-----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, GepOurU0HtSC+/s9lLuHEjvtyg27w9LX1JPyWw9TD8bDZK2n/KIi1R1nXraq/Dvp BDA6lpVfRpoLUlRDNZtO2w== 0000950116-95-000576.txt : 19951222 0000950116-95-000576.hdr.sgml : 19951222 ACCESSION NUMBER: 0000950116-95-000576 CONFORMED SUBMISSION TYPE: SC 13E4 PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 19951221 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HUNT MANUFACTURING CO CENTRAL INDEX KEY: 0000049146 STANDARD INDUSTRIAL CLASSIFICATION: PENS, PENCILS & OTHER ARTISTS' MATERIALS [3950] IRS NUMBER: 210481254 STATE OF INCORPORATION: PA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: SC 13E4 SEC ACT: 1934 Act SEC FILE NUMBER: 005-10075 FILM NUMBER: 95603531 BUSINESS ADDRESS: STREET 1: 230 S BROAD ST CITY: PHILADELPHIA STATE: PA ZIP: 19102 BUSINESS PHONE: 2157327700 MAIL ADDRESS: STREET 1: 230 S BROAD STREET CITY: PHILADELPHIA STATE: PA ZIP: 19102 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HUNT MANUFACTURING CO CENTRAL INDEX KEY: 0000049146 STANDARD INDUSTRIAL CLASSIFICATION: PENS, PENCILS & OTHER ARTISTS' MATERIALS [3950] IRS NUMBER: 210481254 STATE OF INCORPORATION: PA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: SC 13E4 BUSINESS ADDRESS: STREET 1: 230 S BROAD ST CITY: PHILADELPHIA STATE: PA ZIP: 19102 BUSINESS PHONE: 2157327700 MAIL ADDRESS: STREET 1: 230 S BROAD STREET CITY: PHILADELPHIA STATE: PA ZIP: 19102 SC 13E4 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13E-4 Issuer Tender Offer Statement (Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934) _____________________ Hunt Manufacturing Co. (Name of Issuer) (Name of Person(s) Filing Statement) _____________________ Common Shares, Par Value $.10 Per Share (Title of Class of Securities) 445636-10-3 (CUSIP Number of Class of Securities) ______________________ William E. Chandler Senior Vice President, Finance One Commerce Square 2005 Market Street Philadelphia, PA 19103 (215) 656-0300 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of the Person(s) Filing Statement) Copies of Communications to: John C. Bennett, Jr., Esq. Drinker Biddle & Reath 1345 Chestnut Street Philadelphia, PA 19107-3496 (215) 988-2810 ______________________ December 21, 1995 (Date Tender Offer First Published, Sent or Given to Security Holders) ______________________ Calculation of Filing Fee Transaction Value: *$54,910,000 Amount of Filing Fee: *$10,982 *Based on $17 cash price per share for 3,230,000 Shares. [ ] Check box if any part of the fee is offset as provided by rule 0-11(A)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. ITEM 1. Security and Issuer. (a) The issuer is Hunt Manufacturing Co., a Pennsylvania corporation (the "Company"), and its principal executive offices are located at One Commerce Square, 2005 Market Street, Philadelphia, PA 19103. (b) This Schedule relates to a tender offer by the Company to purchase up to 3,230,000 of its Common Shares, par value $.10 per share ("Shares"), for $17 per share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated December 21, 1995, and in the related Letter of Transmittal (which together constitute the "Offer"), copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively. Reference is made to the "Introduction," Section 1 - "Number of Shares; Proration; Extension of the Offer," Section 8 - "Background of the Offer," Section 12 "Transactions and Arrangements Concerning the Shares," and Section 15 - "Extension of Tender Period; Termination; Amendments" in the Offer to Purchase, each of which is incorporated herein by reference. (c) Reference is made to the "Introduction" and Section 7 - "Price Range of Shares; Dividends" in the Offer to Purchase, each of which is incorporated herein by reference. (d) Not applicable. ITEM 2. Source and Amount of Funds or Other Consideration. Reference is made to Section 10 - "Source and Amount of Funds" in the Offer to Purchase, which Section is incorporated herein by reference. ITEM 3. Purpose of the Tender Offer and Plans or Proposals of the Issuer or Affiliate. Reference is made to the "Introduction," Section 6 - "Certain Conditions of the Offer," Section 7 - "Price Range of Shares; Dividends," Section 8 - "Background of the Offer," Section 9 - "Certain Information Concerning the Company," Section 10 - "Source and Amount of Funds," Section 12 "Transactions and Arrangements Concerning the Shares," and Section 14 - "Effects of the Offer on the Market for Shares; Registration under the Exchange Act" in the Offer to Purchase, each of which is incorporated herein by reference. ITEM 4. Interest in Securities of the Issuer. Reference is made to the "Introduction," Section 8 - "Background of the Offer" and Section 12 - "Transactions and Arrangements Concerning the Shares," in the Offer to Purchase, each of which is incorporated herein by reference. ITEM 5. Contracts, Arrangements, Understandings or Relationships with Respect to the Issuer's Securities. Reference is made to the "Introduction," Section 8 - "Background of the Offer" and Section 12 - "Transactions and Arrangements Concerning the Shares," in the Offer to Purchase, each of which is incorporated herein by reference. ITEM 6. Persons Retained, Employed or to be Compensated. Reference is made to the "Introduction" and Section 16 - "Fees and Expenses" in the Offer to Purchase, each of which is incorporated herein by reference. ITEM 7. Financial Information. Reference is made to Section 9 - "Certain Information Concerning the Company" in the Offer to Purchase, the audited financial statements for the 1993 and 1994 fiscal years filed with the Company's Annual Report on Form 10-K for the fiscal year ended November 27, 1994 and the unaudited balance sheets and comparative year-to-date income statements and statements of cash flows and related earnings per share amounts filed with the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 3, 1995, each of which is incorporated herein by reference. ITEM 8. Additional Information. (a) Reference is made to Section 9 - "Certain Information Concerning the Company" and Section 12 - "Transactions and Arrangements Concerning the Shares" in the Offer to Purchase, which Sections are incorporated herein by reference. (b) Reference is made to Section 13 - "Certain Legal Matters; Regulatory Approvals" in the Offer to Purchase, which Section is incorporated herein by reference. -2- (c) Reference is made to Section 14 - "Effects of the Offer on the Market for Shares; Registration under the Exchange Act" in the Offer to Purchase, which Section is incorporated herein by reference. (d) None. (e) Reference is made to the Offer to Purchase and the related Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively, and are incorporated herein by reference in their entirety. ITEM 9. Material to be filed as Exhibits. (a)(1) -- Offer to Purchase, dated December 21, 1995. (a)(2) -- Letter of Transmittal (including Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9). (a)(3) -- Notice of Guaranteed Delivery. (a)(4) -- Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) -- Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) -- Letter to the Company's Stockholders from the President and Chief Executive Officer of the Company. (a)(7) -- Text of Press Release, dated December 20, 1995. (a)(8) -- Text of Press Release, dated December 21, 1995. (a)(9) -- Letter to Savings Plan Participants. (a)(10) -- Form of Election for Savings Plan Participants. (a)(11) -- Form of Tombstone Advertisement. (b) -- Credit Agreement, dated December 19, 1995, between the Company and NationsBank, N.A. (c) -- Stock Purchase Agreement, dated December 19, 1995, by and between Mary F. Bartol and the Company. (d) -- None. (e) -- Not Applicable. (f) -- None. -3- SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. HUNT MANUFACTURING CO. By: William E. Chandler Senior Vice President--Finance Date: December 21, 1995 -4- EX-99.(A)(1) 2 OFFER TO PURCHASE Exhibit (a)(1) HUNT MANUFACTURING CO. OFFER TO PURCHASE FOR CASH UP TO 3,230,000 OF ITS COMMON SHARES AT $17 NET PER SHARE THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME, ON JANUARY 24, 1996, UNLESS THE OFFER IS EXTENDED. Hunt Manufacturing Co., a Pennsylvania corporation (the "Company"), is offering to purchase up to 3,230,000 of the Company's Common Shares, par value $.10 per share ("Shares"), for $17 per Share (the "Purchase Price"), net to the seller in cash, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which together constitute the "Offer"), including the proration provisions described herein. The Company reserves the right, in its sole discretion, to purchase more than 3,230,000 Shares pursuant to the Offer, subject to any required extension of the period of time during which the Offer is open. See Section 15 herein. All Shares properly tendered and not withdrawn prior to the expiration of the Offer will be purchased at the Purchase Price, upon the terms and subject to the conditions of the Offer, including its proration terms. The regular quarterly cash dividend of $.095 per Share to be paid by the Company on February 15, 1996 to shareholders of record on February 7, 1996, will not be payable with respect to Shares tendered and purchased by the Company pursuant to the Offer unless the Offer is extended beyond, or Shares are accepted for payment after, February 7, 1996 for any reason whatsoever. Shares which are tendered but not purchased as a result of proration or otherwise will remain entitled to receipt of such dividend. See Section 7 herein. ------ THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO FINANCING AND CERTAIN OTHER CONDITIONS. SEE SECTION 6 HEREIN. ------ IMPORTANT Any shareholder desiring to tender all or any portion of such shareholder's Shares should either (1) complete and sign the Letter of Transmittal or a facsimile copy thereof in accordance with the instructions in the Letter of Transmittal, mail or deliver it and any other documents required by the Letter of Transmittal to American Stock Transfer & Trust Company, the depositary for the Offer (the "Depositary"), and either mail or deliver the certificates for such Shares to the Depositary along with the Letter of Transmittal or follow the procedure for book-entry transfer set forth in Section 3 herein, or (2) request such shareholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such shareholder. A shareholder having Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if such shareholder desires to tender such Shares. A shareholder who desires to tender Shares and whose certificates for such Shares are not immediately available (or who cannot follow the procedure for book-entry transfer on a timely basis) or who cannot transmit the Letter of Transmittal and all other required documents to the Depositary before the Expiration Date (as defined in Section 1 herein), should tender such Shares by following the procedure for guaranteed delivery set forth in Section 3 herein. ------ NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION AS TO WHETHER ANY SHAREHOLDER SHOULD TENDER ANY OR ALL OF SUCH SHAREHOLDER'S SHARES PURSUANT TO THE OFFER. EACH SHAREHOLDER MUST MAKE SUCH SHAREHOLDER'S OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. THE COMPANY HAS BEEN ADVISED THAT CERTAIN OF ITS OFFICERS AND DIRECTORS INTEND TO TENDER SHARES PURSUANT TO THE OFFER. SEE INTRODUCTION AND SECTION 8 HEREIN. ------ The Shares are listed and principally traded on The New York Stock Exchange (the "NYSE"). On December 19, 1995, the last full trading day before the announcement of the terms of the Offer, the closing price of the Shares on the NYSE was $15 per Share. On December 20, 1995, the last full trading day before the commencement of the Offer, the closing price of the Shares on NYSE was $16 5/8 per Share. Shareholders are urged to obtain a current market quotation for the Shares. ------ Any questions or requests for assistance, additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Information Agent at its address and telephone number set forth on the back cover of this Offer to Purchase. Shareholders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. ------ December 21, 1995 NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE COMPANY AS TO WHETHER SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM TENDERING SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL. IF MADE OR GIVEN, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. TABLE OF CONTENTS
SECTION PAGE -------- -------- Introduction .............................................................................. 1 The Offer ................................................................................. 2 1. Number of Shares; Proration; Extension of the Offer ................................. 2 2. Tenders by Holders of Fewer Than 100 Shares ......................................... 3 3. Procedure for Tendering Shares and Conditional Tenders .............................. 3 4. Withdrawal Rights ................................................................... 6 5. Acceptance for Payment of Shares and Payment of Purchase Price ...................... 6 6. Certain Conditions of the Offer ..................................................... 7 7. Price Range of Shares; Dividends .................................................... 9 8. Background of the Offer ............................................................. 10 9. Certain Information Concerning the Company .......................................... 12 10. Source and Amount of Funds .......................................................... 16 11. Certain Federal Income Tax Considerations ........................................... 17 12. Transactions and Arrangements Concerning the Shares ................................. 20 13. Certain Legal Matters; Regulatory Approvals ......................................... 21 14. Effects of the Offer on the Market for Shares; Registration under the Exchange Act .. 21 15. Extension of Tender Period; Termination; Amendments ................................. 21 16. Fees and Expenses ................................................................... 22 17. Miscellaneous ....................................................................... 23 Annex A -- Opinion of Alex. Brown & Sons, Incorporated .................................... A-1
ii To the Holders of Common Shares of Hunt Manufacturing Co. INTRODUCTION Hunt Manufacturing Co., a Pennsylvania corporation (the "Company"), is offering to purchase up to 3,230,000 of its Common Shares, par value $.10 per share ("Shares"), at a price of $17 per Share (the "Purchase Price"), net to the seller in cash, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which together constitute the "Offer"). A tender of Shares pursuant to the Offer also will be deemed to include a tender of the attached junior participating preferred stock purchase rights issued pursuant to the Company's Shareholders' Rights Agreement dated August 8, 1990, as amended (the "Rights"). No separate consideration will be paid for such Rights. See Section 7 herein. THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO FINANCING AND CERTAIN OTHER CONDITIONS. SEE SECTION 6 HEREIN. As of the close of business on December 19, 1995, there were 13,842,998 Shares outstanding (after giving effect to the private purchase transaction effected on December 19, 1995, described in Section 8 herein) and 1,269,280 Shares were reserved for issuance in connection with outstanding stock options under the Company's stock option plans. The 3,230,000 Shares that the Company is offering to purchase in the Offer represent approximately 23% of the Shares outstanding as of December 19, 1995 and approximately 21% of the fully- diluted Shares outstanding as of such date (in each case after giving effect to such private purchase transaction). The Company's Savings Plan (the "Savings Plan") holds Shares in accounts for participants in the Plan. Under the terms of the Savings Plan, as amended, participants may instruct the Trustee for the Plan to tender some or all of the Shares allocated to such participants' accounts as of December 15, 1995. See Section 3 herein. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS (THE "BOARD") MAKES ANY RECOMMENDATION AS TO WHETHER ANY SHAREHOLDER SHOULD TENDER ANY OR ALL OF SUCH SHAREHOLDER'S SHARES PURSUANT TO THE OFFER. EACH SHAREHOLDER MUST MAKE SUCH SHAREHOLDER'S OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. THE COMPANY HAS BEEN ADVISED THAT CERTAIN OF ITS OFFICERS AND DIRECTORS INTEND TO TENDER SHARES PURSUANT TO THE OFFER. SEE INTRODUCTION AND SECTION 8 HEREIN. In recent years, the Company has maintained relatively low debt levels. The Board believes that it is in the interests of the Company and its shareholders for the Company to increase its leverage and to utilize a portion of the Company's borrowing capacity to afford shareholders an opportunity to sell a significant portion, and perhaps all, of their Shares to the Company without the usual transaction costs associated with open market sales and for a higher price for their Shares than that which has been recently available on the open market. See Section 7 herein. On December 19, 1995, the Company purchased shares from a shareholder of the Company for $16.32 per share in a private purchase transaction. See Section 8 herein. The Company expects that its future cash flow from operations and available borrowings under its New Credit Facility (see Section 10 herein), together with other sources of capital believed to be available, will be sufficient to enable the Company to meet the anticipated future needs of the Company's business and to repay the borrowings made to effect any Share repurchases. If, before the Expiration Date (as defined in Section 1 herein), a greater number of Shares is properly tendered and not withdrawn than will be accepted for purchase by the Company, the Company will accept Shares for purchase, first, from all Shares properly tendered by any Odd Lot Holder (as defined in Section 1 herein) who tenders all Shares beneficially owned by such Odd Lot Holder and complies with the requirements set forth in Section 2 herein and, then, from all other Shares properly tendered on a pro rata basis. See Sections 1 and 2 herein. All Shares not purchased pursuant to the Offer, including Shares not purchased because of proration, will be returned to the tendering shareholders at the Company's expense. Tendering shareholders will not be obligated to pay brokerage commissions, solicitation fees or, subject to Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the Company. However, shareholders should be aware that 1 proceeds from the sale of Shares pursuant to the Offer may be treated as a dividend taxable as ordinary income rather than as capital gain. See Section 11 herein. The Company will pay all fees and expenses of The Bridgeford Group, Alex. Brown & Sons, Incorporated ("Alex. Brown"), American Stock Transfer & Trust Company (the "Depositary") and Georgeson & Company Inc. (the "Information Agent"), in connection with the Offer. See Section 16 herein. The Shares are listed and principally traded on The New York Stock Exchange (the "NYSE"). On December 19, 1995, the last full trading day before the announcement of the terms of the Offer, the closing price of the Shares on the NYSE was $15 per Share. On December 20, 1995, the last full trading day before the commencement of the Offer, the closing price of the Shares on the NYSE was $16 5/8 per Share. See Section 7 herein. Shareholders are urged to obtain a current market quotation for the Shares. THE OFFER 1. NUMBER OF SHARES; PRORATION; EXTENSION OF THE OFFER Upon the terms and subject to the conditions of the Offer, the Company will accept for payment (and will purchase) up to 3,230,000 Shares or such lesser number of Shares as are properly tendered (and not withdrawn in accordance with Section 4 herein) before the Expiration Date at the Purchase Price. The term "Expiration Date" means 5:00 P.M., Eastern Standard Time, on January 24, 1996, unless the Company shall have extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall refer to the latest time and date at which the Offer, as so extended by the Company, shall expire. For a description of the Company's rights to extend the period of time during which the Offer is open and to delay, terminate or amend the Offer, see Section 15 herein and Section 6 herein. Subject to the purchase of Shares properly tendered and not withdrawn by Odd Lot Holders as set forth in Section 2 herein, if the Offer is oversubscribed, Shares tendered before the Expiration Date will be subject to proration. The proration period also expires on the Expiration Date. The Company reserves the right, in its sole discretion, at any time or from time to time, to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary and making a public announcement thereof. See Section 15 herein. There can be no assurance, however, that the Company will exercise its right to extend the Offer. The Offer is not conditioned upon any minimum number of Shares being tendered. The Offer is, however, subject to financing and certain other conditions. See Section 6 herein. All Shares purchased pursuant to the Offer will be purchased at the Purchase Price, net to the seller in cash. The Company reserves the right, in its sole discretion, to purchase more than 3,230,000 Shares pursuant to the Offer. If (a) the Company (i) increases or decreases the price to be paid for Shares, (ii) increases the number of Shares being sought and any such increase exceeds 2% of the outstanding Shares or (iii) decreases the number of Shares being sought, and (b) the Offer is scheduled to expire at any time earlier than the tenth business day from and including the date that notice of such increase or decrease is first published, sent or given in the manner specified in Section 15 herein, the Offer will be extended until the expiration of such ten business day period. For the purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 A.M. through 12:00 Midnight, Eastern Standard Time. All Shares not purchased pursuant to the Offer, including Shares not purchased because of proration, will be returned to the tendering shareholders at the Company's expense as promptly as practicable (which, in the event of proration, is expected to be approximately 12 NYSE trading days) following the Expiration Date. If the number of Shares properly tendered and not withdrawn before the Expiration Date is less than or equal to 3,230,000 Shares (or such greater number of Shares as the Company may elect to purchase pursuant to the Offer), the Company, upon the terms and subject to the conditions of the Offer, will purchase at the Purchase Price all Shares so tendered and not withdrawn. If the number of Shares properly tendered and not withdrawn before the Expiration Date is greater than 3,230,000 Shares (or such greater number of Shares as the Company may elect to purchase pursuant to the Offer), the Company, upon the terms and subject to the conditions of the Offer, will accept Shares for purchase in the following order of priority: 2 (a) first, all Shares properly tendered and not withdrawn before the Expiration Date by any shareholder who beneficially owned as of the close of business on December 15, 1995, and who continues to own beneficially until the Expiration Date an aggregate of fewer than 100 Shares, including any such Shares held in the Savings Plan (each an "Odd Lot Holder") who: (1) tenders all Shares beneficially owned by such Odd Lot Holder (partial and conditional tenders will not qualify for this preference); and (2) completes the box captioned "Odd Lots" on the Letter of Transmittal (or on the Election Form for Savings Plan participants) and, if applicable, on the Notice of Guaranteed Delivery; and (b) then, after purchase of all the foregoing Shares, subject to the conditional tender provisions described in Section 3 herein, all other Shares properly tendered and not withdrawn before the Expiration Date on a pro rata basis, if necessary (with adjustments to avoid purchases of fractional Shares). In the event that proration of tendered Shares is required, the Company will determine the final proration factor as promptly as practicable after the Expiration Date. Although the Company does not expect that it will be able to announce the final proration factor until approximately seven NYSE trading days after the Expiration Date, it will announce preliminary results of proration by press release as promptly as practicable after the Expiration Date. Shareholders may obtain such preliminary information from the Information Agent and may be able to obtain such information from their brokers or financial advisors. 2. TENDERS BY HOLDERS OF FEWER THAN 100 SHARES The Company, upon the terms and subject to the conditions of the Offer, will accept for purchase, without proration, all Shares properly tendered and not withdrawn before the Expiration Date by or on behalf of Odd Lot Holders. See Section 1 herein. To avoid proration, however, an Odd Lot Holder must properly tender all Shares that such Odd Lot Holder beneficially owns, including Shares held in the Savings Plan. Partial or conditional tenders will not qualify for this preference. This preference is not available to owners of 100 or more Shares even if such owners have separate stock certificates for fewer than 100 Shares. Any Odd Lot Holder wishing to tender all Shares beneficially owned by such Odd Lot Holder pursuant to the Offer and to qualify for this preference must complete the box captioned "Odd Lots" on the Letter of Transmittal (or on the Election Form for Savings Plan participants) and, if applicable, on the Notice of Guaranteed Delivery. See Section 3 herein. 3. PROCEDURE FOR TENDERING SHARES AND CONDITIONAL TENDERS Proper Tender of Shares. For Shares to be properly tendered pursuant to the Offer: (a) the certificates for such Shares (or confirmation of receipt of such Shares pursuant to the procedure for book-entry transfer set forth below), together with a properly completed and duly executed Letter of Transmittal (or a facsimile copy thereof) with any required signature guarantees, and any other documents required by the Letter of Transmittal, must be received before the Expiration Date by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase; or (b) the tendering shareholder must comply with the guaranteed delivery procedure set forth below. It is a violation of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), for a person to tender Shares for his or her own account unless the person so tendering (i) has a net long position equal to or greater than the amount of (x) Shares tendered or (y) other securities immediately convertible into, exercisable, or exchangeable for the amount of Shares tendered and will acquire such Shares for tender by conversion, exercise or exchange of such other securities and (ii) will cause such Shares to be delivered in accordance with the terms of the Offer. Rule 14e-4 provides a similar restriction applicable to the tender or guarantee of a tender on behalf of another person. The tender of Shares pursuant to any one of the procedures described in this Section will constitute the tendering shareholder's representation and warranty that (i) such shareholder has a net long position in the Shares being tendered within the meaning of Rule 14e-4 pro- 3 mulgated under the Exchange Act, and (ii) the tender of such Shares complies with Rule 14e-4. The Company's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering shareholder and the Company upon the terms and subject to the conditions of the Offer. Conditional Tenders of Shares. Under certain circumstances and subject to the exceptions set forth in Section 1 herein, the Company may prorate the number of Shares purchased pursuant to the Offer. As discussed in Section 11 herein, the number of Shares to be purchased from a particular shareholder might affect the tax treatment of such purchase to such shareholder and such shareholder's decision as to whether or not to tender. Each shareholder is urged to consult with such shareholder's own tax advisors with respect to the tax consequences to the shareholder of tendering Shares pursuant to the Offer. Accordingly, a shareholder may tender Shares subject to the condition that a specified minimum number of such shareholder's Shares tendered pursuant to a Letter of Transmittal or Notice of Guaranteed Delivery must be purchased if any such Shares so tendered are purchased. Any shareholder desiring to make such a conditional tender must so indicate in the box captioned "Conditional Tender" in such Letter of Transmittal or, if applicable, the Notice of Guaranteed Delivery (or on the Election Form for Savings Plan participants). Any tendering shareholders wishing to make a conditional tender must calculate and appropriately indicate such minimum number of Shares. If the effect of accepting tenders on a pro rata basis would be to reduce the number of Shares to be purchased from any shareholder below the minimum number so specified, such tender will automatically be regarded as withdrawn (except as provided in the next paragraph) and all Shares tendered by such shareholder pursuant to such Letter of Transmittal or Notice of Guaranteed Delivery (or on the Election Form for Savings Plan participants) will be returned as promptly as practicable thereafter. If conditional tenders would otherwise be so regarded as withdrawn and would cause the total number of Shares to be purchased to fall below 3,230,000, then, to the extent feasible, the Company will select enough of such conditional tenders that would otherwise have been withdrawn to permit the Company to purchase 3,230,000 Shares. In selecting among such conditional tenders, the Company will select by lot and will limit its purchase in each case to the designated minimum number of Shares to be purchased. Savings Plan Participants. Shareholders who are participants in the Savings Plan will receive separate instructions in connection with the Offer from the Trustee for the Plan. If a Plan participant authorizes the tender of Shares in his or her Plan account, the number of Shares in the participant's Plan account will be reduced by the number of Plan Shares that are purchased. Any Plan Shares tendered but not purchased will be returned to the participant's Plan account. Participants in the Savings Plan may not use the Letter of Transmittal to direct the tender of Shares in such accounts. Participants in the Savings Plan are urged to read carefully the separate instructions being furnished to them. Signature Guarantees and Methods of Delivery. No signature guarantee is required on the Letter of Transmittal if the Letter of Transmittal is signed by the registered owner of the Shares (which term, for purposes of this Section 3, includes any participant in The Depository Trust Company, the Midwest Securities Trust Company or the Philadelphia Depository Trust Company (collectively, the "Book-Entry Transfer Facilities") whose name appears on a security position listing as the owner of the Shares) tendered therewith, and payment and delivery are to be made directly to such registered owner at such owner's address shown on the records of the Company, or if Shares are tendered for the account of a financial institution (each such entity being hereinafter referred to as an "Eligible Institution") that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchanges Medallion Program (including most banks, savings and loan associations, and brokerage houses). In all other cases, all signatures on the Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 1 of the Letter of Transmittal. If a certificate representing Shares is registered in the name of a person other than the person signing a Letter of Transmittal, or if payment is to be made, or certificates for Shares not purchased or tendered are to be issued, to a person other than the registered owner, the certificate must be endorsed or accompanied by an appropriate stock power, in either case signed exactly as the name of the registered owner appears on the certificate, with the signature on the certificate or stock power guaranteed by an Eligible Institution. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of certificates for such Shares (or a timely confirmation of a book-entry transfer of such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities), a properly completed 4 and duly executed Letter of Transmittal (or a facsimile thereof) and any other documents required by the Letter of Transmittal. The method of delivery of all documents, including stock certificates, the Letter of Transmittal and any other required documents, is at the election and risk of the tendering shareholder. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. Federal Backup Withholding. Absent an exemption under the applicable law concerning "backup withholding" of federal income tax, the Depositary will be required to withhold, and will withhold, 31% of the gross proceeds otherwise payable to a shareholder (or other payee) pursuant to the Offer unless the shareholder (or other payee) provides such person's tax identification number (social security number or employer identification number), certifies that such number is correct and certifies that such person is not subject to backup federal income tax withholding. Each tendering shareholder, other than a noncorporate foreign shareholder, should complete and sign the main signature form and the Substitute Form W-9 included as part of the Letter of Transmittal so as to provide the information and certifications necessary to avoid backup withholding, unless an applicable exemption exists and is proved in a manner satisfactory to the Company and the Depositary. Noncorporate foreign shareholders generally should complete and sign a Form W-8, Certificate of Foreign Status, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. For a discussion of certain other federal income tax consequences of the Offer, see Section 11 herein. Each shareholder is urged to consult with such shareholder's own advisers for advice concerning the federal and state tax consequences of the Offer. Book-Entry Delivery. The Depositary will establish an account with respect to the Shares at each of the Book-Entry Transfer Facilities for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in a Book-Entry Transfer Facility's system may make book-entry delivery of the Shares by causing such facility to transfer such Shares into the Depositary's account in accordance with such facility's procedure for such transfer. Even though delivery of Shares may be effected through book-entry transfer into the Depositary's account at one of the Book-Entry Transfer Facilities, a properly completed and duly executed Letter of Transmittal (or a facsimile thereof), with any required signature guarantees and other required documents, must, in any case, be transmitted to and received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase before the Expiration Date, or the guaranteed delivery procedure set forth below must be followed. Delivery of the Letter of Transmittal and any other required documents to one of the Book-Entry Transfer Facilities does not constitute delivery to the Depositary. Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to the Offer and such shareholder's stock certificates are not immediately available (or the procedure for book-entry transfer cannot be followed on a timely basis) or time will not permit the Letter of Transmittal and all other required documents to reach the Depositary before the Expiration Date, such Shares may nevertheless be tendered provided that all the following conditions are satisfied: (a) such tender is made by or through an Eligible Institution; (b) the Depositary receives (by hand, mail or facsimile transmission) before the Expiration Date, a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form the Company has provided with this Offer to Purchase; and (c) the certificates for all tendered Shares in proper form for transfer (or confirmation of book-entry transfer of such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities), together with a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) and any other documents required by the Letter of Transmittal, are received by the Depositary within five NYSE trading days after the date of execution of such Notice of Guaranteed Delivery. Determination of Validity; Rejection of Shares; Waiver of Defects; No Obligation To Give Notice of Defects. All questions as to the number of Shares to be accepted and the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Company, in its sole discretion, which determination shall 5 be final and binding on all parties. The Company reserves the absolute right to reject any or all tenders determined by it not to be in proper form or the acceptance for payment of which may, in the opinion of the Company's counsel, be unlawful. The Company also reserves the absolute right to waive any of the conditions of the Offer and any defect or irregularity in the tender of any particular Shares. No tender of Shares will be deemed properly made until all defects or irregularities have been cured or waived. Neither the Company, the Depositary, the Information Agent or any other person is or will be obligated to give notice of any defects or irregularities in tenders, and none of them will incur any liability for failure to give any such notice. 4. WITHDRAWAL RIGHTS Except as otherwise provided in Section 3 herein or this Section 4, a tender of Shares pursuant to the Offer is irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time before the Expiration Date. Thereafter, such tenders are irrevocable, except that they may be withdrawn after February 20, 1996 unless theretofore accepted for payment as provided in the Offer. For a withdrawal to be effective, the Depositary must timely receive (at one of its addresses set forth on the back cover of this Offer to Purchase) a written or facsimile transmission notice of withdrawal. Any notice of withdrawal must specify the name of the person having tendered the Shares to be withdrawn, the number of Shares to be withdrawn and, if different from the name of the person who tendered the Shares, the name of the registered owner of such Shares. If the certificates have been delivered or otherwise identified to the Depositary, then, prior to the release of such certificates, the tendering shareholder must also submit the serial numbers shown on the particular certificates evidencing such Shares and the signature on the notice of withdrawal must be guaranteed by an Eligible Institution (except in the case of Shares tendered by an Eligible Institution). If Shares have been delivered pursuant to the procedure for book-entry transfer set forth in Section 3 herein, the notice of withdrawal must specify the name and the number of the account at the applicable Book-Entry Transfer Facility to be credited with the withdrawn Shares and otherwise comply with the procedures of such facility. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Company, in its sole discretion, which determination shall be final and binding on all parties. Neither the Company, the Depositary, the Information Agent or any other person is or will be obligated to give any notice of any defects or irregularities in any notice of withdrawal, and none of them will incur any liability for failure to give any such notice. A withdrawal of a tender of Shares may not be rescinded, and Shares properly withdrawn shall thereafter be deemed not to be validly tendered for purposes of the Offer. Withdrawn Shares, however, may be retendered before the Expiration Date by again following one of the procedures described in Section 3 herein. Participants in the Savings Plan who have requested the tender of Shares held for their account under the Plan should follow the procedures for withdrawal included in the notice to be furnished to such participants. 5. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE Upon the terms and subject to the conditions of the Offer (including, without limitation, those set forth in Section 6 herein), as soon as practicable after the Expiration Date, the Company will purchase and pay the Purchase Price for 3,230,000 Shares (subject to increase or decrease as provided in Sections 1 and 15 herein) or such lesser number of Shares as are properly tendered and not withdrawn as permitted in Section 4 herein. For purposes of the Offer, the Company will be deemed to have accepted for payment (and thereby purchased), subject to proration, Shares which are tendered and not withdrawn when, as and if the Company gives oral or written notice to the Depositary of the Company's acceptance of such Shares for payment pursuant to the Offer. In the event that proration of tendered Shares is required, the Company will determine the final proration factor as promptly as practicable after the Expiration Date. Although the Company does not expect that it will be able to announce the final proration factor until approximately seven NYSE trading days after the Expiration Date, it will announce the preliminary results of proration by press release as promptly as practicable after the Expiration Date. Shareholders may obtain such preliminary information from the Information Agent and may be able to obtain such information from their 6 brokers or financial advisors. Certificates for all Shares not purchased pursuant to the Offer, including Shares not purchased because of proration, will be returned to the tendering shareholders (or, in the case of Shares delivered by book-entry transfer, such Shares will be credited to the account maintained with one of the Book-Entry Transfer Facilities by the participant therein who so delivered such Shares and in the case of Shares held in the Savings Plan, such Shares will be returned to the Trustee) at the Company's expense as promptly as practicable (which, in the event of proration, is expected to be approximately 12 NYSE trading days following the Expiration Date). Payment for Shares purchased pursuant to the Offer will be made by the Company by depositing the aggregate Purchase Price therefor with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payment from the Company and transmitting payment to the tendering shareholders. Notwithstanding any other provision hereof, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of certificates for such Shares (or a timely confirmation by a Book-Entry Transfer Facility of book-entry transfer of such Shares to the Depositary), a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) with any required signature guarantees and any other required documents. Under no circumstances will interest be paid on the Purchase Price of the Shares to be paid by the Company, regardless of any delay in making such payment. The Company will pay any stock transfer taxes with respect to the transfer and sale of Shares to it or its order pursuant to the Offer. If, however, payment is to be made to, or certificates for Shares not purchased or tendered are to be registered in the name of, any person other than the registered holder, or if tendered certificates are registered in the name of any person other than the person(s) signing the Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder or such other person) payable on account of the transfer to such person will be deducted from the Purchase Price unless evidence satisfactory to the Company of the payment of such taxes or an exemption therefrom is submitted. See Instruction 6 of the Letter of Transmittal. ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY AND SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL (OR, IN THE CASE OF A NONCORPORATE FOREIGN SHAREHOLDER, A FORM W-8, WHICH IS OBTAINABLE FROM THE DEPOSITARY) MAY BE SUBJECT TO A FEDERAL BACKUP WITHHOLDING TAX OF 31% OF THE GROSS PROCEEDS TO BE PAID TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE SECTIONS 3 AND 11 HEREIN. 6. CERTAIN CONDITIONS OF THE OFFER Notwithstanding any other provision of the Offer, and in addition to (and not in limitation of) the Company's right to extend, amend or terminate the Offer at any time in its sole discretion, the Company shall not be required to accept for payment or pay for any Shares tendered, and may terminate or amend the Offer if, after December 19, 1995 and before acceptance for payment of or payment for any Shares, any of the following shall have occurred (or shall have been determined by the Company to have occurred): (a) there shall have been threatened, instituted or pending any action or proceeding by any government or governmental, regulatory or administrative agency or tribunal or any other person, domestic or foreign, or before any court, authority, agency or tribunal that (i) challenges the acquisition of Shares pursuant to the Offer, or (ii) in the sole judgment of the Company, could materially and adversely affect the business, condition (financial or other), income, operations or prospects of the Company and its subsidiaries, taken as a whole, or otherwise materially impair in any way the contemplated future conduct of the business of the Company or any of its subsidiaries or materially impair the Offer's contemplated benefits to the Company; (b) there shall have been any action threatened, pending or taken, or approval withheld, or any statute, rule, regulation, judgment, order or injunction threatened, proposed, sought, promulgated, enacted, entered, amended, enforced or deemed to be applicable to the Offer or the Company, or any of its subsidiaries, by any court, authority, agency or tribunal which, in the Company's sole judgment, would or might directly or indirectly (i) make the acceptance for payment of, or payment for, some or all of the Shares illegal or otherwise restrict or prohibit consummation of the Offer, (ii) delay or restrict the ability of the Company, or render 7 the Company unable to accept for payment or pay for, some or all of the Shares, (iii) materially impair the contemplated benefits of the Offer to the Company, or (iv) materially affect the business, condition (financial or other), income, operations or prospects of the Company and its subsidiaries, taken as a whole, or otherwise materially impair in any way the contemplated future conduct of the business of the Company or any of its subsidiaries; (c) sufficient funds to consummate the Offer shall for any reason not be available for borrowing by the Company pursuant to a credit agreement (the "New Credit Facility") between the Company and NationsBank, N.A., dated December 19, 1995 described in Section 10 herein pursuant to which the Company intends to obtain the funds to purchase Shares pursuant to the Offer; (d) it shall have been publicly disclosed or the Company shall have learned that (i) any person or "group" (within the meaning of Section 13(d)(3) of the Exchange Act), other than any members of the Bartol family and related trusts (see Section 8 herein), has acquired or proposes to acquire beneficial ownership of more than 5% of the outstanding Shares, whether through the acquisition of stock, the formation of a group, the grant of any option or right, or otherwise other than as disclosed in a Schedule 13D or 13G on file with the Securities and Exchange Commission (the "Commission") on December 19, 1995 or (ii) any such person or group other than any members of the Bartol family and related trusts that on or prior to December 19, 1995, had filed such a Schedule with the Commission thereafter shall have acquired or shall propose to acquire, whether through the acquisition of stock, the formation of a group, the grant of any option or right, or otherwise, beneficial ownership of additional Shares representing 2% or more of the outstanding Shares (after giving effect to the private purchase transaction described in Section 8 herein); (e) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market, (ii) any significant decline in the economic or financial condition in the United States or abroad that could have a material adverse effect on the Company's business or operations or on any trading in the Shares, (iii) the declaration of a banking moratorium or any limitation on the extension of credit by lending institutions in the United States, (iv) the commencement of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States or (v) in the case of any of the foregoing existing at the time of the commencement of the Offer, in the Company's sole judgment, a material acceleration or worsening thereof; (f) a tender or exchange offer with respect to some or all of the Shares (other than the Offer), or a merger, acquisition or other business combination proposal for the Company, shall have been proposed, announced or made by another person; (g) there shall have occurred any event that has resulted, or may in the sole judgment of the Company result, in an actual or threatened change in the business, condition (financial or other), income, operations, stock ownership or prospects of the Company and its subsidiaries; (h) there shall have occurred any decline in the Dow Jones Industrial Average (5,109.89 at the close of business on December 19, 1995) or the Standard & Poor's Composite 500 Stock Index (611.93 at the close of business on December 19, 1995) by an amount in excess of 10% measured from the close of business on December 19, 1995; or (i) there shall be a reasonable likelihood that the purchase of Shares pursuant to the Offer will cause either (i) the Shares to be held of record by less than 300 persons, or (ii) the Shares not to be listed for trading on the NYSE; and, in the sole judgment of the Company, such event makes it inadvisable to proceed with the Offer or with such acceptance for payment or payment. The foregoing conditions are for the sole benefit of the Company and may be asserted by the Company regardless of the circumstances (including any action or inaction by the Company) giving rise to any such condition, and any such condition may be waived by the Company, in whole or in part, at any time and from time to time in its sole discretion. The Exchange Act requires that all conditions to the Offer must be satisfied or waived before the final Expiration Date. In certain cases, waiver of a condition to the Offer would require an extension of the Offer. See Section 15 herein. 8 The Company's failure at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right; the waiver of any such right with respect to particular facts and circumstances shall not be deemed a waiver with respect to any other facts or circumstances; and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. Any determination by the Company concerning the events described above and any related judgment by the Company regarding the inadvisability of proceeding with the acceptance for payment or payment for any tendered Shares shall be final and binding on all parties. 7. PRICE RANGE OF SHARES; DIVIDENDS The Shares are listed and principally traded on the NYSE under the symbol "HUN." The table below sets forth, for the periods indicated, the high and low reported sale prices per Share on the NYSE and the dividends paid per Share.
Per Share High Low Dividend ------ ----- ----------- Fiscal Year Ended November 27, 1994: First Quarter ........................ $18 1/4 15 1/8 $ .09 Second Quarter ....................... 18 1/4 15 1/4 .09 Third Quarter ........................ 17 15 1/8 .09 Fourth Quarter ....................... 16 5/8 14 1/4 .09 Fiscal Year Ended December 3, 1995: First Quarter ........................ $14 3/4 $12 5/8 $ .095 Second Quarter ....................... 15 1/2 13 .095 Third Quarter ........................ 15 1/4 13 1/2 .095 Fourth Quarter ....................... 18 3/8 13 3/4 .095 Fiscal Year Ending December 1, 1996: First Quarter (through December 19, 1995) ............................. $15 1/4 $13 5/8 *
- ------ * The Company has declared a dividend of $.095 per share payable February 15, 1996 to shareholders of record on February 7, 1996. This dividend will not be payable with respect to Shares tendered and purchased by the Company pursuant to the Offer unless the Offer is extended beyond, or Shares are accepted for payment after, February 7, 1996 for any reason whatsoever. However, Shares tendered and not purchased by the Company as a result of proration or otherwise, will remain entitled to this dividend. On December 19, 1995, the last full trading day before the announcement of the Offer, the closing price of the Shares on the NYSE was $15 per Share. On December 20, 1995, the last full trading day before the commencement of the Offer, the closing price of the Shares on the NYSE was $16 5/8 per Share. Shareholders are urged to obtain a current market quotation for the Shares. On August 8, 1990, the Company adopted a Rights Agreement and declared a dividend of one right (a "Right" or "Rights") for each outstanding Common Share held of record as of the close of business on August 22, 1990. The Rights are deemed to be attached to the Common Shares outstanding as of such date and, generally, issued thereafter and detach and become exercisable only if (with certain exceptions and limitations) a person or group attempts to obtain beneficial ownership of 15% or more of the Company's Common Shares or is determined to be an "adverse person" by the Board of Directors of the Company. Each Right, if and when it becomes exercisable, initially entitles holders of the Company's Common Shares to purchase one one-thousandth of a Series A Junior Participating Preferred Share, par value $.10, of the Company for $60, subject to adjustment. The Rights convert into the right to purchase Common Shares or other securities or property of the Company or an acquiring company in certain other potential or actual takeover situations. The Rights are redeemable by the Company at $.01 per Right in certain circumstances and expire, unless earlier exercised or redeemed, on December 31, 2000. 9 The declaration of future dividends (including dividends for fiscal 1996) is within the discretion of the Board and will depend upon business conditions, the earnings and financial condition of the Company and other factors. In addition, the terms of the Company's New Credit Facility impose certain financial covenants which could limit the payment of dividends. See Section 10 herein. 8. BACKGROUND OF THE OFFER Since early in the Company's 1995 fiscal year, the Company's Board has been studying various possible ways of enhancing shareholder value and liquidity, including possible divestitures or other significant corporate transactions. After due consideration of available alternatives, the Board determined that Share repurchases funded by bank borrowings would meet these objectives and be in the interests of the Company and its shareholders. In arriving at this decision, the Board considered that in recent years the Company has maintained relatively low debt levels. The Board believes that the interests of the Company and its shareholders will be served by increasing the Company's leverage and using a portion of the Company's excess borrowing capacity to afford shareholders an opportunity to sell a significant portion of their Shares to the Company. The Company expects that its future cash flow from operations and available borrowings under its New Credit Facility (see Section 10 herein), together with other sources of capital believed to be available, will be sufficient to enable the Company to meet the anticipated future needs of the Company's business and to repay the borrowings made to effect any Share repurchases. The MFB Purchase. On December 19, 1995, the Company and Mary F. Bartol entered into a stock purchase agreement (the "MFB Purchase Agreement"), pursuant to which the Company purchased from Mrs. Bartol an aggregate of 2,150,165 Shares (constituting approximately 13% of the Shares then outstanding) (the "MFB Shares") for a cash purchase price of $16.32 per Share (the "MFB Purchase"). Mrs. Bartol is the widow of George E. Bartol III, the late Chairman of the Board of the Company, the mother-in-law of Gordon A. MacInnes, the current Chairman of the Board, and the mother of Victoria B. Vallely, another director of the Company. The per share purchase price of $16.32 per Share paid by the Company for the MFB Shares is less (by an aggregate of $1,462,112 for all the MFB Shares) than the $17 per Share being offered by the Company to its public shareholders in the Offer. In arriving at the decision to purchase the MFB Shares, the Board considered, among other things, that the MFB Shares constituted a potential market overhang with a potentially depressing effect on the price of Company's Common Shares and that, by agreeing to purchase all such Shares, the Company would obtain a savings of $1,462,112 over the tender price for such Shares if they all were tendered and purchased by the Company. The Board also had been advised that because of estate and tax planning considerations, including the tax ramifications of tendering shares, Mrs. Bartol was not likely to tender any of these shares pursuant to the Offer, and that in order for the Company to acquire her shares it would be necessary to purchase all of them otherwise than pursuant to a tender offer. See Section 11 herein. See page 11 below for information concerning the agreement of certain other members of the Bartol family not to tender Shares in the Offer. The MFB Purchase was considered and unanimously approved by a Special Committee (consisting entirely of seven outside directors not related to Mrs. Bartol) of the Board. In connection with the MFB Purchase, the Board was advised by its financial advisor, The Bridgeford Group. The Board also received a written opinion from Alex. Brown & Sons, Incorporated ("Alex. Brown") to the effect that, based upon the procedures followed, factors considered, and assumptions made by Alex. Brown as set forth in its opinion, including an analysis of the pro forma effects of MFB Purchase and the Offer and an evaluation of the terms of the MFB Purchase and the Offer with respect to other transactions Alex. Brown deems comparable, that the consideration to be received by shareholders pursuant to the Offer is fair, from a financial point of view, to the Company and that the MFB Purchase is fair to the Company and its shareholders other than Mary Bartol. Alex. Brown, like the Company and its Board of Directors, has not expressed any opinion and does not make any recommendation as to whether any shareholder should tender any or all of such shareholders' shares pursuant to the Offer. The full text of Alex. Brown's opinion, which sets forth the assumptions made, matters considered and limitations on the review undertaken by Alex. Brown, is attached hereto as Annex A and is incorporated herein by reference. The Offer. The Offer is designed to afford to shareholders who are considering the sale of their Shares an opportunity to sell a significant portion, and perhaps all, of such Shares to the Company for a higher price than that which has been recently available in the open market, without the 10 usual transaction costs associated with market sales. In addition, the Offer will allow qualified Odd Lot Holders whose Shares are purchased pursuant to the Offer to avoid the payment of brokerage commissions and any applicable odd lot discount chargeable on a sale of Shares that otherwise could apply to open market transactions. However, proceeds of sales pursuant to the Offer may under certain circumstances be treated as a dividend taxable as ordinary income to a shareholder rather than capital gain. See Section 11 herein. The Offer is not dependent or contingent upon the MFB Purchase. To the extent the purchase of Shares in the Offer results in a reduction in the number of shareholders of record, the costs to the Company for services to shareholders will be reduced. The Offer also allows shareholders to sell a portion of their Shares while retaining a continuing equity interest in the Company, if they so desire. Shareholders whose Shares are not tendered or purchased in the Offer will obtain a proportionate increase in their ownership interest in the Company, and thus in the Company's future earnings and assets, as a result of the acquisition of Shares by the Company pursuant to the Offer and the MFB Purchase and the corresponding reduction in the number of outstanding Shares. NEITHER THE COMPANY NOR THE BOARD MAKES ANY RECOMMENDATION AS TO WHETHER ANY SHAREHOLDER SHOULD TENDER ANY OF OR ALL SUCH SHAREHOLDER'S SHARES PURSUANT TO THE OFFER. EACH SHAREHOLDER MUST MAKE SUCH SHAREHOLDER'S OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. Shares acquired by the Company pursuant to the Offer and the MFB Purchase will be deemed to be issued but not outstanding shares and will be available for the Company to reissue without further shareholder action (except as may be required by applicable law or the rules of the NYSE on which the Shares are traded). Shares could be issued for such purposes as, among others, the acquisition of businesses, the raising of additional capital for use in the Company's business, the distribution of stock dividends and the implementation of employee benefit plans. As of the close of business on December 19, 1995, the Company had issued and outstanding an aggregate of 13,842,998 Shares (which number reflects consummation of the MFB Purchase on such date) and had reserved for issuance upon exercise of outstanding stock options an aggregate of 1,269,280 Shares. The 3,230,000 Shares that the Company is offering to purchase in the Offer represent approximately 23% of the Shares then outstanding, or approximately 21% on a fully diluted basis (assuming the exercise of all outstanding stock options). As of the close of business on December 19, 1995, all directors and executive officers of the Company as a group owned beneficially an aggregate of approximately 1,386,000 Shares (including an aggregate of approximately 377,000 Shares that may be acquired pursuant to the exercise of stock options that were exercisable as of such date or that will become exercisable prior to the Expiration Date), or approximately 10% of the Shares then outstanding, assuming the exercise of all such options. The Company has been advised by its President and Chief Executive Officer, Robert B. Fritsch (who presently expects to retire in the current fiscal year) and by a director of the Company, Jack Farber, that they may tender as many as all of their Shares pursuant to the Offer. Mr. Fritsch holds an aggregate of 138,269 Shares and 117,277 exercisable options and Mr. Farber holds an aggregate of 23,960 Shares and 1,000 exercisable options. With the exception of Mr. Fritsch and Mr. Farber, all of the Company's executive officers and directors have advised the Company that they do not intend to tender any of their Shares pursuant to the Offer. However, all executive officers and directors have reserved the right otherwise to dispose of their Shares if they so desire. Certain members of the Bartol family, comprising the four daughters of Mary Bartol, their spouses and related trusts, holding in the aggregate approximately 3,413,500 Shares, individually have agreed with the Company that none of the Shares beneficially owned by them or over which they otherwise exercise dispositive power will be tendered and sold to the Company pursuant to the Offer, although such persons and trusts have reserved the right otherwise to dispose of such Shares if they so desire. After giving effect to the consummation of the MFB Purchase and the repurchase of Shares by the Company pursuant to the Offer (assuming 3,230,000 Shares are tendered and purchased pursuant to the Offer), such members of the Bartol family and related trusts will own approximately 32% of the outstanding Shares, assuming no outstanding options are exercised, and approximately 29% of the outstanding Shares, assuming the exercise of all outstanding options. 11 Except as disclosed in this Offer to Purchase, the Company currently has no firm plans or proposals that relate to or would result in: (a) the acquisition by any person of a material amount of additional securities of the Company or the disposition of a material amount of securities of the Company; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its significant subsidiaries; (c) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (d) any material change in the present Board of Directors or management of the Company; (e) any material change in the present dividend rate or policy, or indebtedness or capitalization of the Company; (f) any other material change in the Company's corporate structure or business; (g) any change in the Company's Articles of Incorporation or By-laws or other actions which may impede the acquisition of control of the Company by any person; (h) a class of equity securities of the Company being delisted from a national securities exchange; (i) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or (j) the suspension of the Company's obligation to file reports pursuant to Section 15(d) of the Exchange Act. Subject to applicable laws and regulations and restrictions set forth in the New Credit Facility (see Section 10 herein), the Company in the future may purchase additional Shares on the open market, in private transactions, through tender offers or otherwise. Any such purchases may be on the same terms or on terms which are more or less favorable to shareholders than the terms of the Offer. Any possible future purchases of Shares by the Company would depend on many factors, including among others, the market price of the Shares, the results of the Offer, the Company's business and financial position and general economic and market conditions. Rule 13e-4 under the Exchange Act generally prohibits the Company and its affiliates from purchasing any Shares, other than pursuant to the Offer, until at least ten business days after the Expiration Date. Certain pro forma financial effects of the purchase of the Shares pursuant to the MFB Purchase and the Offer are described in Section 9 herein. 9. CERTAIN INFORMATION CONCERNING THE COMPANY The Company is a worldwide manufacturer and distributor of office products (such as manual and electric pencil sharpeners, paper punches, trimmers and shredders; office furniture and various desk top accessories), art/craft products (such as commercial and fine art papers, various types of knives and blades, and printmaking and calligraphy products) and presentation and display products (such as foam board, various types of adhesive products and an array of mounting and laminating equipment) for the business, education and consumer markets. The Company has manufacturing facilities in Alabama, Connecticut, Kentucky, North Carolina, Wisconsin and England and distribution facilities in Canada, Germany and Hong Kong. The Company's principal office is located at One Commerce Square, 2005 Market Street, Philadelphia, Pennsylvania, 19103. Summary Historical Financial Information. The summary unaudited financial information for the years ended November 27, 1994 and November 28, 1993 set forth below has been derived from, and should be read in conjunction with, the audited financial statements (including the related notes thereto) included in the Company's Annual Report on Form 10-K for the year ended November 27, 1994 (the "Form 10-K"). The summary financial information for the nine month periods ended September 3, 1995 and August 28, 1994, has been derived from, and should be read in conjunction with, the unaudited financial statements for such periods included in the Company's Quarterly Report on Form 10-Q for the period ended September 3, 1995 (the "Form 10-Q"). Such summary financial information is qualified in its entirety by reference to such reports and all financial statements and related notes contained therein. The Form 10-K and the Form 10-Q are available for examination, and copies are obtainable, in the manner set forth below in this Section 9 under "Additional Information." The financial information for the nine month periods ended September 3, 1995 and August 28, 1994 has not been audited, but in the opinion of management contains all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of such information. Results for the nine month periods are not necessarily indicative of results for the full year. 12 The Company does not expect to be in a position to release its final audited fiscal year 1995 financial results until January 16, 1996. However, the Company expects its earnings per share for 1995 to range from $.91 to $.96 (excluding provision for organizational changes and relocation and consolidation of operations, the earnings per share range would be $1.13 to $1.18). HUNT MANUFACTURING CO. SUMMARY HISTORICAL FINANCIAL INFORMATION (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND RATIO AMOUNTS) (UNAUDITED)
NINE MONTHS ENDED YEAR ENDED ------------------------------ -------------------------------- SEPTEMBER 3, AUGUST 28, NOVEMBER 27, NOVEMBER 28, -------------- ------------ -------------- -------------- 1995 1994 1994 1993 -------------- ------------ -------------- -------------- (40 WEEKS) (39 WEEKS) Income Statement(a): Net sales ............................. $231,713 $209,338 $288,203 $256,150 Income from operations ................ 14,850 18,668 27,366 24,561 Income before taxes and cumulative effect of accounting change .......... 15,195 18,082 27,081 24,038 Income before cumulative effect of accounting charge .................... 9,937 11,482 17,197 14,928 Net income(b) ......................... $ 9,937 $ 12,277 $ 17,992 $ 14,928 Balance Sheet (at end of period)(a): Working capital ....................... $ 65,930 $ 59,040 $ 64,603 $ 47,128 Total assets less excess of acquisition cost over net assets acquired ........ 161,507 151,253 156,167 139,263 Total long-term debt .................. 4,574 4,856 4,562 6,161 Shareholders' equity .................. $132,279 $124,347 $129,234 $116,267 Per Share Data (a)(c): Net income per common share before cumulative effect of accounting change $ 0.62 $ 0.71 $ 1.07 $ 0.93 Net income per common share ........... 0.62 0.76 1.12 0.93 Net income per share on a fully diluted basis ................................ 0.62 0.75 1.10 0.92 Book value per share .................. $ 8.26 $ 7.72 $ 8.03 $ 7.22 Ratio of earnings to fixed charges .... 14.59 14.98 17.86 14.40
- ------ (a) For the first nine months of fiscal 1995, a pre-tax provision aggregating $3.7 million was recorded relating to the Company's decision to relocate and consolidate certain manufacturing and distribution operations and to costs incurred in connection with organizational changes (approximately $2.4 million or $.15 per share after income taxes). (b) In the first quarter of fiscal 1994, the Company adopted the provisions of Statement of Financial Accounting (SFAS) No. 109 "Accounting for Income Taxes." The adoption of SFAS No. 109 has been recognized as the effect of a change in accounting principle and increased net income in the nine months ended August 28, 1994 and in the fiscal year ended November 27, 1994 by $.8 million, or $.05 per share. (c) Average number of Common Shares outstanding during the nine month periods ended September 3, 1995 and August 28, 1994 was 16,009,000 and 16,104,000, respectively, and during the years ended November 27, 1994 and November 28, 1993 was 16,102,000 and 16,107,000, respectively. 13 Summary Pro Forma Financial Information (Unaudited). The following unaudited pro forma financial information sets forth the pro forma effects on the historical financial results of the Company of the consummation of the MFB Purchase and the Offer and the borrowings and anticipated refinancing of certain debt to be effected by the Company in connection therewith (see Section 10 herein), assuming 3,230,000 Shares are purchased in the Offer for $17 per Share, net to the seller in cash, for an aggregate cost to the Company of approximately $56,410,000, including estimated related fees and expenses of approximately $1,500,000. The summary pro forma balance sheet data as of September 3, 1995 and November 27, 1994 assume that the repurchase of Shares by the Company pursuant to the MFB Purchase and the Offer and related financings had occurred as of the respective balance sheet dates. The summary pro forma income statement data for the nine month period ended September 3, 1995 and the year ended November 27, 1994 assume that the repurchase of Shares by the Company pursuant to the MFB Purchase and the Offer and related financings had occurred as of November 28, 1994 and November 29, 1993, respectively. See the footnotes to the Summary Pro Forma Financial Information below in this Section 9. The estimated financial effects of the repurchase of Shares by the Company pursuant to the MFB Purchase and the Offer and related financings presented in the pro forma financial information are not necessarily indicative of either the Company's financial position or the results of its operations which would have been obtained had the Offer or the MFB Purchase actually occurred on the dates specified above, nor are they necessarily indicative of the results of the Company's future operations. The pro forma financial information should be read in conjunction with the historical financial statements and related notes of the Company set forth above, and in the Form 10-K and the Form 10-Q referred to above, in this Section 9. 14 HUNT MANUFACTURING CO. SUMMARY PRO FORMA FINANCIAL INFORMATION (UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND RATIO AMOUNTS)
Nine Months Ended Year Ended September 3, 1995 November 27, 1994 ------------------------------------------- ------------------------------------------- As Pro Forma Pro Forma As Pro Forma Pro Forma Reported Adjustments As Adjusted Reported Adjustments As Adjusted ---------- ------------- ------------- ---------- ------------- ------------- Income Statement: Net sales ......................... $231,713 $231,713 $288,203 $288,203 Income from operations ............ 14,850 14,850 27,366 27,366 Income before income taxes and cumulative effect of accounting change ........................... 15,195 (4,729)(a) 10,466 27,081 (6,305)(a) 20,776 Income before cumulative effect of accounting change ................ 9,937 (3,050)(b) 6,887 17,197 (4,004)(b) 13,193 Net income ........................ $ 9,937 (3,050)(b) $ 6,887 $ 17,992 (4,004)(b) $ 13,988 Balance Sheet (at end of period): Working capital ................... $ 65,930 (6,676)(c) $ 59,254 $ 64,603 (6,676)(c) $ 57,927 Total assets less excess of acquisition costs over net assets acquired ......................... 161,507 (620)(c) 160,887 156,167 (620)(c) 155,547 Total long-term debt .............. 4,574 90,000 (c) 94,574 4,562 90,000 (c) 94,562 Shareholders' equity .............. $132,279 (90,620)(c) $ 41,659 $129,234 (90,620)(c) $ 38,614 Per Share (d): Net income per common share before cumulative effect of accounting change ........................... $ 0.62 $ 0.64 $ 1.07 $ 1.21 Net income per share .............. 0.62 0.64 1.12 1.28 Net income per share on a fully diluted basis .................... 0.62 0.63 1.10 1.26 Book value per share .............. $ 8.26 $ 3.86 $ 8.03 $ 3.54 Ratio of earnings to fixed charges: 14.59 2.76 17.86 3.59
- ------ (a) Net increases in interest expense relating to the utilized portion of the $130 million New Credit Facility described in Section 10 herein and to the retirement of pre-existing bank credit facilities. The interest rates assumed for the Revolving Credit Facility and Term Loan under the New Credit Facility are 6.5% and 6.65%, respectively. Also includes amortization of fees incurred in connection with the placement of the New Credit Facility and administrative fees associated therewith. (b) Adjustment described in note (a) above, net of corresponding tax effects. (c) Reflects the purchase of the 2,150,165 MFB Shares and 3,230,000 Shares pursuant to the Offer and related borrowings under the New Credit Facility referred to in notes (a) and (b) above. (d) All per share information has been adjusted to reflect the adjustments described in notes (a) through (c) above. Pro forma average number of shares of Common Stock outstanding during the nine months ended September 3, 1995 and the year ended November 27, 1994 was 10,898,000 and 10,805,000, respectively. Certain Additional Matters. Earlier this year, Ronald J. Naples stepped down as Chairman and Chief Executive Officer of the Company. He was succeeded as Chairman of the Board by Gordon A. MacInnes, and Robert B. Fritsch, the Company's President and Chief Operating Officer, was elevated to Chief Executive Officer. The Company currently is engaged in a search for a new Chief Executive Officer, and Mr. Fritsch has agreed to defer his previously planned retirement from the Company for a reasonable period of time until a new Chief Executive Officer has been hired. Mr. Fritsch presently intends to retire during the current fiscal year. Additional Information. The Company is subject to the informational reporting requirements of the Exchange Act and in accordance therewith the Company files reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC"), relating to its business, financial condition and other matters. The Company is required to disclose in such proxy statements and reports certain information, as of particular 15 dates, concerning the Company's directors and officers, their remuneration, stock options granted to them, the principal owners of the Company's securities and any material interest of such persons in transactions with the Company. The Company has also filed an Issuer Tender Offer Statement on Schedule 13E-4 with the SEC which includes certain additional information relating to the Offer. The reports, proxy statements and other information, including the Schedule 13E-4, filed by the Company with the SEC can be inspected and copied at the public reference facilities maintained by the SEC at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the SEC at Seven World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street (Suite 1400), Chicago, Illinois 60661. Copies of such material also can be obtained at prescribed rates from the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549. 10. SOURCE AND AMOUNT OF FUNDS The total amount of funds required by the Company to consummate the MFB Purchase and the Offer and to pay related fees and expenses related to the Offer is estimated to be approximately $91,501,000. The amount of $35,090,692 was required by the Company to purchase 2,150,165 Shares from MFB pursuant to the MFB Purchase Agreement at a price of $16.32 per Share. If 3,230,000 Shares are purchased by the Company pursuant to the Offer at $17 per Share, net to the seller in cash, the aggregate cost to the Company, including estimated related fees and expenses of the Offer, is expected to be approximately $56,410,000. The Company has funded the MFB Purchase through borrowings under the New Credit Facility described below (the "New Credit Facility") and anticipates that it will fund the purchase of Shares pursuant to the Offer and the payment of related fees and expenses through borrowings under the New Credit Facility. See "Summary Pro Forma Financial Information (Unaudited)" in Section 9 herein for further information concerning the assumed cost of funds for the MFB Purchase and the Offer. The Company expects to repay the borrowings under the New Credit Facility through internally generated funds and possibly with funds raised through public or private offerings of securities, additional bank borrowings, issuance of commercial paper or other financings, divestitures or such combination of the foregoing as the Company may deem appropriate with reference to business and market conditions. The following is a summary of the material terms of the New Credit Facility between NationsBank, N.A. (the "Bank") and the Company, dated December 19, 1995. The Company has been advised that the Bank may syndicate the New Credit Facility. The New Credit Facility, as executed and delivered by the Company, has been filed with the SEC as an exhibit to the Schedule 13E-4 of the Company relating to the Offer. Such agreement may be examined, and copies thereof may be obtained, as set forth in Section 9 herein. The New Credit Facility. The New Credit Facility provides for a new $130 million credit facility consisting of (i) a five-year revolving credit facility (the "Revolving Credit Facility") in an amount up to $85 million (with a $10 million sublimit for the issuance of letters of credit), and (ii) a five-year amortizing term loan (the "Term Loan") in the initial principal amount of $45 million. The Company has borrowed approximately $35,000,000 pursuant to the term loan component of the New Credit Facility in connection with the MFB Purchase. The Company intends to use borrowings under the New Credit Facility, possibly together with cash on hand, to fund the purchase of Shares pursuant to the Offer aggregating approximately $56,410,000 (including estimated related fees and expenses of approximately $1,500,000) assuming 3,230,000 Shares are purchased by the Company pursuant to the Offer. The balance of the New Credit Facility is expected to be available for working capital, strategic acquisitions and general corporate purposes. The New Credit Facility is unsecured, but certain of the Company's domestic subsidiaries have guaranteed the repayment of borrowings under the New Credit Facility. However, if the amount required to consummate the MFB Purchase and the Offer is less than $90 million, the Revolving Credit Facility and the Term Loan will be reduced ratably by the amount by which $90 million exceeds such required amount. In addition, if the Offer has not been consummated on or prior to February 15, 1996, the Revolving Credit Facility and the Term Loan will be reduced ratably by $90 million unless the Company and the lenders otherwise agree. Conditions to availability of funds under the New Credit Facility include, without limitation, absence of defaults and continued accuracy of all representations and warranties of the Company under the New Credit Facility, delivery of corporate certificates, borrowing base certificate and delivery of satisfactory legal opinions. 16 The Revolving Credit Facility is expected to mature on December 31, 2000. The Term Loan is expected to amortize in twenty quarterly installments, consisting of four installments each of $1.25 million, $1.75 million, $2.5 million, $2.75 million, and $3 million, respectively. The first installment is due and payable March 31, 1996 and the last installment is due and payable December 31, 2000. The interest rates under the Revolving Credit Facility are at a Base Rate (defined as the higher of (i) the applicable prime rate of the Bank and (ii) the federal funds rate plus 50 basis points) or, at the option of the Company, LIBOR plus a margin of between 40 and 72.5 basis points, the margin in each case to be adjusted quarterly based on the Company's leverage ratio (as defined in the New Credit Facility). The interest rates under the Term Loan are at the Base Rate or, at the option of the Company, LIBOR plus a margin of between 55 and 87.5 basis points, the margin to be adjusted quarterly based on the Company's leverage ratio. The Company has agreed to pay to the Bank an underwriting fee equal to 50 basis points of the aggregate amount of the Term Loan and the Revolving Credit Facility. In addition, a commitment fee is payable to the Bank under the New Credit Facility with respect to the amount of the Revolving Credit Facility equal to a rate per annum of 15 basis points, payable quarterly. The Company will also pay to the Bank an administration fee equal to $50,000 per annum. The New Credit Facility may be voluntarily prepaid at any time and is subject to mandatory principal prepayments in the event of significant asset sales by the Company, unless the sale proceeds are reinvested in similar assets; or the issuance of certain equity securities (unless the proceeds are reinvested in strategic acquisitions) or indebtedness by the Company or any of its subsidiaries, subject in each case to certain exceptions and limitations. The New Credit Facility contains representations, warranties, covenants and conditions which are customary for facilities of this type, including, but not limited to, requirements that the Company comply with certain financial covenants, including interest coverage, fixed charge coverage and leverage ratios and maintain certain levels of net worth, and also contains covenants as to insurance, corporate existence, use of loan proceeds, prohibitions on fundamental changes, and limitations on liens, indebtedness, investments, changes in lines of business, acquisitions, transactions with affiliates and modifications of certain documents. In addition, the New Credit Facility prohibits dividends and other distributions to shareholders unless a minimum fixed charge coverage ratio is satisfied after giving effect to such dividend or distribution. However, the Company does not presently anticipate that this dividend restriction will require any reduction from the Company's current dividend level. Events of default under the New Credit Facility include, but are not limited to, payment defaults, false or misleading representations or warranties, noncompliance with covenants, appointment of a receiver, custodian, trustee or liquidator, reorganization, liquidation, or bankruptcy proceeding, a final judgment against the Company in excess of a material sum, cross-default and cross-acceleration to other material indebtedness for borrowed money, and a change in control of the Company. 11. CERTAIN FEDERAL INCOME TAX CONSIDERATIONS In General. Set forth below is a summary of the principal federal income tax consequences of a sale of Shares pursuant to the Offer under the Internal Revenue Code of 1986, as amended to date (the "Code"). The summary is based on the Code, existing and proposed Treasury regulations, administrative pronouncements and judicial decisions now in effect, all of which are subject to change (possibly on a retroactive basis). The summary deals only with Shares held as capital assets within the meaning of Section 1221 of the Code and does not address foreign, state or local tax consequences, nor does it address estate or gift tax considerations. Furthermore, the summary does not address all aspects of federal income taxation that may be relevant to investors in light of their particular circumstances or to certain types of investors subject to special treatment under the federal income tax laws (such as dealers in securities or currencies, tax-exempt organizations, life insurance companies, other financial institutions, pass-through entities, regulated investment companies, foreign shareholders, or shareholders holding the Shares as part of a conversion transaction or a hedging transaction, or as a position in a straddle for tax purposes). Each shareholder is urged to consult and rely on the shareholder's own tax advisor with respect to the tax consequences to the shareholder of tendering Shares pursuant to the Offer. 17 A shareholder's exchange of Shares for cash pursuant to the Offer will be a taxable transaction for federal income tax purposes and may also be a taxable transaction under applicable state, local, foreign and other tax laws. As discussed more fully below, cash received by most shareholders pursuant to the Offer may be treated as a dividend taxable as ordinary income. Treatment as a Sale or Exchange. Generally, a transfer of Shares to the Company pursuant to the Offer will be treated as a sale or exchange of the Shares (rather than as a dividend distribution) if the receipt of cash upon the sale (a) is "substantially disproportionate" with respect to the shareholder, (b) results in a "complete termination" of the shareholder's interest in the Company, or (c) is "not essentially equivalent to a dividend" with respect to the shareholder. These tests (the "Section 302 tests") are discussed more fully below. The Company believes that, in determining whether any of the Section 302 tests is met, its purchases of Shares pursuant to the MFB Purchase and the Offer should be treated as part of a single integrated transaction. However, such transactions are separate and are not dependent upon each other. In addition, a shareholder must take into account not only Shares actually owned by the shareholder, but also Shares that are constructively owned pursuant to Section 318 of the Code. Under Section 318, a shareholder may constructively own Shares actually owned, and in some cases constructively owned, by certain related individuals or entities and Shares which may be acquired by exercise of an option or by conversion. Substantially contemporaneous dispositions or acquisitions of Shares by a shareholder or related individuals or entities (including market purchases and sales) may be deemed to be part of a single integrated transaction to be taken into account in determining whether any of the Section 302 tests has been satisfied. In the event that the Offer is over-subscribed, the Company's purchase of Shares pursuant to the Offer will be prorated. Thus, in such case, even if all the Shares actually and constructively owned by a shareholder are tendered pursuant to the Offer, not all of the Shares will be purchased by the Company, which in turn may affect the shareholder's ability to satisfy the Section 302 tests. The Section 302 tests are as follows: (a) SUBSTANTIALLY DISPROPORTIONATE TEST. The receipt of cash by a shareholder will be substantially disproportionate with respect to the shareholder if the percentage of the outstanding Shares actually and constructively owned by the shareholder immediately following the exchange of Shares pursuant to the Offer (treating Shares purchased pursuant to the MFB Purchase and purchased pursuant to the Offer as not outstanding) is less than 80% of the percentage of the outstanding Shares actually and constructively owned by the shareholder immediately before the MFB Purchase (treating Shares purchased pursuant to the MFB Purchase and purchased pursuant to the Offer as outstanding). (b) COMPLETE TERMINATION TEST. The receipt of cash by a shareholder will be a complete termination of the shareholder's interest if either (i) all of the Shares actually and constructively owned by the shareholder are sold pursuant to the Offer or (ii) all of the Shares actually owned by the shareholder are sold pursuant to the Offer and the shareholder is eligible to waive, and effectively waives, the attribution of Shares constructively owned by the shareholder in accordance with the procedures described in Section 302(c)(2) of the Code. Shareholders considering terminating their interest in accordance with Section 302(c)(2) of the Code should consult with their own tax advisors. (c) NOT ESSENTIALLY EQUIVALENT TO A DIVIDEND TEST. The receipt of cash by a shareholder will be not essentially equivalent to a dividend if the shareholder's sale of Shares pursuant to the Offer results in a "meaningful reduction" in the shareholder's interest in the Company as compared to such shareholder's interest immediately before the MFB Purchase. Whether the receipt of cash by a shareholder will be "not essentially equivalent to a dividend" will depend upon the individual shareholder's facts and circumstances. The Internal Revenue Service (the "IRS") has indicated in published rulings that even a small reduction in the proportionate interest of a small minority shareholder in a publicly held corporation who exercises no control over corporate affairs may constitute such a "meaningful reduction." See Rev. Rul. 76-385, 1976-2 C.B. 92. Shareholders expecting to rely upon the "not essentially equivalent to a dividend" test should consult their own tax advisors as to its application in their particular situation. If any of the Section 302 tests are satisfied, and the sale of the Shares is therefore treated as a "sale or exchange" for federal income tax purposes, the tendering shareholder will recognize gain or loss equal to the difference between the amount of cash received by the shareholder and the shareholder's tax basis in the Shares sold pursuant to the Offer. Any such gain or loss 18 will be capital gain or loss, and will be long term capital gain or loss if the Shares have been held for more than one year. Long term capital gains are subject to taxation at a maximum, marginal federal income tax rate of 28% for non-corporate taxpayers and 39% for corporate taxpayers. (Pending legislative proposals would reduce these rates; shareholders should consult their tax advisers concerning the status and potential effects of such legislation.) Treatment as a Dividend. If none of the Section 302 tests are satisfied, the amount of cash received by a tendering shareholder will be treated as a dividend taxable as ordinary income (without reduction for the tax basis of the Shares sold pursuant to the Offer) to the extent of the shareholder's share of the Company's earnings and profits. Ordinary income is subject to taxation at a maximum, marginal federal income tax rate of 39.6% for non-corporate taxpayers, and 39% for corporate taxpayers. The shareholder's basis in the Shares sold pursuant to the Offer would be added to such shareholder's basis in its remaining Shares, if any. If none of the Section 302 tests are satisfied, any cash received for Shares pursuant to the Offer in excess of the Company's earnings and profits will be treated, first, as a non-taxable return of capital to the extent of the shareholder's basis for all of such shareholder's shares, and, thereafter, as a capital gain to the extent it exceeds such basis. As noted above, the Company believes that, in determining whether any of the Section 302 tests are met, purchases pursuant to the MFB Purchase and the Offer must be treated as part of a single integrated transaction. However, such transactions are separate and are not dependent upon each other. Accordingly, each shareholder should compare its percentage interest in the Company immediately before the MFB Purchase with its percentage interest in the Company immediately after the Offer. Because of the Shares purchased by the Company from Mrs. Bartol pursuant to the MFB Purchase, it is possible that a shareholder's percentage interest will be higher after the Offer than before the MFB Purchase. Any shareholder whose interest in the Company either remains constant or increases as a result of the MFB Purchase and the Offer will be unable to satisfy any Section 302 test and, therefore, will be subject to the dividend treatment described above. A shareholder seeking sale or exchange treatment should consult with the shareholder's own tax advisor concerning the extent to which sales of Common Stock in the open market would be taken into account in determining whether the shareholder's interest in the Company has been reduced and, if so, how many Shares must be sold. Special Rules for Corporate Shareholders. If a sale of Shares by a corporate shareholder is treated as a dividend, the corporate shareholder may be entitled to claim a deduction equal to 70% of the dividend under Section 243 of the Code, subject to applicable limitations. Corporate Shareholders should, however, consider the effect of Section 246(c) of the Code, which disallows the 70% dividends-received deduction with respect to stock that is held for 45 days or less. For this purpose, the length of time a taxpayer is deemed to have held stock may be reduced by periods during which the taxpayer's risk of loss with respect to the stock is diminished by reason of the existence of certain options or other transactions. Moreover, under Section 246A of the Code, if a corporate shareholder has incurred indebtedness directly attributable to an investment in Shares, the 70% dividends-received deduction may be reduced. In addition, any amount received by a corporate shareholder pursuant to the Offer that is treated as a dividend may constitute an "extraordinary dividend" under Section 1059 of the Code. For this purpose, all dividends received by a shareholder within, and having their ex-dividend date within, an 85-day period (expanded to a 365-day period in the case of dividends received in such period that in the aggregate exceed 20% of the shareholder's adjusted tax basis in the Shares) are aggregated and may also be treated as extraordinary dividends. Accordingly, if applicable, a corporate shareholder would be required under Section 1059(a) of the Code to reduce its basis (but not below zero) in its Shares by the non-taxed portion of the dividend (i.e., the portion of the dividend for which a deduction is allowed), and if such portion exceeds the shareholder's tax basis for its Shares, to treat the excess as gain from the sale of such Shares in the year in which a sale or disposition of such Shares occurs (which, in certain circumstances, may be the year in which Shares are sold pursuant to the Offer). Proposed tax legislation (including both the Revenue Reconciliation Bill of 1995, which was recently passed by Congress but vetoed by the President, and the President's 7-year Balanced Budget Proposal, released December 7, 1995) would require under all circumstances that any such excess be treated as gain at the time that Shares are sold pursuant to the Offer, and would also provide that if a redemption is treated as a dividend by reason of option attribution under Section 318, such dividend will (except as provided in regulations) be treated as an "extraordinary dividend" for purposes of gain recognition under Section 1059(a). Foreign Shareholders. The Company will withhold United States federal income tax at a rate of 30% from gross proceeds paid pursuant to the Offer to a foreign shareholder or his agent, unless the Company determines either 19 that a reduced rate of withholding is applicable pursuant to a tax treaty or that an exemption from withholding is applicable because such gross proceeds are effectively connected with the conduct of a trade or business by the foreign shareholder within the United States. For this purpose, a foreign shareholder is any shareholder that is not (a) a citizen or resident of the United States, (b) a corporation, partnership or other entity created or organized in or under the laws of the United States, or (c) any estate or trust the income of which is subject to United States federal income taxation regardless of its source. Without definite knowledge to the contrary, the Company will determine whether a shareholder is a foreign shareholder by reference to the shareholder's address. A foreign shareholder may be eligible to file for a refund of such tax or a portion of such tax if such shareholder (a) meets the Section 302 tests described above, (b) is entitled to a reduced rate of withholding pursuant to a treaty and the Company withheld at a higher rate, or (c) is otherwise able to establish that no tax or a reduced amount of tax was due. In order to claim an exemption from withholding on the ground that gross proceeds paid pursuant to the Offer are effectively connected with the conduct of a trade or business by a foreign shareholder within the United States or that the foreign shareholder is entitled to the benefits of a tax treaty, the foreign shareholder must deliver to the Depositary a properly executed statement claiming such exemption or benefits. Such statements may be obtained from the Depositary. Foreign shareholders are urged to consult their own tax advisors regarding the application of United States federal income tax withholding, including eligibility for a withholding tax reduction or exemption and the refund procedures. Backup Withholding. Each tendering shareholder must provide certain information through the Letter of Transmittal to avoid the 31% federal "backup withholding" tax on the gross proceeds payable pursuant to the Offer. See Section 3 herein. THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION PURPOSES ONLY. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF SALES MADE BY THEM PURSUANT TO THE OFFER IN VIEW OF THEIR OWN PARTICULAR CIRCUMSTANCES. 12. TRANSACTIONS AND ARRANGEMENTS CONCERNING THE SHARES Based upon the Company's records and upon information provided to the Company by its directors, executive officers and affiliates, neither the Company nor, to the best of the Company's knowledge, any of the directors or executive officers of the Company, or any affiliates or any associates of any of the foregoing, has effected any transactions in the Shares during the 40 business days prior to the date hereof, other than the MFB Purchase (see Section 8 herein) and the following: On October 18, 1995, John W. Carney, Vice President, Human Resources, of the Company surrendered to the Company 1,065 Common Shares at $17.8125 per share in payment of the exercise price of options to be exercised by him pursuant to the Company's Stock Option Plans to purchase 1,794 Common Shares at $10.58 per share. On October 23, 1995, Dennis S. Pizzica, Vice President and Treasurer of the Company, surrendered to the Company 1,127 Common shares at $17.9375 per share in payment of the exercise price of options to be exercised by him pursuant to the Company's Stock Option Plans to purchase 1,912 Common Shares at $10.58 per share. On October 23, 1995, Spencer W. O'Meara, Executive Vice President of the Company, surrendered to the Company 1,127 Common Shares at $17.9375 per share in payment of the exercise price of options to be exercised by him pursuant to the Company's Stock Option Plans to purchase 1,912 Common Shares at $10.58 per share. On October 24, 1995, W. Ernest Precious, Executive Vice President of the Company, surrendered to the Company 2,253 Common Shares at $17.89 per share in payment of the exercise price of options to be exercised by him pursuant to the Company's Stock Option Plans to purchase 3,808 Common Shares at $10.58 per share. 20 The 2,150,165 Shares sold by Mrs. Bartol to the Company in the MFB Purchase were distributed to her from the marital trust established for her benefit by her late husband. Gordon R. MacInnes and his wife (a daughter of Mrs. Bartol) are the trustees of such trust. Except as set forth in this Offer to Purchase, neither the Company nor, to the best of the Company's knowledge, any of its affiliates, directors or executive officers, is a party to any contract, arrangement, understanding or relationship with any other person relating, directly or indirectly, to the Offer with respect to any securities of the Company (including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies, consents or authorizations). See Section 8 herein for information concerning the intentions of executive officers, directors and certain members of the Bartol family concerning participating in the Offer. 13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS The Company is not aware of any license or regulatory permit that appears to be material to its business that might be adversely affected by its acquisition of Shares as contemplated in the Offer or of any approval or other action by any government or governmental, administrative or regulatory authority or agency, domestic or foreign, that would be required for the Company's acquisition or ownership of Shares pursuant to the Offer. Should any such approval or other action be required, the Company currently contemplates that it will seek such approval or other action. The Company cannot predict whether it may determine that it is required to delay the acceptance for payment of Shares tendered pursuant to the Offer pending the outcome of any such matter. There can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that the failure to obtain any such approval or other action might not result in adverse consequences to the Company's business. The Company intends to make all required filings under the Exchange Act. The Company's obligation under the Offer to accept Shares for payment is subject to certain conditions. See Section 6 herein. 14. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE EXCHANGE ACT The Company's purchase of Shares pursuant to the MFB Purchase and the Offer will reduce the number of Shares that might otherwise trade publicly, and the Offer is likely to reduce the number of shareholders. The Shares are registered under the Exchange Act which requires, among other things, that the Company furnish certain information to its shareholders and to the SEC and comply with the SEC's proxy rules in connection with meetings of the Company's shareholders. Registration of the Shares under the Exchange Act may be terminated upon application by the Company to the SEC if the Shares are held of record by fewer than 300 persons and are not quoted on the NYSE. Further, under NYSE rules, the Shares may be subject to delisting by the NYSE if the number of beneficial owners of shares falls below a certain number. However, the Company does not believe that the Offer will result in delisting the Shares from the NYSE or termination of registration of the Shares under the Exchange Act. The Shares are currently "margin securities" under the rules of the Federal Reserve Board. This has the effect, among other things, of allowing brokers to extend credit on the collateral of the Shares. The Company believes that, following the purchase of Shares pursuant to the Offer, the Shares will continue to be "margin securities" for purposes of the Federal Reserve Board's margin regulations. 15. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS The Company expressly reserves the right, in its sole discretion, at any time or from time to time and regardless of whether or not any of the events set forth in Section 6 herein shall have occurred or shall be deemed by the Company to have occurred, to extend the period of time during which the Offer is open and thereby delay acceptance for payment of any Shares by giving oral or written notice of such extension to the Depositary and making a public announcement thereof. During any such extension, all Shares previously tendered and not purchased or withdrawn will remain subject to the Offer, except to the extent that such Shares may be withdrawn as set forth in 21 Section 4 herein. The Company also expressly reserves the right, in its sole discretion, and regardless of whether or not any of the events set forth in Section 6 herein shall have occurred or shall be deemed by the Company to have occurred, to terminate the Offer and not accept for payment or pay for any Shares not theretofore accepted for payment or paid for or, subject to applicable law, to postpone payment for Shares upon the occurrence of any of the conditions specified in Section 6 herein or otherwise by giving oral or written notice of such termination or postponement to the Depositary and making a public announcement thereof. The Company's reservation of the right to delay payment for Shares which it has accepted for payment is limited by Rule 13e-4(f)(5) promulgated under the Exchange Act, which requires that the Company pay the consideration offered or return the Shares tendered promptly after termination or withdrawal of a tender offer. Subject to compliance with applicable law, the Company further reserves the right, in its sole discretion, to amend the Offer in any respect (including, without limitation, by decreasing or increasing the consideration offered in the Offer to owners of Shares or by decreasing the number of Shares being sought in the Offer) or to waive the limitation on the maximum number of shares to be purchased pursuant to the Offer. Amendments to the Offer may be made at any time or from time to time effected by public announcement thereof, such announcement, in the case of an extension, to be issued no later than 9:00 a.m., Eastern Standard Time, on the next business day after the previously scheduled Expiration Date. Any disclosure of a material change in the information published, sent or given to shareholders will be disseminated promptly to shareholders in a manner reasonably designed to inform shareholders of such change. Without limiting the manner in which the Company may choose to make a public announcement pursuant to or concerning the Offer, except as required by applicable law, the Company shall have no obligation to publish, advertise or otherwise communicate any such public announcement, other than by making a release to the Dow Jones News Service. If the Company makes a material change in the terms of the Offer or the information concerning the Offer or waives a material condition of the Offer, the Company will disseminate additional tender offer materials and extend the Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2) promulgated under the Exchange Act. The minimum period during which the Offer must remain open following material changes in the terms of the Offer or information concerning the Offer (other than a change in price or a change in percentage of securities sought) will depend on the facts and circumstances then existing, including the relative materiality of the changed terms or information. If (a) the Company (i) increases or decreases the price at which Shares may be properly tendered, (ii) increases the number of Shares being sought and such increase exceeds 2% of the outstanding Shares, or (iii) decreases the number of Shares being sought, and (b) the Offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from and including the date that notice of such increase or decrease is first published, sent or given, the Offer will be extended until the expiration of such ten business day period. 16. FEES AND EXPENSES The Company has retained The Bridgeford Group as its financial advisor in connection with the Offer and related matters, for which The Bridgeford Group will receive a fee of $450,000 upon the commencement of the Offer and an additional $450,000 upon the consummation (but not termination or withdrawal) of the Offer. The Company also has retained Alex. Brown to provide an opinion to the Company and its Board of Directors with respect to the fairness of the MFB Purchase and the Offer from a financial point of view. See Section 8 herein. Alex. Brown will receive a fee of $200,000 for such services. The Company also will reimburse The Bridgeford Group and Alex. Brown for their reasonable out-of-pocket expenses relating to the Offer and has agreed to indemnify them against certain liabilities in connection with the Offer, including certain liabilities under the federal securities laws. The Bridgeford Group also has rendered to the Company in the past and may in the future render to the Company investment banking and other advisory services for which it has received or will receive customary compensation from the Company for such services. Prior to its having been retained by the Company as its financial advisor for the Offer, The Bridgeford Group had provided financial advisory services to certain members of the Bartol family for which it had been compensated by them. Alex. Brown may in the future render to the Company investment banking and other advisory services for which it will receive customary compensation. 22 The Company has retained Georgeson & Company Inc., as Information Agent, and American Stock Transfer & Trust Company, as Depositary, in connection with the Offer. The Information Agent and the Depositary will each receive reasonable and customary compensation for their services in connection with the Offer and will be reimbursed for their reasonable out-of-pocket expenses. The Company has agreed to indemnify the Information Agent against certain liabilities in connection with the Offer, including certain liabilities under the federal securities laws. Neither the Information Agent nor the Depositary has been retained to, or is authorized to, make solicitations or recommendations in connection with the Offer. The Company will not pay any fees or commissions to any broker, dealer, commercial bank, trust company or other person for soliciting Shares pursuant to the Offer. The Company will, however, on request, reimburse such persons for customary handling and mailing expenses incurred in forwarding materials in respect of the Offer to the beneficial owners for which they act as nominees. No broker, dealer, commercial bank or trust company has been authorized to act as an agent for the Company for the purpose of the Offer. The Company will not pay (or cause to be paid) any stock transfer taxes on its purchase of Shares pursuant to the Offer, except as otherwise provided in Instruction 6 of the Letter of Transmittal. 17. MISCELLANEOUS The Offer is not being made to, nor will the Company accept tenders from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or its acceptance would not be in compliance with the laws of such jurisdiction. The Company is not aware of any jurisdiction where the making of the Offer or the tender of Shares would not be in compliance with applicable law. If the Company becomes aware of any jurisdiction where the making of the Offer or the tender of Shares is not in compliance with any applicable law, the Company will make a good faith effort to comply with such law. If, after such good faith effort, the Company cannot comply with such law, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares residing in such jurisdiction. In any jurisdiction in which the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on the Company's behalf by one or more registered brokers or dealers licensed under the laws of such jurisdiction. HUNT MANUFACTURING CO. December 21, 1995 23 ANNEX A ALEX BROWN & SONS INCORPORATED LOGO ESTABLISHED 1800 o AMERICA'S OLDEST INVESTMENT BANKING FIRM MEMBER NEW YORK STOCK EXCHANGE INC. AND OTHER LEADING EXCHANGES REPLY TO P.O. BOX 515 BALTIMORE, MD 21203 December 19, 1995 Hunt Manufacturing Co. One Commerce Square 2005 Market Street Philadelphia, PA 19103-7085 Dear Members of the Board: Hunt Manufacturing Co. (the "Company") intends to repurchase all of Mary Bartol's 2.15 million common shares, $0.10 par value per share (the "Common Stock"), for $16.32 per share, net to the seller in cash as outlined in a Purchase Agreement to be dated on or about December 19, 1995 (the "Repurchase") and to subsequently commence a fixed price tender offer for up to approximately 3.23 million publicly held shares of Common Stock at a price of $17.00 per share, net to the seller in cash as outlined in an Offer to Purchase to be dated on or about December 21, 1995 (the "Tender Offer"). You have requested our opinion as to whether the consideration to be received by the holders of the Common Stock pursuant to the Tender Offer is fair, from a financial point of view, to the Company and whether the Repurchase is fair, from a financial point of view, to the Company and such holders other than Mary Bartol. Alex. Brown & Sons Incorporated ("Alex. Brown"), as a customary part of its investment banking business, is engaged in the evaluation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, private placements and valuations for estate, corporate and other purposes. Alex. Brown regularly publishes research reports regarding the consumer products industry and the businesses and securities of publicly owned companies in that industry. In the ordinary course of business, we may actively trade the securities of the Company for our own account and the account of our customers and, accordingly, may at any time hold a long or short position in securities of the Company. In connection with our opinion, we have reviewed certain publicly available financial information concerning the Company and certain internal financial analyses and other information furnished to us by the Company. We have also held discussions with members of the senior management of the Company regarding the business and prospects of the Company. In addition, we have (i) reviewed the reported price and trading activity for the Common Stock of the Company, (ii) compared certain financial and stock market information for the Company with similar information for selected other companies whose securities are publicly traded, (iii) reviewed the financial terms of certain recent repurchase transactions and (iv) performed such other studies and analyses and considered such other factors as we deemed appropriate. We have not independently verified the information described above and for purposes of this opinion have assumed the accuracy, completeness and fairness thereof. With respect to information relating to the prospects of the Company, we have assumed that such information reflects the best currently available estimates and judgments of Company management as to the likely future financial performance of the Company. In addition, we have not made an independent evaluation or appraisal of the assets of the Company, nor have we been furnished with any such evaluation or appraisal. Our opinion is based on market, economic and other conditions as they exist and can be evaluated as of the date of this letter, including the assumption that members of the Bartol family and related entities will not participate in the Tender Offer. We have been retained by the Board of Directors of the Company as financial advisor solely for the purpose of rendering this opinion and accordingly, we have not been requested to, and have not provided any other services in connection with, the Repurchase or the Tender Offer. Our opinion expressed herein was prepared for the use of the Board of Directors of the Company and does not constitute a recommendation to the Company's stockholders as to whether and to what extent they should participate in the Tender Offer. We hereby consent, however, to the inclusion of this opinion as an exhibit to the Offer to Purchase distributed in connection with the Tender Offer as well as to the Schedule 13E-4 to be filed with the Securities and Exchange Commission in connection therewith. 24 Based upon and subject to the foregoing, it is our opinion that, as of the date of this letter, the consideration to be received by the holders of the Common Stock pursuant to the Tender Offer is fair, from a financial point of view, to the Company and that the Repurchase is fair, from a financial point of view, to the Company and such holders other than Mary Bartol. Very truly yours, ALEX. BROWN & SONS INCORPORATED By: /S/ William M. Legg --------------------------- William M. Legg Managing Director 25 Facsimile copies of the Letter of Transmittal, properly completed and duly executed, will be accepted. The Letter of Transmittal, certificates for Shares and any other required documents should be sent or delivered by each shareholder of the Company or such shareholder's broker, dealer, commercial bank, trust company or other nominee to the Depositary at one of its addresses set forth below. By Mail or Overnight Delivery: By Facsimile Transmission: American Stock Transfer (718) 234-5001 & Trust Company Information and Confirm by Telephone: 40 Wall Street (718) 921-8200 New York, NY 10005 By Hand: American Stock Transfer & Trust Company 40 Wall Street New York, NY 10005 Any questions or requests for assistance, for additional copies of the Offer to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Information Agent at its address and telephone number set forth below. Shareholders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. The Information Agent for the Offer is: GEORGESON & COMPANY INC. Wall Street Plaza New York, New York 10005 1-800-223-2064 (Toll Free) 26 EX-99.(A)(2) 3 LETTER OF TRANSMITTAL Exhibit (a)(2) LETTER OF TRANSMITTAL TO TENDER COMMON SHARES OF HUNT MANUFACTURING CO. PURSUANT TO THE OFFER TO PURCHASE DATED DECEMBER 21, 1995 THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME, ON JANUARY 24, 1996, UNLESS THE OFFER IS EXTENDED. The Depositary for the Offer is: AMERICAN STOCK TRANSFER AND TRUST COMPANY By Mail or Overnight Delivery: American Stock Transfer & Trust Company 40 Wall Street New York, NY 10005 By Hand: American Stock Transfer & Trust Company 40 Wall Street New York, NY 10005 By Facsimile Transmission: (718) 234-5001 Information and Confirm by Telephone: (718) 921-8200 ------ DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN THOSE SHOWN ABOVE OR TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THE ONE LISTED ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THE LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be used only if (a) certificates for Shares (as defined below) are to be delivered with it or (b) Shares are being delivered by book-entry transfer to the account maintained by the Depositary at The Depository Trust Company ("DTC"), the Midwest Securities Trust Company ("MSTC") or the Philadelphia Depository Trust Company ("PDTC") (collectively, the "Book-Entry Transfer Facilities") as set forth in Section 3 of the Offer to Purchase (as defined below). Shareholders whose stock certificates are not immediately available (or who cannot follow the procedure for book-entry transfer on a timely basis) or who cannot transmit this Letter of Transmittal and all other required documents to the Depositary before the Expiration Date (as defined in Section 1 of the Offer to Purchase) may nevertheless tender their Shares according to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2. A shareholder owning beneficially as of the close of business on December 15, 1995 and who continues to own beneficially until the Expiration Date an aggregate of fewer than 100 Shares (including any such Shares held in the Company's Savings Plan), and who satisfies the other requirements set forth in Instruction 7, may have all such Shares purchased before proration, if any, of the purchase of other Shares pursuant to the Offer. Delivery of the Letter of Transmittal and the other required documents to one of the Book-Entry Transfer Facilities does not constitute delivery to the Depositary.
- ------------------------------------------------------------------------------------------------------------- DESCRIPTION OF SHARES TENDERED (SEE INSTRUCTIONS 3 AND 4) ------------------------------------------------------------------------------------------------------------- NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN EXACTLY AS NAME(S) CERTIFICATES ENCLOSED APPEAR(S) ON CERTIFICATE(S) (ATTACH ADDITIONAL SIGNED LIST, IF NECESSARY) -------------------------------------------------- --------------------------------------------------------- TOTAL NUMBER OF SHARES NUMBER OF CERTIFICATE REPRESENTED BY SHARES NUMBER(S)* CERTIFICATE(S)* TENDERED** ----------------- ------------------- -------------- ----------------- ------------------- -------------- For Informational ----------------- ------------------- -------------- Purposes Only ----------------- ------------------- -------------- ----------------- ------------------- -------------- ----------------- ------------------- -------------- ----------------- ------------------- -------------- TOTAL SHARES: ----------------- ------------------- --------------
* Need not be completed if Shares are delivered by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to the Depositary are being tendered. See Instruction 4 herein. [ ]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING: Name of Tendering Institution: --------------------------------------------------------------------------- Check Box of Applicable Book-Entry Transfer Facility: [ ] The Depository Trust Company [ ] Midwest Securities Trust Company [ ] Philadelphia Depository Trust Company Account Transaction Code Number: Number: [ ]CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Tendering Shareholder(s): --------------------------------------------------------------------------- Date of Execution of Notice of Guaranteed Delivery: --------------------------------------------------------------------------- Name of Institution which Guaranteed Delivery: --------------------------------------------------------------------------- Check Box of Applicable Book-Entry Transfer Facility and Give Account Number if Delivered by Book-Entry Transfer: [ ] The Depository Trust Company [ ] Midwest Securities Trust Company [ ] Philadelphia Depository Trust Company Account Number: - ----------------------------------------------------------------------------- Transaction Code Number: - ----------------------------------------------------------------------------- NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. Ladies and Gentlemen: The undersigned hereby tenders to Hunt Manufacturing Co., a Pennsylvania corporation (the "Company"), the above-described common shares, par value $.10 per share, of the Company (the "Shares"), at a price of $17 per Share (the "Purchase Price"), net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated December 21, 1995 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which together constitute the "Offer"). Subject to and effective upon acceptance for payment of the Shares tendered herewith in accordance with and subject to the terms and conditions of the Offer (including, if the Offer is extended or amended, the terms or conditions of any such extension or amendment), the undersigned hereby sells, assigns and transfers to or upon the order of the Company all right, title and interest in and to all the Shares tendered hereby, or orders the registration of such Shares delivered by book-entry transfer, that are purchased pursuant to the Offer and hereby irrevocably constitutes and appoints the depositary for the offer (the "Depositary") the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to: (a) deliver certificates for such Shares, or transfer ownership of such Shares on the account books maintained by any of the Book-Entry Transfer Facilities, together, in any such case, with all accompanying evidence of transfer and authenticity, to or upon the order of the Company, upon receipt by the Depositary, as the undersigned's agent, of the Purchase Price with respect to such Shares; (b) present certificates for such Shares for cancellation and transfer of such Shares on the Company's books; and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares, all in accordance with the terms of the Offer. The undersigned hereby represents and warrants that: (a) the undersigned "owns" the Shares tendered hereby within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended, and has full power and authority to validly tender, sell, assign and transfer the Shares tendered hereby; (b) the tender of Shares by the undersigned complies with Rule 14e-4; (c) when and to the extent the Company accepts the Shares for purchase, the Company will acquire good, marketable and unencumbered title thereto, free and clear of all security interests, liens, charges, encumbrances, conditional sales agreements or other obligations relating to their sale or transfer, and not subject to any adverse claim; (d) on request, the undersigned will execute and deliver any additional documents the Depositary or the Company deems necessary or desirable to complete the assignment, transfer and purchase of the Shares tendered hereby; and (e) the undersigned has read and agrees to all the terms of the Offer. 2 The undersigned understands that all Shares properly tendered and not withdrawn will be purchased at $17 per Share (or such other price that may be set forth in an amendment to the Offer), net to the seller in cash, upon the terms and subject to the conditions of the Offer, including the proration provisions thereof and that the Company will return all other Shares, including Shares not purchased because of proration. The undersigned understands that tenders of Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Offer. The undersigned also understands that unless preferred stock purchase rights associated with the Shares (the "Rights") are redeemed or become separately transferable in accordance with their terms, by tendering Shares the undersigned will also be tendering the associated Rights and that no separate consideration will be paid for the Rights. The undersigned recognizes that, under the circumstances set forth in the Offer to Purchase, the Company may terminate or amend the Offer or may not be required to accept for payment any of the Shares tendered herewith or may accept for payment, pro rata with Shares tendered by other shareholders, fewer than all the Shares tendered herewith. All authority conferred or agreed to be conferred in this Letter of Transmittal shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated herein and in the Offer to Purchase, this tender is irrevocable. Unless otherwise indicated under "Special Payment Instructions," please issue the check for the aggregate Purchase Price and/or return or issue the certificate(s) evidencing any Shares not tendered or not accepted for payment in the name(s) of the registered holder(s) appearing under "Description of Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the aggregate Purchase Price and/or the certificate(s) evidencing any Shares not tendered or not accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing under "Description of Shares Tendered." If both the "Special Delivery Instructions" and the "Special Payment Instructions" are completed, please issue the check for the aggregate Purchase Price and/or issue or return the certificate(s) evidencing any Shares not tendered or accepted for payment in the name(s) of, and deliver said check and/or certificate(s) to, the person or persons so indicated. In the case of book-entry delivery of Shares, please credit the account maintained at the Book-Entry Transfer Facility indicated above with any Shares not accepted for payment. The undersigned recognizes that the Company has no obligation pursuant to the "Special Payment Instructions" to transfer any Shares from the name(s) of the registered holder(s) thereof if the Company does not accept for payment any of the Shares so tendered. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 4, 5, 6 AND 9) To be completed ONLY if the check for the aggregate Purchase Price of Shares purchased and/or certificates for Shares not tendered or not purchased are to be mailed to someone other than the undersigned or to the undersigned at an address other than that shown below the undersigned's signature. Mail | | check and/or | | certificates to: Name: - ----------------------------------------------------------------------------- (PLEASE PRINT) Address: - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- (ZIP CODE) SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 4, 5, 6, 8 AND 9) To be completed ONLY if the check for the aggregate Purchase Price of Shares purchased and/or certificates for Shares not tendered or not purchased are to be issued in the name of someone other than the undersigned. Issue any | | check and/or | | certificates to: Name: - ----------------------------------------------------------------------------- (PLEASE PRINT) Address: - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- (ZIP CODE) - ----------------------------------------------------------------------------- (Taxpayer Identification or Social Security Number) ODD LOTS (SEE INSTRUCTION 7) SHARES WILL NOT RECEIVE AN ODD LOTS PREFERENCE UNLESS THIS SECTION IS COMPLETED To be completed ONLY if Shares are being tendered by or on behalf of a person who beneficially owned as of the close of business on December 15, 1995, and who will continue to own beneficially until the Expiration Date an aggregate of fewer than 100 Shares (including any Shares held in the Company's Savings Plan, as defined in the Offer to Purchase). The undersigned either (check one box): | | was the beneficial owner as of the close of business on December 15, 1995, and will continue to be the beneficial owner until the Expiration Date of an aggregate of fewer than 100 Shares (including Shares held in the Company's Savings Plan), and is tendering all such Shares, or | | is an "Eligible Institution" (as defined in Instruction 1) that (i) is tendering, for the beneficial owners thereof, Shares with respect to which it is the record owner and (ii) believes, based upon representations made to it by each such beneficial owner, that each such beneficial owner beneficially owned as of the close of business on December 15, 1995, and will continue to own beneficially until the Expiration Date an aggregate of fewer than 100 Shares, (including Shares held in the Company's Savings Plan) and is tendering all such Shares. 3 CONDITIONAL TENDER INSTRUCTIONS A tendering shareholder may condition his tender of Shares upon the purchase by the Company of a specified minimum number of the Shares tendered hereby, all as described in the Offer to Purchase, particularly in Section 3 thereof. Unless at least such minimum number of Shares is purchased by the Company pursuant to the terms of the Offer, none of the Shares tendered hereby will be purchased. It is the tendering shareholder's responsibility to calculate such minimum number of Shares, and each shareholder is urged to consult his or her own tax advisor with respect to the possible consequences of electing, or failing to elect, a conditional tender of Shares. Unless the box below has been completed and a minimum specified, the tender will be deemed unconditional. | | the tender of Shares by the Undersigned is conditioned upon the purchase by the Company of a specified minimum. Minimum number of Shares that must be purchased, if any are purchased: ____________________ Shares SIGN HERE (SEE INSTRUCTIONS 1 AND 5) (PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW) ........................................................................... ........................................................................... SIGNATURE(S) OF OWNER(S) Name(s) ................................................................... (PLEASE PRINT) Date: ..................................................................... Capacity (full title) ..................................................... Address: .................................................................. ........................................................................... ........................................................................... (INCLUDE ZIP CODE) Area Code and Telephone Number ............................................ Taxpayer Identification or Social Security Number ......................... (SEE INSTRUCTION 11) (Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title. See Instruction 5.) GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) Authorized Signature .................................................................. Name ....................................................................... (PLEASE PRINT) Title ...................................................................... Name of Firm ............................................................... Address .................................................................... (INCLUDE ZIP CODE) Area Code and Telephone No. ................................................ Dated: ...................... 4 - ----------------------------------------------------------------------------- Substitute W-9 PAYEE'S NAME: PAYEE'S ADDRESS: - ----------------------------------------------------------------------------- PART I -- PLEASE PROVIDE YOUR TIN ON THE APPROPRIATE LINE AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW SUBSTITUTE Form W-9 DEPARTMENT OF THE TREASURY INTERNAL ................................... REVENUE SERVICE Social Security Number ................................... Payer's Request for Taxpayer Employee Identification Number Identification ----------------------------------------------------------- PART II CERTIFICATION -- Under penalties of perjury, I certify that: (1) The number shown on this form is my current taxpayer identification number (or I am waiting for a number to be issued to me) and (2) I am not subject to backup withholding because (i) I am exempt from backup withholding or (ii) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (iii) the IRS has notified me that I am no longer subject to backup withholding. --------------------------------------------------------- PART III Awaiting TIN _______________________ --------------------------------------------------------- CERTIFICATION INSTRUCTIONS -- You must cross out item (2) in Part II above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you are subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). SIGNATURE:_____________________________ DATE:____________ - -------------------------------------------------------------------------- NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART III OF SUBSTITUTE FORM W-9 - ------------------------------------------------------------------------------ CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver such an application in the near future. I understand that if I do not provide a taxpayer identification number to the payer before the earliest of (i) the date of payment or (ii) sixty (60) days, 31% of all reportable payments made to me may be withheld. _____________________________ _____________. Signature: Date - ------------------------------------------------------------------------------ 5 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a financial institution (each such entity being hereinafter referred to as an "Eligible Institution") that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchanges Medallion Program (including most banks, savings and loan associations, and brokerage houses). Signatures on this Letter of Transmittal need not be guaranteed if (a) this Letter of Transmittal is signed by the registered owner of the Shares (which term, for purposes of this document, shall include any participant in one of the Book-Entry Transfer Facilities whose name appears on a security position listing as the owner of Shares) tendered herewith and such owner has not completed either of the boxes entitled "Special Payment Instructions" or "Special Delivery Instructions" on this Letter of Transmittal or (b) such Shares are tendered for the account of an Eligible Institution. See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES; GUARANTEED DELIVERY PROCEDURES. This Letter of Transmittal is to be used only if (a) certificates are to be forwarded with it to the Depositary or (b) delivery of Shares is to be made by book-entry transfer pursuant to the procedure set forth in Section 3 of the Offer to Purchase. Certificates for all physically delivered Shares, or a confirmation of a book-entry transfer of all Shares delivered electronically into the Depositary's account at one of the Book-Entry Transfer Facilities, together in each case with a properly completed and duly executed Letter of Transmittal (or a facsimile thereof), with any required signature guarantees, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the front page of this Letter of Transmittal on or before the Expiration Date (as defined in the Offer to Purchase). Delivery of documents to one of the Book-Entry Transfer Facilities does not constitute delivery to the Depositary. Shareholders whose certificates are not immediately available (or who cannot follow the procedures for book- entry transfer on a timely basis) or who cannot transmit this Letter of Transmittal and all other required documents to reach the Depositary before the Expiration Date, may nevertheless tender their Shares pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (a) such tender must be made by or through an Eligible Institution, (b) the Depositary must receive (by hand, mail or facsimile transmission), before the Expiration Date, a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form the Company has provided with the Offer to Purchase and (c) the certificates for all tendered Shares in proper form for transfer (or confirmation of a book-entry transfer of all such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities), together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other documents required by this Letter of Transmittal, must be received by the Depositary within five New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase. THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING STOCK CERTIFICATES, THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. Except as expressly provided in this Letter of Transmittal or in the Offer to Purchase, no alternative, conditional or contingent tenders will be accepted, and no fractional Shares will be purchased. By executing this Letter of Transmittal (or a facsimile thereof), each tendering shareholder waives any right to receive any notice of the acceptance of such shareholder's tender. 3. INADEQUATE SPACE. If the space provided in the box entitled "Description of Shares Tendered" is inadequate, the certificate numbers and/or the number of Shares should be listed on a separate signed schedule and attached to this Letter of Transmittal. 4. PARTIAL TENDERS AND UNPURCHASED SHARES. (Not applicable to shareholders who deliver Shares by book-entry transfer.) If fewer than all the Shares evidenced by any certificate delivered to the Depositary are to be tendered, fill in the number of Shares that are to be tendered in the box entitled "Number of Shares Tendered." If such Shares are purchased, a new certificate 6 for the remainder of the Shares evidenced by the old certificate(s) will be sent to and in the name of the registered holder(s) (unless otherwise specified by such holder(s) having completed either of the boxes entitled "Special Delivery Instructions" or "Special Payment Instructions" on this Letter of Transmittal) as soon as practicable following the expiration or termination of the Offer. All Shares represented by the certificates listed and delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS; AND ENDORSEMENTS. (a) If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered herewith, the signature(s) must correspond exactly with the name(s) as written on the face of the certificates without any change whatsoever. (b) If any of the Shares tendered herewith are registered in the names of two or more owners, each such owner must sign this Letter of Transmittal. (c) If any of the Shares tendered herewith are registered in different names on different certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. (d) If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered herewith, no endorsements of certificates or separate stock powers are required unless payment is to be made and/or certificates for Shares not tendered or not purchased are to be issued to a person other than the registered holder(s). If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares tendered herewith, however, the certificates must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appear on the certificates for such Shares. Signatures on any such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1. (e) If this Letter of Transmittal or any certificates or stock powers are signed by a trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing and proper evidence satisfactory to the Company of the authority of such person so to act must be submitted. 6. STOCK TRANSFER TAXES. The Company will pay any stock transfer taxes with respect to the transfer and sale of Shares to it or its order pursuant to the Offer. If, however, payment of the aggregate Purchase Price is to be made to, or certificates for Shares not tendered or accepted for purchase are to be registered in the name of, any person other than the registered holder(s), or if tendered certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder or such person) payable on account of the transfer to such person will be deducted from the aggregate purchase price unless satisfactory evidence of payment of such taxes or exemption therefrom is submitted. 7. ODD LOTS. As described in Sections 1 and 2 of the Offer to Purchase, if the number of Shares properly tendered and not withdrawn before the Expiration Date is greater than 3,230,000 (or such greater number of Shares as the Company may elect to purchase pursuant to the Offer), the Company, upon the terms and subject to the conditions of the Offer, will accept Shares for purchase first from all Shares properly tendered and not withdrawn before the Expiration Date by any shareholder who beneficially owned as of the close of business on December 15, 1995, and who continues to own beneficially until the Expiration Date, an aggregate of fewer than 100 Shares (including Shares held in the Company's Savings Plan), who tendered all Shares beneficially owned by such person (partial and conditional tenders of Shares will not qualify for this preference) and who completes the box captioned "Odd Lots" in this Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery. This preference will not be available unless the box above entitled "Odd Lots" is completed. 8. IRREGULARITIES. All questions as to the number of Shares to be accepted and the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Company, in its sole discretion, which determination shall be final and binding on all parties. The Company reserves the absolute right to reject any or all tenders determined by it not to be in proper form or the acceptance for payment of which may, in the opinion of the Company's counsel, be unlawful. The Company also reserves the absolute right to waive any of the conditions of the Offer and any defect or irregularity in the tender of any particular Shares. The Company's interpretation of the terms and conditions of the Offer (including these instructions) shall be final and binding on all 7 parties. No tender of Shares will be deemed properly made until all defects or irregularities have been cured or waived. Neither the Company, the Depositary, the Information Agent nor any other person is or will be obligated to give notice of any defects or irregularities in tenders, and none of them will incur any liability for failure to give any such notice. 9. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the aggregate Purchase Price of any Shares purchased is to be issued to, or any Shares not tendered or not purchased are to be returned in the name of, a person other than the person(s) signing this Letter of Transmittal or if the check or any certificates for Shares not tendered or not purchased are to be mailed to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal at an address other than that shown in the box entitled "Descriptions of Shares Tendered," the boxes entitled "Special Payment Instructions" and/or "Special Delivery Instructions" on this Letter of Transmittal should be completed. 10. REQUEST FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth below and requests for additional copies of the Offer to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Information Agent. 11. SUBSTITUTE FORM W-9. Except as provided below under "Important Tax Information," each tendering shareholder is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN") on Substitute Form W-9 which is provided under "Important Tax Information" below. Failure to provide the information on the form may subject the tendering shareholder to a $50 penalty and a 31% federal back-up withholding tax may be imposed on the payments made to the shareholder or other payee with respect to Shares purchased pursuant to the Offer. 12. FOREIGN SHAREHOLDER WITHHOLDING. Foreign shareholders should note that the 30% U.S. withholding tax generally applicable to corporate distributions will apply to the proceeds payable pursuant to the Offer, unless either a reduced rate of withholding is applicable pursuant to a tax treaty or an exemption from withholding is applicable because such gross proceeds are effectively connected with the conduct of a trade or business by the foreign shareholder within the United States. FACSIMILE COPIES OF THIS LETTER OF TRANSMITTAL, PROPERLY COMPLETED AND DULY EXECUTED, WILL BE ACCEPTED. THE LETTER OF TRANSMITTAL, CERTIFICATES FOR SHARES AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT OR DELIVERED BY EACH SHAREHOLDER OF THE COMPANY OR SUCH SHAREHOLDER'S BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH BELOW. IMPORTANT TAX INFORMATION Under current U.S. federal income tax law, a shareholder whose tendered Shares are accepted for payment is required by law to provide the Depositary with such shareholder's correct taxpayer identification number ("TIN") on the Substitute Form W-9 below. If the Depositary is not provided with the correct TIN, the Internal Revenue Service may subject the shareholder or other payee to a $50 penalty. In addition, payments that are made to such shareholder or other payee with respect to Shares purchased pursuant to the Offer may be subject to 31% backup withholding for federal income tax purposes. Certain shareholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements and should indicate their status by writing "exempt" across the face of, and by signing and dating, the Substitute Form W-9. In order for a foreign individual to qualify as an exempt recipient, the shareholder must submit a Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. A Form W-8 can be obtained from the Depositary. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for more instructions. If backup withholding applies, the Depositary is required to withhold 31% of any such payments to be made to the shareholder or other payee. Backup withholding is not an additional tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. 8 PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup federal income tax withholding in connection with payments that are made with respect to Shares tendered in the Offer, you must provide the Depositary with your correct TIN by completing the Substitute Form W-9 below, certifying that the TIN provided on Substitute Form W-9 is correct and that either (A) you have not been notified by the Internal Revenue Service that you are subject to backup withholding or (B) the Internal Revenue Service has notified you that you are no longer subject to backup withholding. If you have not been issued a TIN and have applied for one, or if you intend to apply for one in the near future, check the box in Part III and sign and date both the Substitute Form W-9 and the "Certificate of Taxpayer Awaiting Identification Number." You then have generally 60 days within which to provide the Depositary with your TIN and a new Substitute Form W-9. If you fail to do so, the Depositary will withhold 31% from any payments and distributions made to you thereafter until a TIN and new Substitute Form W-9 are provided. WHAT NUMBER TO GIVE THE DEPOSITARY The shareholder is required to give the Depositary the TIN (e.g., social security number or federal employer identification number) of the record owner of the Shares or of the last transferee appearing on the transfers attached to, or endorsed on, the certificates evidencing the Shares. If the Shares are registered in more than one name or are not registered in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. 9 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 (SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE) GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYOR. A Social Security number ("SSN") has nine digits separated by two hyphens: i.e., 000-00-0000. An employer identification number ("EIN") has nine digits separated by one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payor.
Give the SOCIAL SECURITY For this type of account: number of: 1. Individual The individual The actual owner of the account or, if combined funds, the first 2. Two or more individuals (joint account) individual on the account(1) 3. Custodian account of a minor (Uniform Gift to Minors Act) The minor(2) 4. (a) The usual revocable savings trust (grantor is also trustee) The grantor-trustee(1) (b) So-called trust account that is not a legal or valid trust under State law The actual owner(1) 5. Sole proprietorship The owner(3) Give the EMPLOYER IDENTIFICATION For this type of account: number of: 6. Sole proprietorship The owner(3) 7. A valid trust, estate or pension trust The legal entity(4) 8. Corporate The corporation 9. Association, club, religious, charitable, educational or other tax-exempt organization The organization 10. Partnership The partnership 11. A broker or registered nominee The broker or nominee 12. Account with the Department of Agriculture in the name of a public entity that receives agricultural program payments The public entity
- ------ (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Show your individual name. You may also enter your business name. You may use your SSN or EIN. (4) List first and circle the name of the legal trust, estate or pension trust. (Do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.) 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. 1 NAME If you are an individual, you must generally provide 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. OBTAINING A NUMBER If you don't have a taxpayer identification number ("TIN"), apply for one immediately. To apply, obtain Form SS-5, Application for a Social Security Card, from your local office of the Social Security Administration, or Form SS-4, Application for Employer identification Number, from your local Internal Revenue Service (the "IRS") office. PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING The following is a list of payees exempt from backup withholding and for whom no information reporting is required. For dividends, all listed payees are exempt except item (9). For broker transactions, payees listed in (1) through (13) and a person registered under the Investment Advisers Act of 1940 who regularly acts as a broker are exempt. (1) A corporation. (2) An organization exempt from tax under section 501(a), or an individual retirement plan ("IRA"), or a custodial account under section 403(b)(7). (3) The United States or any of its agencies or instrumentalities. (4) A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities. (5) A foreign government or any of its political subdivisions, agencies or instrumentalities. (6) An international organization or any of its agencies or instrumentalities. (7) A foreign central bank of issue. (8) A dealer in securities or commodities required to register in the U.S. or a possession of the U.S. (9) A futures commission merchant registered with the Commodity Futures Trading Commission. (10) A real estate investment trust. (11) An entity registered at all times during the tax year under the Investment Company Act of 1940. (12) A common trust fund operated by a bank under section 584(a). (13) A financial institution. (14) A middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List. (15) A trust exempt from tax under section 664 or described in section 4947. Payments of dividends generally not subject to backup withholding also include the following: o Payments to nonresident aliens subject to withholding under section 1441. o Payments to partnerships not engaged in a trade or business in the U.S. and that have at least one nonresident partner. o Payments of patronage dividends not paid in money. o Payments made by certain foreign organizations. Payments that are not subject to information reporting are also not subject to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044, 6045, 6049, 6050A, and 6050N, and the regulations under those sections. 2 PRIVACY ACT NOTICE -- Section 6109 requires you to furnish 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, or contributions you made to an individual retirement account. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. You must provide your TIN whether or not you are required to file a tax return. Payors must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a TIN to a payor. Certain penalties may also apply. PENALTIES (1) FAILURE TO FURNISH TIN -- If you fail to furnish your correct TIN to a requester (the person asking you to furnish your TIN), 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. (2) 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. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE IRS 3 EX-99.(A)(3) 4 NOTICE OF GUARANTEED DELIVERY Exhibit (a)(3) HUNT MANUFACTURING CO. NOTICE OF GUARANTEED DELIVERY OF COMMON SHARES This form or a facsimile hereof must be used to accept the Offer (as defined below) if: (a) certificates for common shares, par value $.10 per share ("Shares"), of Hunt Manufacturing Co., a Pennsylvania corporation (the "Company"), are not immediately available; or (b) the procedure for book-entry transfer (set forth in Section 3 of the Company's Offer to Purchase, dated December 21, 1995 (the "Offer to Purchase") cannot be followed on a timely basis; or (c) time will not permit the Letter of Transmittal and all other required documents to be delivered to the depositary for the Offer (the "Depositary") before the Expiration Date (as defined in Section 1 of the Offer to Purchase). This form, properly completed and duly executed, may be delivered by hand, mail or facsimile transmission to the Depositary. See Section 3 of the Offer to Purchase. TO: AMERICAN STOCK TRANSFER & TRUST COMPANY, DEPOSITARY By Mail or Overnight Delivery: By Hand: American Stock Transfer American Stock Transfer & Trust Company & Trust Company 40 Wall Street 40 Wall Street New York, NY 10005 New York, NY 10005 By Facsimile Transmission: (718) 234-5001 Information and Confirm by Telephone: (718) 921-8200 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN THOSE SHOWN ABOVE OR TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THIS FORM 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 IN THE OFFER TO PURCHASE) UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL. LADIES AND GENTLEMEN: The undersigned hereby tenders to the Company, at a price of $17 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase and the related Letter of Transmittal (which together constitute the "Offer"), receipt of which is hereby acknowledged,____________ Shares pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.__________________ (insert no. of shares) - ------------------------------------------------------------------------------ ODD LOTS (SEE INSTRUCTION 7 OF THE LETTER OF TRANSMITTAL) To be completed ONLY if Shares are being tendered by or on behalf of a person who beneficially owned as of the close of business on December 15, 1995, and who will continue to own beneficially until the Expiration Date, an aggregate of fewer than 100 Shares (including Shares held pursuant to the Company's Savings Plan). The undersigned either (check one box): [ ] was the beneficial owner as of the close of business on December 15, 1995, and will continue to be the beneficial owner until the Expiration Date, of an aggregate of fewer than 100 Shares, and is tendering all such Shares, or [ ] is an "Eligible Institution" that (i) is tendering, for the beneficial owners thereof, Shares with respect to which it is the record owner, and (ii) believes, based upon representations made to it by each such beneficial owner, that each such beneficial owner beneficially owned as of the close of business on December 15, 1995, and will continue to own beneficially until the Expiration Date, an aggregate of fewer than 100 Shares, and is tendering all such Shares. Number of Shares tendered:_____________________________________________ Certificate Nos. (if available):_______________________________________ If Shares will be delivered by book-entry transfer:____________________ Name of Tendering Institution:_________________________________________ Account No.:___________________________________________________________ at:____________________________________________________________________ [ ] The Depository Trust Company [ ] Midwest Securities Trust Company [ ] Philadelphia Depository Trust Company - ------------------------------------------------------------------------------- CONDITIONAL TENDER INSTRUCTIONS A tendering shareholder may condition his tender of Shares upon the purchase by the Company of a specified minimum number of the Shares tendered hereby, all as described in the Offer to Purchase, particularly in Section 3 thereof. Unless at least such minimum number of Shares is purchased by the Company pursuant to the terms of the Offer, none of the Shares tendered hereby will be purchased. It is the tendering shareholder's responsibility to calculate such minimum number of Shares, and each shareholder is urged to consult his or her own tax advisor with respect to the possible consequences of electing, or failing to elect, a conditional tender of Shares. Unless this box has been completed and a minimum specified, the tender will be deemed unconditional. [ ] the tender of Shares by the Undersigned is conditioned upon the purchase by the Company of a specified minimum. Minimum number of Shares that must be purchased, if any are purchased: ------Shares ----------------------------- ------------------------------ SIGN HERE (Name(s)) (Please Print) - ------------------------------ ------------------------------ (Signature(s)) (Address) - ------------------------------ ------------------------------- (Signature(s)) (Zip Code) ------------------------------- (Area Code and Telephone No.) - ------------------------------------------------------------------------------- GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, an "Eligible Institution," guarantees that (a) the above named person(s) "own(s)" the Shares tendered hereby within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended, (b) such tender of Shares complies with Rule 14e-4 and (c) the Depositary will receive either the stock certificates representing the Shares tendered hereby, in proper form for transfer, or confirmation of the book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company, the Midwest Securities Trust Company or the Philadelphia Depository Trust Company, in any such case together with a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) and any other required documents, all within five New York Stock Exchange trading days after the date of execution of this notice. - -------------------------- ------------------------------- NAME OF FIRM AUTHORIZED SIGNATURE - -------------------------- ------------------------------- TITLE - -------------------------- ADDRESS - -------------------------- ------------------------------- ZIP CODE NAME (PLEASE PRINT) - -------------------------- AREA CODE AND TEL. NO. Date: ____________________________________ DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES MUST BE SENT WITH THE LETTER OF TRANSMITTAL. 2 EX-99.(A)(4) 5 LETTER TO BROKERS, DEALERS, ... Exhibit (a)(4) HUNT MANUFACTURING CO. OFFER TO PURCHASE FOR CASH UP TO 3,230,000 OF COMMON SHARES AT $17 NET PER SHARE December 21, 1995 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: Hunt Manufacturing Co., a Pennsylvania corporation (the "Company"), has appointed us to act as Information Agent in connection with its offer pursuant to which the Company is inviting its shareholders to tender common shares of the Company, par value $.10 per share ("Shares"), at a price of $17 per Share (the "Purchase Price"), net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated December 21, 1995 (the "Offer to Purchase"), and in the related Letter of Transmittal (which together constitute the "Offer"). We enclose herewith the materials listed below relating to the Offer. The Company will purchase, at the Purchase Price, net to the seller in cash, up to 3,230,000 Shares that are properly tendered and not withdrawn, upon the terms and subject to the conditions of the Offer, including the proration provisions described therein. The Company reserves the right, in its sole discretion, to purchase more than 3,230,000 Shares pursuant to the Offer. The Offer is not conditioned upon any minimum number of Shares being validly tendered. The Offer is, however, subject to certain other conditions. See Section 6 of the Offer to Purchase. Neither the Company nor its Board of Directors makes any recommendation as to whether any shareholder should participate in the Offer. For your information and for forwarding to your clients for whom you hold Shares registered in your name or in the name of your nominee, we are enclosing the following documents: (1) Offer to Purchase dated December 21, 1995; (2) Letter of Transmittal for your use and for the information of your clients (together with "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9"); (3) Notice of Guaranteed Delivery to be used to accept the Offer if certificates for Shares are not immediately available (or the procedures for book-entry transfer cannot be followed on a timely basis) or time will not permit the Letter of Transmittal and all other required documents to reach the depositary for the Offer (the "Depositary") before the Expiration Date (as defined in the Offer to Purchase); (4) Letter to Clients which may be sent to your clients for whose accounts you hold Shares registered in your name (or in the name of your nominee), with space provided for obtaining such clients' instructions with regard to the Offer; and (5) Letter from Robert B. Fritsch, President and Chief Executive Officer, of the Company, dated December 21, 1995, to shareholders of the Company. PLEASE BRING THE OFFER TO THE ATTENTION OF YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME, ON JANUARY 24, 1996, UNLESS THE OFFER IS EXTENDED. No fees or commissions will be payable to brokers, dealers or other persons for soliciting tenders of Shares pursuant to the Offer. The Company will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to your clients. The Company will pay any stock transfer taxes with respect to the transfer and sale of Shares to it or its order pursuant to the Offer, except as otherwise provided in Instruction 6 of the Letter of Transmittal. In order to take advantage of the Offer, a duly executed and properly completed Letter of Transmittal and any other required documents should be sent to the Depositary with either certificate(s) representing the tendered Shares or confirmation of their book-entry transfer, all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. As described in Section 3 of the Offer to Purchase, tenders may be made even though stock certificates are not immediately available (or the procedures for book-entry transfer cannot be followed on a timely basis) or time will not permit the Letter of Transmittal and all other required documents to reach the Depositary before the Expiration Date, if such tenders are made by or through an "Eligible Institution" (as defined in the Offer to Purchase). Certificates for Shares so tendered in proper form for transfer (or a confirmation of a book-entry transfer of such Shares into the Depositary's account at one of the "Book-Entry Transfer Facilities" described in the Offer to Purchase), together with a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) and any other documents required by the Letter of Transmittal, must be received by the Depositary within five New York Stock Exchange trading days after the date of execution of a properly completed and duly executed Notice of Guaranteed Delivery. Requests for additional copies of the enclosed material and any questions you have with respect to the Offer should be addressed to the Information Agent at its address and telephone number set forth on the back cover of the Offer to Purchase. Very truly yours, GEORGESON & COMPANY INC. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF THE COMPANY, THE INFORMATION AGENT OR THE DEPOSITARY OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS OR USE ANY MATERIAL ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER, OTHER THAN THE MATERIAL ENCLOSED HEREWITH AND THE STATEMENTS SPECIFICALLY CONTAINED IN SUCH MATERIAL. EX-99.(A)(5) 6 LETTER TO CLIENTS Exhibit (a)(5) HUNT MANUFACTURING CO. OFFER TO PURCHASE FOR CASH UP TO 3,230,000 OF ITS COMMON SHARES AT $17 NET PER SHARE To Our Clients: December 21, 1995 Enclosed for your consideration are the Offer to Purchase dated December 21, 1995 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer"), in connection with the Offer by Hunt Manufacturing Co., a Pennsylvania corporation (the "Company"), pursuant to which the Company is inviting its shareholders to tender its common shares, par value $.10 per share (the "Shares"), at a price of $17 per Share (the "Purchase Price"), net to the seller in cash, upon the terms and subject to the conditions of the Offer. All Shares properly tendered and not withdrawn will be purchased at the Purchase Price, net to the seller in cash, upon the terms and subject to the conditions of the Offer, including the proration provisions thereof. All Shares not purchased pursuant to the Offer, including Shares not purchased because of proration, will be returned to the tendering shareholders at the Company's expense as promptly as practicable following the Expiration Date (as defined in Section 1 of the Offer to Purchase). The Company reserves the right, in its sole discretion, to purchase more than 3,230,000 Shares pursuant to the Offer. See Section 1 of the Offer to Purchase. We are (or our nominee is) the holder of record of Shares held for your account. As such, we are the only ones who can tender your Shares, and then only pursuant to your instructions. The Letter of Transmittal is for your information only and cannot be used by you to tender Shares we hold for your account. Please instruct us as to whether you wish us to tender any of or all the Shares we hold for your account upon the terms and subject to the conditions of the Offer. We call your attention to the following: 1. You may tender any portion of or all your Shares as indicated in the attached instruction form. 2. The Offer is not conditioned upon any minimum number of Shares being tendered. The Offer is, however, subject to certain other conditions. See Section 6 of the Offer to Purchase. 3. The Offer, proration period and withdrawal rights will expire at 5:00 P.M., Eastern Standard Time, on January 24, 1996, unless the Offer is extended. 4. The Offer is for 3,230,000 Shares, representing approximately 23% of the Shares outstanding as of the close of business on December 19, 1995, and approximately 21% of the sum of the Shares then outstanding and all Shares which may be issued upon the exercise of outstanding stock options under the Company's stock option plans. 5. You have the right to tender Shares subject to the condition that a specified minimum of your Shares so tendered are purchased. See Section 3 of the Offer to Purchase. 6. Tendering shareholders will not be obligated to pay any brokerage commissions, solicitation fees, or, subject to Instruction 6 of the Letter of Transmittal, any stock transfer taxes with respect to the transfer and sale of Shares to the Company pursuant to the Offer. 7. If you owned beneficially as of the close of business on December 15, 1995, and will continue to own beneficially until the Expiration Date (as defined in the Offer to Purchase), an aggregate of fewer than 100 Shares (including any such Shares held in the Company's Savings Plan) and you are tendering all such Shares and do not withdraw such Shares before the Expiration Date and complete the box captioned "Odd Lots" in the attached instruction form, the Company, upon the terms and subject to the conditions of the Offer, will accept all such Shares for purchase before any proration of the purchase of other Shares tendered. If you wish to have us tender any of or all your Shares, please so instruct us by completing, executing and returning to us the attached instruction form. If you desire to make a conditional tender of Shares you must calculate and indicate the minimum number of Shares to be accepted for tender. An envelope to return your instruction form to us is enclosed. If you authorize us to tender your Shares, we will tender all such Shares unless you specify otherwise on the instruction form. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF BEFORE THE EXPIRATION DATE. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME, ON JANUARY 24, 1996, UNLESS THE OFFER IS EXTENDED. As described in Section 1 of the Offer to Purchase and subject to matters described therein, if the number of Shares properly tendered and not withdrawn before the Expiration Date is greater than 3,230,000 Shares (or such greater number of Shares as the Company may elect to purchase pursuant to the Offer), the Company, upon the terms and subject to the conditions of the Offer, will accept Shares for purchase in the following order of priority: (a) first, all Shares properly tendered and not withdrawn before the Expiration Date by any shareholder who beneficially owned as of the close of business on December 15, 1995, and who continues to own beneficially until the Expiration Date, an aggregate of fewer than 100 Shares (including any such Shares held in the Company's Savings Plan) and who: (1) tenders all Shares beneficially owned by such shareholder (including any such Shares held in the Company's Savings Plan) (partial tenders will not qualify for this preference); and (2) completes the box captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery; and (b) then, after purchase of all the foregoing Shares, all other Shares properly tendered and not withdrawn before the Expiration Date on a pro rata basis, if necessary (with adjustments to avoid purchases of fractional Shares). This Offer is not being made to, nor will the Company accept tenders from or on behalf of, owners of Shares residing in any jurisdiction in which the making of the Offer or its acceptance would not be in compliance with the laws of such jurisdiction. In any jurisdiction in which the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on the Company's behalf by one or more registered brokers or dealers licensed under the laws of such jurisdiction. INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH UP TO 3,230,000 OF COMMON SHARES OF HUNT MANUFACTURING CO. The undersigned acknowledges receipt of your letter and the enclosed Offer to Purchase, dated December 21, 1995, and the related Letter of Transmittal (which together constitute the "Offer"), in connection with the Offer by Hunt Manufacturing Co., a Pennsylvania corporation (the "Company"), to purchase for cash up to 3,230,000 of its common shares, par value $.10 per share (the "Shares"), at a price of $17 per Share, net to the seller in cash, upon the terms and subject to the conditions of the Offer. The undersigned hereby instruct(s) you to tender to the Company the number of Shares indicated below or, if no number is indicated, all Shares you hold for the account of the undersigned, upon the terms and subject to the conditions of the Offer. Aggregate number of Shares to be tendered by you for the account of the undersigned;* ___________________Shares *Unless otherwise indicated, all the Shares held for the account of the undersigned will be tendered. ODD LOTS | | By checking this box, the undersigned represents that the undersigned beneficially owned as of the close of business on December 15, 1995, and will continue to own beneficially until the Expiration Date, an aggregate of fewer than 100 Shares (including all Shares held in the Company's Savings Plan), and is tendering all such Shares. CONDITIONAL TENDER INSTRUCTIONS A tendering shareholder may condition his tender of Shares upon the purchase by the Company of a specified minimum number of the Shares tendered hereby, all as described in the Offer to Purchase, particularly in Section 3 thereof. Unless at least such minimum number of Shares is purchased by the Company pursuant to the terms of the Offer, none of the Shares tendered hereby will be purchased. It is the tendering shareholder's responsibility to calculate such minimum number of Shares, and each shareholder is urged to consult his or her own tax advisor with respect to the possible consequences of electing, or failing to elect, a conditional tender of Shares. Unless this box has been completed and a minimum specified, the tender will be deemed unconditional. | | the tender of Shares by the Undersigned is conditioned upon the purchase by the Company of a specified minimum. Minimum number of Shares that must be purchased, if any are purchased: ____________________ Shares - ---------------------------------------------------------------------------- SIGNATURE BOX Signature(s)______________________________________________________________ Dated ________________________________________________________, 199_______ Name(s) and Address(es)___________________________________________________ __________________________________________________________________________ (PLEASE PRINT) Area Code and Telephone No._______________________________________________ Taxpayer Identification or Social Security Number_________________________ - ---------------------------------------------------------------------------- EX-99.(A)(6) 7 LETTER TO THE COMPANY'S STOCKHOLDERS Exhibit (a)(6) LOGO HUNT MANUFACTURING CO. HUNT December 21, 1995 To Our Shareholders: We are pleased to inform you that Hunt Manufacturing Co. is offering to purchase up to 3,230,000 shares (representing approximately 23% of the currently outstanding shares) of its common shares from its shareholders at a per share price of $17, net to the seller in cash. The tender offer is designed to afford to shareholders who are considering the sale of all or a portion of their shares an opportunity to sell such shares for a higher price than that available in the open market immediately prior to the announcement of the offer, without the usual transaction costs associated with market sales and, in the case of those holders who own less than 100 shares, without incurring any applicable odd lot discounts. However, shareholders should be aware that proceeds of sales pursuant to the offer may be treated as a dividend taxable as ordinary income to a shareholder rather than capital gain. The tender offer is explained in detail in the enclosed Offer to Purchase and Letter of Transmittal. If you wish to tender your shares, detailed instructions on how to tender shares are also in the enclosed materials. We encourage you to read these materials carefully before making any decision with respect to the tender offer. Neither the Company nor its Board of Directors makes any recommendation as to whether any shareholder should participate in the offer. Please note that the tender offer is scheduled to expire at 5:00 P.M., Eastern Standard Time, on January 24, 1996, unless extended by the Company. Questions regarding the tender offer should be directed to Georgeson & Company Inc., the Information Agent, at 1-800-223-2064 (toll free). Sincerely, /S/ ROBERT B. FRITSCH ---------------------------------- ROBERT B. FRITSCH President and Chief Executive Officer EX-99.(A)(7) 8 PRESS RELEASE Exhibit (a)(7) LOGO NEWS HUNT RELEASE - -------------------------------------------------------------------------------- December 20, 1995 Contact: Georgeson & Company Inc. 1-800-223-2064 HUNT MANUFACTURING CO. ANNOUNCES BOARD AUTHORIZATION OF CASH TENDER OFFER BY THE COMPANY FOR UP TO 3,230,000 SHARES AT $17.00 NET PER SHARE PHILADELPHIA, PA, December 20, 1995 - Hunt Manufacturing Co. (NYSE Symbol HUN) announced today that its Board of Directors has authorized a cash tender offer by the Company to purchase up to 3,230,000 of the Company's common shares at a per share price of $17.00 in cash. The tender offer is expected to commence within the next several days. The closing price for the Company's common shares on December 19, 1995 was $15.00 per share. In arriving at its decision to authorize a tender offer, the Company's Board of Directors considered that the interests of the Company and its shareholders will be served by using a portion of the Company's excess borrowing capacity to afford shareholders an opportunity to sell a significant portion of their shares to the Company. The tender offer will not be conditioned upon any minimum of shares being tendered. The offer will be, however, subject to certain customary conditions described in offering materials to be distributed to shareholders. Neither the Company nor its Board of Directors makes any recommendation as to whether any shareholder should participate in the offer. The Company also announced that, on December 19, 1995, the Company purchased from Mary F. Bartol, an aggregate of approximately 2,150,000 of the Company's common shares for a cash purchase price of $16.32 per share which is below the per share price which will be offered in the tender offer. In connection with this transaction, the Company's Board of Directors received an opinion from its financial advisor, Alex. Brown & Sons Incorporated, to the effect that, based upon the procedures followed, factors considered, and assumptions made by it as set forth in its opinion, the purchase of the shares from Mrs. Bartol by the Company is fair, from a financial point of view, to the Company and the shareholders of the Company, other than Mrs. Bartol. The Company also announced that it has entered into a new five year $130 million credit facility consisting of a revolving credit facility in an amount up to $85 million, and a term loan in the amount of $45 million. The Company intends to use borrowings under the New Credit Facility, possibly together with cash on hand, to fund the purchase of shares from Mrs. Bartol and shares pursuant to the tender offer. The balance of the New Credit Facility will be available for working capital, strategic acquisitions and general corporate purposes. The Company is a worldwide manufacturer and distributor of office, art/craft, and presentation and display products for the business, education and consumer markets. # # # Hunt Manufacturing Co. One Commerce Square 2005 Market Street Philadelphia, PA 19103-7085 (215) 656-0300 Fax: (215) 656-3700 EX-99.(A)(8) 9 PRESS RELEASE Exhibit (a)(8) LOGO NEWS HUNT RELEASE - -------------------------------------------------------------------------------- December 21, 1995 Contact: Georgeson & Company Inc. 1-800-223-2064 HUNT MANUFACTURING CO. COMMENCES CASH TENDER OFFER FOR UP TO 3,230,000 SHARES AT $17.00 NET PER SHARE PHILADELPHIA, PA, December 21, 1995 - Hunt Manufacturing Co. (NYSE Symbol HUN) announced today that it has commenced a cash tender offer to purchase up to 3,230,000 of the Company's common shares at a per share price of $17.00, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated December 21, 1995, and the related Letter of Transmittal (which together constitute the "Offer") The closing price for the Company's common shares on December 19, 1995 (the last full trading day before the announcement of the Offer) was $15.00 per share. The closing price for the Company's common shares on December 20, 1995 was $16.625 per share. The 3,230,000 shares that the Company is offering to purchase in the Offer represent approximately 23% of the shares outstanding as of the close of business on December 19, 1995, after giving effect to the previously announced purchase by the Company from Mary F. Bartol of an aggregate of approximately 2,150,000 of the Company's common shares for a cash purchase price of $16.32 per share. The Offer is designed to afford to shareholders who are considering the sale of all or a portion of their shares an opportunity to sell such shares for a higher price than available in the open market immediately prior to the announcement of the Offer, without the usual transaction costs associated with market sales. The Offer is not conditioned upon any minimum number of shares being tendered. The Offer is, however, subject to certain customary conditions. The Offer, proration period and withdrawal rights are scheduled to expire at 5:00 p.m., Eastern Standard Time, on January 24, 1996, unless the Offer is extended. In arriving at its decision to proceed with a tender offer, the Company's Board of Directors considered that the interests of the Company and its shareholders will be served by using a portion of the Company's excess borrowing capacity to afford shareholders an opportunity to sell a significant portion of their shares to the Company. The Company expects that its cash flow from operations and available borrowings under a New Credit Facility with NationsBank, N.A. together with other sources of capital believed to be available, will enable the Company to repay the borrowings made to effect the share repurchases. The Company recently announced that it had entered into a new five year $130 million credit facility consisting of a revolving credit facility in an amount up to $85 million, and a term loan in the amount of $45 million. The Company intends to use borrowings under the New Credit Facility, possibly together with cash on hand, to fund the purchase of shares pursuant to the Offer. The previously announced purchase by the Company of approximately 2,150,000 of its common shares from a shareholder also was funded through borrowings through the New Credit Facility. The balance of the New Credit Facility will be available for working capital, strategic acquisitions and general corporate purposes. The Company does not expect to be in a position to release its final audited fiscal year 1995 results until January 16, 1996. However, the Company expects its earnings per share for 1995 to range from $.91 to $.96 (excluding the provision for organizational changes and relocation and consolidation of operations, the earnings per share range would be $1.13 to $1.18). Neither the Company not its Board of Directors makes any recommendation as to whether any shareholder should participate in the Offer. Georgeson & Company, Inc. will act as Information Agent and American Stock Transfer & Trust Company will act as the Depositary for the Offer. The Company is a worldwide manufacturer and distributor of office, art/craft, and presentation and display products for the business, education and consumer markets. # # # Hunt Manufacturing Co. One Commerce Square 2005 Market Street Philadelphia, PA 19103-7085 (215) 656-0300 Fax: (215) 656-3700 EX-99.(A)(9) 10 LETTER TO SAVINGS PLAN PARTICIPANTS HUNT MANUFACTURING CO. OFFER TO PURCHASE FOR CASH UP TO 3,230,000 OF ITS COMMON SHARES TO: PARTICIPANTS IN THE HUNT MANUFACTURING CO. SAVINGS PLAN Participants in the Hunt Manufacturing Co. Savings Plan (the "Savings Plan") who have accounts invested in the Stock Fund, which holds Common Shares of Hunt Manufacturing Co. (the "Company"), par value $.10 per share (the "Shares"), have the opportunity to determine if they wish to have The Chase Manhattan Bank, N.A., as Trustee of the Savings Plan, tender Shares allocated to their accounts pursuant to the Company's Offer to Purchase dated December 21, 1995 (the "Offer to Purchase") and the related Letter of Transmittal (which together constitute the "Offer"). Only Shares allocated to a participant's Savings Plan accounts as of December 15, 1995 may be tendered. The number of Shares allocated to your accounts as of December 15, 1995 is specified on the label adjacent to your required signature on the enclosed Election Form. Enclosed is a copy of an Election Form which, if you wish to tender Shares allocated to your Savings Plan accounts, you must fill in, sign and return promptly in accordance with the instructions on the Form. Also enclosed are the Offer to Purchase, Letter of Transmittal and other related documents. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER THE SHARES ALLOCATED TO YOUR SAVINGS PLAN ACCOUNTS. After you have read the enclosed documents, if you wish to tender Shares allocated to your Savings Plan accounts, you should complete the Election Form and send it to the Trustee in the enclosed envelope. YOUR ELECTION FORM MUST BE RECEIVED BY THE TRUSTEE AT ITS ADDRESS SET FORTH ON THE ELECTION FORM BY 5:00 P.M., EASTERN STANDARD TIME, ON JANUARY 22, 1996. EVEN IF YOU DECIDE NOT TO PARTICIPATE IN THE OFFER, PLEASE COMPLETE AND RETURN THE ELECTION FORM. IF YOU DO NOT RESPOND, OR IF YOUR ELECTION FORM IS NOT RECEIVED BY THE DEADLINE SPECIFIED ABOVE, SHARES ALLOCATED TO YOUR SAVINGS PLAN ACCOUNTS WILL NOT BE TENDERED. MOREOVER ONLY WHOLE SHARES MAY BE TENDERED. IF THERE ARE ANY FRACTIONAL SHARES IN YOUR ACCOUNTS, THEY MAY NOT BE TENDERED. In accordance with the provisions of the Savings Plan, the proceeds from the sale of any Shares allocated to your accounts will not be distributed to you. Such proceeds will be invested by the Trustee, at the named fiduciary's direction, in the Bankers Trust Capital Preservation Trust. After you have received confirmation from the Trustee or its agent of the deposit of any proceeds from the sale of Shares into the Bankers Trust Capital Preservation Trust, you may reinvest the proceeds in accordance with the Saving Plan's normal procedures for changing investment options. As more fully described in Section 4 of the Offer to Purchase, a tender of Shares will be deemed irrevocable unless withdrawn by the dates specified therein. To be effective, a notice of withdrawal must be in writing and must be received in a timely manner by the Trustee at the following address: The Chase Manhattan Bank, N.A., c/o Twentieth Century Services, Inc., P.O. Box 411036, Kansas City, Missouri 64141. Any notice of withdrawal must specify your name, your social security number, the full name of the Savings Plan, the number of Shares tendered and the number of Shares to be withdrawn. Upon receipt of a timely written notice of withdrawal, previous instructions to tender with respect to such Shares will be deemed cancelled and the Trustee will not tender such Shares on your behalf. If you wish to retender such withdrawn Shares, you may call Georgeson & Company, Inc. (the "Information Agent") at this special number, 1-212-440-9050, to obtain a new Election Form. Please request a Savings Plan Election Form. If you instruct the Trustee to tender a number of Shares, but less than the specified number of Shares is allocated to your Savings Plan accounts when the Company actually purchases Shares, the Trustee will consider the shortfall in the number of Shares a withdrawal. If fewer than 100 Shares were allocated to your Savings Plan accounts as of the close of business on December 15, 1995, then you may be entitled to tender such Shares without proration, as described in Section 2 of the Offer to Purchase. To take advantage of this preferential treatment, you must tender all the Shares allocated to your accounts and check the box in the "Odd Lots" section of the Election Form. If you have any questions about this information please contact the Information Agent, Georgeson & Company Inc., Wall Street Plaza, New York, New York 10005, at the following number, 1-800-223-2064. EX-99.(A)(10) 11 ELECTION FORM FOR SAVINGS PLAN PARTICIPANTS ELECTION FORM FOR PARTICIPANTS IN THE HUNT MANUFACTURING CO. SAVINGS PLAN (BEFORE COMPLETING THIS FORM, READ CAREFULLY THE ACCOMPANYING OFFER TO PURCHASE) I. TENDER OF SHARES In accordance with the Hunt Manufacturing Co. (the "Company") Offer to Purchase dated December 21, 1995, a copy of which I have received, I hereby instruct The Chase Manhattan Bank, N.A., the Trustee of the Hunt Manufacturing Co. Savings Plan (the "Trustee"), to tender or not to tender Common Shares of the Company, par value $.10 per share (the "Shares"), allocated to my accounts in the Hunt Manufacturing Co. Savings Plan (the "Savings Plan") as of December 15, 1995 prior to the expiration of such Offer to Purchase, as follows (check one box): | | I DO NOT WANT TO TENDER SHARES ALLOCATED TO MY ACCOUNTS UNDER THE SAVINGS PLAN. (If you check this box, do not complete the rest of this form, but do sign the form and print your name and social security number where indicated.) | | I WANT TO TENDER ALL THE SHARES ALLOCATED TO MY ACCOUNTS UNDER THE SAVINGS PLAN. (NOTE THAT ONLY WHOLE SHARES MAY BE TENDERED; THUS THE NUMBER OF SHARES TENDERED WILL BE REDUCED TO THE NEXT LOWEST WHOLE SHARE IF THERE ARE FRACTIONAL SHARES IN YOUR ACCOUNTS). | | I WANT TO TENDER __________ (INSERT NUMBER OF WHOLE SHARES) OF THE SHARES ALLOCATED TO MY ACCOUNTS UNDER THE SAVINGS PLAN. PLEASE NOTE THAT IF NO INSTRUCTIONS ARE RECEIVED YOUR SHARES WILL NOT BE TENDERED. II. ODD LOTS | | By checking this box, I represent that I owned beneficially an aggregate of fewer than 100 Shares (including Shares allocated to my accounts in the Savings Plan) as of the close of business on December 15, 1995 and that I am tendering all of such Shares. NEITHER THE COMPANY, ITS BOARD OF DIRECTORS NOR THE TRUSTEE MAKES ANY RECOMMENDATION TO ANY SAVINGS PLAN PARTICIPANT AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. YOUR INSTRUCTIONS TO THE TRUSTEE WILL BE CONFIDENTIALLY TABULATED AND WILL NOT BE DIVULGED TO ANYONE AT THE COMPANY. THE COMPANY HAS BEEN ADVISED THAT CERTAIN OF ITS DIRECTORS AND OFFICERS INTEND TO TENDER SHARES PURSUANT TO THE OFFER. EACH SAVINGS PLAN PARTICIPANT MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER THE SHARES ALLOCATED TO HIS OR HER ACCOUNTS. THIS FORM MUST BE RECEIVED BY THE TRUSTEE AT THE FOLLOWING ADDRESS: THE CHASE MANHATTAN BANK, N.A., C/O TWENTIETH CENTURY SERVICES, INC., P.O. BOX 411036, KANSAS CITY, MISSOURI 64141, BY 5:00 P.M., EASTERN STANDARD TIME, ON JANUARY 22, 1996. ---------------------------------- Signature of Participant ---------------------------------- Please Print Your Name ---------------------------------- Social Security Number EX-99.(A)(11) 12 FORM OF TOMBSTONE ADVERTISEMENT Exhibit (a)(11) ================================================================================ This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares. The Offer is made solely by the Offer to Purchase, dated December 21, 1995, and the related Letter of Transmittal. The Offer is being made to all holders of Shares; provided, that the Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which making or accepting the Offer would violate that jurisdiction's laws. In those jurisdictions whose securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Company by one or more registered brokers or dealers licensed under the laws of such jurisdictions. NOTICE OF OFFER TO PURCHASE FOR CASH by LOGO HUNT MANUFACTURING CO. UP TO 3,230,000 OF ITS COMMON SHARES AT A PURCHASE PRICE OF $17 PER SHARE Hunt Manufacturing Co., a Pennsylvania corporation (the "Company"), invites its shareholders to tender its Common Shares, par value $.10 per share (the "Shares") at a price of $17 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated December 21, 1995 (the "Offer to Purchase"), and in the related Letter of Transmittal (which together constitute the "Offer"). The Offer is not conditioned upon any minimum number of Shares being tendered. The Offer is, however, subject to other conditions. See Section 6 of the Offer to Purchase. - ----------------------------------------------------------------------------- | THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT | | 5:00 P.M., EASTERN STANDARD TIME, JANUARY 24, 1996, UNLESS THE OFFER IS | | EXTENDED. | - ----------------------------------------------------------------------------- The Company will pay $17 per Share for Shares validly tendered pursuant to the Offer and not withdrawn (the "Purchase Price"). The Purchase Price will be paid in cash, net to the seller, with respect to all Shares purchased. Shares not purchased because of proration and conditional tenders will be returned. Upon the terms and subject to the conditions of the Offer, if more than 3,230,000 Shares have been validly tendered and not withdrawn on or prior to the Expiration Date (as defined in the Offer to Purchase), the Company will purchase Shares in the following order of priority: (a) first, all such Shares validly tendered by any shareholders who owned beneficially an aggregate of fewer than 100 Shares (including any Shares held in the Company's Savings Plan) as of the close of business on December 15, 1995 and who validly tenders all of such Shares (partial and conditional tenders will not qualify for this preference); and (b) then, after purchase of all the foregoing Shares, all other such Shares on a pro rata basis, if necessary (with appropriate adjustments to avoid purchases of fractional Shares). The Company believes that the Offer is in the interests of the Company and its shareholders. The Offer will afford shareholders an opportunity to sell a significant portion, and perhaps all, of their Shares without the usual transaction costs associated with open market sales and for a higher price for their Shares than that which has been recently available on the open market. The Offer will also allow qualifying shareholders owning beneficially fewer than 100 Shares to avoid the payment of brokerage commissions and the applicable odd lot discount payable on a sale of Shares in a transaction effected on a securities exchange. Neither the Company nor its Board of Directors makes any recommendation as to whether any shareholder should tender all or any of such shareholder's Shares pursuant to the Offer. Each shareholder must make his or her own decision as to whether to tender Shares and, if so, how many Shares to tender. The Company reserves the right to extend the period during which the Offer is open by giving notice thereof to the Depositary, and making a public announcement thereof. Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior to the Expiration Date, and, unless previously accepted for payment by the Company after 5:00 P.M., Eastern Standard Time on February 20, 1996. For a withdrawal to be effective, a written or facsimile transmission Notice of Withdrawal must be timely received by the Depositary at one of the addresses or the facsimile number set forth on the back cover of the Offer to Purchase and must contain the information described in Section 4 of the Offer to Purchase. The Company will be deemed to have purchased tendered Shares as, if and when, it gives oral or written notice to the Depositary of its acceptance of such Shares for payment pursuant to the Offer. The information required to be disclosed by Rule 13e-4(d)(1) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. The Offer to Purchase and the related Letter of Transmittal contain important information that should be read before any decision is made with respect to the Offer. Copies of the Offer to Purchase and the related Letter of Transmittal are being mailed to record holders of Shares and to participants in the Company's Savings Plan and will be furnished to brokers, banks and similar persons whose names, or the names of whose nominees, appear on the Company's shareholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. Any questions or requests for assistance may be directed to the Information Agent at its telephone number and address listed below. Requests for additional copies of the Offer to Purchase, the Letter of Transmittal or other tender offer materials may be directed to the Information Agent, and such copies will be furnished promptly at the Company's expense. Shareholders may also contact their local broker, dealer, commercial bank or trust company for assistance concerning the Offer. The Information Agent for the Offer is: Georgeson & Company Inc. Wall Street Plaza New York, New York 10005 Banks and Brokers Call Collect (212) 440-9800 All Others Call Toll Free: 1-800-223-2064 December 22, 1995 ================================================================================ EX-99.(B) 13 CREDIT AGREEMENT Exhibit (b) [EXECUTION COPY] CREDIT AGREEMENT Dated as of December 19, 1995 among HUNT MANUFACTURING CO., as Borrower, THE SUBSIDIARIES FROM TIME TO TIME PARTY HERETO, as Guarantors, THE SEVERAL LENDERS FROM TIME TO TIME PARTY HERETO AND NATIONSBANK, N.A., as Agent TABLE OF CONTENTS
SECTION 1 DEFINITIONS............................................................................ 1 1.1 Definitions................................................................................. 1 1.2 Computation of Time Periods................................................................ 25 1.3 Accounting Terms........................................................................... 25 SECTION 2 CREDIT FACILITIES..................................................................... 26 2.1 Revolving Loans............................................................................ 26 2.2 Letter of Credit Subfacility............................................................... 28 2.3 Term Loan.................................................................................. 34 SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES........................................ 37 3.1 Default Rate............................................................................... 37 3.2 Extension and Conversion................................................................... 37 3.3 Prepayments................................................................................ 38 3.4 Termination and Reduction of Revolving Committed Amount.................................... 40 3.5 Fees....................................................................................... 41 3.6 Capital Adequacy........................................................................... 42 3.7 Inability To Determine Interest Rate....................................................... 42 3.8 Illegality................................................................................. 43 3.9 Requirements of Law........................................................................ 43 3.10 Taxes...................................................................................... 44 3.11 Indemnity.................................................................................. 47 3.12 Pro Rata Treatment......................................................................... 47 3.13 Sharing of Payments........................................................................ 48 3.14 Place and Manner of Payments............................................................... 49 3.15 Mandatory Assignment....................................................................... 50 SECTION 4 GUARANTY.............................................................................. 50 4.1 The Guarantee.............................................................................. 50 4.2 Obligations Unconditional.................................................................. 51 4.3 Reinstatement.............................................................................. 52 4.4 Certain Additional Waivers................................................................. 52 4.5 Remedies................................................................................... 52 4.6 Rights of Contribution..................................................................... 53 4.7 Continuing Guarantee....................................................................... 54 SECTION 5 CONDITIONS............................................................................ 54 5.1 Closing Conditions......................................................................... 54 5.2 Conditions to all Extensions of Credit..................................................... 55 SECTION 6 REPRESENTATIONS AND WARRANTIES........................................................ 57 6.1 Financial Condition........................................................................ 57 6.2 No Change.................................................................................. 58 6.3 Organization; Existence; Compliance with Law............................................... 58 6.4 Power; Authorization; Enforceable Obligations.............................................. 58 6.5 No Legal Bar............................................................................... 59 6.6 No Material Litigation..................................................................... 59 6.7 No Default................................................................................. 59 6.8 Ownership of Property; Liens............................................................... 59 6.9 Intellectual Property...................................................................... 59 6.10 No Burdensome Restrictions................................................................. 60
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6.11 Taxes...................................................................................... 60 6.12 ERISA...................................................................................... 60 6.13 Governmental Regulations, Etc.............................................................. 62 6.14 Subsidiaries............................................................................... 63 6.15 Purpose of Loans and Letters of Credit..................................................... 63 6.16 Environmental Matters...................................................................... 63 6.17 Schedule 13E-4..............................................................................64 SECTION 7 AFFIRMATIVE COVENANTS................................................................. 64 7.1 Information Covenants...................................................................... 65 7.2 Preservation of Existence and Franchises................................................... 68 7.3 Books and Records.......................................................................... 68 7.4 Compliance with Law........................................................................ 68 7.5 Payment of Taxes and Other Indebtedness.................................................... 68 7.6 Insurance.................................................................................. 68 7.7 Maintenance of Property.................................................................... 69 7.8 Performance of Obligations................................................................. 69 7.9 Use of Proceeds............................................................................ 69 7.10 Audits/Inspections......................................................................... 69 7.11 Financial Covenants........................................................................ 69 7.12 Additional Credit Parties.................................................................. 71 7.13 Ownership of Subsidiaries; Limitation of Foreign Operations................................................................................. 72 SECTION 8 NEGATIVE COVENANTS.................................................................... 72 8.1 Indebtedness............................................................................... 72 8.2 Liens...................................................................................... 74 8.3 Nature of Business......................................................................... 74 8.4 Consolidation, Merger, Sale or Purchase of Assets, etc............................................................................. 74 8.5 Advances, Investments, Loans, etc.......................................................... 75 8.6 Restricted Payments........................................................................ 75 8.7 Prepayments of Indebtedness, etc........................................................... 76 8.8 Transactions with Affiliates............................................................... 76 8.9 Fiscal Year................................................................................ 76 8.10 Limitation on Restrictions on Subsidiary Dividends and Other Distributions, etc..................................................... 76 8.11 Issuance and Sale of Subsidiary Stock...................................................... 77 8.12 Sale Leasebacks............................................................................ 77 8.13 No Further Negative Pledges................................................................ 77 8.14 Operating Lease Obligations................................................................ 77 SECTION 9 EVENTS OF DEFAULT..................................................................... 78 9.1 Events of Default.......................................................................... 78 9.2 Acceleration; Remedies..................................................................... 80 SECTION 10 AGENCY PROVISIONS..................................................................... 81 10.1 Appointment................................................................................ 81 10.2 Delegation of Duties....................................................................... 82 10.3 Exculpatory Provisions..................................................................... 82 10.4 Reliance on Communications................................................................. 83 10.5 Notice of Default.......................................................................... 83 10.6 Non-Reliance on Agent and Other Lenders.................................................... 83 10.7 Indemnification............................................................................ 84 10.8 Agent in its Individual Capacity........................................................... 85
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10.9 Successor Agent............................................................................ 85 SECTION 11 MISCELLANEOUS......................................................................... 85 11.1 Notices.................................................................................... 85 11.2 Right of Set-Off........................................................................... 86 11.3 Benefit of Agreement....................................................................... 87 11.4 No Waiver; Remedies Cumulative............................................................. 89 11.5 Payment of Expenses, etc................................................................... 90 11.6 Amendments, Waivers and Consents........................................................... 90 11.7 Counterparts............................................................................... 91 11.8 Headings................................................................................... 91 11.9 Survival of Indemnification................................................................ 91 11.10 Governing Law; Submission to Jurisdiction; Venue........................................... 91 11.11 Severability............................................................................... 92 11.12 Entirety................................................................................... 92 11.13 Survival of Representations and Warranties................................................. 92 11.14 Binding Effect; Termination................................................................ 92 11.15 Confidentiality............................................................................ 93 11.16 Source of Funds............................................................................ 93
- iii - SCHEDULES Schedule 1.1A Investments Schedule 1.1B Liens Schedule 1.1C Schedule 13E-4 Schedule 2.1(a) Lenders Schedule 2.1(b)(i) Form of Notice of Borrowing Schedule 2.1(e) Form of Revolving Note Schedule 2.3(f) Form of Term Note Schedule 3.2 Form of Notice of Extension/Conversion Schedule 5.1(f) Form of Legal Opinion of Drinker Biddle & Reath Schedule 5.1(g) Form of Local Counsel Opinion Schedule 6.4 Required Consents, Authorizations, Notices and Filings Schedule 6.9 Intellectual Property Schedule 6.12 ERISA Disclosures Schedule 6.14 Subsidiaries Schedule 6.16 Environmental Disclosures Schedule 7.1(c) Form of Officer's Compliance Certificate Schedule 7.12 Form of Joinder Agreement Schedule 8.1 Indebtedness Schedule 11.3 Form of Assignment and Acceptance - iv - CREDIT AGREEMENT THIS CREDIT AGREEMENT dated as of December 19, 1995 (the "Credit Agreement"), is by and among HUNT MANUFACTURING CO., a Pennsylvania corporation (the "Borrower"), the subsidiaries identified on the signature pages hereto and such other subsidiaries as may from time to time become a party hereto (the "Guarantors"), the several lenders identified on the signature pages hereto and such other lenders as may from time to time become a party hereto (the "Lenders") and NATIONSBANK, N.A., as agent for the Lenders (in such capacity, the "Agent"). W I T N E S S E T H WHEREAS, the Borrower has requested that the Lenders provide a $130,000,000 credit facility consisting of (i) a $85,000,000 revolving credit facility and (ii) a $45,000,000 term loan for the purposes hereinafter set forth; WHEREAS, the Lenders have agreed to make the requested credit facility available to the Borrower on the terms and conditions hereinafter set forth; NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: SECTION 1 DEFINITIONS 1.1 Definitions. As used in this Credit Agreement, the following terms shall have the meanings specified below unless the context otherwise requires: "Additional Credit Party" means each Person that becomes a Guarantor after the Closing Date by execution of a Joinder Agreement. "Affiliate" means, with respect to any Person, any other Person (i) directly or indirectly controlling or controlled by or under direct or indirect common control with such Person or (ii) directly or indirectly owning or holding five percent (5%) or more of the equity interest in such Person. For purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. - 1 - "Agent" shall have the meaning assigned to such term in the heading hereof. "Agent's Fee Letter" means that certain letter agreement, dated as of December 19, 1995, between the Agent and the Borrower, as amended, modified, supplemented or replaced from time to time. "Agent's Fees" shall have the meaning assigned to such term in Section 3.5(d). "Alternative Assets" means, in connection with any proposed Asset Sale pursuant to the terms of Section 8.4(b)(v)(B), assets (including stock or other equity interests acquired in a transaction contemplated by and permitted under Section 8.4(c) and whether new, additional or replacement assets but exclusive of assets acquired in the course of regular upkeep and maintenance) which are similar in nature, purpose or business line to other assets owned or leased by the Borrower and/or its Subsidiaries prior to or at the time of the acquisition of such assets and useful in the conduct of the business of the Borrower and its Subsidiaries as permitted to be conducted pursuant to Section 8.3. "Applicable Margin" means, for purposes of calculating the applicable interest rate for any day for any Eurodollar Loan or the applicable rate of the Standby Letter of Credit Fee for any day for purposes of Section 3.5(b)(i), the appropriate applicable margin corresponding to the Consolidated Leverage Ratio in effect as of the most recent Calculation Date: - 2 -
=============================================================================================================================== Applicable Margin for Applicable Eurodollar Margin for Applicable Loans which Eurodollar Margin for Consolidated are Loans which Standby Pricing Leverage Revolving are Term Letter of Level Ratio Credit Loans Loans Credit Fee - ------------------------------------------------------------------------------------------------------------------------------- I Equal to or 40.0 bps 55.0 bps 40.0 bps less than 2.00 to 1.00 - ------------------------------------------------------------------------------------------------------------------------------- II Greater than 47.5 bps 62.5 bps 47.5 bps 2.00 to 1.00 but equal to or less than 2.50 to 1.00 - ------------------------------------------------------------------------------------------------------------------------------- III Greater than 60.0 bps 75.0 bps 60.0 bps 2.50 to 1.00 but equal to or less than 3.00 to 1.00 - ------------------------------------------------------------------------------------------------------------------------------- IV Greater than 72.5 bps 87.5 bps 72.5 bps 3.00 to 1.00 ===============================================================================================================================
Determination of the appropriate Applicable Margins based on the Consolidated Leverage Ratio shall be made as of each Calculation Date. The Consolidated Leverage Ratio in effect as of a Calculation Date shall establish the Applicable Margins that shall be effective as of the date designated by the Agent as the Applicable Margin Change Date. The Agent shall determine the Applicable Margins as of each Calculation Date and shall promptly notify the Borrower and the Lenders of the Applicable Margins so determined and of the Applicable Margin Change Date. Such determinations by the Agent of the Applicable Margins shall be conclusive absent demonstrable error. The initial Applicable Margins shall be based on Pricing Level III until the first Applicable Margin Change Date occurring after the Closing Date. "Applicable Margin Change Date" means, with respect to any Calculation Date, a date designated by the Agent that is not more than five (5) Business Days after the date pursuant to the terms of Section 7.1(a) or (b), as applicable, that the Required Financial Information for such Calculation Date is required to be delivered to the Agent and the Lenders. "Application Period" shall have the meaning assigned to such term in Section 8.4(b)(v)(B)(1). - 3 - "Asset Sale" means any sale, lease, transfer or other disposition (including any such transaction effected by way of merger, amalgamation or consolidation) by the Borrower or any of its Subsidiaries subsequent to the date hereof of any asset (including stock in Subsidiaries of the Borrower), including without limitation any sale leaseback transaction (whether or not involving a Capital Lease), but excluding (a) the sale of inventory in the ordinary course of business for fair consideration, (b) the sale or disposition of machinery and equipment no longer used or useful in the conduct of such Person's business, (c) the sale of any asset having a book value of less than $100,000, (d) the Fresno Asset Sale and (e) any Equity Transaction. "Attributed Principal Amount" means, on any day, with respect to any Permitted Receivables Financing entered into by the Borrower, the aggregate amount (with respect to any such transaction, the "Invested Amount") paid to, or borrowed by, such Person as of such date under such Permitted Receivables Financing, minus the aggregate amount received by the applicable Receivables Financier and applied to the reduction of the Invested Amount under such Permitted Receivables Financing. "Available Reinvestment Amount" means, at any time, the aggregate amount of the Net Proceeds of all asset sales made pursuant to Section 8.4(b)(v) with respect to which the related Application Period has not yet expired, provided that such Net Proceeds (i) have not been applied to the purchase, acquisition or construction of Alternative Assets as contemplated by Section 8.4(b)(v)(B)(1) and (ii) have been applied to prepay the Loans as contemplated by Section 8.4(b)(v)(B)(2) and Section 3.3(b)(iii). "Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United States Code, as amended, modified, succeeded or replaced from time to time. "Bankruptcy Event" means, with respect to any Person, the occurrence of any of the following with respect to such Person: (i) a court or governmental agency having jurisdiction in the premises shall enter a decree or order for relief in respect of such Person in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property or ordering the winding up or liquidation of its affairs; or (ii) there shall be commenced against such Person an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or any case, proceeding or other action for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property or for the winding up or liquidation of its affairs, and such - 4 - involuntary case or other case, proceeding or other action shall remain undismissed, undischarged or unbonded for a period of sixty (60) consecutive days; or (iii) such Person shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property or make any general assignment for the benefit of creditors; or (iv) such Person shall be unable to, or shall admit in writing its inability to, pay its debts generally as they become due. "Bartol Family" means the wife, children and descendants of such children of the late George E. Bartol III, their respective spouses and estates, any trusts primarily for the benefit of any of the foregoing and the administrators, executors and trustees of any such estates or trusts. "Base Rate" means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) equal to the greater of (a) the Federal Funds Rate in effect on such day plus 1/2 of 1% or (b) the Prime Rate in effect on such day. If for any reason the Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable after due inquiry to ascertain the Federal Funds Rate for any reason, including the inability or failure of the Agent to obtain sufficient quotations in accordance with the terms hereof, the Base Rate shall be determined without regard to clause (a) of the first sentence of this definition until the circumstances giving rise to such inability no longer exist. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Rate, respectively. "Base Rate Loan" means any Loan bearing interest at a rate determined by reference to the Base Rate. "Bevis" means Bevis Custom Furniture, Inc., an Alabama corporation and a Wholly Owned Subsidiary of the Borrower. "Borrower" means the Person identified as such in the heading hereof, together with any successors and permitted assigns. "Borrower's Obligations" means, without duplication, all (i) of the obligations of the Borrower to the Lenders (including the Issuing Lender) and the Agent, whenever arising, under this Credit Agreement, the Notes or any of the other Credit Documents and (ii) all - 5 - liabilities and obligations, whenever arising, owing from the Borrower to any Lender or any affiliate of a Lender arising under interest rate protection agreements, foreign currency exchange agreements, commodity purchase or option agreements or other interest or exchange rate or commodity price hedging agreements. "Business Day" means a day other than a Saturday, Sunday or other day on which commercial banks in Charlotte, North Carolina are authorized or required by law to close, except that, when used in connection with a Eurodollar Loan, such day shall also be a day on which dealings between banks are carried on in U.S. dollar deposits in London, England and New York, New York. "Calculation Date" means the last day of each fiscal quarter of the Borrower. "Capital Lease" means, as applied to any Person, any lease of any Property (whether real, personal or mixed) by that Person as lessee which, in accordance with GAAP is accounted for as a capital lease on the balance sheet of that Person. "Cash Equivalents" means (a) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition, (b) U.S. dollar denominated time deposits and certificates of deposit of (i) any Lender, (ii) any domestic commercial bank of recognized standing having capital and surplus in excess of $500,000,000 or (iii) any bank whose short-term commercial paper rating from S&P is at least A-1 or the equivalent thereof or from Moody's is at least P-1 or the equivalent thereof (any such bank being an "Approved Lender"), in each case with maturities of not more than 270 days from the date of acquisition, (c) commercial paper and variable or fixed rate notes issued by any Approved Lender (or by the parent company thereof) or any variable rate notes issued by, or guaranteed by, any domestic corporation rated A-1 (or the equivalent thereof) or better by S&P or P- 1 (or the equivalent thereof) or better by Moody's and maturing within six months of the date of acquisition, (d) repurchase agreements entered into by a Person with a bank or trust company (including any of the Lenders) or recognized securities dealer having capital and surplus in excess of $500,000,000 for direct obligations issued by or fully guaranteed by the United States of America in which such Person shall have a perfected first priority security interest (subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase obligations, (e) obligations of any State of the - 6 - United States or any political subdivision thereof, the interest with respect to which is exempt from federal income taxation under Section 103 of the Code, having a long term rating of at least Aa-3 or AA- by Moody's or S&P, respectively, and maturing within three years from the date of acquisition thereof, (f) Investments in municipal auction preferred stock (i) rated AAA (or the equivalent thereof) or better by S&P or Aaa (or the equivalent thereof) or better by Moody's and (ii) with dividends that reset at least once every 365 days and (g) Investments, classified in accordance with GAAP as current assets, in money market investment programs registered under the Investment Company Act of 1940, as amended, which are administered by reputable financial institutions having capital of at least $100,000,000 and the portfolios of which are limited to Investments of the character described in the foregoing subdivisions (a), (b), (c), (e) and (f). "Change of Control" means the occurrence of any of the following events: (i) any Person or two or more Persons acting in concert, other than members of the Bartol Family, shall have acquired beneficial ownership, directly or indirectly, of, or shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in its or their acquisition of, control over, Voting Stock of the Borrower (or other securities convertible into such Voting Stock) representing 35% or more of the combined voting power of all Voting Stock of the Borrower, or (ii) during any period of up to 24 consecutive months, commencing after the Closing Date, individuals who at the beginning of such 24 month period were directors of the Borrower (together with any new director whose election by the Borrower's Board of Directors or whose nomination for election by the Borrower's shareholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors of the Borrower then in office. As used herein, "beneficial ownership" shall have the meaning provided in Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934. "Closing Date" means December 19, 1995 "Code" means the Internal Revenue Code of 1986, as amended, and any successor thereto, as interpreted by the rules and regulations issued thereunder, in each case as in effect from time to time. References to sections of the Code shall be construed also to refer to any successor sections. "Commitment" means (i) with respect to each Lender, the Revolving Commitment of such Lender and the Term Loan Commitment of - 7 - such Lender and (ii) with respect to the Issuing Lender, the LOC Commitment. "Commitment Percentage" means, for any Lender, the percentage identified as its Commitment Percentage on Schedule 2.1(a), as such percentage may be modified in connection with any assignment made in accordance with the provisions of Section 11.3. "Consolidated Capital Expenditures" means, for any period, all capital expenditures (exclusive of expenditures for acquisitions permitted pursuant to the terms of Section 8.4(a) or (c)) of the Borrower and its consolidated Subsidiaries for such period, as determined in accordance with GAAP. "Consolidated EBIT" means, for any period, the sum of (i) Consolidated Net Income for such period but excluding (A) non-cash charges associated with exercise of stock options, (B) unusual items, including but not limited to refinancing, restructuring or reorganizational charges, (C) effects of changes in accounting principles and (D) extraordinary items, plus (ii) an amount which, in the determination of Consolidated Net Income for such period, has been deducted for (A) Consolidated Interest Expense for such period and (B) total Federal, state, local and foreign income taxes of the Borrower and its consolidated Subsidiaries for such period. "Consolidated EBITDA" means, for any period, the sum of (i) Consolidated EBIT for such period, plus (ii) an amount which, in the determination of Consolidated Net Income for such period, has been deducted for consolidated depreciation and amortization expense of the Borrower and its consolidated Subsidiaries for such period. "Consolidated Fixed Charge Coverage Ratio" means, as of any Calculation Date, the ratio of (i) Consolidated EBITDA for the four-quarter period ended as of such Calculation Date minus Consolidated Capital Expenditures for the four-quarter period ended as of such Calculation Date minus Restricted Payments by the Borrower and its consolidated Subsidiaries for the four-quarter period ended as of such Calculation Date, to (ii) Consolidated Interest Expense for the four-quarter period ended as of such Calculation Date plus Consolidated Scheduled Funded Indebtedness Payments for the four-quarter period ended as of such Calculation Date. "Consolidated Funded Indebtedness" means, at any time, the outstanding principal amount of all Funded Indebtedness, without duplication, of the Borrower and its consolidated Subsidiaries at such time. - 8 - "Consolidated Interest Coverage Ratio" means, for any period, the ratio of (i) Consolidated EBIT for such period to (ii) Consolidated Interest Expense for such period. "Consolidated Interest Expense" means, for any period, all interest expense of the Borrower and its consolidated Subsidiaries for such period, as determined in accordance with GAAP but including in any event all imputed interest, whether in the form of "yield", "discount" or other similar item, that accrues in respect of the Attributed Principal Amount of any Permitted Receivables Financing. "Consolidated Leverage Ratio" means, as of any Calculation Date, the ratio of (i) Consolidated Funded Indebtedness as of such Calculation Date at such time to (ii) Consolidated EBITDA for the four fiscal-quarter period ended as of such Calculation Date. "Consolidated Net Income" means, for any period, net income after taxes for such period for the Borrower and its consolidated Subsidiaries, as determined in accordance with GAAP. "Consolidated Net Worth" means, as of any date, total shareholders' equity of the Borrower and its consolidated Subsidiaries as of such date, as determined in accordance with GAAP. "Consolidated Scheduled Funded Indebtedness Payments" means, as of any Calculation Date, the scheduled payments of principal on Funded Indebtedness for the Borrower and its consolidated Subsidiaries for the twelve month period ending on such Calculation Date. "Controlled Group" means (i) the controlled group of corporations as defined in Section 414(b) of the Code and the applicable regulations thereunder, or (ii) the group of trades or businesses under common control as defined in Section 414(c) of the Code and the applicable regulations thereunder, of which the Borrower or any of its Subsidiaries is a member. "Credit Documents" means a collective reference to this Credit Agreement, the Notes, the LOC Documents, each Joinder Agreement, the Agent's Fee Letter and all other related agreements and documents issued or delivered hereunder or thereunder or pursuant hereto or thereto. "Credit Party" means any of the Borrower and the Guarantors. "Debt Transaction" means any issuance by the Borrower or any of its Subsidiaries of Funded Indebtedness other than (i) purchase money Indebtedness, (ii) Capital Leases and (iii) Loans and LOC Obligations. - 9 - "Default" means any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default. "Dollars" and "$" means dollars in lawful currency of the United States of America. "Domestic Credit Party" means any one of the Borrower and each of the Guarantors which is a Domestic Subsidiary of the Borrower. "Domestic Subsidiary" means, with respect to any Person, any Subsidiary of such Person which is incorporated or organized under the laws of any State of the United States or the District of Columbia. "Eligible Assignees" means (i) any Lender or any Affiliate or Subsidiary of a Lender, and (ii) any other commercial bank, financial institution or "accredited investor" (as defined in Regulation D of the Securities and Exchange Commission) reasonably acceptable to the Agent and the Borrower. "Environmental Laws" means any and all lawful and applicable Federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes 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, chemicals, or industrial, toxic or hazardous substances or wastes. "Equity Transaction" means any issuance by the Borrower or any of its Subsidiaries of (A) shares of its capital stock, other than the issuance to the Borrower of the capital stock of any of its Subsidiaries, (B) any shares of its capital stock pursuant to the exercise of options or warrants or (C) any shares of its capital stock pursuant to the conversion of any debt securities to equity. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto, as interpreted by the rules and regulations thereunder, all as the same may be in effect from time to time. References to sections of ERISA shall be construed also to refer to any successor sections. "ERISA Affiliate" means an entity, whether or not incorporated, which is under common control with any Credit Party - 10 - within the meaning of Section 4001(a)(14) of ERISA, or is a member of a group which includes the Borrower and which is treated as a single employer under Sections 414(b), (c), (m), or (o) of the Code. "Eurodollar Loan" means any Loan bearing interest at a rate determined by reference to the Eurodollar Rate. "Eurodollar Rate" means, for the Interest Period for each Eurodollar Loan comprising part of the same borrowing (including conversions, extensions and renewals), a per annum interest rate determined pursuant to the following formula: Interbank Offered Rate Eurodollar Rate = --------------------------------- 1 - Eurodollar Reserve Percentage "Eurodollar Reserve Percentage" means for any day, that percentage (expressed as a decimal) which is in effect from time to time under Regulation D of the Board of Governors of the Federal Reserve System (or any successor), as such regulation may be amended from time to time or any successor regulation, as the maximum reserve requirement (including, without limitation, any basic, supplemental, emergency, special, or marginal reserves) applicable with respect to Eurocurrency liabilities as that term is defined in Regulation D (or against any other category of liabilities that includes deposits by reference to which the interest rate of Eurodollar Loans is determined), whether or not Lender has any Eurocurrency liabilities subject to such reserve requirement at that time. Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credits for proration, exceptions or offsets that may be available from time to time to a Lender. The Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Eurodollar Reserve Percentage. "Event of Default" means such term as defined in Section 9.1. "Excess Sale Event" means, with respect to any sale of assets made pursuant to the terms of Section 8.4(c)(iv), the failure of the Borrower to apply (or cause its applicable Subsidiary to apply) an amount equal to the Net Proceeds of such asset sale to the purchase, acquisition or construction of Alternative Assets during the Application Period for such asset sale as contemplated by the terms of Section 8.4(b)(v)(B)(1). "Facility Fee" shall have the meaning assigned to such term in Section 3.5(a). - 11 - "Facility Fee Calculation Period" shall have the meaning assigned to such term in Section 3.5(a). "Fees" means all fees payable pursuant to Section 3.5. "Federal Funds Rate" means, for any day, the rate of interest per annum (rounded upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (A) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day and (B) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate quoted to the Agent on such day on such transactions as determined by the Agent. "Fiscal Year End" means, for any fiscal year of the Borrower and its Subsidiaries, the Sunday nearest the last day of November. "Foreign Subsidiary" means, with respect to any Person, any Subsidiary of such Person which is not a Domestic Subsidiary. "Fresno Asset Sale" means the sale by the Borrower of its former distribution center and related assets located in Fresno, California and having a book value of not more than $1,950,000. "Funded Indebtedness" means, with respect to any Person, without duplication, (i) all Indebtedness of such Person for borrowed money, (ii) all purchase money Indebtedness of such Person, including without limitation the principal portion of all obligations of such Person under Capital Leases, (iii) all Guaranty Obligations of such Person with respect to outstanding Funded Indebtedness of another Person, (iv) with respect to the Borrower, the outstanding Attributed Principal Amount under any Permitted Receivables Financing and (v) all Funded Indebtedness of another Person secured by a Lien on any Property of such Person, whether or not such Funded Indebtedness has been assumed. The Funded Indebtedness of any Person shall include the Funded Indebtedness of any partnership or joint venture in which such Person is a general partner or joint venturer. "GAAP" means generally accepted accounting principles in the United States applied on a consistent basis and subject to the terms of Section 1.3 hereof. - 12 - "Governmental Authority" means any Federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory body. "Guarantor" means each of those Persons identified as a "Guarantor" on the signature pages hereto, and each Additional Credit Party which may hereafter execute a Joinder Agreement, together with their successors and permitted assigns. "Guaranty Obligations" means, with respect to any Person, without duplication, any obligations of such Person (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) guaranteeing or intended to guarantee any Indebtedness of any other Person in any manner, whether direct or indirect, and including without limitation any obligation, whether or not contingent, (i) to purchase any such Indebtedness or any Property constituting security therefor, (ii) to advance or provide funds or other support for the payment or purchase of any such Indebtedness or to maintain working capital, solvency or other balance sheet condition of such other Person (including without limitation keep well agreements, maintenance agreements, comfort letters issued to a creditor of any non-Affiliate or similar agreements or arrangements) for the benefit of any holder of Indebtedness of such other Person, (iii) to lease or purchase Property, securities or services primarily for the purpose of assuring the holder of such Indebtedness, or (iv) to otherwise assure or hold harmless the holder of such Indebtedness against loss in respect thereof. The amount of any Guaranty Obligation hereunder shall (subject to any limitations set forth therein) be deemed to be an amount equal to the outstanding principal amount (or maximum principal amount, if larger) of the Indebtedness in respect of which such Guaranty Obligation is made. "Hunt Data" means Hunt Data Products, Inc., a Delaware corporation and a Wholly Owned Subsidiary of the Borrower. "Hunt Europe" means Hunt Europe, Ltd., a U.K. corporation and a Wholly Owned Subsidiary of the Borrower. "Hunt Holdings" means Hunt Holdings, Inc., a Delaware corporation and a Wholly Owned Subsidiary of the Borrower. "Hunt X-Acto" means Hunt X-Acto, Inc., a Pennsylvania corporation and a Wholly Owned Subsidiary of the Borrower. "Indebtedness" of any Person means (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, or upon which interest payments are customarily made, (iii) all obligations of such Person under conditional sale or other title retention agreements relating to Property purchased by such Person (other than customary - 13 - reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business), (iv) all obligations of such Person issued or assumed as the deferred purchase price of Property or services purchased by such Person (other than trade debt incurred in the ordinary course of business and due within twelve (12) months of the incurrence thereof) which would appear as liabilities on a balance sheet of such Person, (v) all obligations of such Person under take-or-pay or similar arrangements or under commodities agreements, (vi) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on, or payable out of the proceeds of production from, Property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (vii) all Guaranty Obligations of such Person, (viii) the principal portion of all obligations of such Person under Capital Leases, (ix) all obligations of such Person in respect of interest rate protection agreements, foreign currency exchange agreements, commodity purchase or option agreements or other interest or exchange rate or commodity price hedging agreements, (x) the maximum amount of all letters of credit issued or bankers' acceptances facilities created for the account of such Person and, without duplication, all drafts drawn thereunder (to the extent unreimbursed), (xi) with respect to the Borrower, the outstanding Attributed Principal Amount under any Permitted Receivables Financing and (xii) all preferred stock issued by such Person and required by the terms thereof to be redeemed, or for which mandatory sinking fund payments are due, by a fixed date. The Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer. "Interbank Offered Rate" means, with respect to any Eurodollar Loan for the Interest Period applicable thereto, the rate of interest per annum as determined by the Agent to be the average (rounded upwards, if necessary, to the nearest 1/100 of 1%) of the rates per annum at which deposits in Dollars in immediately available funds are offered to each Reference Bank two Business Days prior to the beginning of such Interest Period by major banks in the interbank eurocurrency market as at or about 10:00 A.M. Charlotte, North Carolina time for delivery on the first day of such Interest Period, for the number of days comprised therein and in an amount equal or comparable to the amount of the related Eurodollar Loan of such Reference Bank. "Interest Payment Date" means (i) as to any Revolving Loan or portion of the Term Loan which is a Base Rate Loan, the last day of each March, June, September and December, the date of repayment of principal of such Loan and the Termination Date and (ii) as to any Eurodollar Loan, the last day of each Interest Period for such Loan - 14 - and on the Termination Date, and in addition where the applicable Interest Period is more than 3 months, then also on the date 3 months from the beginning of the Interest Period, and each 3 months thereafter. If an Interest Payment Date falls on a date which is not a Business Day, such Interest Payment Date shall be deemed to be the next succeeding Business Day, except that in the case of Eurodollar Loans where the next succeeding Business Day falls in the next succeeding calendar month, then on the next preceding Business Day. "Interest Period" means as to Eurodollar Loans, a period of one, two, three or six month's duration, as the Borrower may elect, commencing in each case, on the date of the borrowing (including conversions, extensions and renewals); provided, however, (A) if any Interest Period would end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day (except that in the case of Eurodollar Loans where the next succeeding Business Day falls in the next succeeding calendar month, then on the next preceding Business Day), (B) no Interest Period shall extend beyond the Termination Date, (C) with regard to the Term Loan, no Interest Period shall extend beyond any principal amortization payment date unless the portion of the Term Loan comprised of Base Rate Loans together with the portion of the Term Loan comprised of Eurodollar Loans with Interest Periods expiring prior to the date such principal amortization payment is due, is at least equal to the amount of such principal amortization payment due on such date, and (D) in the case of Eurodollar Loans, where an Interest Period begins on a day for which there is no numerically corresponding day in the calendar month in which the Interest Period is to end, such Interest Period shall end on the last day of such calendar month. "Investment", in any Person, means any loan or advance to such Person, any purchase or other acquisition of any capital stock, warrants, rights, options, obligations or other securities of such Person, any capital contribution to such Person or any other investment in such Person, including, without limitation, any Guaranty Obligation incurred for the benefit of such Person. "Issuing Lender" means NationsBank. "Issuing Lender Fees" shall have the meaning assigned to such term in Section 3.5(b)(iii). "Joinder Agreement" means a Joinder Agreement substantially in the form of Schedule 7.12 hereto, executed and delivered by an Additional Credit Party in accordance with the provisions of Section 7.12. - 15 - "Lenders" means each of the Persons identified as a "Lender" on the signature pages hereto, and each Person which may become a Lender by way of assignment in accordance with the terms hereof, together with their successors and permitted assigns. "Letter of Credit" means any letter of credit issued by the Issuing Lender for the account of the Borrower in accordance with the terms of Section 2.2. "Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance, lien (statutory or otherwise), preference, priority or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the Uniform Commercial Code as adopted and in effect in the relevant jurisdiction or other similar recording or notice statute, and any lease in the nature thereof). "Loan" or "Loans" means the Revolving Loans and/or the Term Loan (or a portion of any Revolving Loan or Term Loan bearing interest at the Base Rate or the Eurodollar Rate and referred to as a Base Rate Loan or a Eurodollar Loan), individually or collectively, as appropriate. "LOC Committed Amount" shall have the meaning assigned to such term in Section 2.2. "LOC Documents" means, with respect to any Letter of Credit, such Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (i) the rights and obligations of the parties concerned or at risk or (ii) any collateral security for such obligations. "LOC Obligations" means, at any time, the sum of (i) the maximum amount which is, or at any time thereafter may become, available to be drawn under Letters of Credit then outstanding, assuming compliance with all requirements for drawings referred to in such Letters of Credit plus (ii) the aggregate amount of all drawings under Letters of Credit honored by the Issuing Lender but not theretofore reimbursed. "Material Adverse Effect" means a material adverse effect on (i) the condition (financial or otherwise), operations, business, assets, liabilities or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the ability of any Credit Party to perform any material obligation under the Credit Documents or (iii) the material - 16 - rights and remedies of the Lenders under the Credit Documents. "Material Subsidiary" means (i) each of Bevis, Hunt Data, Hunt Holdings, Hunt X-Acto and Seal and (ii) any other direct or indirect Subsidiary of the Borrower which at any time on or after the Closing Date has total assets (as determined in accordance with GAAP) equal to or greater than $1,000,000, provided that the aggregate total assets (as determined in accordance with GAAP) at any time of all Subsidiaries of the Borrower excluded from this definition of "Material Subsidiary" shall not exceed $5,000,000. "Materials of Environmental Concern" means any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Laws, including, without limitation, asbestos, polychlorinated biphenyls and urea-formaldehyde insulation. "Moody's" means Moody's Investors Service, Inc., or any successor or assignee of the business of such company in the business of rating securities. "Multiemployer Plan" means a Plan which is a multiemployer plan as defined in Sections 3(37) or 4001(a)(3) of ERISA. "Multiple Employer Plan" means a Plan which the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate and at least one employer other than the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate are contributing sponsors. "NationsBank" means NationsBank, N.A. and its successors. "Net Proceeds" means proceeds received by the Borrower or any of its Subsidiaries from time to time in connection with any Asset Sale, Equity Transaction or Debt Transaction, net of the actual costs and taxes incurred by such Person in connection with and attributable to such Asset Sale, Equity Transaction or Debt Transaction, as applicable. "Non-Excluded Taxes" means such term as is defined in Section 3.10. "Note" means any Revolving Note or any Term Note, as the context may require. "Notice of Borrowing" means a written notice of borrowing in substantially the form of Schedule 2.1(b)(i), as required by Section 2.1(b)(i) or Section 2.3(b). - 17 - "Notice of Extension/Conversion" means the written notice of extension or conversion in substantially the form of Schedule 3.2 as required by Section 3.2. "Operating Lease" means, as applied to any Person, any lease (including, without limitation, leases which may be terminated by the lessee at any time) of any Property (whether real, personal or mixed) which is not a Capital Lease other than any such lease in which that Person is the lessor. "Participation Interest" means, the extension of credit by a Lender by way of a purchase of a participation in any Letters of Credit or LOC Obligations as provided in Section 2.2(c), or in any Loans as provided in Section 3.13. "PBGC" means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA and any successor thereof. "Permitted Investments" means Investments which are either (i) cash and Cash Equivalents; (ii) accounts receivable created, acquired or made by the Borrower or any of its Subsidiaries in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; (iii) Investments consisting of stock, obligations, securities or other property received by the Borrower or any of its Subsidiaries in settlement of accounts receivable (created in the ordinary course of business) from bankrupt obligors; (iv) Investments existing as of the Closing Date and set forth in Schedule 1.1A; (v) Investments in any Subsidiary of the Borrower which is a Guarantor; (vi) Investments in any Subsidiary of the Borrower which is not a Guarantor (A) not to exceed for all such Investments and all such Subsidiaries, an aggregate principal amount of $5,000,000 at any one time outstanding or (B) constituting accumulated retained earnings of such Subsidiary; (vii) Guaranty Obligations permitted by Section 8.1; (viii) acquisitions permitted by Section 6.15 and Section 8.4(c); (ix) transactions permitted by Section 8.8; (x) loans to directors, officers, employees, agents, customers or suppliers that do not exceed an aggregate principal amount of $1,000,000 at any one time outstanding; (xi) Investments received as consideration in connection with or arising by virtue of any merger, consolidation, sale or other transfer of assets permitted under Section 8.4; (xii) Investments by the Borrower in a Subsidiary or Affiliate in connection with a Permitted Receivables Financing; (xiii) intercompany Indebtedness of Bevis, Seal and Hunt Europe to the Borrower incurred in the ordinary course of business and consistent with the past practices of such Persons or for cash management purposes and, in the case of Hunt Europe, not exceeding $5,000,000 at any time outstanding; (xiv) in - 18 - the case of any Foreign Subsidiary of the Borrower, Investments which may be demoninated in a currency other than Dollars, having similar liquidity, duration and credit quality of issuer as Investments of the types described in the definition of "Cash Equivalents" set forth in this Section 1.1; and (xv) Investments in joint ventures and partnerships that do not exceed an aggregate principal amount of $5,000,000 at any one time outstanding. "Permitted Liens" means: (i) Liens in favor of the Agent on behalf of the Lenders; (ii) Liens (other than Liens created or imposed under ERISA) for taxes, assessments or governmental charges or levies not yet due or Liens for taxes being contested in good faith by appropriate proceedings for which adequate reserves determined in accordance with GAAP have been established (and as to which the Property subject to any such Lien is not yet subject to foreclosure, sale or loss on account thereof); (iii) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and suppliers and other liens imposed by law or pursuant to customary reservations or retentions of title arising in the ordinary course of business, provided that such Liens secure only amounts not yet due and payable or, if due and payable, are being contested in good faith by appropriate proceedings for which adequate reserves determined in accordance with GAAP have been established (and as to which the Property subject to any such Lien is not yet subject to foreclosure, sale or loss on account thereof); (iv) Liens (other than Liens created or imposed under ERISA) incurred or deposits made by the Borrower or any of its Subsidiaries in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); (v) Liens in connection with attachments or judgments (including judgment or appeal bonds) provided that the judgments secured shall, within 60 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall have been discharged within 30 days after the expiration of any such stay; - 19 - (vi) easements, rights-of-way, restrictions (including zoning restrictions), minor defects or irregularities in title and other similar charges or encumbrances not, in any material respect, impairing the use of the encumbered Property for its intended purposes; (vii) Liens on Property securing purchase money Indebtedness (including Capital Leases) to the extent permitted under Section 8.1(c), provided that any such Lien attaches to such Property concurrently with or within 90 days after the acquisition thereof; (viii) leases or subleases granted to others not interfering in any material respect with the business of any Credit Party; (ix) any interest of title of a lessor under, and Liens arising from UCC financing statements (or equivalent filings, registrations or agreements in foreign jurisdictions) relating to, leases permitted by this Credit Agreement; (x) Liens created or deemed to exist in connection with a Permitted Receivables Financing (including any related filings of any financing statements), but only to the extent that any such Lien relates to the applicable receivables and related property actually sold, contributed or otherwise conveyed pursuant to such transaction; (xi) normal and customary rights of setoff upon deposits of cash in favor of banks or other depository institutions; and (xii) Liens existing as of the Closing Date and set forth on Schedule 1.1B; provided that (a) no such Lien shall at any time be extended to or cover any property of any Credit Party other than the property subject thereto on the Closing Date and (b) the principal amount of the Indebtedness secured by such Liens shall not be increased. "Permitted Receivables Financing" means any transaction involving one or more sales, contributions or other conveyances by the Borrower of any accounts receivable to a Subsidiary or Affiliate of the Borrower (with respect to any such transaction, the "Receivables Financing SPC"), which Receivables Financing SPC then (x) sells (as determined in accordance with GAAP) any such receivables (or an interest therein) to any Person that is not a Subsidiary or Affiliate of the Borrower (with respect to any such transaction, the - 20 - "Receivables Financier"), (y) borrows from such Receivables Financier and secures such borrowings by a pledge of such receivables or (z) otherwise finances its acquisition of such receivables and, in connection therewith, conveys an interest in such receivables to the Receivables Financier, provided that (i) the aggregate Attributed Principal Amount for all such receivables financings shall not at any time exceed $35,000,000, (ii) such receivables financing shall not involve any recourse to the Borrower or any of its Subsidiaries for any reason other than (A) repurchases of non-eligible receivables or (B) indemnifications for losses other than credit losses related to the receivables sold in such financing, (iii) such receivables financing shall not include any Guaranty Obligations of the Borrower or any of its Subsidiaries, (iv) the Agent shall be reasonably satisfied with the structure of and documentation for any such transaction and that the terms of such transaction, including the discount at which receivables are sold and any termination events, shall be (in the good faith understanding of the Agent) consistent with those prevailing in the market for similar transactions involving a receivables originator/servicer of similar credit quality and a receivables pool of similar characteristics and (v) the documentation for such transaction shall not be amended or modified without the prior written approval of the Agent. "Person" means any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise (whether or not incorporated) or any Governmental Authority. "Plan" means any employee benefit plan (as defined in Section 3(3) of ERISA) which is covered by ERISA and with respect to which the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" within the meaning of Section 3(5) of ERISA. "Prime Rate" means the rate of interest per annum publicly announced from time to time by NationsBank as its prime rate in effect at its principal office in Charlotte, North Carolina, with each change in the Prime Rate being effective on the date such change is publicly announced as effective (it being understood and agreed that the Prime Rate is a reference rate used by NationsBank in determining interest rates on certain loans and is not intended to be the lowest rate of interest charged on any extension of credit by NationsBank to any debtor). "Pro Forma Basis" means, with respect to any transaction, that such transaction shall be deemed to have occurred as of the first day of the four fiscal-quarter period ending as of the most recent Calculation Date preceding the date of such transaction with respect to which the Agent has received the Required Financial Information. - 21 - As used herein, "transaction" means (i) any incurrence, assumption or retirement of Indebtedness as referred to in Section 8.1(h)(i), (ii) any sale or other disposition of assets as referred to in Section 8.3(b)(iv) or (iii) any acquisition of capital stock or securities or any purchase, lease or other acquisition of Property as referred to in Section 8.4(c). With respect to any transaction of the type described in clause (i) above regarding Indebtedness which has a floating or formula rate, the implied rate of interest for such Indebtedness for the applicable period for purposes of this definition shall be determined by utilizing the rate which is or would be in effect with respect to such Indebtedness as at the relevant date of determination. "Property" means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. "Receivables Financier" shall have the meaning assigned to such term in the definition of "Permitted Receivables Financing" set forth in this Section 1.1. "Reference Banks" means (i) prior to primary syndication of the credit facilities hereunder, NationsBank and (ii) thereafter, NationsBank and two other Lenders mutually acceptable to the Agent and the Borrower. "Regulation D, G, U, or X" means Regulation D, G, U or X, respectively, of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof. "Reportable Event" means any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the post-event notice requirement is waived under subsections .13, .14, .18, .19, or .20 of PBGC Reg. ss. 2615. "Required Financial Information" means, with respect to the applicable Calculation Date, (i) the financial statements of the Borrower required to be delivered pursuant to Section 7.1(a) or (b) for the fiscal period or quarter ending as of such Calculation Date, and (ii) the certificate of the chief financial officer, controller or treasurer of the Borrower required by Section 7.1(c) to be delivered with the financial statements described in clause (i) above. "Required Lenders" means, at any time, Lenders which are then in compliance with their obligations hereunder (as determined by the Agent) and holding in the aggregate at least 51% of (i) the Commitments to make Revolving Loans and Term Loans or (ii) if the Commitments have been terminated, the outstanding Loans and Participation Interests. - 22 - "Requirement of Law" means, as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its material property is subject. "Restricted Payment" means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of the Borrower or any of its Subsidiaries, now or hereafter outstanding, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock of the Borrower or any of its Subsidiaries, now or hereafter outstanding and (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of stock of the Borrower or any of its Subsidiaries, now or hereafter outstanding. "Revolving Commitment" means, with respect to each Lender, the commitment of such Lender, in an aggregate principal amount at any time outstanding of up to such Lender's Revolving Commitment Percentage of the Revolving Committed Amount, (A) to make Revolving Loans in accordance with the provisions of Section 2.1(a) and (B) to purchase participation interests in Letters of Credit in accordance with the provisions of Section 2.2(c). "Revolving Committed Amount" shall have the meaning assigned to such term in Section 2.1(a). "Revolving Loans" shall have the meaning assigned to such term in Section 2.1(a). "Revolving Note" means a promissory note of the Borrower in favor of a Lender delivered pursuant to Section 2.1(e) and evidencing the Revolving Loans of such Lender, as such promissory note may be amended, modified, restated or replaced from time to time. "S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill, Inc., or any successor or assignee of the business of such division in the business of rating securities. "Seal" means Seal Products, Inc., a Delaware corporation and a Wholly Owned Subsidiary of the Borrower. "Single Employer Plan" means any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan. "Solvent" or "Solvency" means, with respect to any Person as of a particular date, that on such date (i) such Person is able to - 23 - realize upon its assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (ii) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature in their ordinary course, (iii) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person's Property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged or is to engage, (iv) the fair value of the Property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person and (v) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. "Standby Letter of Credit Fee" shall have the meaning assigned to such term in Section 3.5(b)(i). "Stock Repurchase" means the repurchase, if any, by the Borrower on or after the Closing Date but no later than February 15, 1996 of up to $90,000,000 of the Borrower's common capital stock as described in a Schedule 13E-4 in substantially the form of Schedule 1.1C attached hereto. "Subsidiary" means, as to any Person, (a) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time, any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries, and (b) any partnership, association, joint venture or other entity in which such Person directly or indirectly through Subsidiaries has more than 50% equity interest at any time. "Term Loan" shall have the meaning assigned to such term as defined in Section 2.3(a). "Term Loan Commitment" means, with respect to each Lender, the commitment of such Lender to make its portion of the Term Loan in a principal amount equal to such Lender's Commitment Percentage of the Term Loan Committed Amount. - 24 - "Term Loan Committed Amount" shall have the meaning assigned to such term in Section 2.3(a). "Term Loan Unused Fee" shall have the meaning assigned to such term in Section 3.5(c). "Term Note" means a promissory note of the Borrower in favor of a Lender delivered pursuant to Section 2.3(f) and evidencing such Lender's share of the Term Loan, as such promissory note may be amended, modified, restated or replaced from time to time. "Termination Date" means December 31, 2000. "Termination Event" means (i) with respect to any Plan, the occurrence of a Reportable Event or the substantial cessation of operations (within the meaning of Section 4062(e) of ERISA); (ii) the withdrawal by the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it was a substantial employer (as such term is defined in Section 4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan; (iii) the distribution of a notice of intent to terminate or the actual termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA; (iv) the institution of proceedings to terminate or the actual termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan; or (vi) the complete or partial withdrawal of the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate from a Multiemployer Plan. "Trade Letter of Credit Fee" shall have the meaning assigned to such term in Section 3.5(b)(ii). "Voting Stock" means, with respect to any Person, capital stock issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of such a contingency. "Wholly Owned Subsidiary" of any Person means any Subsidiary 100% of whose Voting Stock or other equity interests is at the time owned by such Person directly or indirectly through other Wholly Owned Subsidiaries. 1.2 Computation of Time Periods. For purposes of computation of periods of time hereunder, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding." - 25 - 1.3 Accounting Terms. Except as otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Lenders hereunder shall be prepared, in accordance with GAAP applied on a consistent basis. All calculations made for the purposes of determining compliance with this Credit Agreement shall (except as otherwise expressly provided herein) be made by application of GAAP applied on a basis consistent with the most recent annual or quarterly financial statements delivered pursuant to Section 7.1 hereof (or, prior to the delivery of the first financial statements pursuant to Section 7.1 hereof, consistent with the financial statements as at November 27, 1994); provided, however, if (a) the Borrower shall object to determining such compliance on such basis at the time of delivery of such financial statements due to any change in or application of GAAP or the rules promulgated with respect thereto or (b) the Agent or the Required Lenders shall so object in writing within 30 days after delivery of such financial statements, then such calculations shall be made on a basis consistent with the most recent financial statements delivered by the Borrower to the Lenders as to which no such objection shall have been made. SECTION 2 CREDIT FACILITIES 2.1 Revolving Loans. (a) Revolving Commitment. Subject to the terms and conditions hereof and in reliance upon the representations and warranties set forth herein, each Lender severally agrees to make available to the Borrower such Lender's Commitment Percentage of revolving credit loans ("Revolving Loans") from time to time from the Closing Date until the Termination Date, or such earlier date as the Revolving Commitments shall have been terminated as provided herein for the purposes hereinafter set forth; provided, however, that Revolving Loans shall not be made hereunder until the Term Loan shall have been advanced by the Lenders pursuant to and in accordance with the terms of Section 2.2; provided further, however, that the sum of the aggregate principal amount of outstanding Revolving Loans shall not exceed EIGHTY-FIVE MILLION DOLLARS ($85,000,000) (as such aggregate maximum amount may be reduced from time to time as provided in Section 3.4, the "Revolving Committed Amount"); provided, further, (i) with regard to each Lender individually, such Lender's outstanding Revolving Loans shall not exceed such Lender's Commitment Percentage of the Revolving Committed Amount, and (ii) with regard to the Lenders collectively, the aggregate principal amount of outstanding Revolving Loans plus LOC Obligations outstanding shall not exceed the Revolving Committed Amount. Revolving Loans may consist of Base Rate Loans or Eurodollar Loans, or a combination thereof, as the Borrower may request, and may be repaid - 26 - and reborrowed in accordance with the provisions hereof; provided, however, that no more than 12 separate Eurodollar Loans shall be outstanding hereunder at any time. For purposes hereof, Eurodollar Loans with different Interest Periods shall be considered as separate Eurodollar Loans, even if they begin on the same date, although borrowings, extensions and conversions may, in accordance with the provisions hereof, be combined at the end of existing Interest Periods to constitute a new Eurodollar Loan with a single Interest Period. Revolving Loans hereunder may be repaid and reborrowed in accordance with the provisions hereof. (b) Revolving Loan Borrowings. (i) Notice of Borrowing. The Borrower shall request a Revolving Loan borrowing by written notice (or telephone notice promptly confirmed in writing) to the Agent not later than 12:00 Noon (Charlotte, North Carolina time) on the Business Day of the requested borrowing in the case of Base Rate Loans, and on the third Business Day prior to the date of the requested borrowing in the case of Eurodollar Loans. Each such request for borrowing shall be irrevocable and shall specify (A) that a Revolving Loan is requested, (B) the date of the requested borrowing (which shall be a Business Day), (C) the aggregate principal amount to be borrowed, and (D) whether the borrowing shall be comprised of Base Rate Loans, Eurodollar Loans or a combination thereof, and if Eurodollar Loans are requested, the Interest Period(s) therefor. If the Borrower shall fail to specify in any such Notice of Borrowing (I) an applicable Interest Period in the case of a Eurodollar Loan, then such notice shall be deemed to be a request for an Interest Period of one month, or (II) the type of Revolving Loan requested, then such notice shall be deemed to be a request for a Base Rate Loan hereunder. The Agent shall give notice to each Lender promptly upon receipt of each Notice of Borrowing, the contents thereof and each such Lender's share of any borrowing to be made pursuant thereto. (ii) Minimum Amounts. Each Eurodollar Loan or Base Rate Loan that is a Revolving Loan shall be in a minimum aggregate amount of $2,000,000 and integral multiples of $1,000,000 in excess thereof (or the remaining amount of the Revolving Committed Amount, if less). (iii) Advances. Each Lender will make its Commitment Percentage of each Revolving Loan borrowing available to the Agent for the account of the Borrower at the office of the Agent specified in Section 11.1, or at such other office as the Agent may designate in writing, by - 27 - 1:00 P.M. (Charlotte, North Carolina time) on the date specified in the applicable Notice of Borrowing in Dollars and in funds immediately available to the Agent. Such borrowing will then be made available to the Borrower by the Agent by crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Agent by the Lenders and in like funds as received by the Agent. (c) Repayment. The principal amount of all Revolving Loans shall be due and payable in full on the Termination Date. (d) Interest. Subject to the provisions of Section 3.1, Revolving Loans shall bear interest at a per annum rate equal to: (i) Base Rate Loans. During such periods as Revolving Loans shall be comprised of Base Rate Loans, the Base Rate. (ii) Eurodollar Loans. During such periods as Revolving Loans shall be comprised of Eurodollar Loans, the Eurodollar Rate plus the Applicable Margin. Interest on Revolving Loans shall be payable in arrears on each Interest Payment Date. (e) Revolving Notes. The Revolving Loans made by each Lender shall be evidenced by a duly executed promissory note of the Borrower to each Lender in substantially the form of Schedule 2.1(e). 2.2 Letter of Credit Subfacility. (a) Issuance. Subject to the terms and conditions hereof and of the LOC Documents, if any, and any other terms and conditions which the Issuing Lender may reasonably require, the Lenders will participate in the issuance by the Issuing Lender from time to time of such Letters of Credit from the Closing Date until the Termination Date as the Borrower may request, in a form acceptable to the Issuing Lender; provided, however, that (i) the LOC Obligations outstanding shall not at any time exceed TEN MILLION DOLLARS ($10,000,000) (the "LOC Committed Amount") and (ii) the sum of the aggregate principal amount of outstanding Revolving Loans plus LOC Obligations outstanding shall not at any time exceed the aggregate Revolving Committed Amount. No Letter of Credit shall (x) have an original expiry date more than one year from the date of issuance or (y) as originally issued or as extended, have an expiry date extending beyond the Termination Date. Each Letter of Credit shall comply with the related LOC Documents. - 28 - The issuance and expiry date of each Letter of Credit shall be a Business Day. (b) Notice and Reports. The request for the issuance of a Letter of Credit shall be submitted by the Borrower to the Issuing Lender at least three (3) Business Days prior to the requested date of issuance. The Issuing Lender will, at least quarterly and more frequently upon request, disseminate to each of the Lenders and the Borrower a detailed report specifying the Letters of Credit which are then issued and outstanding and any activity with respect thereto which may have occurred since the date of the prior report, and including therein, among other things, the beneficiary, the face amount, expiry date as well as any payment or expirations which may have occurred. (c) Participation. Each Lender, upon issuance of a Letter of Credit, shall be deemed to have purchased without recourse a risk participation from the Issuing Lender in such Letter of Credit and the obligations arising thereunder, in each case in an amount equal to its pro rata share of the obligations under such Letter of Credit (based on the respective Commitment Percentages of the Lenders) and shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and be obligated to pay to the Issuing Lender therefor and discharge when due, its pro rata share of the obligations arising under such Letter of Credit. Without limiting the scope and nature of each Lender's participation in any Letter of Credit, to the extent that the Issuing Lender has not been reimbursed as required hereunder or under any such Letter of Credit, each such Lender shall pay to the Issuing Lender its pro rata share of such unreimbursed drawing in same day funds on the day of notification by the Issuing Lender of an unreimbursed drawing pursuant to the provisions of subsection (d) hereof. The obligation of each Lender to so reimburse the Issuing Lender shall be absolute and unconditional and shall not be affected by the occurrence of a Default, an Event of Default or any other occurrence or event. Any such reimbursement shall not relieve or otherwise impair the obligation of the Borrower to reimburse the Issuing Lender under any Letter of Credit, together with interest as hereinafter provided. (d) Reimbursement. In the event of any drawing under any Letter of Credit, the Issuing Lender will promptly notify the Borrower. Unless the Borrower shall immediately notify the Issuing Lender that the Borrower intends to otherwise reimburse the Issuing Lender for such drawing, the Borrower shall be deemed to have requested that the Lenders make a Revolving Loan in the amount of the drawing as provided - 29 - in subsection (e) hereof on the related Letter of Credit, the proceeds of which will be used to satisfy the related reimbursement obligations. The Borrower promises to reimburse the Issuing Lender on the day of drawing under any Letter of Credit (either with the proceeds of a Revolving Loan obtained hereunder or otherwise) in same day funds. If the Borrower shall fail to reimburse the Issuing Lender as provided hereinabove, the unreimbursed amount of such drawing shall bear interest at a per annum rate equal to the Base Rate plus two percent (2%). The Borrower's reimbursement obligations hereunder shall be absolute and unconditional under all circumstances irrespective of any rights of setoff, counterclaim or defense to payment the Borrower may claim or have against the Issuing Lender, the Agent, the Lenders, the beneficiary of the Letter of Credit drawn upon or any other Person, including without limitation any defense based on any failure of the Borrower or any other Credit Party to receive consideration or the legality, validity, regularity or unenforceability of the Letter of Credit. The Issuing Lender will promptly notify the other Lenders of the amount of any unreimbursed drawing and each Lender shall promptly pay to the Agent for the account of the Issuing Lender in dollars and in immediately available funds, the amount of such Lender's pro rata share of such unreimbursed drawing. Such payment shall be made on the day such notice is received by such Lender from the Issuing Lender if such notice is received at or before 2:00 P.M. (Charlotte, North Carolina time) otherwise such payment shall be made at or before 12:00 Noon (Charlotte, North Carolina time) on the Business Day next succeeding the day such notice is received. If such Lender does not pay such amount to the Issuing Lender in full upon such request, such Lender shall, on demand, pay to the Agent for the account of the Issuing Lender interest on the unpaid amount during the period from the date of such drawing until such Lender pays such amount to the Issuing Lender in full at a rate per annum equal to, if paid within two (2) Business Days of the date of drawing, the Federal Funds Rate and thereafter at a rate equal to the Base Rate. Each Lender's obligation to make such payment to the Issuing Lender, and the right of the Issuing Lender to receive the same, shall be absolute and unconditional, shall not be affected by any circumstance whatsoever and without regard to the termination of this Credit Agreement or the Commitments hereunder, the existence of a Default or Event of Default or the acceleration of the obligations of the Borrower hereunder and shall be made without any offset, abatement, withholding or reduction whatsoever. Simultaneously with the making of each such payment by a Lender to the Issuing Lender, such Lender shall, automatically and without any further action on the part of the Issuing Lender or such - 30 - Lender, acquire a participation in an amount equal to such payment (excluding the portion of such payment constituting interest owing to the Issuing Lender) in the related unreimbursed drawing portion of the LOC Obligation and in the interest thereon and in the related LOC Documents, and shall have a claim against the Borrower with respect thereto. (e) Repayment with Revolving Loans. On any day on which the Borrower shall have requested, or been deemed to have requested, a Revolving Loan advance to reimburse a drawing under a Letter of Credit, the Agent shall give notice to the Lenders that a Revolving Loan has been requested or deemed requested by the Borrower to be made in connection with a drawing under a Letter of Credit, in which case a Revolving Loan advance comprised solely of Base Rate Loans shall be immediately made to the Borrower by all Lenders (notwithstanding any termination of the Commitments pursuant to Section 9.2) pro rata based on the respective Commitment Percentages of the Lenders (determined before giving effect to any termination of the Commitments pursuant to Section 9.2) and the proceeds thereof shall be paid directly to the Issuing Lender for application to the respective LOC Obligations. Each such Lender hereby irrevocably agrees to make its pro rata share of each such Revolving Loan immediately upon any such request or deemed request in the amount, in the manner and on the date specified in the preceding sentence notwithstanding (i) the amount of such borrowing may not comply with the minimum amount for advances of Revolving Loans otherwise required hereunder, (ii) whether any conditions specified in Section 5.2 are then satisfied, (iii) whether a Default or an Event of Default then exists, (iv) failure for any such request or deemed request for Revolving Loan to be made by the time otherwise required hereunder, (v) whether the date of such borrowing is a date on which Revolving Loans are otherwise permitted to be made hereunder or (vi) any termination of the Commitments relating thereto immediately prior to or contemporaneously with such borrowing. In the event that any Revolving Loan cannot for any reason be made on the date otherwise required above (including, without limitation, as a result of the commencement of a proceeding under the Bankruptcy Code with respect to the Borrower or any other Credit Party), then each such Lender hereby agrees that it shall forthwith purchase (as of the date such borrowing would otherwise have occurred, but adjusted for any payments received from the Borrowers on or after such date and prior to such purchase) from the Issuing Lender such participation in the outstanding LOC Obligations as shall be necessary to cause each such Lender to - 31 - share in such LOC Obligations ratably (based upon the respective Commitment Percentages of the Lenders (determined before giving effect to any termination of the Commitments pursuant to Section 9.2)), provided that at the time any purchase of participation pursuant to this sentence is actually made, the purchasing Lender shall be required to pay to the Issuing Lender, to the extent not paid to the Issuer by the Borrowers in accordance with the terms of subsection (d) hereof, interest on the principal amount of participation purchased for each day from and including the day upon which such borrowing would otherwise have occurred to but excluding the date of payment for such participation, at the rate equal to, if paid within two (2) Business Days of the date of the Revolving Loan advance, the Federal Funds Rate, and thereafter at a rate equal to the Base Rate. (f) Renewal, Extension. The renewal or extension of any Letter of Credit shall, for purposes hereof, be treated in all respects the same as the issuance of a new Letter of Credit hereunder. (g) Uniform Customs and Practices. The Issuing Lender may have the Letters of Credit be subject to The Uniform Customs and Practice for Documentary Credits, as published as of the date of issue by the International Chamber of Commerce (the "UCP"), in which case the UCP may be incorporated therein and deemed in all respects to be a part thereof. (h) Indemnification; Nature of Issuing Lender's Duties. (i) In addition to its other obligations under this Section 2.2, the Borrower hereby agrees to protect, indemnify, pay and save the Issuing Lender harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys' fees) that the Issuing Lender may incur or be subject to as a consequence, direct or indirect, of (A) the issuance of any Letter of Credit or (B) the failure of the Issuing Lender to honor a drawing under a Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or governmental authority (all such acts or omissions, herein called "Government Acts"). (ii) As between the Borrower and the Issuing Lender, the Borrower shall assume all risks of the acts, omissions or misuse of any Letter of Credit by the beneficiary thereof. The Issuing Lender shall not be responsible: (A) for the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any Letter of Credit, even if it should in fact prove to be in any or all respects - 32 - invalid, insufficient, inaccurate, fraudulent or forged; (B) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, that may prove to be invalid or ineffective for any reason; (C) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (D) for any loss or delay in the transmission or otherwise of any document required in order to make a drawing under a Letter of Credit or of the proceeds thereof; and (E) for any consequences arising from causes beyond the control of the Issuing Lender, including, without limitation, any Government Acts. None of the above shall affect, impair, or prevent the vesting of the Issuing Lender's rights or powers hereunder. (iii) In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by the Issuing Lender, under or in connection with any Letter of Credit or the related certificates, if taken or omitted in good faith, shall not put such Issuing Lender under any resulting liability to the Borrower or any other Credit Party. It is the intention of the parties that this Credit Agreement shall be construed and applied to protect and indemnify the Issuing Lender against any and all risks involved in the issuance of the Letters of Credit, all of which risks are hereby assumed by the Borrower (on behalf of itself and each of the other Credit Parties), including, without limitation, any and all Government Acts. The Issuing Lender shall not, in any way, be liable for any failure by the Issuing Lender or anyone else to pay any drawing under any Letter of Credit as a result of any Government Acts or any other cause beyond the control of the Issuing Lender. (iv) Nothing in this subsection (h) is intended to limit the reimbursement obligations of the Borrower contained in subsection (d) above. The obligations of the Borrower under this subsection (h) shall survive the termination of this Credit Agreement. No act or omissions of any current or prior beneficiary of a Letter of Credit shall in any way affect or impair the rights of the Issuing Lender to enforce any right, power or benefit under this Credit Agreement. (v) Notwithstanding anything to the contrary contained in this subsection (h), the Borrower shall have no obligation to indemnify the Issuing Lender in respect of any liability incurred by the Issuing Lender (A) arising solely out of the gross negligence or willful - 33 - misconduct of the Issuing Lender or (B) caused by the Issuing Lender's unlawful failure to pay under any Letter of Credit. (i) Responsibility of Issuing Lender. It is expressly understood and agreed that the obligations of the Issuing Lender hereunder to the Lenders are only those expressly set forth in this Credit Agreement and that the Issuing Lender shall be entitled to assume that the conditions precedent set forth in Section 5.2 have been satisfied unless it shall have acquired actual knowledge that any such condition precedent has not been satisfied; provided, however, that nothing set forth in this Section 2.2 shall be deemed to prejudice the right of any Lender to recover from the Issuing Lender any amounts made available by such Lender to the Issuing Lender pursuant to this Section 2.2 in the event that it is determined by a court of competent jurisdiction that the payment with respect to a Letter of Credit constituted gross negligence or willful misconduct on the part of the Issuing Lender. (j) Conflict with LOC Documents. In the event of any conflict between this Credit Agreement and any LOC Document, this Credit Agreement shall control. 2.3 Term Loan. (a) Term Commitment. Subject to and upon the terms and conditions and relying upon the representations and warranties herein set forth, each Lender agrees, severally and not jointly, to make available to the Borrower, from time to time from the Closing Date through and including February 15, 1996, or such earlier date as the Term Loan Commitments shall have been terminated as provided herein, such Lender's Commitment Percentage of a term loan (the "Term Loan") in the aggregate amount of FORTY-FIVE MILLION DOLLARS ($45,000,000) (as such aggregate maximum amount may be reduced from time to time as provided in Section 3.4, the "Term Loan Committed Amount") for the purposes hereinafter set forth. The Term Loan may consist of Base Rate Loans or Eurodollar Loans, or a combination thereof, as the Borrower may request; provided, however, that no more than 12 separate Eurodollar Loans shall be outstanding hereunder at any time. For purposes hereof, Eurodollar Loans with different Interest Periods shall be considered as separate Eurodollar Loans, even if they begin on the same date, although borrowings, extensions and conversions may, in accordance with the provisions hereof, be combined at the end of existing Interest Periods to constitute a new Eurodollar Loan with a single Interest Period. Amounts repaid on the Term Loan may not be reborrowed. In the event that for any reason the Borrower for any reason shall not borrow by February 15, 1996 aggregate advances of the Term Loan in an amount equal to the initial Term Loan Committed - 34 - Amount, then (without duplication of the effect of any reductions of the Term Loan Committed Amount pursuant to Section 3.3(b)(ii) or Section 3.4(b)(ii) or (iii)) the scheduled amortization payments on the Term Loan required pursuant to the terms of Section 2.3(d) shall be reduced ratably by the amount by which the initial Term Loan Committed Amount exceeds the aggregate outstanding principal balance on the Term Loan as of February 15, 1996 (after giving effect to any advances on the Term Loan to be made on such date, but prior to giving effect to any reduction of the Term Loan Committed Amount to be made on such date pursuant to Section 3.3(b)(ii) or Section 3.4(b)(ii) or (iii)). (b) Borrowing Procedures. (i) Notice of Borrowing. The Borrower shall request a Term Loan advance by written notice (or telephone notice promptly confirmed in writing) to the Agent not later than 12:00 Noon (Charlotte, North Carolina time) on the Business Day of the requested borrowing in the case of Base Rate Loans, and on the third Business Day of the requested borrowing in the case of Eurodollar Loans. Each such request for borrowing shall be irrevocable and shall specify (A) that a Term Loan advance is requested, (B) the date of the requested advance (which shall be a Business Day), (C) the aggregate principal amount to be advanced and (D) whether the advance shall be comprised of Base Rate Loans, Eurodollar Loans or a combination thereof, and if Eurodollar Loans are requested, the Interest Period(s) therefor. If the Borrower shall fail to specify in any such Notice of Borrowing (I) an applicable Interest Period in the case of a Eurodollar Loan, then such notice shall be deemed to be a request for an Interest Period of one month or (II) the type of Term Loan advance requested, then such notice shall be deemed to be a request for a Base Rate Loan hereunder. The Agent shall give notice to each Lender promptly upon receipt of each Notice of Borrowing pursuant to this Section 2.3(b)(i), the contents thereof and each such Lender's share of the Term Loan advance to be made pursuant thereto. (ii) Advances. Each Lender will make its Term Loan Commitment Percentage of each Term Loan advance available to the Agent for the account of the Borrower at the office of the Agent specified in Section 11.1, or at such other office as the Agent may designate in writing, by 1:00 P.M. (Charlotte, North Carolina time) on the date specified in the applicable Notice of Borrowing in Dollars and in funds immediately available to the Agent. Such advance will then be made available to the Borrower by the Agent by crediting the account of the Borrower on the books of such office with the aggregate of the amounts made available to the Agent by the Lenders and in like funds as received by the Agent. - 35 - (c) Minimum Amounts. Each Eurodollar Loan and Base Rate Loan that is part of the Term Loan shall be in an aggregate principal amount that is not less than the lesser of $5,000,000 and integral multiples of $1,000,000 (or the then remaining principal balance of the Term Loan, if less). (d) Repayment of Term Loan. Subject to possible reduction under the terms of subsection (a) of this Section 2.3 The principal amount of the Term Loan shall be repaid in consecutive quarterly installments as follows: Payment Date Principal Amount ------------ ---------------- March 31, 1996 $1,250,000 June 30, 1996 $1,250,000 September 30, 1996 $1,250,000 December 31, 1996 $1,250,000 March 31, 1997 $1,750,000 June 30, 1997 $1,750,000 September 30, 1997 $1,750,000 December 31, 1997 $1,750,000 March 31, 1998 $2,500,000 June 30, 1998 $2,500,000 September 30, 1998 $2,500,000 December 31, 1998 $2,500,000 March 31, 1999 $2,750,000 June 30, 1999 $2,750,000 September 30, 1999 $2,750,000 December 31, 1999 $2,750,000 March 31, 2000 $3,000,000 June 30, 2000 $3,000,000 September 30, 2000 $3,000,000 Termination Date $3,000,000 (e) Interest. Subject to the provisions of Section 3.1, the Term Loan shall bear interest at a per annum rate equal to: (i) Base Rate Loans. During such periods as the Term Loan (or any portion thereof) shall consist of Base Rate Loans, the Base Rate. (ii) Eurodollar Loans. During such periods as the Term Loan (or any portion thereof) shall consist of Eurodollar Loans, the Eurodollar Rate plus the Applicable Margin. Interest on the Term Loan shall be payable in arrears on each applicable Interest Payment Date (or at such other times as may be specified herein). (f) Term Notes. The portion of the Term Loan made by each Lender shall be evidenced by a duly executed promissory note of the Borrower to each such Lender dated as of the Closing Date in an original principal amount equal to such Lender's Commitment Percentage of the Term Loan and substantially - 36 - in the form of Schedule 2.3(f) (such promissory note, as amended, modified, extended, renewed or replaced from time to time is hereinafter referred to individually as a "Term Note" and collectively, the "Term Notes"). SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES 3.1 Default Rate. Upon the occurrence, and during the continuance, of an Event of Default, the principal of and, to the extent permitted by law, interest on the Loans and any other amounts owing hereunder or under the other Credit Documents shall bear interest, payable on demand, at a per annum rate 2% greater than the rate which would otherwise be applicable (or if no rate is applicable, whether in respect of interest, fees or other amounts, then 2% greater than the Base Rate). 3.2 Extension and Conversion. Subject to the terms of Section 5.2, the Borrower shall have the option, on any Business Day, to extend existing Loans into a subsequent permissible Interest Period or to convert Loans into Loans of another type; provided, however, that (i) except as provided in Section 3.8, Eurodollar Loans may be converted into Base Rate Loans only on the last day of the Interest Period applicable thereto, (ii) Eurodollar Loans may be extended, and Base Rate Loans may be converted into Eurodollar Loans, only if no Default or Event of Default is in existence on the date of extension or conversion, (iii) Loans extended as, or converted into, Eurodollar Loans shall be subject to the terms of the definition of "Interest Period" set forth in Section 1.1 and shall be in such minimum amounts as provided in, with respect to Revolving Loans, Section 2.1(b)(ii) or, with respect to the Term Loan, 2.3(c), (iv) no more than 12 separate Eurodollar Loans shall be outstanding hereunder at any time, and (v) any request for extension or conversion of a Eurodollar Loan which shall fail to specify an Interest Period shall be deemed to be a request for an Interest Period of one month. Each such extension or conversion shall be effected by the Borrower by giving a Notice of Extension/Conversion (or telephone notice promptly confirmed in writing) to the Agent prior to 11:00 A.M. (Charlotte, North Carolina time) on the Business Day of, in the case of the conversion of a Eurodollar Loan into a Base Rate Loan and on the third Business Day prior to, in the case of the extension of a Eurodollar Loan as, or conversion of a Base Rate Loan into, a Eurodollar Loan, the date of the proposed extension or conversion, specifying the date of the proposed extension or conversion, the Loans to be so extended or converted, the types of Loans into which such Loans are to be converted and, if appropriate, the applicable Interest Periods with respect thereto. Each request for extension or conversion shall constitute a representation and warranty by the Borrower of the matters specified in subsections (ii), (iii), (iv) and (v) of Section 5.2(a). In the - 37 - event the Borrower fails to request extension or conversion of any Eurodollar Loan in accordance with this Section, or any such conversion or extension is not permitted or required by this Section, then such Loan shall be automatically converted into a Base Rate Loan at the end of the Interest Period applicable thereto. The Agent shall give each Lender notice as promptly as practicable of any such proposed extension or conversion affecting any Loan. 3.3 Prepayments. (a) Voluntary Prepayments. The Borrower shall have the right to prepay Loans in whole or in part from time to time without premium or penalty; provided, however, that (i) Eurodollar Loans may only be prepaid on three Business Days' prior written notice to the Agent and specifying the applicable Loans to be prepaid; (ii) any prepayment of Eurodollar Loans will be subject to Section 3.11; and (iii) each such partial prepayment of Loans shall be in a minimum principal amount of $2,000,000, in the case of Revolving Loans, and in a minimum principal amount of $1,000,000, in the case of Term Loans, and integral multiples of $1,000,000 in excess thereof. Subject to the foregoing terms, amounts prepaid hereunder shall be applied as the Borrower may elect; provided that if the Borrower fails to specify a voluntary prepayment then such prepayment shall be applied first to Term Loans and then to Revolving Loans, in each case first to Base Rate Loans and then to Eurodollar Loans in direct order of Interest Period maturities. (b) Mandatory Prepayments. (i) If at any time the sum of the aggregate amount of outstanding Revolving Loans plus LOC Obligations outstanding shall exceed the Revolving Committed Amount, the Borrower promises to prepay immediately the outstanding principal balance on the Revolving Loans in an amount sufficient to eliminate such excess. (ii) (A) If the aggregate price paid by the Borrower for the Stock Repurchase is less than $90,000,000, the Borrower immediately shall prepay the Revolving Loans and reduce the Revolving Commitments and prepay the Term Loan and reduce the Term Loan Commitments, pro rata in accordance with the respective Term Loan Committed Amount (or, if less, the outstanding principal amount of the Term Loan) and the amount of the Revolving Committed Amount, in an aggregate amount equal to the amount by which $90,000,000 exceeds such aggregate price; and (B) if the Stock Repurchase shall not have been consummated on or prior to February 15, 1996, the Borrower immediately shall prepay the Revolving Loans and reduce the Revolving Commitments and prepay the Term Loan and reduce the Term Loan Commitments, pro rata in accordance with the respective Term Loan Committed Amount (or, if less, the outstanding principal amount of the Term Loan) and the amount of the Revolving Committed Amount, in an aggregate amount equal to $90,000,000. - 38 - (iii) (A) Immediately upon the occurrence of any Excess Sale Event, the Borrower shall prepay the Loans in an amount equal to 50% of the Net Proceeds of the related asset sale not applied (or caused to be applied) by the Borrower during the related Application Period to the purchase, acquisition or construction of Alternative Assets as contemplated by the terms of Section 8.4(b)(v)(B)(1). (B) Immediately upon the occurrence of the Fresno Asset Sale, the Borrower shall prepay the Loans in an amount equal to 50% of the Net Proceeds thereof in excess of $900,000. (C) Any prepayment pursuant to this Section 3.3(b)(iii) shall be applied first to the Term Loan and then to Revolving Loans. (iv) To the extent that the aggregate cumulative amount of cash (including cash received in respect of non-cash consideration) Net Proceeds from Equity Transactions received by the Borrower or any of its Subsidiaries during any fiscal year exceeds $500,000, the Borrower shall, within 60 days of receipt of any such Net Proceeds at any time that the Consolidated Leverage Ratio as of the most recent fiscal quarter end with respect to which the Agent shall have received the Required Financial Information is greater than 2.50 to 1.00, prepay the Loans in an amount equal to 50% of the portion of such cash Net Proceeds exceeding $500,000 not applied by the Borrower within such 60 day period to pay the purchase price in connection with any acquisition permitted by the terms of Section 8.4(c). Any prepayment pursuant to this Section 3.3(b)(iv) shall be applied first to the Term Loan and then to Revolving Loans. (v) Immediately upon the receipt by the Borrower or any of its Subsidiaries of Net Proceeds from any Debt Transaction the Borrower shall prepay the Loans in an amount equal to 100% of all such Net Proceeds. Any prepayment pursuant to this Section 3.3(b)(v) shall be applied first to the Term Loan and then to Revolving Loans. (c) General. All prepayments made pursuant to this Section 3.3 shall be subject to Section 3.11, shall be applied first to Base Rate Loans and then to Eurodollar Loans in direct order, shortest to longest, of Interest Period maturities and shall be accompanied by accrued interest on the principal amount being prepaid to the date of prepayment and all other amounts due and payable hereunder with respect to such Loans. All prepayments of the Term Loan pursuant to this Section 3.3 shall be applied to principal installments thereof in inverse order of maturity. Amounts prepaid on the Revolving Loans may be reborrowed in accordance with the provisions hereof. Amounts prepaid on the Term Loan may not be reborrowed. - 39 - 3.4 Termination and Reduction of Revolving Committed Amount. (a) Voluntary Reductions. The Borrower may from time to time permanently reduce or terminate the Revolving Committed Amount in whole or in part (in minimum aggregate amounts of $5,000,000 or in integral multiples of $1,000,000 in excess thereof (or, if less, the full remaining amount of the then applicable Revolving Committed Amount)) upon three Business Days' prior written notice to the Agent; provided, however, no such termination or reduction shall be made which would reduce the Revolving Committed Amount to an amount less than the aggregate principal amount of outstanding Revolving Loans plus LOC Obligations outstanding. The Agent shall promptly notify each of the Lenders of receipt by the Agent of any notice from the Borrower pursuant to this Section 3.4(a). (b) Mandatory Reductions. (i) On any date that the Revolving Loans are required to be prepaid or the Revolving Commitments are required to be reduced pursuant to the terms of Section 3.3(b), the Revolving Committed Amount automatically shall be permanently reduced by the amount of such required prepayment. (ii) On any date that the Term Loan is required to be prepaid or the Term Loan Commitments are required to be reduced pursuant to the terms of Section 3.3(b)(ii), the Term Loan Committed Amount automatically shall be permanently reduced by the amount of such required prepayment. (iii) Without duplication of any reductions of the Term Loan Committed Amount effected pursuant to Section 3.3(b)(ii) or clause (b)(ii) of this Section 3.4, the Term Loan Committed Amount automatically shall be permanently reduced on February 15, 1996 by the amount by which the Term Loan Committed Amount exceeds the outstanding principal balance of the Term Loan (after giving effect to any requested advance of the Term Loan to be made on such date). (iv) On any date that the Borrower shall enter into a Permitted Receivables Financing, the Revolving Committed Amount automatically shall be permanently reduced by the facility commitment amount of such Permitted Receivables Financing. (c) Termination Date. The Commitments of the Lenders and the Issuing Lender shall automatically terminate on the Termination Date. - 40 - 3.5 Fees. (a) Facility Fee. In consideration of the Revolving Commitments of the Lenders hereunder, the Borrower agrees to pay to the Agent for the account of each Lender a fee (the "Facility Fee") on such Lender's Commitment Percentage of the Revolving Committed Amount (regardless of usage, but taking into account any permanent reductions in the Revolving Committed Amount) computed at a per annum rate of 15 basis points for each day during the applicable Facility Fee Calculation Period (hereinafter defined). The Facility Fee shall commence to accrue on the Closing Date and shall be due and payable in arrears on the fifteenth (15th) day of each January, April, July and October (and the Termination Date) for the immediately preceding fiscal quarter (or portion thereof) (each such fiscal quarter or portion thereof for which the Facility Fee is payable hereunder being herein referred to as an "Facility Fee Calculation Period"), beginning with the first of such dates to occur after the Closing Date. (b) Letter of Credit Fees. (i) Issuance Fee. In consideration of the issuance of Letters of Credit hereunder, the Borrower promises to pay to the Agent for the account of the Lenders a fee (the "Standby Letter of Credit Fee") on the average daily maximum amount available to be drawn under each such standby Letter of Credit computed at a per annum rate for each day from the date of issuance to the date of expiration equal to the Applicable Margin for the Standby Letter of Credit Fee. The Letter of Credit Fee will be payable quarterly in arrears on the last day of each March, June, September and December for the immediately preceding fiscal quarter (or a portion thereof). (ii) Trade Letter of Credit Drawing Fee. In consideration of the issuance of trade Letters of Credit hereunder, the Borrower promises to pay to the Agent for the account of the Lenders a fee (the "Trade Letter of Credit Fee") of 15 basis points on the amount of each drawing under any such trade Letter of Credit. The Trade Letter of Credit Fee will be payable on each date of drawing under a trade Letter of Credit. (iii) Issuing Lender Fees. In addition to the Standby Letter of Credit Fee payable pursuant to clause (i) above and the Trade Letter of Credit Fee payable pursuant to clause (ii) above, the Borrower promises to pay to the Issuing Lender for its own account without sharing by the other Lenders the letter of credit fronting and negotiation fees agreed to by the Borrower and the Issuing Lender from time to time and the customary charges from time to time of the Issuing Lender - 41 - with respect to the issuance, amendment, transfer, administration, cancellation and conversion of, and drawings under, such Letters of Credit (collectively, the "Issuing Lender Fees"). (c) Term Loan Unused Fee. In consideration of the Term Loan Commitments of the Lenders hereunder, the Borrower agrees to pay to the Agent for the account of each Lender a fee (the "Term Loan Unused Fee") on an amount equal to such Lender's Commitment Percentage of the Term Loan Committed Amount computed at a per annum rate of 15 basis points for each day on and after the Closing Date until the first to occur of (i) the date on which the Term Loan is fully advanced pursuant to the terms of Section 2.3 and (ii) the date on which the Term Loan Committed Amount is reduced to zero ($0) pursuant to the terms of Section 3.4(b). (d) Administrative Fees. The Borrower agrees to pay to the Agent, for its own account and for the account of NationsBanc Capital Markets, Inc., as applicable, the fees referred to in the Agent's Fee Letter (collectively, the "Agent's Fees"). 3.6 Capital Adequacy. If, after the date hereof, any Lender has determined that the adoption or the becoming effective of, or any change in, or any change by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof in the interpretation or administration of, any applicable law, rule or regulation regarding capital adequacy, or compliance by such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Lender's capital or assets as a consequence of its commitments or obligations hereunder to a level below that which such Lender could have achieved but for such adoption, effectiveness, change or compliance (taking into consideration such Lender's policies with respect to capital adequacy), then, upon notice and detailed explanation from such Lender to the Borrower, the Borrower shall be obligated to pay to such Lender such additional amount or amounts as will compensate such Lender for such reduction. Each determination by any such Lender of amounts owing under this Section shall, absent manifest error, be conclusive and binding on the parties hereto. 3.7 Inability To Determine Interest Rate. If prior to the first day of any Interest Period, the Agent shall have determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, the Agent shall give telecopy or telephonic notice thereof to the Borrower and the Lenders as soon as practicable thereafter. If such notice is given (x) any Eurodollar Loans requested to be made on the first day of such Interest Period shall be made as Base Rate Loans, (y) any Loans that were to have been converted on the first - 42 - day of such Interest Period to or continued as Eurodollar Loans shall be converted to or continued as Base Rate Loans and (z) any outstanding Eurodollar Loans shall be converted, on the first day of such Interest Period, to Base Rate Loans. Until such notice has been withdrawn by the Agent, no further Eurodollar Loans shall be made or continued as such, nor shall the Borrower have the right to convert Base Rate Loans to Eurodollar Loans. 3.8 Illegality. Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof occurring after the Closing Date shall make it unlawful for any Lender to make or maintain Eurodollar Loans as contemplated by this Credit Agreement, (a) such Lender shall promptly give written notice of such circumstances to the Borrower and the Agent (which notice shall be withdrawn whenever such circumstances no longer exist), (b) the commitment of such Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and convert a Base Rate Loan to Eurodollar Loans shall forthwith be canceled and, until such time as it shall no longer be unlawful for such Lender to make or maintain Eurodollar Loans, such Lender shall then have a commitment only to make a Base Rate Loan when a Eurodollar Loan is requested and (c) such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans on the respective last days or the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a Eurodollar Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to Section 3.11. 3.9 Requirements of Law. If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof applicable to any Lender, or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority, in each case made subsequent to the Closing Date (or, if later, the date on which such Lender becomes a Lender): (a) shall subject such Lender to any tax of any kind whatsoever with respect to any Letter of Credit, any Eurodollar Loans made by it or its obligation to make Eurodollar Loans, or change the basis of taxation of payments to such Lender in respect thereof (except for Non- Excluded Taxes covered by Section 3.10 (including Non- Excluded Taxes imposed solely by reason of any failure of such Lender to comply with its obligations under Section 3.10(b)) and changes in taxes measured by or imposed upon the overall net income, or franchise tax (imposed in lieu of such net income tax), of such Lender or its applicable lending office, branch, or any affiliate thereof); - 43 - (b) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender which is not otherwise included in the determination of the Eurodollar Rate hereunder; or (c) shall impose on such Lender any other condition (excluding any tax of any kind whatsoever); and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar Loans or issuing or participating in Letters of Credit or to reduce any amount receivable hereunder in respect thereof, then, in any such case, upon notice to the Borrower from such Lender, through the Agent, in accordance herewith, the Borrower shall be obligated to promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable, provided that, in any such case, the Borrower may elect to convert the Eurodollar Loans made by such Lender hereunder to Base Rate Loans by giving the Agent at least one Business Day's notice of such election, in which case the Borrower shall promptly pay to such Lender, upon demand, without duplication, such amounts, if any, as may be required pursuant to Section 3.11. If any Lender becomes entitled to claim any additional amounts pursuant to this subsection, it shall provide prompt notice thereof to the Borrower, through the Agent, certifying (x) that one of the events described in this paragraph (a) has occurred and describing in reasonable detail the nature of such event, (y) as to the increased cost or reduced amount resulting from such event and (z) as to the additional amount demanded by such Lender and a reasonably detailed explanation of the calculation thereof. Such a certificate as to any additional amounts payable pursuant to this subsection submitted by such Lender, through the Agent, to the Borrower shall be conclusive and binding on the parties hereto in the absence of manifest error. This covenant shall survive the termination of this Credit Agreement and the payment of the Loans and all other amounts payable hereunder. 3.10 Taxes. (a) Except as provided below in this subsection, all payments made by the Borrower under this Credit Agreement and any Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any court, or governmental body, agency or other official, excluding taxes measured by or imposed upon the overall net income of any Lender or its applicable lending office, or any branch or affiliate thereof, and - 44 - all franchise taxes, branch taxes, taxes on doing business or taxes on the overall capital or net worth of any Lender or its applicable lending office, or any branch or affiliate thereof, in each case imposed in lieu of net income taxes, imposed: (i) by the jurisdiction under the laws of which such Lender, applicable lending office, branch or affiliate is organized or is located, or in which its principal executive office is located, or any nation within which such jurisdiction is located or any political subdivision thereof; or (ii) by reason of any connection between the jurisdiction imposing such tax and such Lender, applicable lending office, branch or affiliate other than a connection arising solely from such Lender having executed, delivered or performed its obligations, or received payment under or enforced, this Credit Agreement or any Notes. If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts payable to the Agent or any Lender hereunder or under any Notes, (A) the amounts so payable to the Agent or such Lender shall be increased to the extent necessary to yield to the Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Credit Agreement and any Notes, provided, however, that the Borrower shall be entitled to deduct and withhold any Non-Excluded Taxes and shall not be required to increase any such amounts payable to any Lender that is not organized under the laws of the United States of America or a state thereof if such Lender fails to comply with the requirements of paragraph (b) of this subsection whenever any Non-Excluded Taxes are payable by the Borrower, and (B) as promptly as possible thereafter the Borrower shall send to the Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to the Agent the required receipts or other required documentary evidence, the Borrower shall indemnify the Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the Agent or any Lender as a result of any such failure. The agreements in this subsection shall survive the termination of this Credit Agreement and the payment of the Loans and all other amounts payable hereunder. (b) Each Lender that is not incorporated under the laws of the United States of America or a state thereof shall: (X)(i) on or before the date of any payment by the Borrower under this Credit Agreement or Notes to such Lender, deliver to the Borrower and the Agent (A) two (2) duly completed copies of United States Internal Revenue Service - 45 - Form 1001 or 4224, or successor applicable form, as the case may be, certifying that it is entitled to receive payments under this Credit Agreement and any Notes without deduction or withholding of any United States federal income taxes and (B) an Internal Revenue Service Form W-8 or W-9, or successor applicable form, as the case may be, certifying that it is entitled to an exemption from United States backup withholding tax; (ii) deliver to the Borrower and the Agent two (2) further copies of any such form or certification on or before the date that any such form or certification expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower; and (iii) obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by the Borrower or the Agent; or (Y) in the case of any such Lender that is not a "bank" within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (i) represent to the Borrower (for the benefit of the Borrower and the Agent) that it is not a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (ii) agree to furnish to the Borrower on or before the date of any payment by the Borrower, with a copy to the Agent two (2) accurate and complete original signed copies of Internal Revenue Service Form W-8, or successor applicable form certifying to such Lender's legal entitlement at the date of such certificate to an exemption from U.S. withholding tax under the provisions of Section 881(c) of the Internal Revenue Code with respect to payments to be made under this Credit Agreement and any Notes (and to deliver to the Borrower and the Agent two (2) further copies of such form on or before the date it expires or becomes obsolete and after the occurrence of any event requiring a change in the most recently provided form and, if necessary, obtain any extensions of time reasonably requested by the Borrower or the Agent for filing and completing such forms), and (iii) agree, to the extent legally entitled to do so, upon reasonable request by the Borrower, to provide to the Borrower (for the benefit of the Borrower and the Agent) such other forms as may be reasonably required in order to establish the legal entitlement of such Lender to an exemption from withholding with respect to payments under this Credit Agreement and any Notes; unless in any such case any change in treaty, law or regulation has occurred after the date such Person becomes a Lender hereunder which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it - 46 - and such Lender so advises the Borrower and the Agent. Each Person that shall become a Lender or a participant of a Lender pursuant to subsection 11.3 shall, upon the effectiveness of the related transfer, be required to provide all of the forms, certifications and statements required pursuant to this subsection, provided that in the case of a participant of a Lender the obligations of such participant of a Lender pursuant to this subsection (b) shall be determined as if the participant of a Lender were a Lender except that such participant of a Lender shall furnish all such required forms, certifications and statements to the Lender from which the related participation shall have been purchased. 3.11 Indemnity. The Borrower promises to indemnify each Lender and to hold each Lender harmless from any loss or expense which such Lender may sustain or incur (other than through such Lender's gross negligence or willful misconduct) as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar Loans after the Borrower has given a notice requesting the same in accordance with the provisions of this Credit Agreement, (b) default by the Borrower in making any prepayment of a Eurodollar Loan after the Borrower has given a notice thereof in accordance with the provisions of this Credit Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which is not the last day of an Interest Period with respect thereto. With respect to Eurodollar Loans, such indemnification may include an amount equal to the excess, if any, of (i) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of the applicable Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Eurodollar Loans provided for herein (excluding, however, the Applicable Margin included therein, if any) over (ii) the amount of interest (as reasonably determined by such Lender) which would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank Eurodollar market. The covenants of the Borrower set forth in this Section 3.11 shall survive the termination of this Credit Agreement and the payment of the Loans and all other amounts payable hereunder. 3.12 Pro Rata Treatment. Except to the extent otherwise provided herein: (a) Loans. Each Revolving Loan, each payment or prepayment of principal of any Revolving Loan or reimbursement obligations arising from drawings under Letters of Credit, each payment of interest on the Revolving Loans or reimbursement obligations arising from drawings under Letters of Credit, each payment of Facility Fees, each payment - 47 - of the Standby Letter of Credit Fee, each payment of the Trade Letter of Credit Fee, each reduction of the Revolving Committed Amount and each conversion or extension of any Revolving Loan, shall be allocated pro rata among the Lenders in accordance with the respective principal amounts of their outstanding Loans and Participation Interests. (b) Advances. Unless the Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its Commitment Percentage of such borrowing available to the Agent, the Agent may assume that such Lender is making such amount available to the Agent, and the Agent may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If such amount is not made available to the Agent by such Lender within the time period specified therefor hereunder, such Lender shall pay to the Agent, on demand, such amount with interest thereon at a rate equal to the Federal Funds Rate for the period until such Lender makes such amount immediately available to the Agent. A certificate of the Agent submitted to any Lender with respect to any amounts owing under this subsection shall be conclusive in the absence of manifest error. If such Lender's Commitment Percentage of such borrowing is not made available to the Agent by such Lender within two Business Days of the date of the related borrowing, (i) the Agent shall notify the Borrower of the failure of such Lender to make such amount available to the Agent and the Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to Base Rate Loans hereunder, on demand, from the Borrower and (ii) then the Borrower may, without waiving any rights it may have against such Lender, borrow a like amount on an unsecured basis from any commercial bank for a period ending on the date upon which such Lender does in fact make such borrowing available, provided that at the time such borrowing is made and at all times while such amount is outstanding the Borrower would be permitted to borrow such amount pursuant to Section 2.1 of this Credit Agreement. 3.13 Sharing of Payments. The Lenders agree among themselves that, in the event that any Lender shall obtain payment in respect of any Loan, LOC Obligations or any other obligation owing to such Lender under this Credit Agreement through the exercise of a right of setoff, banker's lien or counterclaim, or pursuant to a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, in excess of its pro rata share of such payment as provided for in this Credit Agreement, such Lender shall promptly purchase from the other Lenders a participation in such Loans, LOC Obligations and other obligations in such amounts, and make such other adjustments from time to time, as shall be equitable to the end that all Lenders share such payment in accordance with their respective ratable shares - 48 - as provided for in this Credit Agreement. The Lenders further agree among themselves that if payment to a Lender obtained by such Lender through the exercise of a right of setoff, banker's lien, counterclaim or other event as aforesaid shall be rescinded or must otherwise be restored, each Lender which shall have shared the benefit of such payment shall, by repurchase of a participation theretofore sold, return its share of that benefit (together with its share of any accrued interest payable with respect thereto) to each Lender whose payment shall have been rescinded or otherwise restored. The Borrower agrees that any Lender so purchasing such a participation may, to the fullest extent permitted by law, exercise all rights of payment, including setoff, banker's lien or counterclaim, with respect to such participation as fully as if such Lender were a holder of such Loan, LOC Obligations or other obligation in the amount of such participation. Except as otherwise expressly provided in this Credit Agreement, if any Lender or the Agent shall fail to remit to the Agent or any other Lender an amount payable by such Lender or the Agent to the Agent or such other Lender pursuant to this Credit Agreement on the date when such amount is due, such payments shall be made together with interest thereon for each date from the date such amount is due until the date such amount is paid to the Agent or such other Lender at a rate per annum equal to the Federal Funds Rate. If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section 3.13 applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders under this Section 3.13 to share in the benefits of any recovery on such secured claim. 3.14 Place and Manner of Payments. Except as otherwise specifically provided herein, all payments hereunder shall be made to the Agent in dollars in immediately available funds, without offset, deduction, counterclaim or withholding of any kind, at its offices at the Agent's office specified in Schedule 2.1(a) not later than 2:00 P.M. (Charlotte, North Carolina time) on the date when due. Payments received after such time shall be deemed to have been received on the next succeeding Business Day. The Agent may (but shall not be obligated to) debit the amount of any such payment which is not made by such time to any ordinary deposit account of the Borrower maintained with the Agent (with notice to the Borrower). The Borrower shall, at the time it makes any payment under this Credit Agreement, specify to the Agent the Loans, LOC Obligations, Fees, interest or other amounts payable by the Borrower hereunder to which such payment is to be applied (and in the event that it fails so to specify, or if such application would be inconsistent with the terms hereof, the Agent shall distribute such payment to the Lenders in such manner as the Agent may determine to be appropriate in respect of obligations owing by the Borrower hereunder, subject to the terms of Section 3.12(a)). The Agent will distribute such payments to such Lenders, if any such payment is received prior to 12:00 Noon (Charlotte, North Carolina time) on a Business Day in like funds - 49 - as received prior to the end of such Business Day and otherwise the Agent will distribute such payment to such Lenders on the next succeeding Business Day. Whenever any payment hereunder shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day (subject to accrual of interest and Fees for the period of such extension), except that in the case of Eurodollar Loans, if the extension would cause the payment to be made in the next following calendar month, then such payment shall instead be made on the next preceding Business Day. Except as expressly provided otherwise herein, all computations of interest and fees shall be made on the basis of actual number of days elapsed over a year of 360 days, except with respect to computation of interest on Base Rate Loans which (unless the Base Rate is determined by reference to the Federal Funds Rate) shall be calculated based on a year of 365 or 366 days, as appropriate. Interest shall accrue from and include the date of borrowing, but exclude the date of payment. 3.15 Mandatory Assignment. In the event any Lender delivers to the Borrower any notice in accordance with Section 3.6 or any Lender requests payment by the Borrower of any additional amounts pursuant to Section 3.10, then, provided that no Default or Event of Default has occurred and is continuing at such time, the Borrower may, at its own expense (such expense to include any transfer fee payable to the Agent under Section 11.3(b)), and in its sole discretion require such Lender to transfer and assign in whole or in part, without recourse (in accordance with and subject to the terms and conditions of Section 11.3(b)), all or part of its interests, rights and obligations under this Credit Agreement to an Eligible Assignee which shall assume such assigned obligations, provided that (i) such assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority and (ii) the Borrower or such assignee shall have paid to the assigning Lender in immediately available funds the principal of and interest accrued to the date of such payment on the Loans made by it hereunder and all other amounts owed to it hereunder. SECTION 4 GUARANTY 4.1 The Guarantee. Each of the Guarantors hereby jointly and severally guarantees to each Lender and the Agent as hereinafter provided the prompt payment of the Borrower's Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration, a mandatory cash collateralization or otherwise) strictly in accordance with the terms thereof. The Guarantors hereby further agree that if any of the Borrower's Obligations are not paid in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration, as mandatory cash collateralization or otherwise), the Guarantors will, jointly and severally, promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Borrower's Obligations, the same will be - 50 - promptly paid in full when due (whether at extended maturity, as a mandatory prepayment, by acceleration or otherwise) in accordance with the terms of such extension or renewal. Notwithstanding any provision to the contrary contained herein or in any other of the Credit Documents, to the extent the obligations of a Guarantor shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state or federal law relating to fraudulent conveyances or transfers) then the obligations of each Guarantor hereunder shall be limited to the maximum amount that is permissible under applicable law (whether federal or state and including, without limitation, the Bankruptcy Code). 4.2 Obligations Unconditional. The obligations of the Guarantors under Section 4.1 hereof are joint and several, absolute and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of any of the Credit Documents, or any other agreement or instrument referred to therein, or any substitution, release or exchange of any other guarantee of or security for any of the Borrower's Obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this Section 4.2 that the obligations of the Guarantors hereunder shall be absolute and unconditional under any and all circumstances. Each Guarantor agrees that such Guarantor shall have no right of subrogation, indemnity, reimbursement or contribution against the Borrower or any other Guarantor of the Borrower's Obligations for amounts paid under this Guaranty until such time as the Lenders have been paid in full, all Commitments under the Credit Agreement have been terminated and no Person or Governmental Authority shall have any right to request any return or reimbursement of funds from the Lenders in connection with monies received under the Credit Documents. Without limiting the generality of the foregoing, it is agreed that, to the fullest extent permitted by law, the occurrence of any one or more of the following shall not alter or impair the liability of any Guarantor hereunder which shall remain absolute and unconditional as described above: (i) at any time or from time to time, without notice to any Guarantor, the time for any performance of or compliance with any of the Borrower's Obligations shall be extended, or such performance or compliance shall be waived; (ii) any of the acts mentioned in any of the provisions of any of the Credit Documents or any other agreement or instrument referred to therein shall be done or omitted; (iii) the maturity of any of the Borrower's Obligations shall be accelerated, or any of the Borrower's Obligations shall be modified, supplemented or amended in any respect, or any right under any of the - 51 - Credit Documents or any other agreement or instrument referred to therein shall be waived or any other guarantee of any of the Borrower's Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with; (iv) any Lien granted to, or in favor of, the Agent or any Lender or Lenders as security for any of the Borrower's Obligations shall fail to attach or be perfected; or (v) any of the Borrower's Obligations shall be determined to be void or voidable (including, without limitation, for the benefit of any creditor of any Guarantor) or shall be subordinated to the claims of any Person (including, without limitation, any creditor of any Guarantor). With respect to its obligations hereunder, each Guarantor hereby expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that the Agent or any Lender exhaust any right, power or remedy or proceed against any Person under any of the Credit Documents or any other agreement or instrument referred to therein, or against any other Person under any other guarantee of, or security for, any of the Borrower's Obligations. 4.3 Reinstatement. The obligations of the Guarantors under this Section 4 shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of any Person in respect of the Borrower's Obligations is rescinded or must be otherwise restored by any holder of any of the Borrower's Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and each Guarantor agrees that it will indemnify the Agent and each Lender on demand for all reasonable costs and expenses (including, without limitation, fees and expenses of counsel) incurred by the Agent or such Lender in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law. 4.4 Certain Additional Waivers. Without limiting the generality of the provisions of this Section 4, each Guarantor hereby specifically waives the benefits of N.C. Gen. Stat. ss.ss. 26- 7 through 26-9, inclusive. Each Guarantor further agrees that such Guarantor shall have no right of recourse to security for the Borrower's Obligations. 4.5 Remedies. The Guarantors agree that, to the fullest extent permitted by law, as between the Guarantors, on the one hand, and the Agent and the Lenders, on the other hand, the Borrower's Obligations may be declared to be forthwith due and payable as provided in Section 9.2 hereof (and shall be deemed to have become automatically due and payable in the circumstances provided in - 52 - said Section 9.2) for purposes of Section 4.1 hereof notwithstanding any stay, injunction or other prohibition preventing such declaration (or preventing the Borrower's Obligations from becoming automatically due and payable) as against any other Person and that, in the event of such declaration (or the Borrower's Obligations being deemed to have become automatically due and payable), the Borrower's Obligations (whether or not due and payable by any other Person) shall forthwith become due and payable by the Guarantors for purposes of said Section 4.1. 4.6 Rights of Contribution. The Guarantors hereby agree, as among themselves, that if any Guarantor shall become an Excess Funding Guarantor (as defined below), each other Guarantor shall, on demand of such Excess Funding Guarantor (but subject to the next sentence hereof and to subsection (b) below), pay to such Excess Funding Guarantor an amount equal to such Guarantor's Pro Rata Share (as defined below and determined, for this purpose, without reference to the properties, assets, liabilities and debts of such Excess Funding Guarantor) of such Excess Payment (as defined below). The payment obligation of any Guarantor to any Excess Funding Guarantor under this Section 4.6 shall be subordinate and subject in right of payment to the prior payment in full of the obligations of such Guarantor under the other provisions of this Section 4, and such Excess Funding Guarantor shall not exercise any right or remedy with respect to such excess until payment and satisfaction in full of all of such obligations. For purposes hereof, (i) "Excess Funding Guarantor" shall mean, in respect of any obligations arising under the other provisions of this Section 4 (hereafter, the "Guaranteed Obligations"), a Guarantor that has paid an amount in excess of its Pro Rata Share of the Guaranteed Obligations; (ii) "Excess Payment" shall mean, in respect of any Guaranteed Obligations, the amount paid by an Excess Funding Guarantor in excess of its Pro Rata Share of such Guaranteed Obligations; and (iii) "Pro Rata Share", for the purposes of this Section 4.6, shall mean, for any Guarantor, the ratio (expressed as a percentage) of (a) the amount by which the aggregate present fair saleable value of all of its assets and properties exceeds the amount of all debts and liabilities of such Guarantor (including contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of such Guarantor hereunder) to (b) the amount by which the aggregate present fair saleable value of all assets and other properties of the Borrower and all of the Guarantors exceeds the amount of all of the debts and liabilities (including contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of the Borrower and the Guarantors hereunder) of the Borrower and all of the Guarantors, all as of the Closing Date (if any Guarantor becomes a party hereto subsequent to the Closing Date, then for the purposes of this Section 4.6 such subsequent Guarantor shall be deemed to have been a Guarantor as of the Closing Date and the information pertaining to, and only pertaining to, such Guarantor as of the date such Guarantor became a Guarantor shall be deemed true as of the Closing Date). - 53 - 4.7 Continuing Guarantee. The guarantee in this Section 4 is a continuing guarantee, and shall apply to all Borrower's Obligations whenever arising. SECTION 5 CONDITIONS 5.1 Closing Conditions. The obligation of the Lenders to enter into this Credit Agreement and to make the initial Loans (including the initial advances on the Term Loan) or the Issuing Lender to issue the initial Letter of Credit, whichever shall occur first, shall be subject to satisfaction of the following conditions (in form and substance acceptable to the Lenders): (a) The Agent shall have received original counterparts of this Credit Agreement executed by each of the parties hereto; (b) The Agent shall have received an appropriate original Revolving Note for each Lender, executed by the Borrower; (c) The Agent shall have received an appropriate original Term Note for each Lender, executed by the Borrower; (d) The Agent shall have received all documents it may reasonably request relating to the existence and good standing of each of the Credit Parties, the corporate or other necessary authority for and the validity of the Credit Documents, and any other matters relevant thereto, all in form and substance reasonably satisfactory to the Agent; (e) The Agent shall have received a certificate executed by the chief financial officer of the Borrower as of the Closing Date stating that immediately after giving effect to this Credit Agreement and the other Credit Documents, (i) the Borrower on a consolidated basis is Solvent, (ii) no Default or Event of Default exists and (iii) the representations and warranties set forth in Section 6 are true and correct in all material respects; (f) The Agent shall have received a legal opinion of Drinker Biddle & Reath, counsel for the Credit Parties, dated as of the Closing Date and substantially in the form of Schedule 5.1(f); (g) The Agent shall have received a legal opinion of special Alabama counsel for Bevis, dated as of the Closing Date and substantially in the form of Schedule 5.1(g); (h) The Agent shall have received a certificate in form and substance satisfactory to the Agent executed by the chief financial - 54 - officer of the Borrower as of the Closing Date stating that (i) there does not exist any action, suit or proceeding, pending or, to the best knowledge of such Person, threatened, in which there is a reasonable possibility of an adverse decision, which would materially adversely affect the ability of the Credit Parties taken as a whole to perform their obligations under the Credit Documents or the ability of the Lenders to exercise their rights thereunder; (ii) none of the Domestic Subsidiaries of the Borrower has any assets or liabilities as of December 3, 1995 or any cash flows for the 12 month period ended as of December 3, 1995 other than as set forth on a schedule attached to such certificate, except for (A) assets and cash flows of Bevis, Seal and Hunt Holding, (B) liabilities of Bevis or Seal to trade creditors in an aggregate amount for both of such Persons not exceeding $7,000,000, (C) liabilities of Bevis and Seal to the Borrower in respect of intercompany loans and advances and (D) liabilities of Hunt Europe to the Borrower in respect of intercompany loans and advances in an aggregate principal amount not to exceed $5,000,000; and (iii) immediately after giving effect to this Credit Agreement, the other Credit Documents and all other transactions contemplated by this Credit Agreement to occur on such date, (A) each of the Credit Parties is Solvent, (B) no Default or Event of Default exists and (C) the representations and warranties set forth in Section 6 are true and correct in all material respects; (i) The Agent shall have received copies of insurance policies or certificates of insurance of the Credit Parties evidencing liability and casualty insurance meeting the requirements of the Credit Documents; (j) The Agent shall have received, for its own account and for the accounts of the Lenders, all fees and expenses required by this Credit Agreement or any other Credit Document to be paid on or before the Closing Date; and (k) The Agent shall have received such other documents, agreements or information which may be reasonably requested by the Agent. 5.2 Conditions to all Extensions of Credit. The obligations of each Lender to make, convert or extend any Loan (including advances on the Term Loan) and of the Issuing Lender to issue or extend Letters of Credit (including the initial Loans (and the initial advance of the Term Loan) and the initial Letter of Credit) are subject to satisfaction of the following conditions in addition to satisfaction on the Closing Date of the conditions set forth in Section 5.1: (i) The Borrower shall have delivered (A) in the case of any Revolving Loan or any portion of the Term Loan, an appropriate Notice of Borrowing or Notice of Extension/Conversion or (B) in the case of any Letter of - 55 - Credit, the Issuing Lender shall have received an appropriate request for issuance in accordance with the provisions of Section 2.2(b); (ii) The representations and warranties set forth in Section 6 shall be, subject to the limitations set forth therein, true and correct in all material respects as of such date (except for those which expressly relate to an earlier date); (iii) There shall not have been commenced against the Borrower or any Guarantor an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or any case, proceeding or other action for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property or for the winding up or liquidation of its affairs, and such involuntary case or other case, proceeding or other action shall remain undismissed, undischarged or unbonded; (iv) No Default or Event of Default shall exist and be continuing either prior to or after giving effect thereto; (v) No material adverse change shall have occurred since November 27, 1994 in the condition (financial or otherwise), business, management or prospects of the Borrower and its Subsidiaries taken as a whole; and (vi) Immediately after giving effect to the making of such Loan (and the application of the proceeds thereof) or to the issuance of such Letter of Credit, as the case may be, (A) the sum of the aggregate principal amount of outstanding Revolving Loans plus LOC Obligations outstanding shall not exceed the aggregate Revolving Committed Amount, and (B) the LOC Obligations shall not exceed the LOC Committed Amount. The delivery of each Notice of Borrowing, each Notice of Extension/Conversion and each request for a Letter of Credit pursuant to Section 2.2(b) shall constitute a representation and warranty by the Borrower of the correctness of the matters specified in subsections (ii), (iii), (iv), (v) and (vi) above. SECTION 6 REPRESENTATIONS AND WARRANTIES The Credit Parties hereby represent to the Agent and each Lender that: - 56 - 6.1 Financial Condition. (a) The audited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as of November 27, 1994 and the audited consolidated statements of earnings and statements of cash flows for the years ended November 28, 1993 and November 27, 1994 have heretofore been furnished to each Lender. Such financial statements (including the notes thereto) (i) have been audited by Coopers & Lybrand, (ii) have been prepared in accordance with GAAP consistently, applied throughout the periods covered thereby and (iii) present fairly in all material respects (on the basis disclosed in the footnotes to such financial statements) the consolidated financial position, results of operations and cash flows of the Borrower and its consolidated Subsidiaries as of such date and for such periods. The unaudited interim balance sheets of the Borrower and its consolidated Subsidiaries as at the end of, and the related unaudited interim statements of earnings and of cash flows for, each fiscal quarterly period (other than the fourth quarter of fiscal year 1995) ended after November 27, 1994 and prior to the Closing Date have heretofore been furnished to each Lender. Such interim financial statements for each such quarterly period, (i) have been prepared in accordance with the requirements of the Securities and Exchange Commission for Form 10-Q and (ii) present fairly in all material respects (on the basis disclosed in the footnotes to such financial statements) the consolidated financial position, results of operations and cash flows of the Borrower and its consolidated Subsidiaries as of such date and for such periods. During the period from November 27, 1994 to and including the Closing Date, there has been no sale, transfer or other disposition by the Borrower or any of its Subsidiaries of any material part of the business or property of the Borrower and its consolidated Subsidiaries, taken as a whole, and no purchase or other acquisition by any of them of any business or property (including any capital stock of any other person) material in relation to the consolidated financial condition of the Borrower and its consolidated Subsidiaries, taken as a whole, in each case, which, is not reflected in the foregoing financial statements or in the notes thereto and has not otherwise been disclosed in writing to the Lenders on or prior to the Closing Date. (b) The projected balance sheets and income statements of the Borrower and its consolidated Subsidiaries for fiscal years 1996, 1997, 1998, 1999 and 2000, copies of which have heretofore been furnished to each Lender, are based upon reasonable assumptions made known to the Lenders and upon information not known to be incorrect or misleading in any material respect. 6.2 No Change. Since November 27, 1994, (a) there has been no development or event relating to or affecting the Borrower or any of its Subsidiaries which has had or would be reasonably expected to have a Material Adverse Effect and (b) except as permitted under this Credit Agreement, no dividends or other distributions have been declared, paid or made upon the capital stock or other equity interest in the Borrower or any of its Subsidiaries nor, except as otherwise permitted under this Credit Agreement, - 57 - has any of the capital stock or other equity interest in the Borrower or any of its Subsidiaries been redeemed, retired, purchased or otherwise acquired for value by such Person. 6.3 Organization; Existence; Compliance with Law. Each of the Borrower and its Subsidiaries (a) is a corporation duly organized, validly existing and is in good standing under the laws of the jurisdiction of its incorporation or organization, (b) has the corporate or other necessary power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, except to the extent that the failure to have such legal right would not be reasonably expected to have a Material Adverse Effect, (c) is duly qualified as a foreign entity and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, other than in such jurisdictions where the failure to be so qualified and in good standing would not be reasonably expected to have a Material Adverse Effect, and (d) is in compliance with all material Requirements of Law, except to the extent that the failure to comply therewith would not, in the aggregate, be reasonably expected to have a Material Adverse Effect. 6.4 Power; Authorization; Enforceable Obligations. Each of the Credit Parties has the corporate or other necessary power and authority, and the legal right, to make, deliver and perform the Credit Documents to which it is a party, and in the case of the Borrower, to borrow hereunder, and has taken all necessary corporate action to authorize the borrowings on the terms and conditions of this Credit Agreement and to authorize the execution, delivery and performance of the Credit Documents to which it is a party. No consent or authorization of, filing with, notice to or other similar act by or in respect of, any Governmental Authority or any other Person is required to be obtained or made by or on behalf of any Credit Party in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of the Credit Documents to which such Credit Party is a party, except for consents, authorizations, notices and filings described in Schedule 6.4, all of which have been obtained or made or have the status described in such Schedule 6.4. This Credit Agreement has been, and each other Credit Document to which any Credit Party is a party will be, duly executed and delivered on behalf of the Credit Parties. This Credit Agreement constitutes, and each other Credit Document to which any Credit Party is a party when executed and delivered will constitute, a legal, valid and binding obligation of such Credit Party enforceable against such party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). - 58 - 6.5 No Legal Bar. The execution, delivery and performance of the Credit Documents by the Credit Parties, the borrowings hereunder and the use of the proceeds thereof (a) will not violate any Requirement of Law or contractual obligation of the Borrower or any of its Subsidiaries in any respect that would reasonably be expected to have a Material Adverse Effect, (b) will not result in, or require, the creation or imposition of any Lien on any of the properties or revenues of the Borrower or any of its Subsidiaries pursuant to any such Requirement of Law or contractual obligation and (c) will not violate or conflict with any provision of any Credit Party's articles of incorporation or by-laws. 6.6 No Material Litigation. No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the best knowledge of the Credit Parties, threatened by or against the Borrower or any of its Subsidiaries or against any of their respective properties or revenues which (a) relates to any of the Credit Documents or any of the transactions contemplated hereby or thereby or (b) would be reasonably expected to have a Material Adverse Effect. 6.7 No Default. Neither the Borrower nor any of its Subsidiaries is in default under or with respect to any of its contractual obligations in any respect which would be reasonably expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing. 6.8 Ownership of Property; Liens. Each of the Borrower and its Subsidiaries has good record and marketable title in fee simple to, or a valid leasehold interest in, all its material real property, and good title to, or a valid leasehold interest in, all its other material property, and none of such property is subject to any Lien, except for Permitted Liens. 6.9 Intellectual Property. Each of the Borrower and its Subsidiaries owns, or has the legal right to use, all United States trademarks, tradenames, copyrights, technology, know-how and processes necessary for each of them to conduct its business as currently conducted (the "Intellectual Property") except for those the failure to own or have such legal right to use would not be reasonably expected to have a Material Adverse Effect. Except as provided on Schedule 6.9, no claim has been asserted and is pending by any Person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does any Credit Party know of any such claim, and the use of such Intellectual Property by the Borrower or any of its Subsidiaries does not infringe on the rights of any Person, except for such claims and infringements that in the aggregate, would not be reasonably expected to have a Material Adverse Effect. 6.10 No Burdensome Restrictions. Except as previously disclosed in writing to the Lenders on or prior to the Closing Date, no Requirement of Law or contractual obligation of the Borrower or any of its Subsidiaries would be reasonably expected to have a Material Adverse Effect. - 59 - 6.11 Taxes. Each of the Borrower and its Subsidiaries has filed or caused to be filed all United States federal income tax returns and all other material tax returns which, to the best knowledge of the Credit Parties, are required to be filed and has paid (a) all taxes shown to be due and payable on said returns or (b) all taxes shown to be due and payable on any assessments of which it has received notice made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any (i) taxes, fees or other charges with respect to which the failure to pay, in the aggregate, would not have a Material Adverse Effect or (ii) taxes, fees or other charges the amount or validity of which are currently being contested and with respect to which reserves in conformity with GAAP have been provided on the books of such Person), and no tax Lien has been filed, and, to the best knowledge of the Credit Parties, no claim is being asserted, with respect to any such tax, fee or other charge. 6.12 ERISA. Except as set forth in Schedule 6.12 attached hereto or as could not reasonably be expected to have a Material Adverse Effect: (a) During the five-year period prior to the date on which this representation is made or deemed made: (i) no Termination Event has occurred, and, to the best knowledge of the Credit Parties, no event or condition has occurred or exists as a result of which any Termination Event could reasonably be expected to occur, with respect to any Plan; (ii) no "accumulated funding deficiency," as such term is defined in Section 302 of ERISA and Section 412 of the Code, whether or not waived, has occurred with respect to any Plan; (iii) each Plan has been maintained, operated, and funded in compliance with its own terms and in material compliance with the applicable provisions of ERISA, the Code, and any other applicable federal or state laws; and (iv) no lien in favor of the PBGC or a Plan has arisen or is reasonably likely to arise on account of any Plan. (b) The actuarial present value of all "benefit liabilities" under each Single Employer Plan (determined within the meaning of Section 401(a)(2) of the Code, utilizing the actuarial assumptions used to fund such Plans), whether or not vested, did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the current value of the assets of such Plan allocable to such accrued liabilities. (c) Neither the Borrower, any of the Subsidiaries of the Borrower nor any ERISA Affiliate has incurred, or, to the best knowledge of the Credit Parties, could be reasonably expected to incur, any withdrawal liability under ERISA to any Multiemployer Plan or Multiple Employer Plan. Neither the Borrower, any of the Subsidiaries of the Borrower nor any ERISA Affiliate would become - 60 - subject to any withdrawal liability under ERISA if the Borrower, any of the Subsidiaries of the Borrower or any ERISA Affiliate were to withdraw completely from all Multiemployer Plans and Multiple Employer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made. Neither the Borrower, any of the Subsidiaries of the Borrower nor any ERISA Affiliate has received any notification that any Multiemployer Plan is in reorganization (within the meaning of Section 4241 of ERISA), is insolvent (within the meaning of Section 4245 of ERISA), or has been terminated (within the meaning of Title IV of ERISA), and no Multiemployer Plan is, to the best knowledge of the Credit Parties, reasonably expected to be in reorganization, insolvent, or terminated. (d) No prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the Code) or breach of fiduciary responsibility has occurred with respect to a Plan which has subjected or may subject the Borrower, any of the Subsidiaries of the Borrower or any ERISA Affiliate to any liability under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any agreement or other instrument pursuant to which the Borrower, any of the Subsidiaries of the Borrower or any ERISA Affiliate has agreed or is required to indemnify any person against any such liability. (e) Each Plan which is a welfare plan (as defined in Section 3(1) of ERISA) to which Sections 601-609 of ERISA and Section 4980B of the Code apply has been administered in compliance in all material respects with such sections. (f) Neither the execution and delivery of this Agreement nor the consummation of the financing transactions contemplated thereunder will involve any transaction which is subject to the prohibitions of Section 406 of ERISA or in connection with which a tax could be imposed pursuant to Section 4975 of the Code. The representation by the Credit Parties in the preceding sentence is made in reliance upon and subject to the accuracy of the Lenders' representation in Section 11.16 with respect to their source of funds and is subject, in the event that the source of the funds used by the Lenders in connection with this transaction is an insurance company's general asset account, to the continued validity of Department of Labor Interpretative Bulletin 75-2, 29 C.F.R. ss. 2509.75-2(b) (November 13, 1986) or the issuance of any other similar relief or prohibited transaction exemption, to the effect that assets in an insurance company's general asset account do not constitute assets of an "employee benefit plan" within the meaning of Section 3(3) of ERISA or a "plan" within the meaning of Section 4975(e)(1) of the Code. 6.13 Governmental Regulations, Etc. (a) No part of the proceeds of the Loans will be used, directly or indirectly, for the purpose of purchasing or carrying any "margin stock" within the meaning of Regulation G or Regulation U, or for the purpose of purchasing or carrying or trading in any securities, - 61 - except for the Stock Repurchase. If requested by any Lender or the Agent, the Borrower will furnish to the Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form U-1 referred to in said Regulation U. No indebtedness being reduced or retired out of the proceeds of the Loans was or will be incurred for the purpose of purchasing or carrying any margin stock within the meaning of Regulation U or any "margin security" within the meaning of Regulation T. "Margin stock" within the meanings of Regulation U does not constitute more than 25% of the value of the consolidated assets of the Borrower and its Subsidiaries. None of the transactions contemplated by this Credit Agreement (including, without limitation, the direct or indirect use of the proceeds of the Loans) will violate or result in a violation of the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, or regulations issued pursuant thereto, or Regulation G, T, U or X. (b) Neither the Borrower nor any of its Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act or the Investment Company Act of 1940, each as amended. In addition, neither the Borrower nor any of its Subsidiaries is (i) an "investment company" registered or required to be registered under the Investment Company Act of 1940, as amended, and is not controlled by such a company, or (ii) a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. (c) As of the Closing Date, no director, executive officer or principal shareholder of the Borrower or any of its Subsidiaries is a director, executive officer or principal shareholder of any Lender. For the purposes hereof the terms "director", "executive officer" and "principal shareholder" (when used with reference to any Lender) have the respective meanings assigned thereto in Regulation O issued by the Board of Governors of the Federal Reserve System. (d) Each of the Borrower and its Subsidiaries has obtained all material licenses, permits, franchises or other governmental authorizations necessary to the ownership of its respective Property and to the conduct of its business. (e) Neither the Borrower nor any of its Subsidiaries is in violation of any applicable statute, regulation or ordinance of the United States of America, or of any state, city, town, municipality, county or any other jurisdiction, or of any agency thereof (including without limitation, environmental laws and regulations), which violation could reasonably be expected to have a Material Adverse Effect. - 62 - (f) Each of the Borrower and its Subsidiaries is current with all material reports and documents, if any, required to be filed with any state or federal securities commission or similar agency and is in full compliance in all material respects with all applicable rules and regulations of such commissions. 6.14 Subsidiaries. Schedule 6.14 sets forth all the Subsidiaries of the Borrower at the Closing Date, the jurisdiction of their incorporation and the direct or indirect ownership interest of the Borrower therein. 6.15 Purpose of Loans and Letters of Credit. The proceeds of the Loans hereunder shall be used solely by the Borrower (i) to finance or refinance the Stock Repurchase (if any), (ii) for the working capital and general corporate purposes (other than acquisitions) of the Borrower and its Domestic Subsidiaries and (iii) to finance acquisitions by the Borrower, provided that (A) the aggregate cumulative amount of all Loan proceeds used to finance all such acquisitions subsequent to the Closing Date shall not exceed $25,000,000 plus the Available Reinvestment Amount and (B) no more than $15,000,000 of Loan proceeds plus the Available Reinvestment Amount shall be used to finance any single acquisition. The Letters of Credit shall be used only for or in connection with appeal bonds, reimbursement obligations arising in connection with surety and reclamation bonds, reinsurance, domestic or international trade transactions and obligations not otherwise aforementioned relating to transactions entered into by the Borrower in the ordinary course of business. 6.16 Environmental Matters. Except as set forth in Schedule 6.16 attached hereto or as could not reasonably be expected to have a Material Adverse Effect: (a) Each of the facilities and properties owned, leased or operated by the Borrower or any of its Domestic Subsidiaries (the "Properties") and all operations at the Properties are in compliance with all applicable Environmental Laws, and there is no violation of any Environmental Law with respect to the Properties or the businesses operated by the Borrower or any of its Domestic Subsidiaries (the "Businesses"), and there are no conditions relating to the Businesses or Properties that could give rise to liability under any applicable Environmental Laws. (b) None of the Properties contains, or has previously contained, any Materials of Environmental Concern at, on or under the Properties in amounts or concentrations that constitute a violation of, or could give rise to liability under, Environmental Laws. (c) Neither the Borrower nor any of its Domestic Subsidiaries has received any written notice of, or inquiry from any Governmental Authority regarding, any violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Properties or the Businesses that remains unresolved, nor does the Borrower or any of its Domestic Subsidiaries have knowledge or reason to believe that any such notice will be received or is being threatened. - 63 - (d) Materials of Environmental Concern have not been transported or disposed of from the Properties, or generated, treated, stored or disposed of at, on or under any of the Properties or, to the best knowledge of the Credit Parties, any other location, in each case by or on behalf of the Borrower or any of its Domestic Subsidiaries in violation of, or in a manner that would be reasonably likely to give rise to liability under, any applicable Environmental Law. (e) No judicial proceeding or governmental or administrative action is pending or, to the best knowledge of any Credit Party, threatened, under any Environmental Law to which the Borrower or any of its Domestic Subsidiaries is or will be named as a party, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Borrower or any of its Domestic Subsidiaries, the Properties or the Businesses. (f) There has been no release or, threat of release of Materials of Environmental Concern at or from the Properties, or arising from or related to the operations (including, without limitation, disposal) of the Borrower or any of its Domestic Subsidiaries in connection with the Properties or otherwise in connection with the Businesses, in violation of Environmental Laws. 6.17 Schedule 13E-4. The disclosure set forth in the Schedule 13E-4 attached hereto as Schedule 1.1C complies in all material respects with the requirements for Schedule 13E-4 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934. SECTION 7 AFFIRMATIVE COVENANTS Each Credit Party hereby covenants and agrees that so long as this Credit Agreement is in effect or any amounts payable hereunder or under any other Credit Document shall remain outstanding, and until all of the Commitments hereunder shall have terminated: 7.1 Information Covenants. The Borrower will furnish, or cause to be furnished, to the Agent: (a) Annual Financial Statements. As soon as available, and in any event within 90 days after the close of each fiscal year of the Borrower and its Subsidiaries, a consolidated balance sheet and income statement of the Borrower and its Subsidiaries, as of the end of such - 64 - fiscal year, together with related consolidated statements of operations and retained earnings and of cash flows for such fiscal year, setting forth in comparative form consolidated figures for the preceding fiscal year, all such financial information described above to be in reasonable form and detail and audited by independent certified public accountants of recognized national standing reasonably acceptable to the Agent and whose opinion shall be to the effect that such financial statements have been prepared in accordance with GAAP (except for changes with which such accountants concur) and shall not be limited as to the scope of the audit or qualified as to the status of the Borrower and its Subsidiaries as a going concern; provided that, the delivery within the time period specified above of the Borrower's Annual Report on Form 10-K for any fiscal year prepared in compliance with the requirements therefor and filed with the Securities and Exchange Commission shall be deemed to satisfy the requirements of this subsection (a) for such period. (b) Quarterly Financial Statements. As soon as available, and in any event within 45 days after the close of each fiscal quarter of the Borrower and its Subsidiaries (other than the fourth fiscal quarter, in which case 90 days after the end thereof) a consolidated balance sheet and income statement of the Borrower and its Subsidiaries, as of the end of such fiscal quarter, together with related consolidated statements of operations and retained earnings and of cash flows for such fiscal quarter in each case setting forth in comparative form consolidated figures for the corresponding period of the preceding fiscal year, all such financial information described above to be in reasonable form and detail and reasonably acceptable to the Agent, and accompanied by a certificate of the chief financial officer of the Borrower to the effect that such quarterly financial statements fairly present in all material respects the financial position of the Borrower and its Subsidiaries and have been prepared in accordance with GAAP, subject to changes resulting from audit and normal year-end audit adjustments; provided that, the delivery within the time period specified above of the Borrower's Annual Report on Form 10-Q for any fiscal quarter prepared in compliance with the requirements therefor and filed with the Securities and Exchange Commission shall be deemed to satisfy the requirements of this subsection (a) for such period. (c) Officer's Certificate. At the time of delivery of the financial statements provided for in Sections 7.1(a) and 7.1(b) above, a certificate of the chief financial officer of the Borrower; substantially in the form of Schedule 7.1(c), (i) demonstrating compliance with the financial covenants contained in Section 7.11 by calculation thereof as of the end of each such fiscal period and (ii) stating that no Default or Event of Default exists, or if any Default - 65 - or Event of Default does exist, specifying the nature and extent thereof and what action the Borrower proposes to take with respect thereto. (d) Annual Business Plan and Budgets. At least 90 days after the end of each fiscal year of the Borrower, beginning with the fiscal year ending December 1, 1996, an annual business plan and budget of the Borrower containing, among other things, projected financial statements for the next fiscal year. (e) Accountant's Certificate. Within the period for delivery of the annual financial statements provided in Section 7.1(a), a certificate of the accountants conducting the annual audit stating that they have reviewed Section 7.11 of this Credit Agreement and stating further whether, in the course of their audit, they have become aware of any Default or Event of Default under such Section 7.11 and, if any such Default or Event of Default exists, specifying the nature and extent thereof. (f) Auditor's Reports. Promptly upon receipt thereof, a copy of any other report or "management letter" submitted by independent accountants to the Borrower or any of its Subsidiaries in connection with any annual, interim or special audit of the books of such Person. (g) Reports. Promptly upon transmission or receipt thereof, (i) copies of any filings and registrations with, and reports to or, if material, from, the Securities and Exchange Commission, or any successor agency, and copies of all financial statements, proxy statements, notices and reports as the Borrower or any of its Subsidiaries shall send to its shareholders or to a holder of any Indebtedness owed by the Borrower or any of its Subsidiaries in its capacity as such a holder and (ii) upon the request of the Agent, all reports and written information to and from the United States Environmental Protection Agency, or any state or local agency responsible for environmental matters, the United States Occupational Health and Safety Administration, or any state or local agency responsible for health and safety matters, or any successor agencies or authorities concerning environmental, health or safety matters. (h) Notices. Upon a Credit Party obtaining knowledge thereof, the Borrower will give written notice to the Agent immediately of (a) the occurrence of an event or condition consisting of a Default or Event of Default, specifying the nature and existence thereof and what action the Credit Parties propose to take with respect thereto, and (b) the occurrence of any of the following with respect to the Borrower or any of its Subsidiaries (i) the pendency or commencement of any litigation, arbitral or governmental proceeding against such Person which if adversely determined is likely to have a Material Adverse - 66 - Effect, (ii) the institution of any proceedings against such Person with respect to, or the receipt of notice by such Person of potential liability or responsibility for violation, or alleged violation of any federal, state or local law, rule or regulation, including but not limited to, Environmental Laws, the violation of which would likely have a Material Adverse Effect, or (iii) any notice or determination concerning the imposition of any withdrawal liability by a multiemployer Plan against such Person or any ERISA Affiliate, the determination that a Multiemployer Plan is, or is expected to be, in reorganization within the meaning of Title IV of ERISA or the termination of any Plan. (i) ERISA. Upon any of the Credit Parties obtaining knowledge thereof, the Borrower will give written notice to the Agent promptly (and in any event within five business days) of: (i) of any event or condition, including, but not limited to, any Reportable Event, that constitutes, or might reasonably lead to, a Termination Event; (ii) with respect to any Multiemployer Plan, the receipt of notice as prescribed in ERISA or otherwise of any withdrawal liability assessed against the Borrower or any of its ERISA Affiliates, or of a determination that any Multiemployer Plan is in reorganization or insolvent (both within the meaning of Title IV of ERISA); (iii) the failure to make full payment on or before the due date (including extensions) thereof of all amounts which the Borrower, any of the Subsidiaries of the Borrower or any ERISA Affiliate is required to contribute to each Plan pursuant to its terms and as required to meet the minimum funding standard set forth in ERISA and the Code with respect thereto; or (iv) any change in the funding status of any Plan that reasonably could be expected to have a Material Adverse Effect; together, with a description of any such event or condition or a copy of any such notice and a statement by the principal financial officer of the Borrower briefly setting forth the details regarding such event, condition, or notice, and the action, if any, which has been or is being taken or is proposed to be taken by the Credit Parties with respect thereto. Promptly upon request, the Borrower shall furnish the Agent and the Lenders with such additional information concerning any Plan as may be reasonably requested, including, but not limited to, copies of each annual report/return (Form 5500 series), as well as all schedules and attachments thereto required to be filed with the Department of Labor and/or the Internal Revenue Service pursuant to ERISA and the Code, respectively, for each "plan year" (within the meaning of Section 3(39) of ERISA). (j) Other Information. With reasonable promptness upon any such request, such other information regarding the business, properties or financial condition of the Borrower or any of its Subsidiaries as the Agent or the Required Lenders may reasonably request. - 67 - 7.2 Preservation of Existence and Franchises. Except as otherwise permitted pursuant to the terms of Section 8.4, the Borrower will, and will cause each of its Subsidiaries to, do all things necessary to preserve and keep in full force and effect its existence, material rights and franchises and authority. 7.3 Books and Records. The Borrower will, and will cause each of its Subsidiaries to, keep complete and accurate books and records of its transactions in accordance with GAAP. 7.4 Compliance with Law. The Borrower will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and orders, and all applicable restrictions imposed by all Governmental Authorities, applicable to it and its property if noncompliance with any such law, rule, regulation, order or restriction would have a Material Adverse Effect. 7.5 Payment of Taxes and Other Indebtedness. The Borrower will, and will cause each of its Subsidiaries to, pay and discharge (i) all taxes, assessments and governmental charges or levies imposed upon it, or upon its income or profits, or upon any of its properties, before they shall become delinquent, (ii) all lawful claims (including claims for labor, materials and supplies) which, if unpaid, might give rise to a Lien upon any of its properties, and (iii) except as prohibited hereunder, all of its other Indebtedness as it shall become due; provided, however, that the Borrower and its Subsidiaries shall not be required to pay any such tax, assessment, charge, levy, claim or Indebtedness which is being contested in good faith by appropriate proceedings and as to which adequate accruals therefor have been established in accordance with GAAP, unless the failure to make any such payment (i) would give rise to an immediate right to foreclose on a Lien securing such amounts or (ii) would have a Material Adverse Effect. 7.6 Insurance. The Borrower will, and will cause each of its Subsidiaries to, at all times maintain in full force and effect insurance (including worker's compensation insurance, liability insurance, casualty insurance and business interruption insurance) in such amounts, covering such risks and liabilities and with such deductibles or self-insurance retentions as are in accordance with normal industry practice. 7.7 Maintenance of Property. The Borrower will, and will cause each of its Subsidiaries to, maintain and preserve its properties and equipment material to the conduct of its business in good repair, working order and condition, normal wear and tear excepted, and will make, or cause to be made, in such properties and equipment from time to time all repairs, renewals, replacements, extensions, additions, betterments and improvements thereto as may be needed or proper, to the extent and in the manner customary for companies in similar businesses. 7.8 Performance of Obligations. The Borrower will, and will cause each of its Subsidiaries to, perform in all material respects all of its obligations - 68 - under the terms of all material agreements, indentures, mortgages, security agreements or other debt instruments to which it is a party or by which it is bound. 7.9 Use of Proceeds. The Borrower will use the proceeds of the Loans and will use the Letters of Credit solely for the purposes set forth in Section 6.15. 7.10 Audits/Inspections. Upon reasonable notice and during normal business hours, the Borrower will, and will cause each of its Subsidiaries to, permit representatives appointed by the Agent, including, without limitation, independent accountants, agents, attorneys, and appraisers to visit and inspect its property, including its books and records, its accounts receivable and inventory, its facilities and its other business assets, and to make photocopies or photographs thereof and to write down and record any information such representative obtains and shall permit the Agent or its representatives to investigate and verify the accuracy of information provided to the Lenders and to discuss all such matters with the officers, employees and representatives of such Person. 7.11 Financial Covenants. (a) Consolidated Net Worth. Consolidated Net Worth at all times shall be no less than $__________ [85% of Consolidated Net Worth as of the Closing Date], reduced on and after the date of the Stock Repurchase by the amount of the reduction (not to exceed $93,000,000), as determined in accordance with GAAP, in the net worth of the Borrower and its consolidated Subsidiaries resulting from the Stock Repurchase and increased on a cumulative basis by (i) as of the last day of each fiscal year commencing with the last day of fiscal year 1996 by an amount equal to the greater of (A) $0 or (B) 50% of the excess of (1) Consolidated Net Income for the fiscal year then ended over (2) dividends and other distributions to shareholders by the Borrower and its consolidated Subsidiaries for the fiscal year then ended and (ii) upon the consummation of any Equity Transaction on or after the Closing Date, an amount equal to 85% of the Net Proceeds of such Equity Transaction. (b) Consolidated Leverage Ratio. The Consolidated Leverage Ratio at each Calculation Date shall be no greater than the following proportions: Period Ratio ------ ----- For any first fiscal 3.25 to 1.00 quarter period, second fiscal quarter period or fourth fiscal quarter period occurring from the Closing Date through the last day of - 69 - fiscal year 1996 of the Borrower For any third fiscal 3.75 to 1.00 quarter period occurring from the Closing Date through the last day of fiscal year 1996 of the Borrower For any first fiscal 3.00 to 1.00 quarter period, second fiscal quarter period or fourth fiscal quarter period occurring from the first day of fiscal year 1997 of the Borrower through the last day of such fiscal year For any third fiscal 3.50 to 1.00 quarter period occurring from the first day of fiscal year 1997 of the Borrower through the last day of such fiscal year For any first fiscal 2.75 to 1.00 quarter period, second fiscal quarter period or fourth fiscal quarter period occurring from the first day of fiscal year 1998 of the Borrower through the last day of such fiscal year For any third fiscal 3.25 to 1.00 quarter period occurring from the first day of fiscal year 1998 of the Borrower through the last day of such fiscal year For any first fiscal 2.50 to 1.00 quarter period, second fiscal quarter period or fourth fiscal quarter period occurring from the first day of fiscal year 1999 of the Borrower and thereafter - 70 - For any third fiscal 3.00 to 1.00 quarter period occurring from the first day of fiscal year 1999 of the Borrower and thereafter (c) Consolidated Fixed Charge Coverage Ratio. The Consolidated Fixed Charge Coverage Ratio at each Calculation Date shall be no less than 1.45 to 1.00. (d) Consolidated Interest Coverage Ratio. The Consolidated Interest Coverage Ratio at each Calculation Date shall be no less than 2.50 to 1.00. 7.12 Additional Credit Parties. Within thirty (30) days of any Person becoming a Material Subsidiary of the Borrower or in the event that the Borrower elects to cause any other present or future direct or indirect Subsidiary of the Borrower to become a Guarantor hereunder, the Borrower shall so notify the Agent and shall cause such Person to (a) execute a Joinder Agreement in substantially the same form as Schedule 7.12 attached hereto and (b) deliver such other documentation as the Agent may reasonably request in connection with the foregoing, including, without limitation, certified corporate resolutions and other corporate documents of such Person and favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to above), all in form, content and scope reasonably satisfactory to the Agent. Notwithstanding any provision of this Credit Agreement to the contrary, in the event that any Guarantor shall not be or that any Guarantor shall cease to be a Material Subsidiary in accordance with the terms of this Credit Agreement, then, upon written request of the Borrower to the Agent and provided that no Default or Event of Default shall exist at such time (1) such Guarantor, automatically and without further act on the part of the Agent or the Lenders, shall cease to be a Guarantor and shall be released from its obligations hereunder and (2) the Agent (on behalf of the Lenders) shall thereupon execute such documents and take such other action reasonably requested by the Borrower to cause such Guarantor to be released from its obligations arising hereunder. 7.13 Ownership of Subsidiaries; Limitation of Foreign Operations. (a) Except to the extent otherwise provided in Section 8.4(b), Section 8.5 and clause (xv) of the definition of "Permitted Investments" set forth in Section 1.1 and Section 8.11, the Borrower shall, directly or indirectly, own at all times 100% of the capital stock of each of its Subsidiaries. (b) (i) The Borrower and its Domestic Subsidiaries shall own at all times at least 75% of Consolidated Total Assets and (ii) as of each Calculation Date, the portion attributable to the Borrower and its - 71 - Domestic Subsidiaries of Consolidated Net Income for the four quarter then ended shall be at least 75% of Consolidated Net Income for such period; provided, however, that the parties hereto hereby agree that, at such time, if any, as the Foreign Subsidiaries of the Borrower shall have obtained bank financing for their working capital and general corporate needs in such amounts, on such terms (including without limitation intercreditor arrangements between the provider(s) of such financing and the Lenders) and from such lenders as shall be satisfactory to the Lenders in their sole reasonable discretion, the Credit Parties and the Lenders shall enter into an agreement amending this Credit Agreement to eliminate this Section 7.13(b). SECTION 8 NEGATIVE COVENANTS Each Credit Party hereby covenants and agrees that, so long as this Credit Agreement is in effect or any amounts payable hereunder or under any other Credit Document shall remain outstanding, and until all of the Commitments hereunder shall have terminated: 8.1 Indebtedness. The Borrower will not, nor will it permit any of its Subsidiaries to, contract, create, incur, assume or permit to exist any Indebtedness, except: (a) Indebtedness arising under this Credit Agreement and the other Credit Documents; (b) Indebtedness of the Borrower and any of its Subsidiaries existing as of the Closing Date set forth in Schedule 8.1 (and renewals, refinancings and extensions thereof on terms and conditions no less favorable to such Person than such existing Indebtedness); (c) purchase money Indebtedness (including Capital Leases) hereafter incurred by the Borrower or any of its Foreign Subsidiaries to finance the purchase of fixed assets provided that (i) the aggregate principal amount of such Indebtedness plus the aggregate outstanding principal amount of Indebtedness permitted pursuant to clause (b) below and clause (h)(i) below shall not exceed $6,000,000 at any time, (ii) such Indebtedness when incurred shall not exceed the purchase price of the asset(s) financed and (iii) no such Indebtedness shall be refinanced for a principal amount in excess of the principal balance outstanding thereon at the time of such refinancing; (d) unsecured Indebtedness of the Borrower or any of its Foreign Subsidiaries with respect to letters of credit (other than Letters of Credit issued hereunder) provided that the aggregate maximum amount available to be drawn under all such letters of credit, together with all unreimbursed drawings with respect thereto, shall not exceed $3,000,000 at any time outstanding; - 72 - (e) obligations of the Borrower in respect of interest rate protection agreements, foreign currency exchange, commodity purchase or option agreements or other interest or exchange rate or commodity price hedging agreements entered into in order to manage existing or anticipated interest rate, exchange rate or commodity price risks and not for speculative purposes; (f) obligations in connection with any Permitted Receivables Financing; (g) intercompany Indebtedness of Bevis, Seal and Hunt Europe owing to the Borrower to the extent permitted by the definition of "Permitted Investments" set forth in Section 1.1; and (h) in addition to the Indebtedness otherwise permitted by this Section 8.1, (i) other Indebtedness hereafter incurred by the Borrower or any of its Foreign Subsidiaries provided that (A) in the case of any such Indebtedness incurred by the Borrower, the loan documentation with respect to such Indebtedness shall not contain covenants or default provisions relating to the Borrower and its Subsidiaries that are more restrictive than the covenants and default provisions contained in the Credit Documents, (B) on the date of incurrence of such Indebtedness after giving effect on a Pro Forma Basis to the incurrence of such Indebtedness and to the concurrent retirement of any other Indebtedness of the Borrower or any of its Subsidiaries, no Default or Event of Default would exist hereunder and (C) the aggregate principal amount of such Indebtedness plus the aggregate outstanding principal amount of Indebtedness permitted pursuant to clauses (b) and (c) above shall not exceed $6,000,000 at any time; and (ii) (A) Guaranty Obligations of the Borrower with respect to any Indebtedness of a Foreign Subsidiary permitted under this Section 8.1 and (B) Guaranty Obligations of any Subsidiary of the Borrower that is a Guarantor with respect to any Indebtedness of the Borrower permitted under this Section 8.1. 8.2 Liens. The Borrower will not, nor will it permit any of its Subsidiaries to, contract, create, incur, assume or permit to exist any Lien with respect to any of their Property, whether now owned or after acquired, except for Permitted Liens. - 73 - 8.3 Nature of Business. Neither the Borrower nor any of its Subsidiaries will substantively alter the character or conduct of the business conducted by any such Person as of the Closing Date. 8.4 Consolidation, Merger, Sale or Purchase of Assets, etc. The Borrower will not, nor will it permit any of its Subsidiaries to: (a) dissolve, liquidate or wind up their affairs, or enter into any transaction of merger or consolidation; provided, however, that, so long as no Default or Event of Default would be directly or indirectly caused as a result thereof, (i) the Borrower may merge or consolidate with any of its Subsidiaries provided that the Borrower is the surviving corporation; (ii) any Domestic Subsidiary of the Borrower may merge or consolidate with any other Domestic Subsidiary of the Borrower; (iii) any Domestic Subsidiary of the Borrower may merge or consolidate with any Foreign Subsidiary of the Borrower provided that such Domestic Subsidiary is the surviving corporation; (iv) any Foreign Subsidiary of the Borrower may merge or consolidate with any other Foreign Subsidiary of the Borrower; and (v) any Wholly-Owned Subsidiary of the Borrower may dissolve, liquidate or wind up its affairs at any time; (b) sell, lease, transfer or otherwise dispose of any Property (including without limitation pursuant to any sale and leaseback transaction) other than (i) the sale of inventory in the ordinary course of business for fair consideration, (ii) the sale or disposition of machinery and equipment no longer used or useful in the conduct of such Person's business, (iii) in a Permitted Receivables Financing, (iv) the Fresno Asset Sale, provided that the Borrower shall (A) immediately repay or prepay in full the industrial revenue bond financing in an outstanding principal amount as of the Closing Date of approximately $1,600,000 relating to such assets and (B) prepay the Loans in connection with such asset sale to the extent required by Section 3.3(b)(iii)(B) and (v) other sales of assets, provided that (A) after giving effect on a Pro Forma Basis to such sale or other disposition, no Default or Event of Default would exist hereunder and (B) the Borrower shall give notice to the Agent and each of the Lenders specifying the anticipated or actual date of such asset sale, briefly describing the assets sold or to be sold and setting forth the net book value of such assets and the aggregate consideration and Net Proceeds to be received for such assets in connection with such asset sale, and thereafter the Borrower shall (1) within the period of twelve months following the consummation of such asset sale (with respect to any such asset sale, the "Application Period"), apply (or cause its applicable Subsidiary to apply) an amount equal to the Net Proceeds of such asset sale to the purchase, acquisition or, in the case of real property, construction of Alternative Assets in a transaction complying with - 74 - all of the terms and conditions of this Credit Agreement or (2) prepay the Loans in connection with such asset sale to the extent required by Section 3.3(b)(iii); or (c) except as otherwise permitted by Section 8.4(a), acquire all or any portion of the capital stock or securities of any other Person or purchase, lease or otherwise acquire (in a single transaction or a series of related transactions) all or any substantial part of the Property of any other Person; provided that, subject to the terms of Section 8.8, after giving effect on a Pro Forma Basis to such transaction, the Consolidated Leverage Ratio shall not be greater than 3.00 to 1.00. 8.5 Advances, Investments, Loans, etc. The Borrower will not, nor will it permit any of its Subsidiaries to, make Investments in or to any Person, except for Permitted Investments. 8.6 Restricted Payments. The Borrower will not, nor will it permit any of its Subsidiaries to, directly or indirectly declare, order, make or set apart any sum for or pay any Restricted Payment, except (i) to make dividends payable solely in the same class of capital stock of such Person, (ii) to make dividends or other distributions payable to the Borrower (directly or indirectly through Subsidiaries of the Borrower), (iii) as permitted by Section 8.7 and (iv) other Restricted Payments made by the Borrower, provided that, after giving effect to any such Restricted Payment on a pro forma basis (determined by calculating the Consolidated Fixed Charge Coverage Ratio for the four quarter period ended as of the last day of the most recent fiscal quarter with respect to which the Agent shall have received the Required Financial Information, except that Restricted Payments included in such calculation shall be the Restricted Payment proposed to be made and all other Restricted Payments during the then current fiscal quarter of the Borrower plus all Restricted Payments for the three quarters ending as of the last day of the most recent fiscal quarter), no Default or Event of Default would exist hereunder. 8.7 Prepayments of Indebtedness, etc. The Borrower will not, nor will it permit any of its Subsidiaries to, (i) after the issuance thereof, amend or modify (or permit the amendment or modification of) any of the terms of any Indebtedness if such amendment or modification would add or change any terms in a manner adverse to the issuer of such Indebtedness, or shorten the final maturity or average life to maturity or require any payment to be made sooner than originally scheduled or increase the interest rate applicable thereto or change any subordination provision thereof, (ii)(A) if any Default or Event of Default has occurred and is continuing or would be directly or indirectly caused as a result thereof, make (or give any notice with respect thereto) any voluntary or optional payment or prepayment or redemption or acquisition for value of (including without limitation, by way of depositing money or securities - 75 - with the trustee with respect thereto before due for the purpose of paying when due), refund, refinance or exchange of any other Indebtedness (other than Subordinated Indebtedness) or (B) make (or give any notice with respect thereto) any voluntary or optional payment or prepayment or redemption or acquisition for value of (including without limitation, by way of depositing money or securities with the trustee with respect thereto before due for the purpose of paying when due), refund, refinance or exchange of any Indebtedness subordinated to the obligations of the Borrower or the Guarantors hereunder or (C) amend, modify or change its articles of incorporation (or corporate charter or other similar organizational document) or bylaws (or other similar document) where such change would have a Material Adverse Effect. 8.8 Transactions with Affiliates. The Borrower will not, nor will it permit any of its Subsidiaries to, enter into or permit to exist any transaction or series of transactions with any officer, director, shareholder, Subsidiary or Affiliate of such Person other than (a) advances of working capital to the Borrower, (b) transfers of cash and assets to the Borrower, (c) transactions permitted by Section 8.1(g), Section 8.4(a), Section 8.5 or Section 8.6, (d) normal compensation and reimbursement of expenses of officers and directors and (e) except as otherwise specifically limited in this Credit Agreement, other transactions which are entered into in the ordinary course of such Person's business on terms and conditions substantially as favorable to such Person as would be obtainable by it in a comparable arms-length transactions with a Person other than an officer, director, shareholder, Subsidiary or Affiliate. 8.9 Fiscal Year. Without the prior written approval of the Agent, the Borrower will not, nor will it permit any of its Subsidiaries to, change its fiscal year. 8.10 Limitation on Restrictions on Subsidiary Dividends and Other Distributions, etc. The Borrower will not, nor will it permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause, incur, assume, suffer or permit to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any such Person to (a) pay dividends or make any other distribution on any of such Person's capital stock, (b) subject to subordination provisions, pay any Indebtedness owed to the Borrower or any other Credit Party, (c) make loans or advances to any other Credit Party or (d) transfer any of its Property to any other Credit Party, except for encumbrances or restrictions existing under or by reason of (i) customary non-assignment provisions in any lease governing a leasehold interest and (ii) this Credit Agreement and the other Credit Documents. 8.11 Issuance and Sale of Subsidiary Stock. The Borrower will not, nor will it permit any of its Subsidiaries to, except to qualify directors where required by applicable law and except as otherwise permitted under the terms - 76 - of Section 8.4(b), sell, transfer or otherwise dispose of, any shares of capital stock of any of its Subsidiaries or permit any of its Subsidiaries to issue, sell or otherwise dispose of, any shares of capital stock of any of its Subsidiary. 8.12 Sale Leasebacks. Except as otherwise permitted by Section 8.4(c), the Borrower will not, nor will it permit any of its Subsidiaries to, directly or indirectly, become or remain liable as lessee or as guarantor or other surety with respect to any lease, whether an Operating Lease or a Capital Lease, of any Property (whether real or personal or mixed), whether now owned or hereafter acquired, (i) which such Person has sold or transferred or is to sell or transfer to any other Person other than the Borrower or (ii) which such Person intends to use for substantially the same purpose as any other Property which has been sold or is to be sold or transferred by such Person to any other Person in connection with such lease. 8.13 No Further Negative Pledges. Except with respect to prohibitions against other encumbrances on specific Property encumbered to secure payment of particular Indebtedness (which Indebtedness relates solely to such specific Property, and improvements and accretions thereto, and is otherwise permitted hereby), the Borrower will not, nor will it permit any of its Subsidiaries to, enter into, assume or become subject to any agreement prohibiting or otherwise restricting the creation or assumption of any Lien upon its properties or assets, whether now owned or hereafter acquired, or requiring the grant of any security for such obligation if security is given for some other obligation. 8.14 Operating Lease Obligations. The Borrower will not, nor will it permit any of its Subsidiaries to, enter into, assume or permit to exist any obligations for the payment of rental under Operating Leases which in the aggregate for all such Persons would exceed $10,000,000 in any fiscal year. SECTION 9 EVENTS OF DEFAULT 9.1 Events of Default. An Event of Default shall exist upon the occurrence of any of the following specified events (each an "Event of Default"): (a) Payment. Any Credit Party shall (i) default in the payment when due of any principal of any of the Loans or of any reimbursement obligations arising from drawings under Letters of Credit, or - 77 - (ii) default, and such defaults shall continue for five (5) or more days, in the payment when due of any interest on the Loans or on any reimbursement obligations arising from drawings under Letters of Credit, or of any Fees or other amounts owing hereunder, under any of the other Credit Documents or in connection herewith or therewith; or (b) Representations. Any representation, warranty or statement made or deemed to be made by any Credit Party herein, in any of the other Credit Documents, or in any statement or certificate delivered or required to be delivered pursuant hereto or thereto shall prove untrue in any material respect on the date as of which it was deemed to have been made; or (c) Covenants. Any Credit Party shall (i) default in the due performance or observance of any term, covenant or agreement contained in Sections 7.2, 7.10, 7.12, 7.13 or 8.1 through 8.14, inclusive, or (ii) default in the due performance or observance by it of any term, covenant or agreement (other than those referred to in subsections (a), (b) or (c)(i) or this Section 9.1) contained in this Credit Agreement and such default shall continue unremedied for a period of at least 30 days after the earlier of a responsible officer of a Credit Party becoming aware of such default or notice thereof by the Agent; or (d) Other Credit Documents. (i) Any Credit Party shall default in the due performance or observance of any term, covenant or agreement in any of the other Credit Documents (subject to applicable grace or cure periods, if any), or (ii) any Credit Document shall fail to be in full force and effect or to give the Agent and/or the Lenders the liens, rights, powers and privileges purported to be created thereby; or (e) Guaranties. The guaranty given by any Guarantor hereunder (including any Additional Credit Party) or any provision thereof shall cease to be in full force and effect, or any Guarantor (including any Additional Credit Party) hereunder or any Person acting by or on behalf of such Guarantor shall deny or disaffirm such Guarantor's obligations under such guaranty, or any Guarantor shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to any guaranty; or - 78 - (f) Bankruptcy Event. Any Bankruptcy Event shall occur with respect to the Borrower or any of its Subsidiaries; or (g) Defaults under Other Agreements. With respect to any Indebtedness (other than Indebtedness outstanding under this Credit Agreement) in excess of $10,000,000 in the aggregate for the Borrower and its Subsidiaries taken as a whole, (i) the Borrower or any of its Subsidiaries shall (A) default in any payment (beyond the applicable grace period with respect thereto, if any) with respect to any such Indebtedness, or (B) default in the observance or performance relating to such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event or condition shall occur or condition exist, the effect of which default or other event or condition is to cause, or permit, the holder or holders of such Indebtedness (or trustee or agent on behalf of such holders) to cause (determined without regard to whether any notice or lapse of time is required), any such Indebtedness to become due prior to its stated maturity; or (ii) any such Indebtedness shall be declared due and payable, or required to be prepaid other than by a regularly scheduled required prepayment, prior to the stated maturity thereof; or (h) Judgments. One or more judgments or decrees shall be entered against the Borrower or any of its Subsidiaries involving a liability of $10,000,000 or more in the aggregate (to the extent not paid or fully covered by insurance provided by a carrier who has acknowledged coverage) and any such judgments or decrees shall not have been vacated, discharged or stayed or bonded pending appeal within 30 days from the entry thereof; or (i) ERISA. Any of the following events or conditions, if such event or condition could have a Material Adverse Effect: (1) any "accumulated funding deficiency," as such term is defined in Section 302 of ERISA and Section 412 of the Code, whether or not waived, shall exist with respect to any Plan, or any lien shall arise on the assets of the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate in favor of the PBGC or a Plan; (2) a Termination Event shall occur with respect to a Single Employer Plan, which is, in the reasonable opinion of the Agent, likely to result in the termination of such Plan for purposes of Title IV of ERISA; (3) a Termination Event shall occur with respect to a Multiemployer Plan or Multiple Employer Plan, which is, in the reasonable opinion of the Agent, likely to result in (i) the termination of such Plan for purposes of Title IV of ERISA, or (ii) the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate - 79 - incurring any liability in connection with a withdrawal from, reorganization of (within the meaning of Section 4241 of ERISA), or insolvency or (within the meaning of Section 4245 of ERISA) such Plan; or (4) any prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the Code) or breach of fiduciary responsibility shall occur which may subject the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate to any liability under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any agreement or other instrument pursuant to which the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate has agreed or is required to indemnify any person against any such liability; or (j) Stock Repurchase. (i) The aggregate price paid by the Borrower for the Stock Repurchase, together with related transaction costs, shall exceed $93,000,000, or (ii) on the date of the consummation of the Stock Repurchase, if any, and immediately after giving effect thereto (but not thereafter), there shall be less than $30,000,000 of availability under the Revolving Commitments of the Lenders; or (k) Ownership. There shall occur a Change of Control. 9.2 Acceleration; Remedies. Upon the occurrence of an Event of Default, and at any time thereafter unless and until such Event of Default has been waived by the Required Lenders or cured to the satisfaction of the Required Lenders (pursuant to the voting procedures in Section 11.6), the Agent shall, upon the request and direction of the Required Lenders, by written notice to the Credit Parties take any of the following actions without prejudice to the rights of the Agent or any Lender to enforce its claims against the Credit Parties, except as otherwise specifically provided for herein: (i) Termination of Commitments. Declare the Commitments terminated whereupon the Commitments shall be immediately terminated. (ii) Acceleration. Declare the unpaid principal of and any accrued interest in respect of all Loans, any reimbursement obligations arising from drawings under Letters of Credit and any and all other indebtedness or obligations of any and every kind owing by the Borrower to any of the Lenders hereunder to be due whereupon the same shall be immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. (iii) Cash Collateral. Direct the Borrower to pay (and the Borrower agrees that upon receipt of such notice, or upon the - 80 - occurrence of an Event of Default under Section 9.1(f), it will immediately pay) to the Agent additional cash, to be held by the Agent, for the benefit of the Lenders, in a cash collateral account as additional security for the LOC Obligations in respect of subsequent drawings under all then outstanding Letters of Credit in an amount equal to the maximum aggregate amount which may be drawn under all Letters of Credits then outstanding. (iv) Enforcement of Rights. Enforce any and all rights and interests created and existing under the Credit Documents and all rights of set-off. Notwithstanding the foregoing, if an Event of Default specified in Section 9.1(f) shall occur, then the Commitments shall automatically terminate and all Loans, all reimbursement obligations arising from drawings under Letters of Credit, all accrued interest in respect thereof, all accrued and unpaid Fees and other indebtedness or obligations owing to the Lenders hereunder automatically shall immediately become due and payable without the giving of any notice or other action by the Agent. SECTION 10 AGENCY PROVISIONS 10.1 Appointment. Each Lender hereby designates and appoints NationsBank of North Carolina, N.A. as administrative agent (in such capacity as Agent hereunder, the "Agent") of such Lender to act as specified herein and the other Credit Documents, and each such Lender hereby authorizes the Agent as the agent for such Lender, to take such action on its behalf under the provisions of this Credit Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated by the terms hereof and of the other Credit Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere herein and in the other Credit Documents, the Agent shall not have any duties or responsibilities, except those expressly set forth herein and therein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Credit Agreement or any of the other Credit Documents, or shall otherwise exist against the Agent. Except as otherwise expressly provided herein, the provisions of this Section are solely for the benefit of the Agent and the Lenders and none of the Credit Parties shall have any rights as a third party beneficiary of the provisions hereof. In performing its functions and duties under this Credit Agreement and the other Credit Documents, the Agent shall not act solely as agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation or relationship of agency or trust with or for any Credit Party. - 81 - 10.2 Delegation of Duties. The Agent may execute any of their respective duties hereunder or under the other Credit Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care. 10.3 Exculpatory Provisions. Neither the Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection herewith or in connection with any of the other Credit Documents (except for its or such Person's own gross negligence or willful misconduct), or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by any of the Credit Parties contained herein or in any of the other Credit Documents or in any certificate, report, document, financial statement or other written or oral statement referred to or provided for in, or received by the Agent under or in connection herewith or in connection with the other Credit Documents, or enforceability or sufficiency therefor of any of the other Credit Documents, or for any failure of any Credit Party to perform its obligations hereunder or thereunder. The Agent shall not be responsible to any Lender for the effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Credit Agreement, or any of the other Credit Documents or for any representations, warranties, recitals or statements made herein or therein or made by the Borrower or any Credit Party in any written or oral statement or in any financial or other statements, instruments, reports, certificates or any other documents in connection herewith or therewith furnished or made by the Agent to the Lenders or by or on behalf of the Credit Parties to the Agent or any Lender or be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained herein or therein or as to the use of the proceeds of the Loans or the use of the Letters of Credit or of the existence or possible existence of any Default or Event of Default or to inspect the properties, books or records of the Credit Parties. 10.4 Reliance on Communications. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to any of the Credit Parties, independent accountants and other experts selected by the Agent with reasonable care). The Agent may deem and treat the Lenders as the owner of their respective interests hereunder for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Agent in - 82 - accordance with Section 11.3(b) hereof. The Agent shall be fully justified in failing or refusing to take any action under this Credit Agreement or under any of the other Credit Documents unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or under any of the other Credit Documents in accordance with a request of the Required Lenders (or to the extent specifically provided in Section 11.6, all the Lenders) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders (including their successors and assigns). 10.5 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Agent has received notice from a Lender or a Credit Party referring to the Credit Document, describing such Default or Event of Default and stating that such notice is a "notice of default." In the event that the Agent receives such a notice, the Agent shall give prompt notice thereof to the Lenders. The Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders. 10.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly acknowledges that neither the Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the Agent or any affiliate thereof hereinafter taken, including any review of the affairs of any Credit Party, shall be deemed to constitute any representation or warranty by the Agent to any Lender. Each Lender represents to the Agent that it has, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrower and the other Credit Parties and made its own decision to make its Loans hereunder and enter into this Credit Agreement. Each Lender also represents that it will, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Credit Agreement, and to make such investigation as it deems necessary to inform itself as to the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrower and the other Credit Parties. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any - 83 - Lender with any credit or other information concerning the business, operations, assets, property, financial or other conditions, prospects or creditworthiness of the Borrower and the other Credit Parties which may come into the possession of the Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates. 10.7 Indemnification. The Lenders agree to indemnify the Agent in its capacity as such (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Commitments (or if the Commitments have expired or been terminated, in accordance with the respective principal amounts of outstanding Loans and Participation Interests of the Lenders), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including without limitation at any time following the final payment of all of the obligations of the Borrower hereunder and under the other Credit Documents) be imposed on, incurred by or asserted against the Agent in its capacity as such in any way relating to or arising out of this Credit Agreement or the other Credit Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or willful misconduct of the Agent. If any indemnity furnished to the Agent for any purpose shall, in the opinion of the Agent, be insufficient or become impaired, the Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. The agreements in this Section shall survive the repayment of the Loans, LOC Obligations and other obligations under the Credit Documents and the termination of the Commitments hereunder. 10.8 Agent in its Individual Capacity. The Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with any Credit Party as though the Agent were not Agent hereunder. With respect to the Loans made by and all obligations of the Borrower hereunder and under the other Credit Documents owing to it, the Agent shall have the same rights and powers under this Credit Agreement as any Lender and may exercise the same as though they were not Agent, and the terms "Lender" and "Lenders" shall include the Agent in its individual capacity. 10.9 Successor Agent. The Agent may, at any time, resign upon 20 days' written notice to the Lenders and the Borrower, and be removed with or without cause by the Required Lenders upon 30 days' written notice to the Agent. Upon any such resignation or removal, the Required Lenders shall have the right, with the prior consent of the Borrower, to appoint a successor Agent. If no - 84 - successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the notice of resignation or notice of removal, as appropriate, then the retiring Agent, with the prior consent of the Borrower, shall select a successor Agent provided such successor is a Lender hereunder or a commercial bank organized under the laws of the United States of America or of any State thereof and has a combined capital and surplus of at least $400,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations as Agent, as appropriate, under this Credit Agreement and the other Credit Documents and the provisions of this Section 10.9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Credit Agreement. SECTION 11 MISCELLANEOUS 11.1 Notices. Except as otherwise expressly provided herein, all notices and other communications shall have been duly given and shall be effective (i) when delivered, (ii) when transmitted via telecopy (or other facsimile device) to the number set out below, (iii) the day following the day on which the same has been delivered prepaid to a reputable national overnight air courier service, or (iv) the third Business Day following the day on which the same is sent by certified or registered mail, postage prepaid, in each case to the respective parties at the address, in the case of the Borrower, Guarantors and the Agent, set forth below, and, in the case of the Lenders, set forth on Schedule 2.1(a), or at such other address as such party may specify by written notice to the other parties hereto: if to the Borrower or the Guarantors: Hunt Manufacturing Co. One Commerce Square 2005 Market Street Philadelphia, PA 19103-7085 Attn: Mr. William E. Chandler Chief Financial Officer Telephone: (215) 841-2300 Telecopy: (215) 656-3711 - 85 - if to the Agent: NationsBank, N.A. Independence Center, 15th Floor NC1-001-15-04 101 N. Tryon Street Charlotte, North Carolina 28255 Attn: Agency Services Telephone: (704) 386-8388 Telecopy: (704) 386-9923 with a copy to: NationsBank, N.A. NationsBank Corporate Center, 8th Floor 100 North Tryon Street Charlotte, NC 28255 Attn: M. Gregory Seaton Senior Vice President Telephone: (704) 386-8843 Telecopy: (704) 386-3271 11.2 Right of Set-Off. In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence of an Event of Default, each Lender is authorized at any time and from time to time, without presentment, demand, protest or other notice of any kind (all of which rights being hereby expressly waived), to set-off and to appropriate and apply any and all deposits (general or special) and any other indebtedness at any time held or owing by such Lender (including, without limitation branches, agencies or Affiliates of such Lender wherever located) to or for the credit or the account of any Credit Party against obligations and liabilities of such Credit Party to such Lender hereunder, under the Notes, the other Credit Documents or otherwise, irrespective of whether such Lender shall have made any demand hereunder and although such obligations, liabilities or claims of such Lender to such Credit Party, or any of them, may be contingent or unmatured, and any such set-off shall be deemed to have been made immediately upon the occurrence of an Event of Default even though such charge is made or entered on the books of such Lender subsequent thereto. Each of the Credit Parties hereby agrees that any Person purchasing a participation in the Loans and Commitments hereunder pursuant to Section 11.3(c) or Section 3.13 may exercise all rights of set-off with respect to its participation interest as fully as if such Person were a Lender hereunder. 11.3 Benefit of Agreement. (a) Generally. This Credit Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto; provided that none of the Credit Parties may assign and transfer any of its interests without prior - 86 - written consent of the Lenders and the Borrower; provided further that the rights of each Lender to transfer, assign or grant participations in its rights and/or obligations hereunder shall be limited as set forth in this Section 11.3, provided however that nothing herein shall prevent or prohibit any Lender from (i) pledging its Loans hereunder to a Federal Reserve Bank in support of borrowings made by such Lender from such Federal Reserve Bank, or (ii) granting assignments or participation in such Lender's Loans and/or Commitments hereunder to its parent company and/or to any affiliate of such Lender which is at least 50% owned by such Lender or its parent company. (b) Assignments. Each Lender may assign all or a portion of its rights and obligations hereunder pursuant to an assignment agreement substantially in the form of Schedule 11.3(b) to one or more Eligible Assignees, provided that any such assignment shall be in a minimum aggregate amount of $5,000,000 of the Commitments and in integral multiples of $1,000,000 above such amount, that each such assignment shall be of a constant not varying, percentage of all of the assigning Lender's rights and obligations under this Credit Agreement. Any assignment hereunder shall be effective upon delivery to the Agent of written notice of the assignment together with a transfer fee of $3,500 payable to the Agent for its own account. The assigning Lender will give prompt notice to the Agent and the Borrower of any such assignment. Upon the effectiveness of any such assignment (and after notice to the Borrower as provided herein), the assignee shall become a "Lender" for all purposes of this Credit Agreement and the other Credit Documents and, to the extent of such assignment, the assigning Lender shall be relieved of its obligations hereunder to the extent of the Loans and Commitment components being assigned. Along such lines the Borrower agrees that upon notice of any such assignment and surrender of the appropriate Note or Notes, it will promptly provide to the assigning Lender and to the assignee separate promissory notes in the amount of their respective interests substantially in the form of the original Note (but with notation thereon that it is given in substitution for and replacement of the original Note or any replacement notes thereof). By executing and delivering an assignment agreement in accordance with this Section 11.3(b), the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim; (ii) except as set forth in clause (i) above, such - 87 - assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Credit Agreement, any of the other Credit Documents or any other instrument or document furnished pursuant hereto or thereto, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Credit Agreement, any of the other Credit Documents or any other instrument or document furnished pursuant hereto or thereto or the financial condition of any Credit Party or the performance or observance by any Credit Party of any of its obligations under this Credit Agreement, any of the other Credit Documents or any other instrument or document furnished pursuant hereto or thereto; (iii) such assignee represents and warrants that it is legally authorized to enter into such assignment agreement; (iv) such assignee confirms that it has received a copy of this Credit Agreement, the other Credit Documents and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such assignment agreement; (v) such assignee will independently and without reliance upon the Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Credit Agreement and the other Credit Documents; (vi) such assignee appoints and authorizes the Agent to take such action on its behalf and to exercise such powers under this Credit Agreement or any other Credit Document as are delegated to the Agent by the terms hereof or thereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Credit Agreement and the other Credit Documents are required to be performed by it as a Lender. (c) Participations. Each Lender may sell, transfer, grant or assign participations in all or any part of such Lender's interests and obligations hereunder; provided that (i) such selling Lender shall remain a "Lender" for all purposes under this Credit Agreement (such selling Lender's obligations under the Credit Documents remaining unchanged) and the participant shall not constitute a Lender hereunder, (ii) no such participant shall have, or be granted, rights to approve any amendment or waiver relating to this Credit Agreement or the other Credit Documents except to the extent any such amendment or waiver would (A) reduce the principal of or rate of interest on or Fees in respect of any Loans in which the participant is participating, (B) postpone the date fixed for any payment of principal (including - 88 - extension of the Termination Date or the date of any mandatory prepayment), interest or Fees in which the participant is participating, or (C) release any Guarantor from its guaranty obligations hereunder (except as expressly provided in the Credit Documents), (iii) sub- participations by the participant (except to an affiliate, parent company or affiliate of a parent company of the participant) shall be prohibited and (iv) any such participations shall be in a minimum aggregate amount of $5,000,000 of the Commitments and in integral multiples of $1,000,000 in excess thereof. In the case of any such participation, the participant shall not have any rights under this Credit Agreement or the other Credit Documents (the participant's rights against the selling Lender in respect of such participation to be those set forth in the participation agreement with such Lender creating such participation) and all amounts payable by the Borrower hereunder shall be determined as if such Lender had not sold such participation, provided, however, that such participant shall be entitled to receive additional amounts under Sections 3.6, 3.9, 3.10 and 3.11 on the same basis as if it were a Lender, except that all claims and petitions for payment and all payments made pursuant to such sections shall be made through such selling Lender and except that a participant shall not be entitled to receive pursuant to such provisions an amount larger than its share of the amount of which the selling Lender would have been entitled. 11.4 No Waiver; Remedies Cumulative. No failure or delay on the part of the Agent or any Lender in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between any of the Credit Parties shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights and remedies provided herein are cumulative and not exclusive of any rights or remedies which the Agent or any Lender would otherwise have. No notice to or demand on any Credit Party in any case shall entitle the Borrower or any other Credit Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Agent or the Lenders to any other or further action in any circumstances without notice or demand. 11.5 Payment of Expenses, etc. The Borrower agrees to: (i) pay all reasonable out-of-pocket costs and expenses of the Agent in connection with the negotiation, preparation, execution and delivery and administration of this Credit Agreement and the other Credit Documents and the documents and instruments referred to therein (including, without limitation, the reasonable fees and expenses of Moore & Van Allen, special counsel to the Agent) and any - 89 - amendment, waiver or consent relating hereto and thereto including, but not limited to, any such amendments, waivers or consents resulting from or related to any work-out, renegotiation or restructure relating to the performance by the Credit Parties under this Credit Agreement and of the Agent and the Lenders in connection with enforcement of the Credit Documents and the documents and instruments referred to therein (including, without limitation, in connection with any such enforcement, the reasonable fees and disbursements of counsel for the Agent and each of the Lenders); (ii) pay and hold each of the Lenders harmless from and against any and all present and future stamp and other similar taxes with respect to the foregoing matters and save each of the Lenders harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to such Lender) to pay such taxes; and (iii) indemnify each Lender, its officers, directors, employees, representatives and agents from and hold each of them harmless against any and all losses, liabilities, claims, damages or expenses incurred by any of them as a result of, or arising out of, or in any way related to, or by reason of, any investigation, litigation or other proceeding (whether or not any Lender is a party thereto) related to the entering into and/or performance of any Credit Document or the use of proceeds of any Loans (including other extensions of credit) hereunder or the consummation of any other transactions contemplated in any Credit Document, including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceeding (but excluding any such losses, liabilities, claims, damages or expenses to the extent incurred by reason of gross negligence or willful misconduct on the part of the Person to be indemnified). 11.6 Amendments, Waivers and Consents. Neither this Credit Agreement nor any other Credit Document nor any of the terms hereof or thereof may be amended, changed, waived, discharged or terminated unless such amendment, change, waiver, discharge or termination is in writing entered into by, or approved in writing by, the Required Lenders, provided that no such amendment, change, waiver, discharge or termination shall, without the consent of each Lender, (i) extend the scheduled maturities (including the final maturity and any mandatory prepayments) of any Loan, or any portion thereof, or reduce the rate or extend the time of payment of interest (other than as a result of waiving the applicability of any post-default increase in interest rates) thereon or fees hereunder or reduce the principal amount thereof, or increase the Commitments of the Lenders over the amount thereof in effect (it being understood and agreed that a waiver of any Default or Event of Default or of a mandatory reduction in the total commitments shall not constitute a change in the terms of any Commitment of any Lender), (ii) release any Guarantor from its guaranty obligations hereunder (except as expressly provided in the Credit Documents), (iii) amend, modify or waive any provision of this Section or Section 3.6, 3.10, 3.11, 3.12, 3.13, 5.1, 5.2, 9.1(a), 11.2, 11.3, 11.5 or 11.9, (iv) reduce any percentage specified in, or otherwise modify, the definition of - 90 - Required Lenders or (v) consent to the assignment or transfer by the Borrower (or Guarantor) of any of its rights and obligations under (or in respect of) this Credit Agreement. No provision of Section 2.2 may be amended without the consent of the Issuing Lender, and no provision of Section 9 may be amended without the consent of the Agent. 11.7 Counterparts. This Credit Agreement may be executed in any number of counterparts, each of which where so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. It shall not be necessary in making proof of this Credit Agreement to produce or account for more than one such counterpart. 11.8 Headings. The headings of the sections and subsections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Credit Agreement. 11.9 Survival of Indemnification. All indemnities set forth herein, including, without limitation, in Section 2.2(h), 3.9, 3.11, 10.7 or 11.5 shall survive the execution and delivery of this Credit Agreement, and the making of the Loans, the issuance of the Letters of Credit, the repayment of the Loans, LOC Obligations and other obligations under the Credit Documents and the termination of the Commitments hereunder. 11.10 Governing Law; Submission to Jurisdiction; Venue. (a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. Any legal action or proceeding with respect to this Credit Agreement or any other Credit Document may be brought in the courts of the State of North Carolina in Mecklenburg County, or of the United States for the Western District of North Carolina, and, by execution and delivery of this Credit Agreement, each of the Credit Parties hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of such courts. Each of the Credit Parties further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to it at the address set out notices pursuant to Section 11.1, such service to become effective 30 days after such mailing. Nothing herein shall affect the right of the Agent to serve process in any other manner permitted by law or to commence legal proceedings or to otherwise proceed against any Credit Party in any other jurisdiction. - 91 - (b) Each of the Credit Parties hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Credit Agreement or any other Credit Document brought in the courts referred to in subsection (a) hereof and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. (c) EACH OF THE AGENTS, EACH OF THE LENDERS AND EACH OF THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY. 11.11 Severability. If any provision of any of the Credit Documents is determined to be illegal, invalid or unenforceable, such provision shall be fully severable and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal, invalid or unenforceable provisions. 11.12 Entirety. This Credit Agreement together with the other Credit Documents represent the entire agreement of the parties hereto and thereto, and supersede all prior agreements and understandings, oral or written, if any, including any commitment letters or correspondence relating to the Credit Documents or the transactions contemplated herein and therein. 11.13 Survival of Representations and Warranties. All representations and warranties made by the Credit Parties herein shall survive delivery of the Notes and the making of the Loans and the issuance of the Letters of Credit hereunder. 11.14 Binding Effect; Termination. (a) This Credit Agreement shall become effective at such time on or after the Closing Date when it shall have been executed by the Borrower, the Guarantors and the Agent, and the Agent shall have received copies hereof (telefaxed or otherwise) which, when taken together, bear the signatures of each Lender, and thereafter this Credit Agreement shall be binding upon and inure to the benefit of the Borrower, the Guarantors, the Agent and each Lender and their respective successors and assigns. (b) The term of this Credit Agreement shall be until no Loans, LOC Obligations or any other amounts payable hereunder or under any of the other Credit Documents shall remain outstanding and until all of the Commitments hereunder shall have expired or been terminated. 11.15. Confidentiality. The Agent and the Lenders agree to keep confidential (and to cause their respective affiliates, officers, directors, - 92 - employees, agents and representatives to keep confidential) all information, materials and documents furnished to the Agent or any such Lender by or on behalf of the Borrower (whether before or after the Closing Date) which relates to the Borrower or any of its Subsidiaries (the "Information"). Notwithstanding the foregoing, the Agent and each Lender shall be permitted to disclose Information (i) to its affiliates, officers, directors, employees, agents and representatives who have a need to know such Information in connection with their work on any of the transactions evidenced by this Credit Agreement or any other Credit Documents or the administration of this Credit Agreement or any other Credit Documents; (ii) to the extent required by applicable laws and regulations or by any subpoena or similar legal process, or requested by any Governmental Authority; (iii) to the extent such Information (A) becomes publicly available other than as a result of a breach of this Credit Agreement or any agreement entered into pursuant to clause (iv) below, (B) becomes available to the Agent or such Lender on a non-confidential basis from a source other than the Borrower or any of its Subsidiaries or (C) was available to the Agent or such Lender on a non-confidential basis prior to its disclosure to the Agent or such Lender by the Borrower; (iv) to any assignee or participant (or prospective assignee or participant) so long as such assignee or participant (or prospective assignee or participant) first specifically agrees in a writing furnished to and for the benefit of the Borrower to be bound by the terms of this Section 11.15; provided, however, that disclosures of any Information shall not be permitted pursuant to this clause (iv) prior to December 22, 1995; or (v) to the extent that the Borrower shall have consented in writing to such disclosure. Nothing set forth in this Section 11.15 shall obligate the Agent or any Lender to return any materials furnished by the Borrower. 11.16 Source of Funds. Each of the Lenders hereby represents and warrants to the Borrower that at least one of the following statements is an accurate representation as to the source of funds to be used by such Lender in connection with the financing hereunder: (a) no part of such funds constitutes assets allocated to any separate account maintained by such Lender in which any employee benefit plan (or its related trust) has any interest; (b) to the extent that any part of such funds constitutes assets allocated to any separate account maintained by such Lender, such Lender has disclosed to the Borrower the name of each employee benefit plan whose assets in such account exceed 10% of the total assets of such account as of the date of such purchase (and, for purposes of this subsection (b), all employee benefit plans maintained by the same employee or employee organization are deemed to be a single plan); or - 93 - (c) such funds constitute assets of one or more specific benefit plans which such Lender has identified in writing to the Borrower. As used in this Section 11.16, the terms "employee benefit plan" and "separate account" shall have the respective meanings assigned to such terms in Section 3 of ERISA. [Signature Page to Follow] - 94 - IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Credit Agreement to be duly executed and delivered as of the date first above written. BORROWER: HUNT MANUFACTURING CO. By____________________________ Title_________________________ GUARANTORS: BEVIS CUSTOM FURNITURE, INC. By____________________________ Title_________________________ HUNT DATA PRODUCTS, INC. By____________________________ Title_________________________ HUNT HOLDINGS, INC. By____________________________ Title_________________________ HUNT X-ACTO, INC. By____________________________ Title_________________________ SEAL PRODUCTS, INC. By____________________________ Title_________________________ S-1 LENDERS: NATIONSBANK, N.A., individually in its capacity as a Lender and in its capacity as Agent By_____________________________ Title__________________________ S-2 Schedule 1.1A INVESTMENTS 1 Schedule 1.1B LIENS 1 Schedule 1.1C SCHEDULE 13E-4 1 Schedule 2.1(a) LENDERS 1 Schedule 2.1(b)(i) FORM OF NOTICE OF BORROWING NationsBank, N.A., as Agent for the Lenders 101 N. Tryon Street Independence Center, 15th Floor NC1-001-15-04 Charlotte, North Carolina 28255 Attention: Agency Services Ladies and Gentlemen: The undersigned, Hunt Manufacturing Co. (the "Borrower") refers to the Credit Agreement dated as of December 19, 1995 (as it may be amended, modified, extended or restated from time to time, the "Credit Agreement"), among the Borrower, the other Credit Parties party thereto, the Lenders party thereto and NationsBank, N.A., as Agent. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. [The undersigned hereby gives you notice that it requests a Revolving Loan advance in accordance with the provisions of Section 2.1 of the Credit Agreement and in connection therewith sets forth below the terms on which such Loan advance is requested to be made: (A) Date of Borrowing (which is a Business Day) _______________________ (B) Principal Amount of Borrowing _______________________ (C) Interest rate basis _______________________ (D) Interest Period and the last day thereof _______________________ The delivery of this Notice of Borrowing shall constitute a representation and warranty by the Borrower of the correctness of the matters specified in subsections (ii), (iii), (iv), (v) and (vi) of Sections 5.2.] 1 [The undersigned hereby gives you notice that it requests an advance of the Term Loan in accordance with the provisions of Section 2.3 of the Credit Agreement and in connection therewith sets forth below the terms on which such Loan advance is requested to be made: (A) Date of Borrowing (which is a Business Day) _______________________ (B) Principal Amount of Borrowing _______________________ (C) Interest rate basis _______________________ (D) Interest Period and the last day thereof _______________________ The delivery of this Notice of Borrowing shall constitute a representation and warranty by the Borrower of the correctness of the matters specified in subsections (ii), (iii), (iv), (v) and (vi) of Sections 5.2.] Very truly yours, HUNT MANUFACTURING CO. By ___________________________ Title: 1 Schedule 2.1(e) FORM OF REVOLVING NOTE $_________________ December 19, 1995 FOR VALUE RECEIVED, HUNT MANUFACTURING CO., a Pennsylvania corporation (the "Borrower"), hereby promises to pay to the order of __________________________, its successors and assigns (the "Lender"), at the office of NationsBank, N.A., as Agent (the "Agent"), at 101 N. Tryon Street, Independence Center, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or places as the holder hereof may designate), at the times set forth in the Credit Agreement dated as of the date hereof among the Borrower, the Lenders and the Agent (as it may be amended, modified, extended or restated from time to time, the "Credit Agreement"; all capitalized terms not otherwise defined herein shall have the meanings set forth in the Credit Agreement), but in no event later than the Termination Date, in Dollars and in immediately available funds, the principal amount of ________________________DOLLARS ($____________) or, if less than such principal amount, the aggregate unpaid principal amount of all Revolving Loans made by the Lender to the Borrower pursuant to the Credit Agreement, and to pay interest from the date hereof on the unpaid principal amount hereof, in like money, at said office, on the dates and at the rates selected in accordance with Section 2.1(d) of the Credit Agreement. Upon the occurrence and during the continuance of an Event of Default the balance outstanding hereunder shall bear interest as provided in Section 3.1 of the Credit Agreement. Further, in the event the payment of all sums due hereunder is accelerated under the terms of the Credit Agreement, this Note, and all other indebtedness of the Borrower to the Lender shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby waived by the Borrower. In the event this Note is not paid when due at any stated or accelerated maturity, the Borrower agrees to pay, in addition to the principal and interest, all costs of collection, including reasonable attorneys' fees. All borrowings evidenced by this Note and all payments and prepayments of the principal hereof and interest hereon and the respective dates thereof shall be endorsed by the holder hereof on Schedule A attached hereto and incorporated herein by reference, or on a continuation thereof which shall be attached hereto and made a part hereof; provided, however, that any failure to endorse such information on such schedule or continuation thereof shall not in any manner affect the obligation of the Borrower to make payments of principal and interest in accordance with the terms of this Note. 1 IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed by its duly authorized officer as of the day and year first above written. HUNT MANUFACTURING CO. By____________________________ Title_________________________ 2 SCHEDULE A TO THE REVOLVING NOTE OF _______________ DATED DECEMBER 19, 1995
Unpaid Name of Type Principal Person of Interest Payments Balance Making Date Loan Period Principal Interest of Note Notation - ---- ---- -------- --------- -------- -------- --------
3 Schedule 2.3(f) FORM OF TERM NOTE $_________________ December 19, 1995 FOR VALUE RECEIVED, HUNT MANUFACTURING CO., a Pennsylvania corporation (the "Borrower"), hereby promises to pay to the order of __________________________, its successors and assigns (the "Lender"), at the office of NationsBank, N.A., as Agent (the "Agent"), at 101 N. Tryon Street, Independence Center, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or places as the holder hereof may designate), at the times set forth in the Credit Agreement dated as of the date hereof among the Borrower, the Lenders and the Agent (as it may be amended, modified, extended or restated from time to time, the "Credit Agreement"; all capitalized terms not otherwise defined herein shall have the meanings set forth in the Credit Agreement), but in no event later than the Termination Date, in Dollars and in immediately available funds, the principal amount of ________________________DOLLARS ($____________), or, if less than such principal amount, the aggregate unpaid principal amount of all Term Loan advances made by the Lender to the Borrower pursuant to the Credit Agreement, and to pay interest from the date hereof on the unpaid principal amount hereof, in like money, at said office, on the dates and at the rates selected in accordance with Section 2.3(e) of the Credit Agreement. Upon the occurrence and during the continuance of an Event of Default the balance outstanding hereunder shall bear interest as provided in Section 3.1 of the Credit Agreement. Further, in the event the payment of all sums due hereunder is accelerated under the terms of the Credit Agreement, this Note, and all other indebtedness of the Borrower to the Lender shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby waived by the Borrower. In the event this Note is not paid when due at any stated or accelerated maturity, the Borrower agrees to pay, in addition to the principal and interest, all costs of collection, including reasonable attorneys' fees. All borrowings evidenced by this Note and all payments and prepayments of the principal hereof and interest hereon and the respective dates thereof shall be endorsed by the holder hereof on Schedule A attached hereto and incorporated herein by reference, or on a continuation thereof which shall be attached hereto and made a part hereof; provided, however, that any failure to endorse such information on such schedule or continuation thereof shall not in any manner affect the obligation of the Borrower to make payments of principal and interest in accordance with the terms of this Note. 1 IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed by its duly authorized officer as of the day and year first above written. HUNT MANUFACTURING CO. By____________________________ Title_________________________ 2 SCHEDULE A TO THE TERM NOTE OF _______________ DATED DECEMBER 19, 1995
Unpaid Name of Type Principal Person of Interest Payments Balance Making Date Loan Period Principal Interest of Note Notation - ---- ---- -------- --------- -------- -------- --------
3 Schedule 3.2 FORM OF NOTICE OF EXTENSION/CONVERSION NationsBank, N.A., as Agent for the Lenders 101 N. Tryon Street Independence Center, 15th Floor NC1-001-15-04 Charlotte, North Carolina 28255 Attention: Agency Services Ladies and Gentlemen: The undersigned, Hunt Manufacturing Co. (the "Borrower"), refers to the Credit Agreement dated as of December 19, 1995 (as amended, modified, extended or restated from time to time, the "Credit Agreement"), among the Borrower, the Lenders and NationsBank, N.A., as Agent. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. The Borrower hereby gives notice pursuant to Section 3.2 of the Credit Agreement that it requests an extension or conversion of a Loan outstanding under the Credit Agreement, and in connection herewith sets forth below the terms on which such extension or conversion is requested to be made: (A) Type of Loan ______________________ (A) Date of Extension or Conversion (which is the last day of the the applicable Interest Period) _______________________ (B) Principal Amount of Extension or Conversion _______________________ (C) Interest rate basis _______________________ (D) Interest Period and the last day thereof _______________________ The delivery of this Notice of Extension/Conversion shall constitute a representation and warranty by the Borrower of the correctness of the matters specified in subsections (ii), (iii), (iv), (v) and (vi) of Sections 5.2. Very truly yours, HUNT MANUFACTURING CO. By:__________________________________ Title:_______________________________ 1 Schedule 5.1(f) FORM OF LEGAL OPINION 1 Schedule 5.1(g) FORM OF LOCAL COUNSEL OPINION 1 Schedule 6.4 REQUIRED CONSENTS, AUTHORIZATIONS, NOTICES AND FILINGS 1 Schedule 6.9 INTELLECTUAL PROPERTY 1 Schedule 6.12 ERISA DISCLOSURES 1 Schedule 6.14 SUBSIDIARIES 1 Schedule 6.16 ENVIRONMENTAL DISCLOSURES 1 Schedule 7.1(c) FORM OF OFFICER'S COMPLIANCE CERTIFICATE For the fiscal quarter ended _________________, 19___. I, ____________________, Chief Financial Officer, of Hunt Manufacturing Co. (the "Borrower") hereby certify that, to the best of my knowledge and belief, with respect to that certain Credit Agreement dated as of December 19, 1995 (as amended, modified, extended or restated from time to time, the "Credit Agreement"; all of the defined terms in the Credit Agreement are incorporated herein by reference) among the Borrower, the other Credit Parties party thereto, the Lenders party thereto and NationsBank, N.A., as Agent: a. The company-prepared financial statements which accompany this certificate are true and correct in all material respects and have been prepared in accordance with generally accepted accounting principles applied on a consistent basis, subject to changes resulting from normal year-end audit adjustments. b. Since ___________ (the date of the last similar certification, or, if none, the Closing Date) no Default or Event of Default has occurred under the Credit Agreement; and Delivered herewith are detailed calculations demonstrating compliance by the Credit Parties with the financial covenants contained in Section 7.11 of the Credit Agreement as of the end of the fiscal period referred to above. This ______ day of ___________, 19__. HUNT MANUFACTURING CO. -------------------------------- Title: 1 Attachment to Officer's Certificate Computation of Financial Covenants 1 Schedule 7.12 FORM OF JOINDER AGREEMENT THIS JOINDER AGREEMENT (the "Agreement"), dated as of _____________, 19__, is by and between _____________________, a ___________________ (the "Subsidiary"), and NATIONSBANK, N.A., in its capacity as Agent under that certain Credit Agreement (as it may be amended, modified, extended or restated from time to time, the "Credit Agreement"), dated as of December 19, 1995, by and among HUNT MANUFACTURING CO., a Pennsylvania corporation (the "Borrower"), the other Credit Parties party thereto, the Lenders party thereto and NationsBank, N.A., as Agent. All of the defined terms in the Credit Agreement are incorporated herein by reference. The Borrower is required by, or has otherwise elected pursuant to, Section 7.12 of the Credit Agreement to cause the Subsidiary to become a "Guarantor". Accordingly, the Subsidiary hereby agrees as follows with the Agent, for the benefit of the Lenders: 1. The Subsidiary hereby acknowledges, agrees and confirms that, by its execution of this Agreement, the Subsidiary will be deemed to be a party to the Credit Agreement and a "Guarantor" for all purposes of the Credit Agreement, and shall have all of the obligations of a Guarantor thereunder as if it had executed the Credit Agreement. The Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Credit Agreement, including without limitation (i) all of the representations and warranties set forth in Section 6 of the Credit Agreement as they relate to such Subsidiary, (ii) all of the affirmative and negative covenants set forth in Sections 7 and 8 of the Credit Agreement and (iii) all of the undertakings and waivers set forth in Section 3 of the Credit Agreement (subject to the limitations set forth therein). Without limiting the generality of the foregoing terms of this paragraph 1, the Subsidiary hereby (i) subject to the limitation set forth in Section 4.1 of the Credit Agreement, jointly and severally together with the other Guarantors, guarantees to each Lender and the Agent, as provided in Section 4 of the Credit Agreement, the prompt payment and performance of the Borrower's Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise) strictly in accordance with the terms thereof and (ii) agrees that if any of the Borrower's Obligations are not paid or performed in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise), the Subsidiary will, jointly and severally together with the other Guarantors, promptly pay and perform the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Borrower's Obligations, the same will be promptly paid in full when due (whether 1 at extended maturity, as a mandatory prepayment, by acceleration or otherwise) in accordance with the terms of such extension or renewal. 2. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute one contract. IN WITNESS WHEREOF, the Subsidiary has caused this Joinder Agreement to be duly executed by its authorized officers, and the Agent, for the benefit of the Lenders, has caused the same to be accepted by its authorized officer, as of the day and year first above written. [SUBSIDIARY] By____________________________ Title_________________________ Acknowledged and accepted: NATIONSBANK, N.A., as Agent By______________________________ Title___________________________ 2 Schedule 8.1 INDEBTEDNESS 1 Schedule 11.3(b) FORM OF ASSIGNMENT AND ACCEPTANCE THIS ASSIGNMENT AND ACCEPTANCE dated as of ________, 199_ is entered into between ________________ ("Assignor") and ____________________ ("Assignee"). Reference is made to the Credit Agreement dated as of December 19, 1995, as amended and modified from time to time thereafter (the "Credit Agreement") among Hunt Manufacturing Co., the other Credit Parties party thereto, the Lenders party thereto and NationsBank, N.A., as Agent. Terms defined in the Credit Agreement are used herein with the same meanings. 1. The Assignor hereby sells and assigns, without recourse, to the Assignee, and the Assignee hereby purchases and assumes, without recourse, from the Assignor, effective as of the Effective Date set forth below, the interests set forth below (the "Assigned Interest") in the Assignor's rights and obligations under the Credit Agreement, including, without limitation, the interests set forth below in the Commitments of the Assignor on the effective date of the assignment designated below (the "Effective Date") and the Revolving Loans owing to the Assignor which are outstanding on the Effective Date, together with unpaid interest accrued on the assigned Loans to the Effective Date and the amount, if any, set forth below of the Fees accrued to the Effective Date for the account of the Assignor. Each of the Assignor and the Assignee hereby makes and agrees to be bound by all the representations, warranties and agreements set forth in Section 11.3(b) of the Credit Agreement, a copy of which has been received by each such party. From and after the Effective Date (i) the Assignee, if it is not already a Lender under the Credit Agreement, shall be a party to and be bound by the provisions of the Credit Agreement and, to the extent of the interests assigned by this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent of the interests assigned by this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 2. This Assignment and Acceptance shall be governed by and construed in accordance with the laws of the State of North Carolina. 1 3. Terms of Assignment (a) Date of Assignment: (b) Legal Name of Assignor: (c) Legal Name of Assignee: (d) Effective Date of Assignment: (e) Revolving Loan Commitment Percentage Assigned (expressed as a percentage set forth to at least 8 decimals) % (f) Revolving Loan Commitment Percentage of Assignor after Assignment (set forth to at least 8 decimals) % (g) Total Revolving Loans outstanding as of Effective Date $_____________ (h) Principal Amount of Revolving Loans assigned on Effective Date (the amount set forth in (g) multiplied by the percentage set forth in (e)) $_____________ (i) Term Loan Commitment Percentage Percentage Assigned (expressed as a percentage set forth to at least 8 decimals) % (j) Term Loan Commitment Percentage of Assignor after Assignment (set forth to at least 8 decimals) % (k) Outstanding balance of Assignor's portion of the Term Loan as of as of Effective Date $_____________ (l) Principal Amount of Assignor's portion of Term Loan assigned on Effective Date (the amount set forth in (k) multiplied by the percentage set forth in (i)) $_____________ 2 The terms set forth above are hereby agreed to: ____________________, as Assignor By:_____________________________________ Title:__________________________________ _____________________, as Assignee By:_____________________________________ Title:__________________________________ CONSENTED TO: NATIONSBANK, N.A., as Agent By:____________________________________ Title: HUNT MANUFACTURING CO. By:____________________________________ Title: 3 EX-99.(C) 14 STOCK PURCHASE AGREEMENT Exhibit (c) STOCK PURCHASE AGREEMENT STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of December 19, 1995, by and between Mary F. Bartol ("Shareholder") and HUNT MANUFACTURING CO., a Pennsylvania corporation (the "Company"). W I T N E S S E T H : WHEREAS, Shareholder desires to sell 2,150,165 Common Shares, par value $.10 per share, of the Company (the "Shares") to the Company, and the Company desires to purchase the Shares from the Shareholder, on the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the parties hereto, intending to be legally bound, do hereby agree as follows: 1. Sale of Shares 1.1 Sale of Shares. Pursuant to the terms of this Agreement, at the Closing (as hereinafter defined), Shareholder shall sell, transfer, assign and deliver the Shares to the Company, and the Company shall purchase and acquire the Shares from Shareholder. 1.2 Purchase Price and Payment. The aggregate purchase price (the "Purchase Price") for the Shares shall be $35,090,692, representing a per share amount equal to $16.32. 2. Closing 2.1 Closing. The closing of the transactions contemplated by this Agreement (the "Closing") shall take place immediately following the execution and delivery of this Agreement. 2.2 Deliveries by the Company to Shareholder. At the Closing, the Company shall pay the Purchase Price to Shareholder by wire transfer of federal funds or by delivery of a Company check. 2.3 Deliveries by Shareholder to the Company. At the Closing, Shareholder shall deliver, or shall cause to be delivered, to the Company, certificates evidencing the Shares, accompanied by stock powers and such other documents as may be reasonably requested by the Company, or such other evidence of transfer and assignment as the Company may reasonably request. 3. Representations and Warranties of Shareholder. Shareholder hereby represents and warrants to the Company as follows: 3.1 Authority, etc. Shareholder has full right, power, authority and capacity to execute and deliver this Agreement and to consummate and perform the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Shareholder and (assuming the due authorization, execution and delivery hereof by the Company) constitutes the legal, valid and binding obligation of Shareholder, enforceable against her in accordance with its terms, except as may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws affecting the enforcement of creditors' rights and remedies generally, and subject as to enforceability to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). 3.2 Consents. No consent, approval, waiver, license or authorization or other action by or filing with any person or governmental authority is required on the part of Shareholder in connection with the execution and delivery by Shareholder of this Agreement or the consummation by Shareholder of the transactions contemplated hereby. 3.3 Ownership of Shares. The Shares are owned lawfully of record and beneficially by Shareholder, free and clear of all liens, encumbrances, restrictions and claims of every kind whatsoever, and upon purchase of the Shares by the Company in accordance with the terms of this Agreement, the Company shall have acquired good title to such Shares free and clear of all liens, encumbrances, restrictions and claims of every kind whatsoever. 3.4 Access to Information. Shareholder has had an opportunity to discuss the Company's business, management and financial affairs with its management and to obtain all information which she believes necessary to an informed decision to sell the Shares. Shareholder is well-versed in financial matters and is able to protect her interests in connection with the transactions contemplated hereby by reason of (a) her relationships with the Company and certain of its officers and directors; (b) her sophisticated business and financial experience; and (c) the sophisticated business and financial experience of her financial advisor and other advisors. 3.5 No Other Representations. Other than as specifically set forth in this Agreement, Shareholder has made no representations or -2- warranties (written or oral, express or implied) to the Company in respect of the transactions contemplated hereby. 4. Representations and Warranties of the Company. The Company hereby represents and warrants to Shareholder as follows: 4.1 Authority, etc. The Company has full corporate power and authority to execute and deliver this Agreement and to consummate and perform the transactions contemplated hereby. The execution and delivery of this Agreement by the Company and the consummation and performance of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of the Company. This Agreement has been duly and validly executed and delivered by the Company and (assuming the due execution and delivery hereof by Shareholder) constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws affecting the enforcement of creditors' rights and remedies generally, and subject as to enforceability to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). 4.2 Consents. No consent, approval, waiver, license or authorization or other action by or filing with any person or governmental authority is required on the part of the Company in connection with the execution and delivery by the Company of this Agreement or the consummation by the Company of the transactions contemplated hereby. 4.3 Bylaws. Section 9.01 of the Bylaws of the Company (a correct copy of which is attached as Annex I hereto) was duly adopted by the Board of Directors of the Company on or before July 26, 1990 and currently is in full force and effect. 4.4 No Other Representations. Other than as specifically set forth in this Agreement, the Company has made no representations or warranties (written or oral, express or implied) to Shareholder in respect of the transactions contemplated hereby. 5. Indemnification. (a) The Company shall indemnify and hold harmless Shareholder against any and all losses, liabilities, claims, damages and expenses whatsoever as incurred (including but not limited to attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation), to which she may -3- become subject, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any inaccuracy in the representations and warranties of the Company contained herein or any failure of the Company to perform its obligations hereunder; and will reimburse Shareholder for any legal and other expenses as such expenses are reasonably incurred in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. (b) Shareholder shall indemnify and hold harmless the Company against any and all losses, liabilities, claims, damages and expenses whatsoever as incurred (including but not limited to attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation), to which it may become subject, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any inaccuracy in the representations and warranties of Shareholder contained herein or any failure of Shareholder to perform its obligations hereunder; and will reimburse the Company for any legal and other expenses as such expenses are reasonably incurred in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. 6. Survival. The representations and warranties made herein shall survive the execution and delivery of this Agreement and the Closing. 7. Further Assurances. Each party hereto shall execute and deliver such other documents or agreements as may be necessary or desirable for the implementation of this Agreement and the consummation of the transactions contemplated hereby. 8. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, heirs and personal representatives. 9. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same document. 10. Governing Law. This Agreement, and all matters relating hereto, shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania as in effect from time to time, without regard to any principles of choice of laws or conflicts of law. -4- 11. Section and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. 12. Entire Agreement. This Agreement sets forth the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes any prior negotiations, agreements, understandings or arrangements between the parties hereto with respect to the subject matter hereof. IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly executed and delivered on the day and year first above written. HUNT MANUFACTURING CO. By: ____________________________________ Name: Title: ____________________________________ Name: -5- ANNEX I Section 9. MISCELLANEOUS Section 9.01. Nonapplicability of Certain Laws. The following provisions of the Act of April 27, 1990 (No. 36) amending the Pennsylvania Business Corporation Law of 1988 and related statutes shall not be applicable to the Corporation: (1) subsections (d) through (f) of Section 511 (15 Pa. C.S. ss.511); (2) subsections (e) through (g) of Section ss.1721, (15 Pa. C.S. ss.1721); (3) Subchapter G of Chapter 25 (15 Pa. C.S. ss.2561 through ss.2567)(including Subchapters I (15 Pa. C.S. ss.2581 through ss.2583) and J (15 Pa. C.S. ss.2585 through ss.2588) which are dependent upon Subchapter G); and (4) Subchapter H of Chapter 25 (15 Pa. C.S. ss.2571 though ss.2575). The Section 9.01 shall be effective July 26, 1990. -----END PRIVACY-ENHANCED MESSAGE-----