these By-laws, any two or more available members of the then incumbent Executive Committee shall constitute a quorum of that Committee for the full conduct and management of the affairs and business of the Association in accordance with the provisions of Article II of these By-laws; and in addition, such Committee shall be empowered to exercise all of the powers reserved to the General Trust Committee under Section 5.3 of Article V hereof. In the event of the unavail- ability, at such time, of a minimum of two members of the then incumbent Executive Committee, any three available directors shall constitute the Executive Committee for the full conduct and management of the affairs and business of the Association in accordance with the foregoing provisions of this section. This By-law shall be subject to implementation by resolutions of the Board of Directors passed from time to time for that purpose, and any provisions of these By-laws (other than this section) and any resolutions which are contrary to the provisions of this section or to the provisions of any such implementary resolutions shall be suspended until it shall be determined by an interim Executive Committee acting under this section that it shall be to the advantage of this Association to resume the conduct and management of its affairs and business under all of the other provisions of these By-laws. 30 Officer Succession BE IT RESOLVED, that if consequent upon war or warlike damage or disaster, the Chief Executive Officer of this Association cannot be located by the then acting Head Officer or is unable to assume or to continue normal executive duties, then the authority and duties of the Chief Executive Officer shall, without further action of the Board of Directors, be automatically assumed by one of the following persons in the order designated: Chairman President Division Head/Area Administrator - Within this officer class, officers shall take seniority on the basis of length of service in such office or, in the event of equality, length of service as an officer of the Association. Any one of the above persons who in accordance with this resolution assumes the authority and duties of the Chief Executive Officer shall continue to serve until he resigns or until five-sixths of the other officers who are attached to the then acting Head Office decide in writing he is unable to perform said duties or until the elected Chief Executive Officer of this Association, or a person higher on the above list, shall become available to perform the duties of Chief Executive Officer of the Association. BE IT FURTHER RESOLVED, that anyone dealing with this Association may accept a certification by any three officers that a specified individual is acting as Chief Executive Officer in accordance with this resolution; and that anyone accepting such certification may continue to consider it in force until notified in writing of a change, said notice of change to carry the signatures of three officers of the Association. Alternate Locations The offices of the Association at which its business shall be conducted shall be the main office thereof in each city which is designated as a City Office (and branches, if any), and any other legally authorized location which may be leased or acquired by this Association to carry on its business. During an emergency resulting in any authorized place of business of this Association being unable to function, the business ordinarily conducted at such location shall be relocated elsewhere in suitable quarters, in addition to or in lieu of the locations heretofore mentioned, as may be designated by the Board of Directors or by the Executive Committee or by such persons as are then, in accordance with resolutions adopted from time to time by the Board of Directors dealing with the exercise of authority in the time of such emergency, conducting the affairs of this Association. Any temporarily relocated place of business of this Association shall be returned to its legally authorized location 2 31 as soon as practicable and such temporary place of business shall then be discontinued. Acting Head Offices BE IT RESOLVED, that in case of and provided because of war or warlike damage or disaster, the General Office of this Association, located in Charlotte, North Carolina, is unable temporarily to continue its functions, the Raleigh office, located in Raleigh, North Carolina, shall automatically and without further action of this Board of Directors, become the "Acting Head Office of this Association"; BE IT FURTHER RESOLVED, that if by reason of said war or warlike damage or disaster, both the General Office of this Association and the said Raleigh Office of this Association are unable to carry on their functions, then and in such case, the Asheville Office of this Association, located in Asheville, North Carolina, shall, without further action of this Board of Directors, become the "Acting Head Office of this Association"; and if neither the Raleigh Office nor the Asheville Office can carry on their functions, then the Greensboro Office of this Association, located in Greensboro, North Carolina, shall, without further action of this Board of Directors, become the "Acting Head Office of this Association"; and if neither the Raleigh Office, the Asheville Office, nor the Greensboro Office can carry on their functions, then the Lumberton Office of this Association, located in Lumberton, North Carolina, shall, without further action of this Board of Directors, become the "Acting Head Office of this Association". The Head Office shall resume its functions at its legally authorized location as soon as practicable. 3 32 Exhibit 7 --------- Legal Title of Bank: First Union National Bank Call Date: 3/31/98 ST-BK: 37-0351 FFIEC 031 Address: Two First Union Center Page RC-1 City, State, Zip: Charlotte, NC 28288-0201 FDIC Certificate #: 04885 -----
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31, 1998 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter. SCHEDULE RC--BALANCE SHEET
C400 Dollar Amount in Thousands RCFD Bil Mil Thou - ------------------------------------------------------------------------------------------------------ ASSETS //////////////// 1. Cash and balances due from depository institutions (from Schedule RC-A): //////////////// a. Noninterest-bearing balances and currency and coin (1) . . . . . . . . . 0081 7,346,667 1.a. b. Interest-bearing balances (2) . . . . . . . . . . . . . . . . . . . . . 0071 12,481 1.b. 2. Securities: //////////////// a. Held-to-maturity securities (from Schedule RC-B, column A) . . . . . . . 1754 1,937,159 2.a. b. Available-for-sale securities (from Schedule RC-B, column D) . . . . . . 1773 31,508,601 2.b. 3. Federal funds sold and securities purchased under agreements to resell . . . 1350 4,501,133 3. 4. Loans and lease financing receivables //////////////// a. Loans and leases, net of unearned income (from Schedule RC-C) . . . . . . . . . . . . . . . . . RCFD 2122 83,315,758 //////////////// 4.a. b. LESS: Allowance for loan and lease losses . . . . . . RCFD 3123 1,005,217 //////////////// 4.b. c. LESS: Allocated transfer risk reserve . . . . . . . . RCFD 3128 0 //////////////// 4.c. d. Loans and leases, net of unearned income, //////////////// allowance, and reserve (item 4.a minus 4.b and 4.c) . . . . . . . . . . 2126 96,830,110 4.d. 5. Trading assets (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . 3545 3,818,431 5. 6. Premises and fixed assets (including capitalized leases) . . . . . . . . . . 2145 2,660,908 6. 7. Other real estate owned (from Schedule RC-M) . . . . . . . . . . . . . . . . 2150 112,869 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2180 269,234 8. 9. Customers' liability to this bank on acceptances outstanding . . . . . . . . 2155 575,447 9. 10. Intangible assets (from Schedule RC-M) . . . . . . . . . . . . . . . . . . . 2143 2,896,263 10. 11. Other assets (from Schedule RC-F) . . . . . . . . . . . . . . . . . . . . . 2160 7,274,331 11. 12. Total assets (sum of items 1 through 11) . . . . . . . . . . . . . . . . . . 2170 159,743,634 12.
- --------------- (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. 33 Exhibit 7 --------- Legal Title of Bank: First Union National Bank Call Date: 3/31/98 ST-BK: 37-0351 FFIEC 031 Address: Two First Union Center Page RC-1 City, State, Zip: Charlotte, NC 28288-0201 FDIC Certificate #: 04885 -----
Schedule RC--Continued
Dollar Amount in Thousands Bil Mil Thou - -------------------------------------------------------------------------------------------------------------------- LIABILITIES //////////////////////// 13. Deposits: //////////////////////// a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, . . . //////////////////////// part I) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCON 2200 101,438,219 13.a. (1) Noninterest-bearing (1) . . . . . . . . . . . . . RCON 6631 19,061,893 //////////////////////// 13.a.(1) (2) Interest-bearing . . . . . . . . . . . . . . . . . RCON 6636 82,376,326 //////////////////////// 13.a.(2) b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II) . . . . . . . . . . . . . . . . . . . . . . . . . . RCFN 2200 5,487,257 13.b. (1) Noninterest-bearing . . . . . . . . . . . . . . . RCFN 6631 29,619 //////////////////////// 13.b.(1) (2) Interest-bearing . . . . . . . . . . . . . . . . . RCFN 6636 5,457,638 //////////////////////// 13.b.(2) 14. Federal funds purchased and securities sold under agreements to repurchase . . . . . RCFD 2800 24,525,123 14. 15. a. Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . RCON 2840 426,758 15.a. b. Trading liabilities (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . RCFD 3548 4,547,787 15.b. 16. Other borrowed money (includes mortgage indebtedness and obligations under . . . . . //////////////////////// capitalized leases): . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . //////////////////////// a. With a remaining maturity of one year or less . . . . . . . . . . . . . . . . . RCFD 2332 3,391,194 16.a. b. With a remaining maturity of more than one year through three years . . . . . . RCFD A547 635,109 16.b. c. With a remaining maturity of more than three years . . . . . . . . . . . . . . . RCFD A548 416,618 16.c. 17. Not applicable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . //////////////////////// 18. Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . RCFD 2920 575,222 18. 19. Subordinated notes and debentures (2) . . . . . . . . . . . . . . . . . . . . . . . RCFD 3200 2,797,773 19. 20. Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . . . . . . . . RCFD 2930 3,662,892 20. 21. Total liabilities (sum of items 13 through 20) . . . . . . . . . . . . . . . . . . . RCFD 2948 147,903,952 21. 22. Not applicable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . //////////////////////// EQUITY CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . //////////////////////// 23. Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . RCFD 3838 160,540 23. 24. Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3230 82,795 24. 25. Surplus (exclude all surplus related to preferred stock) . . . . . . . . . . . . . . RCFD 3839 8,532,323 25. 26. a. Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . RCFD 3632 2,823,904 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities . . . . . RCFD 8434 204,120 26.b. 27. Cumulative foreign currency translation adjustments . . . . . . . . . . . . . . . . RCFD 3284 0 27. 28. Total equity capital (sum of items 23 through 27) . . . . . . . . . . . . . . . . . RCFD 3210 11,839,682 28. 29. Total liabilities and equity capital (sum of items 21 and 28) . . . . . . . . . . . RCFD 3300 159,743,634 29. Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external Number auditors as of any date during 1996 . . . . . . . . . . . . . . . . . . . . . . . . RCFD 6724 N/A M.1.
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8 = No external audit work - --------------- (1) Includes total demand deposits and noninterest-bearing time and savings deposit. (2) Includes limited-life preferred stock and related surplus. 2 EX-99.1 41 FORM OF LETTER OF TRANSMITTAL 1 EXHIBIT 99.1 LETTER OF TRANSMITTAL GENERAL BINDING CORPORATION OFFER TO EXCHANGE ITS 9 3/8% SENIOR SUBORDINATED NOTES DUE 2008 THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON __________,1998 (AS SUCH DATE AND TIME MAY BE EXTENDED, THE "EXPIRATION DATE"). If you desire to accept the Exchange Offer, this Letter of Transmittal should be completed, signed and delivered to: First Union National Bank
By Mail: By Overnight Courier: By Hand: First Union National Bank First Union National Bank First Union National Bank Corporate Trust Reorganization Dept. Corporate Trust Reorganization 40 Broad Street 1525 West W.T. Harris Blvd., 3C3 Dept. 5th Floor, Suite 550 Charlotte, North Carolina 28288 1525 West W.T. Harris Blvd., 3C3 New York, New York 10004 Attn: Mike Klotz Charlotte, North Carolina 28262 Attn: Mike Klotz
By Facsimile Transmission: (For Eligible Institutions Only): (704) 590-7628 Confirm by Telephone (704) 590-7408 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA A FACSIMILE NUMBER OTHER THAN THAT SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. The undersigned hereby acknowledges receipt of the Prospectus dated __________, 1998 (as the same may be amended or supplemented from time to time, the "Prospectus") of General Binding Corporation, a Delaware corporation (the "Company"), and this Letter of Transmittal (the "Letter of Transmittal"), that together constitute the Company's offer (the "Exchange Offer") to exchange $1,000 in principal amount of its 9 3/8% Senior Subordinated Notes due 2008 ("Exchange Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for each $1,000 in principal amount of its outstanding 9 3/8% Senior Subordinated Notes due 2008 ("Notes"), of which $150,000,000 aggregate principal 2 amount are outstanding. Capitalized terms used but not defined herein have the meanings ascribed to them in the Prospectus. This Letter of Transmittal is to be completed either if (a) certificates for Notes are to be delivered herewith or (b) tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in the Prospectus under "Exchange Offer -- Procedures for Tendering" and an Agent's Message (as defined below) is not delivered. Certificates for Notes, or book-entry confirmation of a book-entry transfer of such Notes into the account of First Union National Bank (the "Exchange Agent") at The Depository Trust Company ("DTC"), as well as this Letter of Transmittal (or a facsimile copy hereof), properly completed and duly executed, with any required signature guarantees, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at its address set forth herein on or prior to the Expiration Date or the guaranteed delivery procedures set forth in Instruction 2 must be complied with. Tenders by book-entry transfer may also be made by delivering an Agent's Message in lieu of this Letter of Transmittal. The term "book-entry confirmation" means a confirmation of book-entry transfer of Notes into the Exchange Agent's account at DTC. The term "Agent's Message" means a message, transmitted by DTC to and received by the Exchange Agent and forming a part of a book-entry confirmation, which states that DTC has received an express acknowledgment from the tendering participant, which acknowledgment states that such participant has received and agrees to be bound by this Letter of Transmittal and that the Company may enforce this Letter of Transmittal against such participant. If a registered holder (which term, for purposes of this document, shall include a participant in the book- entry transfer facility system at DTC whose name appears on a security position listing as the owner of the Notes) desires to tender Notes and such Notes are not immediately available or time will not permit all documents required by the Exchange Offer to reach the Exchange Agent (or if the procedures for book-entry transfer cannot be completed on a timely basis) prior to the Expiration Date, a tender may be effected in accordance with the guaranteed delivery procedures set forth in Instruction 2. The undersigned hereby tenders to the Company, the aggregate principal amount of Notes described in Box 1 below (the "Tendered Notes") in exchange for a like aggregate principal amount of the Company's Exchange Notes which have been registered under the Securities Act, upon the terms and subject to the conditions described in the Prospectus and this Letter of Transmittal. The undersigned is the registered holder of all the Tendered Notes and the undersigned represents that it has received from each beneficial owner of Tendered Notes ("Beneficial Owners") a duly completed and executed form of "Instruction to Registered Holder from Beneficial Owner" accompanying this Letter of Transmittal, instructing the undersigned to take the action described in this Letter of Transmittal. Subject to and effective upon the acceptance for exchange of the Tendered Notes tendered herewith in accordance with the terms and conditions of the Exchange Offer (including, if the Exchange Offer is extended or amended, the terms and conditions of any such extension or amendment), the undersigned hereby exchanges, assigns and transfers to, or upon the order of, the Company all right, title and interest in, to and under the Tendered Notes. Unless otherwise indicated under "Special Issuance Instructions" below (Box 4), the undersigned hereby directs that the Exchange Notes exchanged for the Tendered Notes be issued in the name(s) of the undersigned or, in the case of a book-entry transfer of Notes, that such Exchange Notes be credited to the account indicated below maintained at DTC. If applicable, substitute certificates representing Notes not exchanged or not accepted for exchange will be issued to the undersigned or, in the case of a book-entry transfer of Notes, will be credited to the account indicated below maintained at DTC. Similarly, unless otherwise indicated under "Special Delivery Instructions" below (Box 5), please send or cause to be sent the -2- 3 certificates for Exchange Notes (and accompanying documents, as appropriate) to the undersigned at the address shown below in Box 1. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as the true and lawful agent and attorney in fact (with full knowledge that the Exchange Agent is also acting as agent of the Company in connection with the Exchange Offer) of the undersigned with respect to the Tendered Notes, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), subject only to the right of withdrawal described in Instruction 6, to (i) deliver certificates for the Tendered Notes to the Company or cause ownership of the Tendered Notes to be transferred to, or upon the order of, the Company, on the books of the registrar for the Notes and deliver all accompanying evidences of transfer and authenticity to, or transfer ownership of such Notes on the account books maintained by DTC to, or upon the order of, the Company, upon receipt by the Exchange Agent, as the undersigned's agent, of the Exchange Notes to be issued in exchange for such Notes pursuant to the Exchange Offer, and (ii) receive for the account of the Company all benefits and otherwise exercise all rights of beneficial ownership of the Tendered Notes, all in accordance with the terms of the Exchange Offer. The undersigned understands that tenders of Notes pursuant to any one of the procedures described in the Prospectus under the caption "Exchange Offer - -- Procedures for Tendering" and in the instructions hereto will, upon the Company's acceptance for exchange of such Tendered Notes, constitute a binding agreement among the undersigned and the Company upon the terms and subject to the conditions of the Exchange Offer, subject only to withdrawal of such tenders on the terms set forth in Instruction 6. The undersigned recognizes that, under certain circumstances set forth in the Prospectus, the Company may not be required to accept for exchange any of the Tendered Notes. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and any Beneficial Owner(s), and every obligation of the undersigned or any Beneficial Owners hereunder shall be binding upon the heirs, executors, administrators, personal representatives, trustees in bankruptcy, legal representatives, successors and assigns of the undersigned and such Beneficial Owner(s). The undersigned hereby represents, warrants and agrees that the undersigned has full power and authority to tender, exchange, sell, assign and transfer the Tendered Notes and that the Company will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances when the Tendered Notes are acquired by the Company as contemplated herein, and the Tendered Notes are not subject to any adverse claims or proxies. The undersigned warrants and agrees that the undersigned and each Beneficial Owner will, upon request, execute and deliver any additional documents deemed by the Company or the Exchange Agent to be necessary or desirable to complete the tender, exchange, sale, assignment and transfer of the Tendered Notes, and that the undersigned will comply with its obligations under the Registration Rights Agreement. The undersigned has read and agrees to all of the terms of the Exchange Offer. The undersigned hereby represents and warrants that the information set forth in Box 2 is true and correct. BY TENDERING NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL (OR DELIVERY OF AN AGENT'S MESSAGE IN LIEU HEREOF), THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT (i) NEITHER THE UNDERSIGNED NOR ANY BENEFICIAL OWNER(S) IS AN "AFFILIATE" OF THE COMPANY, (ii) ANY EXCHANGE NOTES TO BE RECEIVED BY THE UNDERSIGNED AND ANY BENEFICIAL OWNER(S) ARE BEING ACQUIRED BY THE UNDERSIGNED AND ANY BENEFICIAL OWNER(S) IN THE ORDINARY COURSE OF BUSINESS OF THE UNDERSIGNED AND ANY BENEFICIAL OWNER(S), (iii) THE UNDERSIGNED -3- 4 AND EACH BENEFICIAL OWNER HAVE NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF EXCHANGE NOTES TO BE RECEIVED IN THE EXCHANGE OFFER, AND (iv) THE UNDERSIGNED AND ANY SUCH BENEFICIAL OWNER IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE IN, A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH EXCHANGE NOTES. A broker-dealer who holds Notes for its own account as a result of market-making activities or other trading activities and who receives Exchange Notes in exchange for such Notes pursuant to the Exchange Offer may be deemed to be an "underwriter" within the meaning of the Securities Act and will be required to deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes. If the undersigned or any beneficial owner(s) is a broker-dealer which acquired any of the Tendered Notes for its own account as the result of market-making activities or other trading activities, such broker-dealer acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of Exchange Notes received in exchange for any of such Tendered Notes that were acquired for its own account as the result of market-making activities or other trading activities (provided that, by so acknowledging and by delivering a prospectus, such broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act). Subject to certain provisions set forth in the Registration Rights Agreement and to the limitations described in the Prospectus, the Company has agreed that the Prospectus, as it may be amended or supplemented from time to time, may be used by a Participating Broker-Dealer (as defined below) in connection with resales of Exchange Notes received in exchange for Notes that were acquired by such Participating Broker-Dealer for its own account as a result of market- making activities or other trading activities, for a period ending 90 days after the Expiration Date or, if earlier, when all such Exchange Notes have been disposed of by such Participating Broker-Dealer. In that regard, each broker- dealer who participates in the Exchange Offer with respect to Notes acquired for its own account as a result of market- making or other trading activities (a "Participating Broker-Dealer"), by tendering such Notes and executing this Letter of Transmittal or delivering an Agent's Message in lieu hereof, agrees that, upon receipt of notice from the Company of the occurrence of any event or the discovery of any fact which makes any statement contained or incorporated by reference in the Prospectus untrue in any material respect or which causes the Prospectus to omit to state a material fact necessary in order to make the statements contained or incorporated by reference therein, in light of the circumstances under which they were made, not misleading or of the occurrence of certain other events specified in the Registration Rights Agreement, such Participating Broker-Dealer will suspend the sale of Exchange Notes pursuant to the Prospectus until the Company has amended or supplemented the Prospectus to correct such misstatement or omission and has furnished copies of the amended or supplemented Prospectus to such Participating Broker-Dealer or the Company has given notice that the sale of the Exchange Notes may be resumed, as the case may be. As a result, a Participating Broker-Dealer who intends to use the Prospectus in connection with resales of Exchange Notes received in exchange for Notes pursuant to the Exchange Offer must notify the Company, or cause the Company to be notified, on or prior to the Expiration Date, that it is a Participating Broker-Dealer. Such notice may be given in the space provided below or may be delivered to the Exchange Agent at the address set forth in the Prospectus under "Exchange Offer--Exchange Agent." Any holder of Notes who uses the Exchange Offer to participate in a distribution of the Exchange Notes to be acquired in the Exchange Offer, any broker-dealer who receives Exchange Notes in exchange for Notes that were purchased directly from the Company to resell pursuant to Rule 144A or any other available exemption under the Securities Act, any person participating in the distribution of the Notes who receives -4- 5 Exchange Notes in the Exchange Offer and any "affiliate" of the Company who receives Exchange Notes in the Exchange Offer (a) will not be able to rely on the interpretative letters of the staff of the Securities and Exchange Commission (the "SEC") described in the section of the Prospectus entitled "Exchange Offer" and (b) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or other transfer of such Exchange Notes, unless such sale is made pursuant to an exemption from such requirements. Any such resale transaction must be made by delivery of a prospectus containing the selling securityholder information required by the rules of the SEC under the Securities Act. PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING THE BOXES
========================================================================================================= BOX 1 DESCRIPTION OF TENDERED NOTES (ATTACH ADDITIONAL SIGNED PAGES, IF NECESSARY) ========================================================================================================= Aggregate Principal Name(s) and address(es) of Registered Holder(s), exactly Amount Aggregate as name(s) appear(s) on Note Certificate(s) or on a Certificate Represented Principal security position listing Number(s)* by Amount (Please fill in, if blank) of Notes Certificate(s) Tendered** - --------------------------------------------------------------------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- =========================================================================================================
* Need not be completed by book-entry holders. ** The minimum permitted tender is $1,000 in principal amount of Notes. All other tenders must be in integral multiples of $1,000 of principal amount. Unless otherwise indicated in this column, the principal amount of all Note Certificates identified in this Box 1 or delivered to the Exchange Agent herewith shall be deemed tendered.
============================================================================================================ BOX 2 BENEFICIAL OWNER(S) State of Principal Residence of Each Beneficial Aggregate Principal Amount of Tendered Notes Held Owner of Tendered Notes for Account of Beneficial Owner ============================================================================================================ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ ============================================================================================================
If delivery of Notes is to be made by book-entry transfer to the account maintained by the Exchange Agent at DTC, then tenders of Notes must be effected in accordance with the procedures mandated by DTC's Automated Tender Offer Program and the procedures set forth in the Prospectus under the caption "Exchange Offer -- Procedures for Tendering." -5- 6 =================================================================================================== BOX 3 (TO BE COMPLETED BY ELIGIBLE INSTITUTIONS ONLY) =================================================================================================== [ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING: Name of Tendering Institution ___________________________________ DTC Account Number _________________________________________ Transaction Code Number ______________________________________ [ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name of Registered Holders(s) ___________________________________ Window Ticket Number (if any) __________________________________ Date of Execution of Notice of Guaranteed Delivery _________________ Name of Institution which Guaranteed Delivery_______________ If Guaranteed Delivery is to be made By Book-Entry Transfer: Name of Tendering Institution ____________________________________ DTC Account Number __________________________________________ Transaction Code Number _______________________________________ [ ] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED NOTES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH ABOVE. [ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE NOTES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: ____________________________________________________________ Address: __________________________________________________________ ===================================================================================================
-6- 7 ====================================================================================================== BOX 4 SPECIAL ISSUANCE INSTRUCTIONS (SEE INSTRUCTIONS 4, 7 AND 8) ====================================================================================================== To be completed ONLY if the Exchange Notes are to be issued in the name of someone other than the registered holder(s) of the Notes whose name(s) appear(s) above (Box 1) or if Notes delivered by book-entry transfer which are not accepted for exchange are to be returned by credit to an account other than the account indicated above (Box 3). Issue [ ] Notes not tendered [ ] Exchange Notes to: Name(s): _____________________________________________________________________ Address: _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ (include Zip Code) Area Code and Telephone Number: __________________________________________________________ Tax Identification or Social Security No.: __________________________________________________________ [ ] Credit unexchanged Notes delivered by book-entry transfer to the DTC account set forth below. ________________________________________ (DTC Account Number, if applicable) ======================================================================================================
-7- 8 ====================================================================================================== BOX 5 SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 4, 7 AND 8) ====================================================================================================== To be completed ONLY if certificates for the Exchange Notes exchanged for the Notes and for untendered Notes are to be sent to someone other than the registered holder(s) whose name(s) appear(s) above (Box 1), or to such registered holder(s) at an address other than that shown above (Box 1). Mail Exchange Notes and any untendered Notes to: Name(s): _____________________________________________________________________ (please print) Address: _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ (include Zip Code) Area Code and Telephone Number: _________________________________________________________ Tax Identification or Social Security No.: _________________________________________________________ ======================================================================================================
====================================================================================================== BOX 6 USE OF GUARANTEED DELIVERY ====================================================================================================== [ ] CHECK HERE ONLY IF NOTES ARE BEING TENDERED BY MEANS OF A NOTICE OF GUARANTEED DELIVERY. See Instruction 2. If this box is checked, please provide the following information: Name(s) of Registered Holder(s): ________________________________________________________ __________________________________________________________________________________________ Date of Execution of Notice of Guaranteed Delivery: _____________________________________ Name of Institution which Guaranteed Delivery: __________________________________________ ======================================================================================================
-8- 9 ====================================================================================================== BOX 7 TENDERING HOLDER SIGNATURE (SEE INSTRUCTIONS 1, 4 AND 7) IN ADDITION, COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN ====================================================================================================== X _________________________________________ Guarantee of Signature(s) (If required by Instructions 4 and 7) X _________________________________________ Authorized Signature (Signature(s) of Registered Holder(s) or Authorized Signatory) X __________________________________________ Note: The above lines must be signed by the Name: ___________________________________ registered holder(s) of Notes exactly as their (please print) name(s) appear(s) on certificate(s) for Notes hereby tendered or on a security position listing, Title: ___________________________________ or by person(s) authorized to become the Name of Firm: ______________________________ registered holder(s) by endorsements and documents (Must be an Eligible Institution transmitted herewith (including such opinions of as defined in Instruction 2) counsel, certifications and other information as may be required by the Company to comply with the Address: ___________________________________ restrictions on transfer applicable to the Notes). ___________________________________ If signature is by a trustee, executor, ___________________________________ administrator, guardian, attorney-in-fact, (include Zip Code) officer, or other person acting in a fiduciary or representative capacity, such person must set Area Code and forth his or her full title below. See Telephone Number: ________________________ Instruction 7. Dated: ___________________________________ Dated: _____________________________________ Name(s): _____________________________________ _____________________________________ (please print) Capacity: _____________________________________ _____________________________________ (full title) Street Address: ________________________________ _____________________________________ _____________________________________ (include Zip Code) Area Code and Telephone Number: ___________________________ Tax Identification or Social Security Number(s): _____________________________________ ======================================================================================================
-9- 10 IMPORTANT TAX INFORMATION PLEASE PROVIDE YOUR SOCIAL SECURITY OR OTHER TAXPAYER IDENTIFICATION NUMBER ON THIS SUBSTITUTE FORM W-9 AND CERTIFY THEREIN THAT YOU ARE NOT SUBJECT TO BACKUP WITHHOLDING. FAILURE TO DO SO MAY SUBJECT YOU TO 31% FEDERAL INCOME TAX WITHHOLDING. ================================================================================================================== BOX 8 SUBSTITUTE FORM W-9 ================================================================================================================== PART I -- Please provide the Taxpayer Social Security Number Identification Number ("TIN") of the person submitting this Letter of Transmittal in ________________________ the box at right and certify by signing and dating below. or Employer Identification Number PART II -- For Payees exempt from backup withholding, see the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W- 9 and complete as instructed therein. CERTIFICATION -- Under penalties of perjury, the undersigned hereby certifies the following: (1) The TIN shown in Part I above is the correct TIN of the person who is submitting this Letter of Transmittal and who is required by law to provide such TIN; and (2) The person who is submitting this Letter of Transmittal and who is required by law to provide such TIN is not subject to backup withholding because such person has not been notified by the Internal Revenue Service ("IRS") that such person is subject to backup withholding as a result of a failure to report all interest or dividends, or because the IRS has notified such person that he or she is no longer subject to backup withholding, or because such person is an exempt payee under the attached guidelines. NOTE: You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding unless you have been notified by the IRS that you are no longer subject to backup withholding. THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING. Date: Signature: ____________________________________________________________ ____________________________ ____________________________________________________________ ==================================================================================================================
-10- 11 INSTRUCTIONS TO LETTER OF TRANSMITTAL FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. Delivery of this Letter of Transmittal and Certificates. Certificates for the Tendered Notes, as well as a properly completed and duly executed copy of this Letter of Transmittal, with any required signature guarantees, a Substitute Form W-9 (or facsimile thereof) and any other documents required by this Letter of Transmittal must be received by the Exchange Agent at its address set forth herein on or prior to the Expiration Date; provided, however, that book-entry transfers of Notes may be effected in accordance with the procedures mandated by DTC's Automatic Tender Offer Program ("ATOP"). Certificates for Notes, or book-entry confirmation of a book-entry transfer of such Notes into the Exchange Agent's account at DTC, as well as this Letter of Transmittal (or facsimile hereof or Agent's Message in lieu hereof), properly completed and duly executed, with any required signature guarantees, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at its address set forth herein on or prior to the Expiration Date or the guaranteed delivery procedures set forth in Instruction 2 must be complied with. THE METHOD OF DELIVERY OF CERTIFICATES FOR TENDERED NOTES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS TO BE BY MAIL, THE USE OF REGISTERED MAIL, WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. The Company will not accept any alternative, conditional or contingent tenders. Each tendering holder, by execution of a Letter of Transmittal (or facsimile thereof or delivery of an Agent's Message in lieu thereof), waives any right to receive any notice of the acceptance of such tender. 2. Guaranteed Delivery Procedures. Holders who wish to tender their Notes but (i) the certificates for such Notes are not immediately available, (ii) who cannot deliver their Notes, Letter of Transmittal and any other documents required by the Letter of Transmittal to the Exchange Agent on or prior to the Expiration Date or (iii) who cannot complete the procedures for delivery by book-entry transfer on a timely basis, must tender their Notes according to the guaranteed delivery procedures set forth below, including completion of Box 6. Pursuant to such procedures: (i) such tender must be made by or through an Eligible Institution (as defined below); (ii) on or prior to the Expiration Date, a completed and signed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery), substantially in the form accompanying this Letter of Transmittal, must have been delivered to the Exchange Agent; and (iii) the certificates (or a book-entry confirmation (as defined in the Prospectus)) representing the Tendered Notes, in proper form for transfer, together with a completed and signed Letter of Transmittal or, in the case of a book-entry tender, an Agent's Message in lieu of this Letter of Transmittal, with any required signature guarantees and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent within three New York Stock Exchange, Inc. trading days after the date of execution of such Notice of Guaranteed Delivery, all as provided in the Prospectus under "Exchange Offer--Procedures for Tendering." The Notice of Guaranteed Delivery may be delivered by hand or overnight carrier, or transmitted by facsimile or mail to the Exchange Agent, and must include a guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery. For Notes to be properly tendered pursuant to the guaranteed delivery procedure, the Exchange Agent must receive a Notice of Guaranteed Delivery on or prior to the -11- 12 Expiration Date. As used herein and in the Prospectus, "Eligible Institution" means a firm or other entity identified in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, as "an eligible guarantor institution," including (as such terms are defined therein) (i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or government securities broker or dealer; (iii) a credit union; (iv) a national securities exchange, registered securities association or clearing agency; or (v) a savings association that is a participant in a Securities Transfer Association. 3. Beneficial Owner Instructions to Registered Holders. Only a holder in whose name the Notes are registered on the books of the registrar or on a security position listing (or the legal representative or attorney-in-fact of such registered holder) may execute and deliver this Letter of Transmittal (or an Agent's Message in lieu hereof). Any Beneficial Owner of Notes who is not the registered holder must arrange promptly with the registered holder to execute and deliver this Letter of Transmittal on his or her behalf through the execution and delivery to the registered holder of the Instructions to Registered Holder from Beneficial Owner form accompanying this Letter of Transmittal. 4. Guarantee of Signatures. No signature guarantee on this Letter of Transmittal is required if: (i) this Letter of Transmittal is signed by the registered holder of Notes tendered herewith, unless such holder(s) has completed either the box entitled "Special Issuance Instructions" (Box 4) or the box entitled "Special Delivery Instructions" (Box 5) above, or (ii) such Notes are tendered for the account of a firm that is an Eligible Institution. In all other cases, an Eligible Institution must guarantee the signature(s) on this Letter of Transmittal. See Instruction 7. 5. Inadequate Space. If the space provided in the box captioned "Description of Notes" is inadequate, the certificate number(s) and/or the aggregate principal amount of Notes and any other required information should be listed on a separate signed schedule which is attached to this Letter of Transmittal. 6. Partial Tenders and Withdrawal Rights. Tenders of Notes will be accepted only in the aggregate principal amount of $1,000 or any integral multiple in excess thereof. If less than the entire aggregate principal amount of Notes evidenced by any certificate submitted is tendered, the tendering holder should fill in the principal amount tendered in the column labeled "Aggregate Principal Amount Tendered" of the box entitled "Description of Notes Tendered" (Box 1) above. The entire aggregate principal amount of Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. If the entire aggregate principal amount of all Notes is not tendered, new certificate(s) for Notes for the principal amount of Notes not tendered and Exchange Notes exchanged for any Notes tendered will be sent to the holder at his or her registered address, unless a different address is provided in the appropriate box on this Letter of Transmittal, as soon as practicable following the Expiration Date. As set forth below, tenders of Notes may be withdrawn at any time on or prior to the Expiration Date. In order for a withdrawal to be effective, a written or facsimile transmission of such notice of withdrawal must be received by the Exchange Agent at one of its addresses set forth above on or prior to the Expiration Date. Any such notice of withdrawal must specify the name of the person who tendered the Notes to be withdrawn, the aggregate principal amount of Notes to be withdrawn, and (if certificates for Notes have been tendered) the name of the registered holder of the Notes as set forth on the certificate for the Notes, if different from that of the person who tendered such Notes. If certificates for the Notes have been delivered -12- 13 or otherwise identified to the Exchange Agent, then prior to the physical release of such certificates for the Notes, the tendering holder must submit the serial numbers shown on the particular certificates for the Notes to be withdrawn and the signature on the notice of withdrawal must be guaranteed by an Eligible Institution, except in the case of Notes tendered for the account of an Eligible Institution. If Notes have been tendered pursuant to the procedures for book- entry transfer set forth in the Prospectus under "Exchange Offer--Procedures for Tendering," the notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn Notes. Withdrawals of tenders of Notes may not be rescinded. Notes properly withdrawn will not be deemed validly tendered for purposes of the Exchange Offer, but may be retendered at any subsequent time on or prior to the Expiration Date by following any of the procedures described in the Prospectus under "Exchange Offer--Procedures for Tendering." All questions as to the validity, form and eligibility (including time of receipt) of such withdrawal notices will be determined by the Company, in its sole discretion, whose determination shall be final and binding on all parties. The Company, any affiliates or assigns of the Company, the Exchange Agent or any other person shall not be under any duty to give any notification of any irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Any Notes which have been tendered but which are withdrawn will be returned to the holder thereof promptly after withdrawal. 7. Signatures on the Letter of Transmittal; Bond Powers and Endorsements. If this Letter of Transmittal is signed by the registered holder(s) of the Tendered Notes, the signature(s) must correspond exactly with the name(s) as written on the face of the certificates, or on a security position listing, without alteration, enlargement or any change whatsoever. If any of the Tendered Notes are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any Tendered Notes are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate copies of the Letter of Transmittal documents as there are names in which certificates are held. If this Letter of Transmittal is signed by the registered holder(s) of Tendered Notes and Exchange Notes are to be issued (and any untendered aggregate principal amount of Notes is to be reissued) to the registered holder(s), the registered holder(s) need not and should not endorse any Tendered Notes nor provide a separate bond power. In any other case, such registered holder(s) must either duly endorse the certificate(s) for Notes tendered or transmit a properly executed bond power with the certificate(s), with the signature(s) on the endorsement or bond power guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of any Notes listed, the certificates must be endorsed or accompanied by appropriate bond powers, in each case, signed exactly as the name or names of the registered holder(s) appear(s) on the certificates, and also must be accompanied by such opinions of counsel, certifications and other information as the Company may require in accordance with the restrictions on transfer applicable to the Notes. The signature on the endorsement or bond power must be guaranteed by an Eligible Institution. If this Letter of Transmittal, any certificate for Notes, bond power, power of attorney or any other document required by this Letter of Transmittal is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing and, unless waived by the Company, proper evidence satisfactory to the Company, in its sole discretion, of such person's authority to so act must be submitted with this Letter of Transmittal. -13- 14 Endorsements on certificates or signatures on bond powers required by this Instruction 7 must be guaranteed by an Eligible Institution. 8. Special Issuance and Special Delivery Instructions. If Exchange Notes are to be issued in the name of a person other than the registered holder(s) of Tendered Notes or are to be sent to a name and address other than the name and address of the person signing this Letter of Transmittal or if Notes delivered by book-entry transfer which are not accepted for exchange are to be returned by credit to a DTC account other than that of the person signing this Letter of Transmittal, the appropriate boxes (Box 4 and/or Box 5) on this Letter of Transmittal should be completed. Certificates for Notes not exchanged will be returned by mail or, if tendered by book-entry transfer, by crediting the account indicated above maintained at DTC. See Instruction 6. 9. Transfer Taxes. Holders who tender their Notes for exchange will not be obligated to pay any transfer taxes in connection therewith. If, however, Exchange Notes are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the Tendered Notes, or if a transfer tax is imposed for any reason other than the exchange of Notes in connection with the Exchange Offer, then the amount of any such transfer tax (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder. 10. Tax Identification Number. A holder whose Tendered Notes are accepted for exchange should provide the Exchange Agent with such holder's correct taxpayer identification number ("TIN"), which, in the case of a holder who is an individual, is his or her social security number. If the Exchange Agent is not provided with the correct TIN, the holder or other payee may be subject to a $50 penalty imposed by the Internal Revenue Service (the "IRS"). In addition, payments to such holders or other payees with respect to Notes exchanged pursuant to the Exchange Offer may be subject to 31% backup withholding. To prevent backup withholding with respect to payments of distributions on the Exchange Notes, each tendering holder should provide such holder's correct TIN by completing the Substitute Form W-9 set forth herein, certifying that the TIN provided is correct (or that such holder is awaiting a TIN), and that the holder is not subject to backup withholding because (i) the holder is exempt from backup withholding, or (ii) the holder has not been notified by the Internal Revenue Service that such holder is subject to backup withholding as a result of failure to report all interest or dividends, or (iii) the Internal Revenue Service has notified the holder that such holder is no longer subject to backup withholding. If the Exchange Notes will be registered in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for information on which TIN to report. Certain holders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. Such holders should nevertheless complete the attached Substitute Form W-9, and write "exempt" on the face thereof, to avoid possible erroneous backup withholding. A foreign person may qualify as an exempt recipient by submitting a properly completed IRS Form W-8, signed under penalties of perjury, attesting to that holder's exempt status. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional instructions. The Company reserves the right in its sole discretion to take whatever steps are necessary to comply with the Company's obligation regarding backup withholding. Any amount paid as backup withholding will be creditable against a holder's tax liability. -14- 15 11. Validity of Tenders. All questions as to the form of documents, validity, eligibility (including time of receipt) and acceptance for exchange of Tendered Notes will be determined by the Company, in its sole discretion, whose determination shall be final and binding on all parties. The Company reserves the absolute right, in its sole and absolute discretion, to reject any and all tenders determined by it not to be in proper form or the acceptance of which, or exchange for, may, in the view of the Company or of counsel to the Company, be unlawful. The Company also reserves the absolute right, subject to applicable law, to waive any of the conditions of the Exchange Offer as set forth in the Prospectus under "Exchange Offer -- Conditions" or any condition, defect or irregularity in any tender of Notes of any particular holder whether or not similar conditions, defects or irregularities are waived in the case of other holders. The interpretation of the terms and conditions of the Exchange Offer (including this Letter of Transmittal and the instructions hereto) by the Company will be final and binding on all parties. No tender of Notes will be deemed to have been validly made until all irregularities with respect to such tender have been cured or waived. The Company, any affiliates or assigns of the Company, the Exchange Agent or any other person shall not be under any duty to give any notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. 12. Mutilated, Lost, Stolen or Destroyed Certificates. Any tendering holder whose Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above for further instruction. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing mutilated, lost, stolen or destroyed certificate(s) have been followed. 13. Questions, Requests for Assistance and Additional Copies. Questions and requests for assistance and requests for additional copies of the Prospectus and this Letter of Transmittal may be directed to the Exchange Agent at the address and telephone number set forth on the front of this Letter of Transmittal. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer. 14. Acceptance of Tendered Notes and Issuance of Exchange Notes; Return of Notes. Subject to the terms and conditions of the Exchange Offer, the Company will accept for exchange all validly tendered Notes as soon as practicable after the Expiration Date and will issue Exchange Notes therefor as soon as practicable thereafter. For purposes of the Exchange Offer, the Company shall be deemed to have accepted the Tendered Notes when, as and if the Company has given written or oral notice thereof to the Exchange Agent. If any Tendered Notes are not exchanged pursuant to the Exchange Offer for any reason, such unexchanged Notes will be returned, without expense, to the undersigned at the address shown below or at a different address as may be indicated herein under "Special Issuance Instructions" or "Special Delivery Instructions." IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU HEREOF) AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE. -15- 16 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER OF SUBSTITUTE FORM W-9 Guidelines for Determining the Proper Identification Number to Give the Payer. Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification number have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the name and number to give the payer.
==================================================== ================================================= Give the name and Give the name and For this type of SOCIAL SECURITY number For this type of EMPLOYER IDENTIFICATION account of -- account number of-- ==================================================== ================================================= 1. Individual The individual 6. Sole proprietorship The Owner(3) 2. Two or more The actual owner of the 7. A valid trust, Legal entity (Do not individuals account or, if combined estate, or pension furnish the taxpayer (joint account) funds, the first trust identification number individual on the of the personal account(1) representative or trustee unless the legal entity itself is not designated in the account title.)(4) 3. Custodian account The minor(2) 8. Corporate The Corporation of a minor (Uniform Gift to Minors Act) 4. a. The usual The grantor-trustee(1) 9. Association, club, The organization revocable religious, savings trust charitable, account (grantor educational, or is also other tax-exempt trustee) organization b. So-called trust The actual owner(1) account that is not a legal or valid trust under State law 5. Sole proprietorship The owner(3) 10. Partnership The partnership 11. A broker or The broker or nominee registered nominee 12. Account with the The public entity Department of Agriculture in the name of a public entity (such as a state or local government, school district, or person) that receives agricultural program payments ==================================================== =================================================
(1) List first and circle the name of the person whose number you furnish. If only one person on a joint account has a social security number, that person's number must be furnished. (2) Circle the minor's name and furnish the minor's social security number. (3) You must show your individual name, but you may also enter your business or "doing business as" name. You may use either your social security number or employer identification number (if you have one). (4) List first and circle the name of the legal trust, estate, or pension trust. Note: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. -16- 17 SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE. PURPOSE OF FORM. -- A person who is required to file an information return with the IRS must get your correct TIN to report, for example, income paid to you, real estate transactions, mortgage interest you paid, the acquisition or abandonment of secured property, cancellation of debt, or contributions you made to an IRA. Use Form W-9 to give your correct TIN to the requester (the person requesting your TIN) and, when applicable, (1) to certify the TIN you are giving is correct (or you are waiting for a number to be issued), (2) to certify you are not subject to backup withholding, or (3) to claim exemption from backup withholding if you are an exempt payee. Giving your correct TIN and making the appropriate certifications will prevent certain payments from being subject to backup withholding. WHAT IS BACKUP WITHHOLDING?--Persons making certain payments to you must withhold and pay to the IRS 31% of such payments under certain conditions. This is called "backup withholding." Payments that could be subject to backup withholding include interest, dividends, broker and barter exchange transactions, rents, royalties, nonemployee pay, and certain payments from fishing boat operators. Real estate transactions are not subject to backup withholding. If you give the requester your correct TIN, make the proper certifications, and report all your taxable interest and dividends on your tax return, your payments will not be subject to backup withholding. Payments you receive will be subject to backup withholding if: 1. You do not furnish your TIN to the requester, or 2. The IRS tells the requester that you furnished an incorrect TIN, or 3. The IRS tells you that you are subject to backup withholding because you did not report all your interest and dividends on your tax return (for reportable interest and dividends only), or 4. You do not certify to the requester that you are not subject to backup withholding under 3 above (for reportable interest and dividend accounts opened after 1983 only), or 5. You do not certify your TIN when required. See the Part III Instructions for exceptions. Certain payees and payments are exempt from backup withholding and information reporting. See the Part II Instructions and the separate Instructions for the Requester of Form W-9. HOW TO GET A TIN. -- If you do not have a TIN, apply for one immediately. To apply, get Form SS-5, Application for a Social Security Number Card (for individuals), from your local office of the Social Security Administration, or Form SS-4, Application for Employer Identification Number (for businesses and all other entities), or Form W-7, Application for IRS Individual Taxpayer Identification Number (for resident aliens ineligible to get a social security number), from the IRS by calling 1-800-TAX-FORM (1-800-829-3676). If you do not have a TIN, write "Applied For" in the space for the TIN in Part I, sign and date the form, and give it to the requester. Generally, you will then have 60 days to get a TIN and give it to the requester. If the requester does not receive your TIN within 60 days, backup withholding, if applicable, will begin and continue until you furnish your TIN. Note: Writing "Applied For" on the form means that you have already applied for a TIN OR that you intend to apply for one soon. As soon as you receive your TIN, complete another Form W-9, include your TIN, sign and date the form, and give it to the requester. PENALTIES FAILURE TO FURNISH TIN. -- If you fail to furnish your correct TIN to a requester, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty. CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. -17- 18 MISUSE OF TINS. -- If the requester discloses or uses TINs in violation of Federal law, the requester may be subject to civil and criminal penalties. SPECIFIC INSTRUCTIONS NAME. -- If you are an individual, you must generally enter the name shown on your social security card. However, if you have changed your last name, for instance, due to marriage, without informing the Social Security Administration of the name change, please enter your first name, the last name shown on your social security card and your new last name. If the account is in joint names, list first and then circle the name of the person or entity whose number you entered in Part I. SOLE PROPRIETOR. -- You must enter your individual name. (Enter either your SSN or EIN in Part I). You may also enter your business name or "doing business as" name on the business name line. Enter your name as shown on your social security card and business name as it was used to apply for your EIN on Form SS-4. OTHER ENTITIES. -- Enter the business name as shown on required federal tax documents. This name should match the name shown on the charter or other legal document creating the entity. You may enter any business, trade, or "doing business as" name on the business name line. PART I -- TAXPAYER IDENTIFICATION NUMBER (TIN) You must enter your TIN in the appropriate box. If you are a sole proprietor, you may enter your SSN or EIN. Also see the chart on page 20 for further clarification of name and TIN combinations. If you are a resident alien and you are ineligible to get a social security number, your TIN is your IRS individual taxpayer identification number. Enter it in the social security number box. If you do not have a TIN, follow the instructions under HOW TO GET A TIN on page 21. PART II -- FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING Individuals (including sole proprietors) are not exempt from backup withholding. Corporations are exempt from backup withholding for certain payments, such as interest and dividends. If you are exempt from backup withholding, you should still complete this form to avoid possible erroneous backup withholding. Enter your correct TIN in Part I, write "Exempt" in Part II, and sign and date the form. If you are a nonresident alien or a foreign entity not subject to backup withholding, give the requester a completed Form W-8, Certificate of Foreign Status. PART III -- CERTIFICATION For a joint account, only the person whose TIN is shown in Part I should sign. 1. Interest, Dividend, and Barter Exchange Accounts Opened Before 1984 and Broker Accounts Considered Active During 1983. You must give your correct TIN, but you do not have to sign the certification. 2. Interest, Dividend, Broker, and Barter Exchange Accounts Opened After 1983 and Broker Accounts Considered Inactive During 1983. You must sign the certification or backup withholding will apply. If you are subject to backup withholding and you are merely providing your correct TIN to the requester, you must cross out Item 2 in the certification before signing the form. 3. Real Estate Transactions. You must sign the certification. You may cross out Item 2 of the certification. 4. Other Payments. You must give your correct TIN, but you do not have to sign the certification unless you have been notified that you have previously given an incorrect TIN. Other payments include payments made in the course of the requester's trade or business for rents, royalties, goods (other than bills for merchandise), medical and health care services (including payments to corporations), payments to a nonemployee for services (including attorney and accounting fees), and payments to certain fishing boat crew members. 5. Mortgage Interest Paid by You, Acquisitions or Abandonment of Secured Property, Cancellation of Debt, or IRA Contributions. You must give your correct TIN, but you do not have to sign the certification. PRIVACY ACT NOTICE Section 6109 of the Internal Revenue Code requires you to give your correct TIN to persons who must file information returns with the IRS to report interest, dividends, and certain other income paid to you, mortgage interest you paid, the acquisition or abandonment of secured property, cancellation of debt, or contributions you made to an IRA. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. The IRS may also provide this information to the Department of Justice for civil and criminal litigation and to cities, states, and the District of Columbia to carry out their tax laws. You must provide your TIN whether or not you are required to file a tax return. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not give a TIN to a payer. Certain penalties may also apply. -18- EX-99.2 42 FORM OF NOTICE OF GUARANTEED DELIVERY 1 EXHIBIT 99.2 NOTICE OF GUARANTEED DELIVERY WITH RESPECT TO 9 3/8% SENIOR SUBORDINATED NOTES DUE 2008 OF GENERAL BINDING CORPORATION As set forth in the Exchange Offer (as defined below), this Notice of Guaranteed Delivery (or a facsimile hereof) or one substantially equivalent hereto or the electronic form used by The Depository Trust Company ("DTC") for this purpose must be used to accept the Exchange Offer if certificates for 9 3/8% Senior Subordinated Notes due 2008 (the "Notes") of General Binding Corporation, a Delaware corporation (the "Company"), are not immediately available to the registered holder of such Notes, or if a participant in DTC is unable to complete the procedures for book-entry transfer on a timely basis of Notes to the account maintained by First Union National Bank (the "Exchange Agent") at DTC, or if time will not permit all documents required by the Exchange Offer to reach the Exchange Agent prior to 5:00 p.m., New York City time, on __________, 1998, unless extended (the "Expiration Date"). This Notice of Guaranteed Delivery (or a facsimile hereof) or one substantially equivalent hereto or the electronic form used by DTC may be delivered by mail (registered or certified mail is recommended), by facsimile transmission, by hand or overnight carrier to the Exchange Agent. See "Exchange Offer - Procedures for Tendering." Capitalized terms used herein and not defined herein have the meanings assigned to them in the Exchange Offer. The Exchange Agent is: FIRST UNION NATIONAL BANK
By Mail: By Overnight Courier: By Hand: First Union National Bank First Union National Bank First Union National Bank Corporate Trust Reorganization Dept. Corporate Trust Reorganization 40 Broad Street 1525 West W.T. Harris Blvd., 3C3 Dept. 5th Floor, Suite 550 Charlotte, North Carolina 28262 1525 West W.T. Harris Blvd., 3C3 New York, New York 10004 Attn: Mike Klotz Charlotte, North Carolina 28262 Attn: Mike Klotz By Facsimile Transmission: (For Eligible Institutions Only): (704) 590-7628 Confirm by Telephone (704) 590-7408
DELIVERY OF THIS NOTICE AS GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA A FACSIMILE NUMBER OTHER THAN THE NUMBER LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution (as defined therein) under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. 2 Ladies and Gentlemen: The undersigned hereby tenders to the Company the aggregate principal amount of Notes indicated below pursuant to the guaranteed delivery procedures and upon the terms and subject to the conditions set forth in the accompanying Prospectus dated __________, 1998 (as the same may be amended or supplemented from time to time, the "Prospectus") and in the related Letter of Transmittal (which together with the Prospectus constitute the "Exchange Offer"), receipt of which is hereby acknowledged. The undersigned hereby represents, warrants and agrees that the undersigned has full power and authority to tender, exchange, sell, assign, and transfer the Tendered Notes and that the Company will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances when the Tendered Notes are acquired by the Company as contemplated herein, and the Tendered Notes are not subject to any adverse claims or proxies. The undersigned warrants and agrees that the undersigned and each Beneficial Owner will, upon request, execute and deliver any additional documents deemed by the Company or the Exchange Agent to be necessary or desirable to complete the tender, exchange, sale, assignment and transfer of the Tendered Notes, and that the undersigned will comply with its obligations under the Registration Rights Agreement. The undersigned has read and agrees to all of the terms of the Exchange Offer. BY TENDERING NOTES AND EXECUTING THIS NOTICE OF GUARANTEED DELIVERY, THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT (i) NEITHER THE UNDERSIGNED NOR ANY BENEFICIAL OWNER(S) IS AN "AFFILIATE" OF THE COMPANY, (ii) ANY EXCHANGE NOTES TO BE RECEIVED BY THE UNDERSIGNED AND ANY BENEFICIAL OWNER(S) ARE BEING ACQUIRED BY THE UNDERSIGNED AND ANY BENEFICIAL OWNER(S) IN THE ORDINARY COURSE OF BUSINESS OF THE UNDERSIGNED AND ANY BENEFICIAL OWNER(S), (iii) THE UNDERSIGNED AND EACH BENEFICIAL OWNER HAVE NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF EXCHANGE NOTES TO BE RECEIVED IN THE EXCHANGE OFFER, AND (iv) THE UNDERSIGNED OR ANY SUCH BENEFICIAL OWNER IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE IN, A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH EXCHANGE NOTES. A broker-dealer who holds Notes for its own account as a result of market-making activities or other trading activities and who receives Exchange Notes in exchange for such Notes pursuant to the Exchange Offer may be deemed to be an "underwriter" within the meaning of the Securities Act and will be required to deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes. If the undersigned or any beneficial owner(s) is a broker-dealer which acquired any of the Tendered Notes for its own account as the result of market-making activities or other trading activities, such broker-dealer acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of Exchange Notes received in exchange for any of such Tendered Notes that were acquired for its own account as the result of market-making activities or other trading activities (provided that, by so acknowledging and by delivering a prospectus, such broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act). ALL QUESTIONS AS TO THE FORM OF DOCUMENTS, VALIDITY, ELIGIBILITY (INCLUDING TIME OF RECEIPT) AND ACCEPTANCE FOR EXCHANGE OF TENDERED NOTES WILL BE DETERMINED BY THE COMPANY, IN ITS SOLE DISCRETION, WHOSE DETERMINATION SHALL BE FINAL AND BINDING ON ALL PARTIES. THE COMPANY RESERVES THE ABSOLUTE RIGHT, 3 IN ITS SOLE AND ABSOLUTE DISCRETION, TO REJECT ANY AND ALL TENDERS DETERMINED BY THE COMPANY NOT TO BE IN PROPER FORM OR THE ACCEPTANCE OF WHICH, OR EXCHANGE FOR WHICH, MAY, IN THE VIEW OF THE COMPANY OR OF COUNSEL TO THE COMPANY, BE UNLAWFUL. ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED HEREUNDER SHALL BE BINDING UPON THE HEIRS, EXECUTORS, ADMINISTRATORS, PERSONAL REPRESENTATIVES, TRUSTEES IN BANKRUPTCY, LEGAL REPRESENTATIVES, SUCCESSORS AND ASSIGNS OF THE UNDERSIGNED. Name(s) of Registered Holder(s):________________________________________________ ________________________________________________________________________________ Please Print Address(es):____________________________________________________________________ ________________________________________________________________________________ Area Code and Tel. No(s): _____________________________________________________ X______________________________________________________________________ X______________________________________________________________________ Signature(s) of Owner(s) or Authorized Signatory Must be signed by the registered holder(s) of the Tendered Notes as their name(s) appear(s) on certificates for such Tendered Notes, or on a security position listing, or by person(s) authorized to become registered holder(s) by endorsement and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below.
Aggregate Principal Certificate No(s) Amount Represented Aggregate Principal (if available) by Certificate Amount Tendered -------------- -------------- --------------- _______________________________ ____________________________ _______________________________ _______________________________ ____________________________ _______________________________ _______________________________ ____________________________ _______________________________ _______________________________ ____________________________ _______________________________
-3- 4 If Notes will be delivered by book-entry transfer to The Depository Trust Company, provide the following information: Signature:______________________________________________________________________ Account Number:_________________________________________________________________ Date: __________________________________________________________________________ THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED -4- 5 GUARANTEE (Not to be used for signature guarantee) The undersigned, a firm or other entity identified in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, as an "eligible guarantor institution," including (as such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities broker, municipal securities dealer, government securities broker, government securities dealer; (iii) a credit union; (iv) a national securities exchange, registered securities association or clearing agency; or (v) a savings association that is a participant in a Securities Transfer Association recognized program (each of the foregoing being referred to as an "Eligible Institution"), hereby guarantees delivery to the Exchange Agent, at one of its addresses set forth above, of either certificates for the Notes tendered hereby, in proper form for transfer, or confirmation of the book-entry transfer of such Notes to the Exchange Agent's account at The Depository Trust Company ("DTC"), pursuant to the procedures for book-entry transfer set forth in the Prospectus, in either case together with one or more properly completed and duly executed Letter(s) of Transmittal (or facsimile thereof or an Agent's Message in lieu thereof) and any other documents required by the Letter of Transmittal, all within three (3) business days after the date of execution of this Notice of Guaranteed Delivery. The undersigned acknowledges that it must communicate the guarantee to the Exchange Agent and must deliver the Letter of Transmittal and certificates for the Notes tendered hereby to the Exchange Agent within the time period shown hereon and that failure to do so could result in a financial loss to the undersigned. ____________________________________ ____________________________________ Firm Authorized Signature ____________________________________ Name _______________________________ Address (Please Type or Print) ____________________________________ Title ______________________________ Zip Code Dated ________________________, 1998 Area Code and Tel. No.: ________________________________________________________
DO NOT SEND CERTIFICATES FOR NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. ACTUAL SURRENDER OF NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS. -5- EX-99.3 43 FORM OF TENDER INSTRUCTIONS 1 EXHIBIT 99.3 GENERAL BINDING CORPORATION OFFER TO EXCHANGE ITS 9 3/8% SENIOR SUBORDINATED NOTES DUE 2008 INSTRUCTIONS TO REGISTERED HOLDER FROM BENEFICIAL OWNER: The undersigned acknowledge(s) receipt of the Prospectus dated __________, 1998 and the related Letter of Transmittal in connection with the offer (the "Exchange Offer") by General Binding Corporation, a Delaware corporation (the "Company"), to exchange its 9 3/8% Senior Subordinated Notes due 2008 (the "Exchange Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for any and all of the Company's outstanding 9 3/8% Senior Subordinated Notes due 2008 (the "Notes"). This will instruct you to tender the principal amount of Notes indicated below held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Prospectus and the related Letter of Transmittal. The undersigned represents that (i) it is not an "affiliate" of the Company, (ii) any Exchange Notes to be received by the undersigned are being acquired in the ordinary course of the undersigned's business, (iii) the undersigned has no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of such Exchange Notes, and (iv) the undersigned is not engaged in, and does not intend to engage in, a distribution (within the meaning of the Securities Act) of such Exchange Notes. A broker-dealer who holds Notes for its own account as a result of market-making activities or other trading activities and who receives Exchange Notes in exchange for such Notes pursuant to the Exchange Offer may be deemed to be an "underwriter" within the meaning of the Securities Act and will be required to deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes. If the undersigned is a broker-dealer which acquired any of the Tendered Notes for its own account as the result of market-making activities or other trading activities (a "Participating Broker-Dealer"), such broker-dealer acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of Exchange Notes received in exchange for any of such Tendered Notes that were acquired for its own account as the result of market-making activities or other trading activities. Notwithstanding the foregoing, the undersigned does not thereby admit that it is an "underwriter" within the meaning of the Securities Act. The undersigned understands that the Company has agreed that, subject to the provisions of the Registration Rights Agreement (as defined in the Prospectus) and to the limitations described under "Exchange Offer - Resale of the Exchange Notes" in the Prospectus, the Prospectus, as it may be amended or supplemented from time to time, may be used by a Participating Broker-Dealer in connection with resales of Exchange Notes received in exchange for Notes that were acquired by such Participating Broker-Dealer for its own account as a result of market-making activities or other trading activities, for a period ending 90 days after the Expiration Date or, if earlier, when all such Exchange Notes have been disposed of by such Participating Broker-Dealer. If the undersigned is a Participating Broker-Dealer, the undersigned agrees that, upon receipt of notice from the Company of the occurrence of any event or the discovery of any fact which makes any statement contained or incorporated by reference in the Prospectus untrue in any material respect or which causes the Prospectus to omit to state a material fact necessary in order to make the statements contained or incorporated by reference therein, in light of the circumstances under which they were made, not misleading or of the occurrence of certain other events specified in the registration rights agreement, such Participating Broker-Dealer will suspend the sale of Exchange Notes pursuant to the Prospectus until the 2 Company has amended or supplemented the Prospectus to correct such misstatement or omission and has furnished copies of the amended or supplemented Prospectus to such Participating Broker-Dealer or the Company has given notice that the sale of the Exchange Notes may be resumed, as the case may be. Sign Here __________________________________________ Signature(s) Aggregate Principal Amount of Notes held by you for the account of the undersigned $__________________________ [ ] TENDER $__________* aggregate principal amount of the Notes [ ] DO NOT tender any Notes held by you for the account of the undersigned [ ] Check this box if the Beneficial Owner of the Notes is a Participating Broker-Dealer and such Participating Broker-Dealer acquired the Notes for its own account as a result of market-making activities or other trading activities. IF THIS BOX IS CHECKED, A COPY OF THESE INSTRUCTIONS MUST BE RECEIVED WITHIN THREE BUSINESS DAYS AFTER THE EXPIRATION DATE BY GENERAL BINDING CORPORATION, ATTENTION: STEVEN RUBIN, FACSIMILE (847) 272-4763 _______________________________________________________ NAME(S) (PLEASE PRINT) _______________________________________________________ ADDRESS _______________________________________________________ ZIP CODE _______________________________________________________ AREA CODE AND TELEPHONE NO. _______________________________________________________ TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER Dated: _________________, 1998 ________________________ *Unless otherwise indicated, it will be assumed that all of the Notes listed are to be tendered. -2- -----END PRIVACY-ENHANCED MESSAGE-----