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CONTENTS
CLAUSE PAGE
------ ----
1. INTERPRETATION....................................................... 1
2. SALE AND PURCHASE.................................................... 12
3. CONSIDERATION........................................................ 13
4. PRICE ADJUSTMENT..................................................... 13
5. RETENTION............................................................ 14
6. PROTECTION FOR THE SELLERS........................................... 15
7. COMPLETION........................................................... 15
8. WARRANTIES AND INDEMNITIES........................................... 16
9. RESTRICTIONS ON SELLERS' BUSINESS ACTIVITIES......................... 17
10. EFFECT OF COMPLETION................................................. 18
11. LIABILITY OF THE SELLERS............................................. 18
12. ENTIRE AGREEMENT..................................................... 18
13. REMEDIES AND WAIVERS................................................. 19
14. VARIATION............................................................ 19
15. ASSIGNMENT........................................................... 19
16. THIRD PARTY RIGHTS................................................... 20
17. NOTICES.............................................................. 20
18. ANNOUNCEMENTS........................................................ 22
19. CONFIDENTIALITY...................................................... 22
20. COSTS AND EXPENSES................................................... 23
21. COUNTERPARTS......................................................... 24
22. TIME OF ESSENCE...................................................... 24
23. INVALIDITY........................................................... 24
24. INTEREST............................................................. 24
25. FURTHER ASSURANCES................................................... 24
26. GOVERNING LAW AND SUBMISSION TO JURISDICTION......................... 24
SCHEDULE 1 25
PARTICULARS OF THE SELLERS AND THE COMPANY........................... 25
Part A Particulars of the Sellers.................................... 25
Part B Particulars of the Company.................................... 26
SCHEDULE 2 WARRANTIES.................................................... 27
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Part A Warranties given by the Sellers............................... 27
Part B Warranties given by the Purchaser............................. 44
SCHEDULE 3 COMPLETION OBLIGATIONS........................................ 45
Part A Sellers' Obligations.......................................... 45
Part B Purchaser's Obligations....................................... 47
Part C Sellers' and Purchaser's Obligations.......................... 48
SCHEDULE 4 COMPLETION STATEMENT.......................................... 49
Part A Completion Statement.......................................... 49
Part B Basis of preparation of Net Current Assets and Completion
Statement......................................................... 51
SCHEDULE 5 THE PROPERTY.................................................. 54
SCHEDULE 6 INTELLECTUAL PROPERTY......................................... 55
SCHEDULE 7 PROTECTIONS FOR THE SELLER.................................... 56
SCHEDULE 8 FIXED ASSETS.................................................. 64
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THIS AGREEMENT is made on __________ 2007
BETWEEN:
(1) ALAN RICHARD MORRIS, whose address is at 14 Lee Lane, Millhouse Green
Penistone, Sheffield, South Yorkshire, S36 9LN;
(2) EDWIN RHYS MORRIS, whose address is at 14 Lee Lane, Millhouse Green
Penistone, Sheffield, South Yorkshire, S36 9LN;
(3) MORGAN LAWN MORRIS, whose address is at 4 East Park Road, Harrogate, North
Yorkshire, HG1 5QT; and
(collectively, the "SELLERS" and each a "SELLER"); and
(4) GLATFELTER LYDNEY LIMITED, a company registered in England and Wales
(company registration number 05734921) whose registered office is at Lydney
Paper Mill, Church Road, Lydney, Gloucestershire GL15 5EG (the
"PURCHASER").
WHEREAS the Sellers have agreed to sell and the Purchaser has agreed to purchase
the Shares (as defined in this Agreement) in each case on the terms and subject
to the conditions of this Agreement.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement and the Schedules to it, unless the context otherwise
requires:-
"ACCEPTANCE NOTICE" has the meaning given in paragraph 9.8(a) of
Schedule 7;
"ACCOUNTS" means the audited financial statements of the
Company for the last accounting reference
period ending on the Accounts Date;
"ACCOUNTS DATE" means 31 March 2007;
"AFFILIATE" means, in relation to any person which is a
company, a company which is a subsidiary of
the person concerned or which is a holding
company of such person or a subsidiary of
such holding company;
"AGREED TERMS" means, in relation to any document, such
document in the terms agreed between the
Sellers and the Purchaser;
"API ACQUISITION DATE" means 8 December 2004 being the date of
completion of the acquisition of the business
and assets, including the employees under the
Transfer of Undertakings (Protection of
Employment) Regulations 1981 (as amended), of
Henry & Leigh Slater Limited by the
1
Company;
"ASBESTOS INDEMNITY" means the indemnity set out in clause 8.8(d);
"ASSIGNMENT" means the deed of assignment, in the agreed
terms, to be entered into on the date of this
Agreement between MW Associates Limited and
the Company in respect of the "Metbrite"
trade mark;
"ATEX REGULATIONS" means, without limitation, the Equipment and
Protective Systems for Use in Potentially
Explosive Atmospheres Regulations (1996) and
the Dangerous Substances and Explosive
Atmosphere Regulations (2002);
"ATEX STUDY INDEMNITY" means the indemnity set out in clause 8.8(b);
"BANK INSTRUCTION LETTER" means the letter, in agreed form, to be
delivered from the Escrow Agents to the
Escrow Bank in accordance with paragraph 1 of
Part C of Schedule 3;
"BREAK-FEE LETTER" means the letter from P.H. Glatfelter Company
to the Sellers dated 3 August 2007, relating
to the payment of the Earnest Money Deposit;
"BUSINESS" means the manufacture of metallised paper
conducted by or on behalf of the Company and
all activities incidental thereto;
"BUSINESS DAY" means a day (other than a Saturday or a
Sunday) on which banks are open for business
in London and a Business Day shall not
include any day when the Business is closed
down during a Christmas period which, for
Christmas 2007 shall be from 6.00 p.m. on 21
December 2007 to 9.00 a.m. on 3 January 2008
inclusive;
"BUSINESS INFORMATION" means all information, know-how and records
(whether or not confidential and in whatever
form held) including (without limitation) all
formulas, designs, specifications, drawings,
data, manuals and instructions and all
customer lists, sales information, business
plans and forecasts, and all technical or
other expertise and all computer software and
all accounting and tax records,
correspondence, orders and inquiries;
"CASH BALANCES" means cash in hand or credited to any account
with a financial institution and securities
with a maturity of less than one year which
are readily convertible into
2
cash;
"CLAIM NOTICE" has the meaning given in paragraph 6 of
Schedule 7;
"COMPANY" means Metallised Products Limited (company
registration number 05285231), basic
information concerning which is set out in
Part B of Schedule 1;
"COMPLETION" means completion of the sale and purchase of
the Shares under this Agreement;
"COMPLETION AMOUNT" means the sum of L3,000,000 adjusted:
(a) in accordance with clause 4.1; and
(b) so as to deduct an amount equal to the
Earnest Money Deposit;
"COMPLETION DATE" means the date of this Agreement;
"COMPLETION STATEMENT" means the statement, in the agreed form, to
be produced in accordance with Schedule 4;
"CONFIDENTIAL BUSINESS means Business Information which is
INFORMATION" confidential or not generally known;
"CONSIDERATION" has the meaning given in Clause 3.1;
"CONSULTANCY AGREEMENT" means an agreement other than a contract of
employment with the Company pursuant to which
an individual provides services to the
Company as a Consultant;
"CONSULTANT" means an individual providing services to the
Company pursuant to a Consultancy Agreement
where the annual fees payable to such
consultant exceed L50,000 (or the equivalent
in another currency);
"COVENANTORS" means the covenantors named in the Tax Deed;
"CPSE REPLIES" means the replies to Commercial Property
Standard Enquiries 1 (Version 2.6) and
Commercial Property Standard Enquiries 4
(version 2.1) dated 27 November 2007 given by
the Sellers to the Purchaser;
"CREDITORS" means the items listed in the Accounts as
amounts of money owed to third parties and
falling due within one year including, but
not limited to:
(a) trade creditors:
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(b) Tax;
(c) payroll creditors:
(d) other creditors;
(e) invoice discounting;
(f) accruals and deferred income; and
(g) any and all debt obligations (short
and long term) of the Business;
"CURRENT ASSETS" means the current assets of the Company,
being:
(a) stocks (including raw materials,
work-in-progress and finished goods);
(b) VAT;
(c) debtors (including trade debtors and
debtor provision);
(d) prepayments;
(e) accrued income; and
(f) cash (at bank and in hand);
"DEED OF VARIATION" means the deed of variation of the Lease, in
the agreed terms, between the Company, First
Propco Limited and P.H. Glatfelter Company to
be entered into on the date of this
Agreement;
"DISCLOSURE BUNDLE" means the bundle of documents to be appended
to the Disclosure Letter;
"DISCLOSURE LETTER" means the letter of even date with this
Agreement written by the Sellers to the
Purchaser disclosing information constituting
exceptions to the Warranties;
"DISPUTE" means any dispute, difference, controversy or
claim (of any and every kind or type, whether
based on contract, tort, statute, regulation,
or otherwise) arising out of, in relation to,
or in connection with this Agreement,
including any dispute as to the construction,
validity, interpretation, enforceability or
breach of this Agreement;
"DISTRIBUTION AND AGENCY means the indemnity set out in Clause 8.9;
INDEMNITY"
4
"DUE AMOUNT" the amount (if any) due and payable to the
Purchaser on a Relevant Claim being settled
or due and payable to the Purchaser in
relation to a Tax Claim;
"EARNEST MONEY DEPOSIT" means the non-refundable deposit of
L30,000 paid by P.H. Glatfelter Company to
the Sellers on the terms set out in the
Break-fee Letter;
"EMPLOYEES" means employees of the Company as at the date
of this Agreement;
"ENCUMBRANCE" means any claim, charge, mortgage, security,
lien, option, equity, power of sale,
usufruct, hypothecation, retention of title,
right of pre-emption, right of first refusal
or other third party rights or security
interest of any kind or an agreement to
create any of the foregoing;
"ENVIRONMENT" means all or any of the following media
(alone or in combination): air (including the
air within buildings and the air within other
natural or man-made structures whether above
or below ground); water (including surface
water, sub-surface water, groundwater,
coastal and inland waters and water in drains
or sewers and any other natural or man-made
structures); soil and land and any ecological
systems and living organisms supported by
these media;
"ENVIRONMENTAL AUTHORITY" means any legal person or body of persons
(including any government department or
government agency or court or tribunal)
having jurisdiction to determine any matter
arising under Environmental Law, including,
without limitation, the Caerphilly Borough
Council and the Environment Agency in England
and Wales;
"ENVIRONMENTAL DEED" means the deed, in the agreed terms, between
First Propco and the Company to be entered
into on Completion;
"ENVIRONMENTAL INSURANCE means the environmental insurance policy in
POLICY" relation to the Property in the agreed terms
to be entered into by the Company, the
Purchaser, First Propco and Nationwide
Building Society as named insureds on
Completion;
"ENVIRONMENTAL LAW" means all applicable laws (including, for the
avoidance of doubt, common law), statutes,
regulations, statutory guidance notes, rules,
codes, written guidelines, policies and
requirements of any Environmental Authority,
and court and other tribunal decisions of any
relevant jurisdiction in force in
5
England and Wales at Completion, related to
protection or prevention of pollution of the
Environment, protection of health or safety,
noise, regulation of emissions, discharges,
or releases of Hazardous Substances into the
Environment, or regulation of the use,
treatment, storage, burial, disposal,
transport or handling of Hazardous
Substances, including, without limitation,
the following: European Union Directive
1999/13/EC regarding emissions of volatile
organic compounds; the Environmental
Protection Act 1990; the Equipment and
Protective Systems for Use in Potentially
Explosive Atmospheres Regulations (1996); the
Dangerous Substances and Explosive Atmosphere
Regulations (2002); the Control of Major
Accident Hazards Regulations (1999) as
amended by the Control of Major Accident
Hazards (Amendment) Regulations 2005; the
Control of Asbestos Regulations (2006); the
Producer Responsibility Obligations
(Packaging Waste) Regulations 2007; and the
Pollution Prevention and Control Regulations
(2000);
"ESCROW ACCOUNT" means the joint interest-bearing bank account
at the Escrow Bank to be established in
accordance with the Escrow Letter;
"ESCROW AGENTS" the Purchaser's Solicitors and the Sellers'
Solicitors;
"ESCROW BANK" Barclays Bank PLC, whose registered office is
at 1 Churchill Place, London, E14 5HP;
"ESCROW LETTER" the letter, in the agreed form, to be signed
by the parties and authorising the Escrow
Agents to establish and operate the Escrow
Account;
"ESTIMATED NET CURRENT means the Net Current Assets balance given at
ASSETS" 26 November 2007 by the Sellers to the
Purchaser in writing;
"ESTIMATED LIABILITY" has the meaning given to that term in
paragraph 6 of Schedule 7;
"EXPERT" means an expert appointed pursuant to
paragraph 9.10 of Schedule 7;
"FINAL NET CURRENT ASSETS" means the Net Current Assets balance referred
to in paragraph 2 of Part B of Schedule 4;
6
"FIRST RELEASE DATE" means the date falling one year after the
Completion Date;
"FIRST PROPCO" means First Propco Limited registered in
England and Wales with company registration
number 05286483 whose registered office is at
14 Lee Lane, Millhouse Green, Sheffield, S36
9LN;
"FIVE ARROWS AGREEMENT" means the agreement dated 2 February 2005
between the Company and Five Arrows
Commercial Finance Limited (serial no MA
0677) in relation to the Master Invoice
Discounting Agreement (serial no: MA 0677);
"FIXED ASSETS" means the assets listed in Schedule 8, being
the capital assets of the Company each with
an estimated value at Completion in excess of
L25,000;
"HAZARDOUS SUBSTANCE" means any solid, liquid, gaseous or thermal
irritant, pollutant or contaminant,
including, without limitation, smoke,
vapours, soot, fumes, acids, alkalis, toxic
chemicals, medical waste, polychlorinated
biphenyls, trichloroethene and other volatile
organic compounds and their degradation
products, heavy metals and waste materials;
"IHTA" means the Inheritance Tax Act 1984;
"INDEMNITIES" means the Workplace Noise Indemnity, the ATEX
Study Indemnity, the PCB Inspection
Indemnity, the Asbestos Indemnity and the
Distribution and Agency Indemnity (and
"INDEMNITY" shall be construed accordingly);
"INFORMATION TECHNOLOGY" has the meaning given to that term in
paragraph 9.4 of Part A of Schedule 2;
"INSURER" means the insurer from time to time under the
Environmental Insurance Policy;
"INTELLECTUAL PROPERTY" means patents, inventions, know-how, trade
marks and service marks, rights in designs,
trade or business names, copyrights, domain
names, get-up and topography rights (whether
or not any of these is registered and
including any registration of such rights,
applications and rights to apply for such
registrations) and all rights or forms of
protection of a similar nature or having
equivalent or similar effect to any of these
which may subsist anywhere in the world;
"LEASE" means the lease between (1) First Propco
Limited and (2) Metallised Products Limited,
dated 16 May 2005,
7
relating to land and buildings registered at
HM Land Registry under title number WA39664;
"LOSSES" means all losses, liabilities, costs
(including, without limitation, legal,
consultants' and other professional fees and
costs), damages, charges, expenses, actions,
proceedings, claims and demands, including
interest, fines and penalties;
"M LICENCE AGREEMENT" means the licence agreement, in the agreed
terms, to be entered into on the date of this
Agreement between MW Associates Limited and
the Company relating to Community trade mark
number 005157714 filed on 23 June 2006;
"MATERIAL INTELLECTUAL means all Intellectual Property used by the
PROPERTY" Company and which is material in relation to
the Business and which is listed in Schedule
6;
"NET CURRENT ASSETS" means the Current Assets minus Creditors
calculated in accordance with and subject to
the provisions set out in Part B of Schedule
4;
"NOTIFIED CLAIM" has the meaning given to it in clause 5.6;
"PAYMENT ACCOUNT DETAILS" means, in relation to any payment to be made
under or pursuant to this Agreement, the
account name, account number, bank name, bank
sort code, bank location and other details
specified by the payee and necessary to
effect payment (including, where relevant,
the SWIFT number) (whether by cheque,
banker's draft, telegraphic or other
electronic means of transfer) to the payee;
"PCB INSPECTION INDEMNITY" means the indemnity set out in clause 8.8(c);
"PROPERTY PRE-EMPTION means the pre-emption agreement in the agreed
AGREEMENT" terms between the Company and First Propco
Limited relating to the Property entered into
on the date of this Agreement;
"PROPERTY" means the property details of which are set
out in Schedule 5;
"PURCHASER'S GROUP" means the Purchaser, its subsidiaries and
subsidiary undertakings, any holding company
of the Purchaser and all other subsidiaries
of any such holding company from time to
time;
"PURCHASER'S LAWYERS" means Shearman & Sterling (London) LLP of
8
Broadgate West, 9 Appold Street, London EC2A
2AP;
"REJECTION NOTICE" has the meaning given in paragraph 9.8(b) of
Schedule 7;
"RELEASE DATE" means the First Release Date or the Second
Release Date as the case may be;
"RELEVANT CLAIM" means a claim under the Warranties (excluding
the Tax Warranties), amended to reflect any
accounting adjustments made under this
Agreement;
"RESTRICTED BUSINESS" means the manufacture of metallised paper and
metallised film;
"RETENTION AMOUNT" has the meaning given to the term in Clause
3.3(a)(ii);
"SECOND RELEASE DATE" means the date falling two years after the
Completion Date;
"SELLERS' LAWYERS" means Walker Morris of Kings Court, 12 King
Street, Leeds, LS1 2HL;
"SENIOR EMPLOYEE" means any employee employed or engaged by the
Company on an annual salary (on the basis of
full time employment) in excess of
L40,000 (or the equivalent in another
currency);
"SHARES" means 99 ordinary shares of L1 each being all
the issued shares in the capital of the
Company;
"SHARES PRE-EMPTION means the pre-emption agreement in the agreed
AGREEMENT" terms between Top Propco Limited and the
Company relating to the shares in First
Propco Limited to be entered into on the date
of this Agreement;
"TA" means the Income and Corporation Taxes Act
1988;
"TAX" OR "TAXATION" means all forms of taxation and statutory,
governmental, national, state, provincial,
local or municipal charges, impositions,
duties, contribution levies or withholdings
wherever chargeable and whether of the United
Kingdom or any other jurisdiction, and all
penalties, charges, fines, surcharges, costs
and interest relating thereto;
"TAX AUTHORITY" means any taxing or other authority (whether
within or outside of the United Kingdom)
having power or authority in relation to Tax
including HM Revenue & Customs;
9
"TAX CLAIM" means a claim under the Tax Deed or the Tax
Warranties;
"TAX DEED" means the deed of covenant relating to
Taxation in the agreed terms to be entered
into at Completion;
"TAX RETURN" means any return, notice, computation or
claim in relation to Tax;
"TAX WARRANTY" means any Warranty set out in paragraph 15 of
Part A of Schedule 2;
"TCGA" means the Taxation of Chargeable Gains Act
1992;
"THIRD PARTY CLAIM" means a claim by a third party against the
Purchaser or the Company in respect of which
claim it appears to the Purchaser acting
resonably that the Sellers are likely to
become liable under the Warranties excluding
a Claim for Tax (as defined in the Tax Deed);
"TOP PROPCO LIMITED" means the company registered in England and
Wales with company registration number
05285314 whose registered office is at 14 Lee
Lane, Millhouse Green, Sheffield, S36 9LN;
"TRANSACTION DOCUMENTS" means this Agreement, the Disclosure Letter,
the Tax Deed, the Environmental Deed, the
Deed of Variation, the Property Pre-Emption
Agreement, the Shares Pre-Emption Agreement,
the Assignment, the M Licence Agreement and
the Escrow Letter;
"UK GAAP" means all Statements of Standard Accounting
Practice, Financial Reporting Standards and
Urgent Issues Task Force Abstracts issued by
the Accounting Standards Board, and mandatory
for adoption on the relevant date;
"VAT" means value added tax chargeable under the
VATA and any similar replacement or
additional tax;
"VATA" means the Value Added Tax Act 1994;
"WARRANTIES" means the warranties set out in Part A of
Schedule 2 given by the Sellers and
"WARRANTY" shall be construed accordingly;
"WELSH ASSEMBLY GRANT" means the Deed of Novation and Amendment
dated 27 February 2006 between (1) the
National Assembly for Wales, (2) Henry &
Leigh Slater Limited and (3) the Company and
all agreements and letters relating thereto;
and
10
"WORKPLACE NOISE INDEMNITY" means the indemnity set out in clause 8.8(a).
1.2 In this Agreement, unless otherwise specified:-
(a) references to clauses, sub-clauses, paragraphs, sub-paragraphs and
Schedules are to clauses, sub-clauses, paragraphs sub-paragraphs of,
and Schedules to, this Agreement;
(b) a reference to any statute or statutory provision shall be construed
as a reference to the same as it may have been, or may from time to
time be, amended, modified or re-enacted provided that this sub-clause
(b) shall not operate so as to impose any additional liability on the
Sellers which would not otherwise have arisen or to increase any
liability of the Sellers which could arise under the terms of this
agreement;
(c) references to a statutory provision include any subordinate
legislation made from time to time under that provision which is in
force at the date of this Agreement;
(d) references to a "COMPANY" shall be construed so as to include any
company, corporation or other body corporate, wherever and however
incorporated or established;
(e) references to a "PERSON" shall be construed so as to include any
individual, firm, company, government, state or agency of a state or
any joint venture, association or partnership (whether or not having
separate legal personality);
(f) the singular includes the plural and vice versa and references to one
gender include all genders;
(g) references to "INDEMNIFY" and "INDEMNIFYING" any person against any
circumstance include indemnifying and keeping him harmless from all
actions, claims and proceedings from time to time made against that
person and all loss or damage and all payments, costs or expenses made
or incurred by that person as a consequence of or which would not have
arisen but for that circumstance;
(h) a company is a "SUBSIDIARY" of another company (its "HOLDING COMPANY")
if that other company, directly or indirectly, though one or more
subsidiaries:
(i) holds a majority of the voting rights in it;
(ii) is a member or shareholder of it and has the right to appoint or
remove a majority of its board of directors or equivalent
managing body;
(iii) is a member or shareholder of it and controls alone, or pursuant
to an agreement with other shareholders or members, a majority of
the voting rights in it; or
11
(iv) has the right to exercise a dominant influence over it pursuant
to its constitutional documents or pursuant to a control
contract;
(i) any amounts denominated in a currency other than pound sterling
required to be translated into pound sterling for the purposes of this
Agreement shall, save as otherwise provided herein, be translated at
the prevailing exchange rate as at the following dates;
(i) at the date hereof for the purposes of Schedule 3; and
(ii) as at the date on which the event in question occurs for the
purposes of Schedule 4;
(j) references to writing shall include any modes of reproducing words in
a legible and non-transitory form;
(k) headings to clauses and Schedules are for convenience only and do not
affect the interpretation of this Agreement;
(l) the Schedules and any attachments form part of this Agreement and
shall have the same force and effect as if expressly set out in the
body of this Agreement, and any reference to this Agreement shall
include the Schedules;
(m) any reference to books, records or other information means books,
records or other information in any form including paper,
electronically stored data, magnetic media, film and microfilm;
(n) references to the knowledge, information, belief or awareness of any
person shall be treated as being the actual knowledge of the Sellers
(or any of them), Georgina Tallowin (in respect of the Warranties set
out in paragraph 10 of Part A of Schedule 2), Maria Tee (in respect of
the Warranties set out in paragraphs 4 to 13 and 15 (taxation) of Part
A of Schedule 2), Chris Marshall (in respect of the Warranties set out
in paragraph 3 of Part A of Schedule 2), and Hugh Campbell (in respect
of the Warranties set out in paragraphs 8.3 to 8.5 of Part A of
Schedule 2).
(o) the rule known as the ejusdem generis rule shall not apply and
accordingly general words introduced by the word "other" shall not be
given a restrictive meaning by reason of the fact that they are
preceded by words indicating a particular class of acts, matters or
things; and
(p) general words shall not be given a restrictive meaning by reason of
the fact that they are followed by particular examples intended to be
embraced by the general words.
2. SALE AND PURCHASE
2.1 The Sellers shall sell, and the Purchaser shall purchase, those Shares set
opposite its name in Part A of Schedule 1 together with all rights and
advantages attached or accruing to them as at Completion.
2.2 The Shares shall be sold free from all Encumbrances.
12
2.3 The Sellers irrevocably waive all rights of pre-emption over any of the
Shares conferred upon them by the articles of association of the Company or
in any other way and undertakes to take all other steps necessary to ensure
that any other rights of pre-emption over any of the Shares are irrevocably
waived.
3. CONSIDERATION
3.1 The total consideration (payable in cleared funds pursuant to the
provisions of this Agreement) for the sale of the Shares shall be the
payment by the Purchaser of the sum of L3.5 million adjusted in accordance
with Clause 4 (the "CONSIDERATION") payable in accordance with Clause 3.3.
3.2 The proportion of the total consideration to which each Seller is entitled
shall be that set opposite his name in Part A of Schedule 1.
3.3 Payment of the Consideration shall be made as follows:
(a) on the date of this Agreement the Purchaser shall:
(i) pay to the Sellers the Completion Amount in cash; and
(ii) deposit L500,000 (the "RETENTION AMOUNT") into the Escrow Account
to be maintained in accordance with Clause 4; and
(b) the Sellers will treat the Earnest Money Deposit as being provided on
behalf of the Purchaser as part of the Consideration.
3.4 Wherever in this Agreement provision is made for the payment by one party
to another, such payment shall be made by crediting for same day value the
account specified in the Payment Account Details (such details to be
notified in writing by the payee to the payer prior to the due date for
payment) of the party entitled to the payment by way of CHAPS transfer on
or before the due date for payment. Payment of such sum shall be a good
discharge to the payer of its obligation to make such payment and (in the
case of a payment by the Purchaser) the payer shall not be obliged to see
to the application of the Consideration as between the Sellers.
3.5 If any payment is made by the Sellers to the Purchaser pursuant to this
Agreement or the Tax Deed, the payment shall be made by way of an
adjustment of the Consideration paid by the Purchaser and the Consideration
shall be deemed to have been reduced by the amount of such payment.
3.6 Each of the parties shall comply with the requirements pertaining to that
party set out in Schedule 3.
4. PRICE ADJUSTMENT
4.1 The Consideration shall be adjusted so that there shall be deducted an
amount, if any, by which Estimated Net Current Assets are less than zero
(such amount being the "COMPLETION ADJUSTMENT") and the Completion Amount
shall be adjusted accordingly.
13
4.2 The Purchaser shall prepare the Completion Statement in accordance with the
provisions of Schedule 4. Upon the Completion Statement and Final Net
Current Assets having been agreed or determined in accordance with Schedule
4, if and to the extent that in calculating the Final Net Current Assets
shown by the Completion Statement (having added back the amount of any
Completion Adjustment) the Final Net Current Assets are less than zero,
then:
(a) the Purchaser shall be paid from the Escrow Account the aggregate
amount by which the Final Net Current Assets are less than zero (the
"SHORTFALL"); and
(b) if and to the extent that the Shortfall exceeds L50,000, the Sellers
shall (within 5 Business Days of agreement or determination) pay into
the Escrow Account an amount equal to 50 per cent of the Shortfall.
4.3 The amount of any deduction from the Escrow Account pursuant to clause
4.2(a) shall be subject to a maximum cap of L500,000 and any payment
pursuant to Clause 4.2(b) shall be subject to an aggregate maximum cap of
L250,000.
5. RETENTION
5.1 No amount shall be released out of the Escrow Account otherwise than in
accordance with Clause 4.2, this Clause 5 and Schedule 7.
5.2 Subject as otherwise provided by this Clause 5, the amount (if any) in
excess of L250,000 standing to the credit of the Escrow Account (less any
accrued interest) on the First Release Date shall be paid to the Sellers.
5.3 Subject as otherwise provided by this Clause 5, the amount (if any)
standing to the credit of the Escrow Account (including any accrued
interest) on the Second Release Date shall be paid to the Sellers.
5.4 Any interest that may accrue on the credit balance on the Escrow Account
shall be credited to the Escrow Account and any payment of principal out of
the Escrow Account shall include a payment of the interest earned on such
principal sum by the Escrow Account.
5.5 The liability to Taxation on any interest on any amount in the Escrow
Account shall be borne by the party ultimately entitled to that amount.
5.6 If, prior to a Release Date:
(a) a Relevant Claim has been notified by the Purchaser to the Sellers in
accordance with paragraph 9 of Schedule 7 (a "NOTIFIED CLAIM"); or
(b) a Tax Claim has been notified by the Purchaser to the Representative
Covenanter (as defined in the Tax Deed) and the Sellers' Lawyers in
accordance with paragraph 9 of Schedule 7; or
(c) a Third Party Claim or a Claim for Tax (as defined in the Tax Deed)
has been made and where in respect of such Claim for Tax, it appears
to the Purchaser, acting reasonably, that the Sellers are likely to
become liable under the Tax Deed,
14
then:
(i) an amount equal to the Estimated Liability or the amount of the
liability in respect of the Third Party Claim or the Claim for
Tax (as the case may be) shall be retained in the Escrow Account;
or
(ii) where the Estimated Liability or amount of the liability in
respect of the Third Party Claim or the Claim for Tax (as the
case may be) is greater than the amount held in the Escrow
Account at the date of the Claim Notice, Tax Claim, Third Party
Claim or Claim for Tax (as the case may be), then the entire
balance of the Escrow Account shall be retained in the Escrow
Account;
and shall not be released to the Sellers from the Escrow Account
otherwise than in accordance with this Clause 5 and paragraph 9 of
Schedule 7.
5.7 If, prior to a Release Date, a Notified Claim is settled or there is a Tax
Claim and there is a Due Amount, the parties shall as soon as practicable
following such settlement (or, in the case of a Tax Claim, so as to comply
with the timing set out in Clause 3 of the Tax Deed), instruct the Escrow
Agents to pay to the Purchaser out of the Escrow Account the lesser of the
Due Amount and the amount standing to the credit of the Escrow Account.
5.8 As soon as practicable following the settlement of any Notified Claim
outstanding at a Release Date in respect of which there is a Due Amount or,
if at the Relevant Date there is a Tax Claim outstanding in respect of
which there is a Due Amount, so as to comply with the timing set out in
Clause 3 of the Tax Deed, the parties shall instruct the Escrow Agents to
pay to the Purchaser out of the Escrow Account the lesser of the Due Amount
and the amount standing to the credit of the Escrow Account (together with
any interest which has accrued on the amount so paid).
5.9 Subject to Clause 5.6, at the Second Release Date and following payment of
all Due Amounts to the Purchaser from the Escrow Account, the parties
shall, as soon as practicable, instruct the Escrow Agents to pay any
balance standing to the credit of the Escrow Account (together with any
interest which has accrued on such balance) to the Sellers in equal
proportions.
5.10 Nothing in this Clause 5 or paragraph 9 of Schedule 7 permits the Sellers'
liability to pay a Relevant Claim to end on the Second Release Date if that
Relevant Claim arises or is delayed as a result of dishonesty, fraud or
wilful misconduct.
6. PROTECTION FOR THE SELLERS
6.1 The provisions of Schedule 7 shall have effect to limit or qualify any
liability of the Sellers under the Transaction Documents (excluding the
Environmental Deed in respect of which the Sellers (or any one of them)
will have no liability whatsoever).
7. COMPLETION
7.1 Completion shall take place before 11.59 p.m. on the Completion Date at the
offices of the Purchaser's Lawyers at 9 Appold Street, London EC2A 2AP.
15
7.2 At Completion:
(a) the Sellers shall procure that the obligations listed in Part A and
Part C of Schedule 3 are fulfilled;
(b) against compliance by the Sellers with their obligations under Clause
7.2(a), the Purchaser shall ensure payment of the Completion Amount to
the Sellers in accordance with Clause 3.3(a)(i) and 3.4 and the
Retention Amount into the Escrow Account in accordance with Clause
3.3(a)(ii); and
(c) the Purchaser shall procure that the obligations listed in Part B of
Schedule 3 are fulfilled.
7.3 The Purchaser shall not be obliged to complete the sale and purchase of any
of the Shares pursuant to this Agreement unless each Seller complies fully
with its obligations under Clause 7.2.
7.4 The Purchaser shall not be obliged to complete the sale and purchase of any
of the Shares unless the sale and purchase of all the Shares is completed
simultaneously. This Clause 7.4 shall not limit any other clause of this
Agreement and in particular Clause 13.
7.5 The Sellers will indemnify and keep indemnified the Company from and
against all and any Losses incurred by the Company which arise out of or
are in any way connected with any claim brought or threatened by either
Alan Richard Morris or Morgan Lawn Morris against the Company arising out
of their resignation from office.
8. WARRANTIES AND INDEMNITIES
8.1 The Sellers warrant to the Purchaser in the terms set out in Part A of
Schedule 2 as at the date of this Agreement.
8.2 The Sellers accept that the Purchaser is entering into this Agreement in
reliance upon each of the Warranties.
8.3 The Warranties are given subject to anything which is fully and fairly
disclosed in the Disclosure Letter with sufficient detail to clarify the
nature, scope and significance of the fact or matter generally disclosed in
the context of the relevant Warranty or Warranties.
8.4 The Sellers undertake (if any claim is made against any one or all of them
in connection with the sale of the Shares to the Purchaser) not to make any
claim against the Company in connection with assisting the Sellers in
giving the Warranties, preparing the Disclosure Letter and/or entering into
this Agreement and the documents entered into pursuant to this Agreement.
This Clause 8.3 shall not prevent any Seller making or pursuing any claim
or action in relation to fraud.
8.5 Each of the Warranties shall be construed as a separate and independent
warranty and (except where expressly provided to the contrary) shall not be
limited or restricted by reference to or inference from the terms of any
other Warranty or any other term of this Agreement.
16
8.6 If in respect of or in connection with any breach of any of the Warranties
(excluding Tax Warranties) or any facts or matters warranted not being true
and being misleading any amount payable to the Purchaser by the Sellers
(including, without limitation, any payment under this clause or otherwise)
is subject to any deductions or withholdings for or on account of Tax and
to the extent that such payment to the Purchaser by the Sellers has not
been increased by the amount of that deduction or withholding for or on
account of Tax, such additional amounts shall be paid to the Purchaser by
the Sellers so as to ensure that the net amount received by the Purchaser
is equal to the full amount payable to the Purchaser under this Agreement.
For the avoidance of doubt, any payment pursuant to this Clause 8.6 shall
to the extent that there are sufficient funds in the Escrow Account to
allow such payment to be made, be made from the Escrow Account.
8.7 The Purchaser warrants to the Sellers in the terms set out in Part B of
Schedule 2 as at the date of this Agreement.
8.8 The Sellers undertake to pay the Purchaser on demand (for itself and as
trustee for the benefit of the Company) a sum equal to all reasonably and
properly incurred costs and expenses which the Purchaser or the Company
incurs or suffers arising out of or in connection with any remediation
works required in order to ensure that the Company is (to the extent that
it is not already) compliant with applicable UK laws and regulations in
respect of each or any of the following:
(a) work place noise;
(b) modifications required pursuant to the ATEX Regulations;
(c) control of Polychlorinated biphenyls (or PCBs); or
(d) control of asbestos,
in each case in respect of the carrying on of the Business at the Property
in the manner in which it is carried on at the Completion Date.
8.9 The Sellers undertake to indemnify the Purchaser on demand (for itself and
as trustee for the benefit of the Company) a sum equal to any Losses
suffered or incurred relating to termination by the Company in the ordinary
course of business of:
(a) the Company's distribution arrangements in Russia and Estonia; and
(b) the Company's agency arrangements in Benelux, Finland, Portugal,
Belgium, South America, Israel, the West Indies, Hungary, Bulgaria,
Slovenia, Greece and Italy.
9. RESTRICTIONS ON SELLERS' BUSINESS ACTIVITIES
9.1 Each Seller undertakes that he will not, either alone or in conjunction
with or on behalf of any other person, do any of the following things:
(a) within three years after the Completion Date, be engaged or (except as
the holder of shares in a listed company which confer not more than
one per cent.
17
of the votes which could normally be cast at a general meeting of the
company) directly or indirectly interested in carrying on any business
within Europe which competes with or is likely to compete with the
Restricted Business;
(b) within three years after Completion induce or seek to induce any
Restricted Employee to become employed whether as employee, consultant
or otherwise by any of the Sellers provided that the placing of an
advertisement of a post available to a member of the public generally
and the recruitment of a person through an employment agency shall not
constitute a breach of this Clause 9.1(b) provided that none of the
Sellers encourages or advises such agency to approach any such
Restricted Employee; nor
(c) assist any other person to do any of the foregoing things.
9.2 The Sellers agree that they consider the restrictions contained in this
Clause 9 to be no greater than is reasonable and necessary for the
protection of the interest of the Purchaser. Notwithstanding the foregoing,
each undertaking contained in this Clause 9 shall be construed as a
separate undertaking and if one or more of the undertakings is held to be
against the public interest or unlawful or in any way an unreasonable
restraint of trade, the remaining undertakings shall continue to bind the
Sellers.
9.3 In this Clause 9, "RESTRICTED EMPLOYEE" means any present Employee of the
Company who is a Senior Employee.
10. EFFECT OF COMPLETION
Any provision of this Agreement and any other documents referred to in it
which is capable of being performed after but which has not been performed
at Completion and all Warranties and covenants and other undertakings
contained in or entered into pursuant to this Agreement shall remain in
full force and effect notwithstanding Completion.
11. LIABILITY OF THE SELLERS
11.1 The obligations of the Sellers under this Agreement are joint and several.
11.2 If any liability of one of the Sellers is, or becomes illegal, invalid or
unenforceable in any respect, that shall not affect or impair the
liabilities of the other Sellers under this Agreement.
11.3 The Purchaser may release, or compromise the liability of, any Seller or
grant time or other indulgence to any Seller without releasing or reducing
the liability of any other Seller. Where a liability of one or some but not
all of the Sellers under any obligation which is both joint and several is
released or compromised, the remaining Sellers shall continue to be
severally and shall together be jointly liable on that obligation.
12. ENTIRE AGREEMENT
12.1 This Agreement and the other Transaction Documents set out the entire
agreement between the parties to this Agreement and those documents in
respect of the transactions contemplated by this Agreement to the exclusion
of any terms implied by
18
law which may be excluded by contract and supersedes any previous written
or oral agreement between the parties in relation to the matters dealt with
in this Agreement.
12.2 The Purchaser acknowledges that it has not relied on, nor been induced to
enter into this Agreement by any representation, warranty or undertaking
not expressly incorporated into it.
12.3 So far as permitted by law and except in the case of fraud, each party
agrees and acknowledges that its only right and remedy in relation to any
warranty, representation or undertaking given in connection with this
Agreement shall be for breach of the terms of this Agreement to the
exclusion of all other rights or remedies (including those in tort or
arising under statute).
12.4 Without prejudice to the generality of the foregoing, the Purchaser
acknowledges and agrees that, save as expressly set out in this Agreement,
no representation, warranty or other assurance has been given by any of the
Sellers in respect of any projection, forecast or other forward looking
information.
13. REMEDIES AND WAIVERS
13.1 No delay or omission by any party to this Agreement in exercising any
right, power or remedy provided by law or under this Agreement or any other
documents referred to in it shall affect that right, power or remedy or
operate as a waiver thereof.
13.2 The single or partial exercise of any right, power or remedy provided by
law or under this Agreement shall not preclude any other or further
exercise of it or the exercise of any other right, power or remedy.
13.3 The rights, powers and remedies provided in this Agreement are cumulative
and not exclusive of any rights, powers and remedies provided by law.
14. VARIATION
No variation of this Agreement shall be effective unless in writing and
signed by or on behalf of each of the parties to this Agreement.
15. ASSIGNMENT
15.1 This Agreement is personal to the parties and accordingly no party may
assign (at law or in equity), transfer, charge, make the subject of a trust
or deal in any manner with any of its rights or benefits under this
Agreement or purport to do any of the same without the prior written
consent of all the other parties, such consent not to be unreasonably
withheld or delayed except that the Purchaser may, upon giving written
notice to the Sellers, assign all or any part of the benefit of, or its
rights and benefits under, this Agreement to a member of the Purchaser's
Group provided that:
(a) any such assignee remains a member of the Purchaser's Group; and
(b) before such assignee ceases to be a member of the Purchaser's Group,
the Purchaser will procure that the benefit of this Agreement and the
rights and benefits under it are (i) reassigned to the Purchaser or
(ii) (upon giving further written notice to the Sellers) assigned to
another company within the
19
Purchaser's Group (any such further assignment to be subject to the
same conditions as above).
16. THIRD PARTY RIGHTS
A person who is not a party to this Agreement shall have no right under the
Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms.
17. NOTICES
17.1 Except where expressly stated otherwise, a notice under this Agreement
shall only be effective if it is in writing, is sent by recorded delivery
and is made in accordance with this Clause 17 and, where notice is to be
served on the Sellers, is served on each of them at the addresses specified
below.
17.2 Notices under this Agreement shall be sent to a party at its address and
for the attention of the individual set out below:
(a) In the case of the Sellers:
Alan Richard Morris 14 Lee Lane
Millhouse Green
Penistone
Sheffield
South Yorkshire
S36 9LN
Edwin Rhys Morris 14 Lee Lane
Millhouse Green Penistone
Sheffield
South Yorkshire
S36 9LN
Morgan Lawn Morris 4 East Park Road
Harrogate
North Yorkshire
HG1 5QT
20
(b) In the case of the Purchaser:
Glatfelter Lydney Limited
Lydney Paper Mill
Church Road
Lydney
Gloucestershire
GL15 5EG
For the attention of: Mill Manager
With a copy to:
Glatfelter
96 South George Street
York PA 17401
USA
For the attention of: General Counsel
(c) In the case of the Sellers' Lawyers:
Walker Morris
Kings Court
12 King Street
Leeds
LS1 2HL
For the attention of: Debbie Jackson
(d) In the case of the Purchaser's Lawyers:
Shearman & Sterling LLP
9 Appold Street
London
EC2A 2AP
For the attention of: Peter King
Provided that a party may change its notice details on giving notice to the
other party of the change in accordance with this Clause 17.
17.3 Any notice given under this Agreement shall, in the absence of earlier
receipt be deemed to have been duly given if sent by recorded post, two
clear Business Days after the date of posting.
21
18. ANNOUNCEMENTS
No announcement or circular concerning the sale of the Shares or otherwise
in connection with the existence or the subject matter of this Agreement
shall be made or issued by or on behalf of the Sellers without the prior
written approval of the Purchaser. This shall not affect any announcement
or circular required by law or any regulatory body, including the United
States Securities and Exchange Commission, or the rules of any recognised
stock exchange or regulatory body to which that party is subject but in
such circumstances the party with an obligation to make an announcement or
issue a circular shall consult with the other party or parties insofar as
is reasonably practicable before complying with such an obligation.
19. CONFIDENTIALITY
19.1 Subject to Clause 19.3, the Sellers shall:
(a) treat as confidential:
(i) the provisions of the Transaction Documents and any information
regarding the negotiations relating to the Transaction Documents;
(ii) all information about the Purchaser and any member of the
Purchaser's Group obtained or received by it as a result of
negotiating, entering into or performing its obligations under
any of the Transaction Documents or the performance by the other
parties of their obligations under any of the Transaction
Documents; and
(iii) all information used in or otherwise relating to the business,
financial or other affairs of the Company (including future plans
and targets),
together, the "PURCHASER CONFIDENTIAL INFORMATION"; and
(b) not, except with the prior written consent of the Purchaser, publish
or otherwise disclose to any person or use any Purchaser Confidential
Information.
19.2 Subject to Clause 19.3, the Purchaser shall procure that each member of the
Purchaser's Group shall:
(a) treat as confidential:
(i) the provisions of the Transaction Documents and any information
regarding the negotiations relating to the Transaction Documents;
and
(ii) all information about the Sellers obtained or received by it as a
result of negotiating, entering into or performing its
obligations under any of the Transaction Documents or the
performance by the other parties of their obligations under any
of the Transaction Documents,
together, the "SELLERS' CONFIDENTIAL INFORMATION"; and
22
(b) not, except with the prior written consent of the Sellers, publish or
otherwise disclose to any person or use any Sellers' Confidential
Information.
19.3 Neither Clause 19.1 nor 19.2 shall prohibit disclosure or use of any
information if and to the extent:
(a) the disclosure or use is required by law, any regulatory body or the
rules and regulations of any recognised stock exchange or regulatory
body including, but not limited to, the US Securities an Exchange
Commission in the case of the Purchaser;
(b) the disclosure or use is required for the purposes of any judicial
proceedings arising out of this Agreement or any of the Transaction
Documents or the disclosure is required to be made to a Tax Authority
in connection with the Taxation affairs of the disclosing party;
(c) the disclosure or use is required to vest the full benefit of this
Agreement in any of the Sellers or in the Purchaser, as the case may
be;
(d) the disclosure or use is required in the view of the Purchaser, acting
reasonably, for any filing or submission to be made in furtherance of
securing any competition or regulatory approvals;
(e) the disclosure is made to professional advisers of the Sellers or the
Purchaser provided that such disclosure is made in terms that such
professional advisers, auditors or bankers undertake to comply with
the provisions of Clauses 19.1 or 19.2 (as the case may be) in respect
of such information as if they were a party to the Agreement;
(f) the information has come into the public domain (other than through
the fault of that party or the fault of any person to whom such
information is disclosed in accordance with sub-paragraph (e);
(g) the information is at any time after the date of this Agreement
lawfully acquired on a non-confidential basis from a third party who,
as far as the Sellers are or the Purchaser is (as the case may be)
aware, does not owe the other party or any of its affiliates an
obligation of confidence in relation to it.
19.4 The restrictions contained in this Clause 19 shall survive Completion or
termination of this Agreement for any reason and shall continue for a
period of three years from the date of this Agreement.
19.5 The confidentiality agreement between the Purchaser and the Sellers dated
16 April 2007 is hereby terminated and shall have no further force or
effect.
20. COSTS AND EXPENSES
Except as otherwise stated in this Agreement, each party shall pay its own
costs and expenses in relation to the negotiation, preparation, execution
and carrying into effect of this Agreement and all other Transaction
Documents. For the avoidance of doubt, the Company shall not pay any such
costs and expenses.
23
21. COUNTERPARTS
This Agreement may be executed in any number of counterparts, and by the
parties on separate counterparts, but shall not be effective until each
party has executed at least one counterpart. Each counterpart shall
constitute an original of this Agreement, but all the counterparts shall
together constitute but one and the same instrument.
22. TIME OF ESSENCE
Except as otherwise expressly provided, time is of the essence in this
Agreement, both as regards, any dates, times and periods mentioned and as
regards any dates, times and periods which may be substituted for them in
accordance with this Agreement or by agreement in writing between the
parties.
23. INVALIDITY
If any provision of this Agreement is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, that shall
not affect or impair the legality, validity or enforceability in that
jurisdiction of any other provision of this Agreement.
24. INTEREST
If the Sellers or the Purchaser default in the payment when due of any sum
payable under this Agreement the liability of the Sellers or the Purchaser
(as the case may be) shall be increased to include interest on such sum
from the date when such payment is due until the date of actual payment (as
well after as before judgment) at a rate per annum of two per cent. above
the base rate from time to time of Barclays Bank Plc. Such interest shall
accrue from day to day and shall be without prejudice to any other remedy
available to the Sellers or the Purchaser (as the case may be) in respect
of such default.
25. FURTHER ASSURANCES
The Sellers shall, and shall use reasonable endeavours to procure that any
necessary third party shall, execute such documents and do such acts and
things as the Purchaser may reasonably require for the purpose of giving to
the Purchaser the full benefit of all the provisions of this Agreement.
26. GOVERNING LAW AND SUBMISSION TO JURISDICTION
26.1 This Agreement shall be governed by and construed in accordance with
English law.
26.2 Each of the parties irrevocably submits to the jurisdiction of the High
Court of England & Wales and agrees that, subject to the provisions of
Schedule 7, the High Court shall have exclusive jurisdiction to settle any
Disputes which may arise out of or in connection with this Agreement and
any documents executed or agreed pursuant to it.
IN WITNESS whereof this Agreement has been entered into on the date first above
written.
24
SCHEDULE 1
PARTICULARS OF THE SELLERS AND THE COMPANY
PART A
PARTICULARS OF THE SELLERS
NAME & ADDRESS OF SELLER SHARES SOLD CONSIDERATION
------------------------ ----------- -------------
Alan Richard Morris 33 L1,166,666.66
14 Lee Lane
Millhouse Green
Penistone
Sheffield
South Yorkshire
S36 9LN
Edwin Rhys Morris 33 L1,166,666.66
14 Lee Lane
Millhouse Green
Penistone
Sheffield
South Yorkshire
S36 9LN
Morgan Lawn Morris 33 L1,166,666.66
4 East Park Road
Harrogate
North Yorkshire
HG1 5QT
25
PART B
PARTICULARS OF THE COMPANY
Registered Number 05285231
Registered Office Pontygwindy Industrial Estate
Caerphilly
Mid Glamorgan
CF83 3HU
Date and Place of Incorporation 12/11/2004, UK
Directors A R Morris
Secretary M L Morris
Share capital 100 authorised, 99 issued ordinary shares of
L1 each
Accounting Reference Date 31/03
Auditors Broomfield & Alexander Limited
Waters Lane Chambers
Waters Lane Newport
NP20 1LA
Tax Residence England and Wales
Tax District and Reference Number South Wales Area
14th Floor
Phase 2 Building
Llanishen
Cardiff
CF14 5FP
Ref. 204/29658/18261
VAT Number 847 7496 67A
26
SCHEDULE 2
WARRANTIES
PART A
WARRANTIES GIVEN BY THE SELLERS
1. GENERAL CORPORATE INFORMATION
1.1 THE COMPANY AND THE SHARES
(a) The Sellers specified in Part A of Schedule 1 are the sole legal and
beneficial owners of the Shares and have the right to exercise all
voting and other rights over the Shares.
(b) The Shares comprise the whole of the issued and allotted share capital
of the Company, have been properly and validly issued and allotted and
are each fully paid.
(c) No person has the right (whether exercisable now or in the future and
whether contingent or not) to call for the allotment, conversion,
issue, registration, sale or transfer, amortisation or repayment of
any share capital or any other security giving rise to a right over,
or an interest in, the capital of the Company under any option,
agreement or other arrangement (including conversion rights and rights
of pre-emption).
(d) There are no Encumbrances on the Shares.
(e) All consents for the transfer of the Shares have been obtained or will
be obtained by Completion.
(f) The Shares have not been and are not listed on any stock exchange or
regulated market.
(g) The Company does not:
(i) have any interest in, nor has agreed to acquire, any share
capital or other security referred to in paragraph (c) above of
any other company (wherever incorporated); or
(ii) has any branch, division, establishment or operations outside the
jurisdiction in which it is incorporated.
(h) The particulars contained in Schedule 1 are true and accurate.
1.2 CONSTITUTIONAL DOCUMENTS, CORPORATE REGISTERS AND MINUTE BOOKS
(a) The constitutional documents attached to the Disclosure Letter are
true, complete and accurate copies of the constitutional documents of
the Company and there have not been and are not any breaches by the
Company of its constitutional documents.
27
(b) The registers and minute books required to be maintained by the
Company under the law of the jurisdiction of its incorporation are
up-to-date, are maintained in accordance with applicable law and
contain complete and accurate records of all matters required to be
dealt with in such books and records.
(c) All registers and books referred to in paragraph (b) above are in the
possession (or under the control) of the Company and no notice or
allegation that any of such books and records are incorrect or should
be rectified has been received.
(d) All registrations, filings, publications and other formalities
required by applicable law to be made or delivered by the Company to
the Registrar of Companies have been duly made or delivered on a
timely basis.
1.3 NO BREACH
The execution and delivery of, and the performance by the Sellers of their
obligations under, this Agreement, and any of the Transaction Documents to
be executed by the Sellers pursuant to or in connection with this Agreement
will not result in:
(a) a breach of, or give rise to a default under, any contract, licence or
instrument to which any of the Sellers is a party or by which it is
bound;
(b) a violation or breach of any applicable laws or regulations or of any
order, decree or judgment of any court, governmental agency or
regulatory body by which any of the Sellers is bound; or
(c) a requirement for any of the Sellers to obtain any consent or approval
of, or give any notice to or make any registration with any
governmental, regulatory or other authority which has not been
obtained or made at the date of this Agreement on a basis which is
both unconditional and cannot be revoked.
2. AUTHORITY AND CAPACITY
The Transaction Documents will, when executed, constitute valid and binding
obligations on the Sellers, in accordance with their respective terms.
3. CONTRACTS AND COMMITMENTS
3.1 The Company is not a party to or subject to any obligation, contract,
arrangement, transaction or understanding (other than in relation to any
property, lease or contract of employment) which:
(a) is not in the ordinary and usual course of business; or
(b) is not wholly on an arm's length basis; or
(c) is of a long term nature (that is, unlikely to have been fully
performed, in accordance with its terms, more than six months after
the date of Completion or incapable of termination by the Company
within six months of Completion; or
28
(d) restricts its freedom to carry on its business in any part of the
world in such manner as it thinks fit so as to have a material adverse
effect on the Company; or
(e) is of a loss making nature (that is known to be likely to result in
loss on completion of performance) which is material to the Company in
the context of the Business as a whole; or
(f) cannot readily be fulfilled or performed on time without undue or
unusual expenditure of money or effort; or
(g) requires the Business to reveal confidential information, gross margin
or profits, or to otherwise share sensitive or confidential
information with a supplier or customer that is not normally shared in
such transactions; or
(h) contains any antidiscrimination pricing or other provision requiring
the Company to offer or adjust any pricing to any customer to the
lowest pricing offered to another customer,
except paragraphs (c) and (e) and shall not apply in the case of orders
that have been received by the Company on or before Completion.
3.2 During the last 12 months, no significant customer of or any significant
supplier to the Company has ceased to deal with the Company or has
indicated to the Company an intention to cease to deal with the Company,
either in whole or in part, or on materially different terms, and, so far
as the Sellers are aware, no such person has indicated that they are likely
to cease to deal with the Company or deal with the Company on a materially
smaller scale or (in writing) on materially different terms. For the
purposes of paragraph 3.4(a) a "significant customer" is a customer who has
accounted for more than 5 per cent of turnover in any of the 2006 and 2007
calendar years and a significant supplier is a supplier who has accounted
for more than 5 per cent of operating costs in any of the 2006 and 2007
calendar years.
3.3 (a) The Company is not nor has been party to any contract arrangement or
understanding material to the Business with any current or former
employee or current or former director or officer or any current or
former Consultant of the Company or any person connected (as defined
in section 252 and 253 of the Companies Act 2006) with any of such
persons, or in which any such person as aforesaid is interested
(whether directly or indirectly), other than on normal commercial
terms in the ordinary and usual course of business.
(b) There are no existing contracts or arrangements between or involving
the Company and any of the Sellers and/or any person connected with
any of them.
(c) Any existing contracts or arrangements between or involving the
Company and any of the Sellers and/or any person connected with any of
them, together with any outstanding liabilities, shall be terminated
and settled at or prior to Completion.
3.4 So far as the Sellers are aware:
29
(a) all the contracts in respect of significant customers or significant
suppliers to which the Company is a party are valid and binding
obligations of the parties thereto and the terms thereof have been
materially complied with by the Company and by any other party to such
contracts.
(b) no notice of termination or of intention to terminate has been
received in respect of any such contracts and there are no grounds for
rescission, avoidance or repudiation of any of such material
contracts.
3.5 The Company has not, nor has agreed to become, a member of any joint
venture, consortium, partnership or other unincorporated association (other
than a recognised trade association in relation to the Company has a
liability or obligation except for the payment of annual subscription or
membership fees).
3.6 The Company has not applied for or received any grant, allowance, and / or
subsidy from any supranational, national or local authority or government
agency during the last six years.
4. LEGAL COMPLIANCE
4.1 So far as the Sellers are aware, as at the date of the Agreement, the
Company has all licences, consents, authorisations, orders, warrants,
confirmations, permissions, certificates, approvals and authorities
necessary for the carrying on of the businesses and operations of the
Company ("LICENCES") and such Licences are in full force and effect and
have been and are being complied with in accordance with their terms and to
the extent required by law. There is no investigation or proceeding
outstanding in respect of any such Licences.
4.2
(a) The Company is conducting, and, so far as the Sellers are aware,
during the two year period prior to Completion, has conducted the
Business in material compliance with applicable laws and regulations
in each country in which the Business is carried on and has full
corporate power and authority to carry on such Business and to own the
material property and assets it owns.
(b) So far as the Sellers are aware, there is no investigation,
disciplinary proceedings, or order, decree, decision or judgment of,
any court, tribunal, arbitrator, governmental agency or regulatory
body outstanding against the Company which will have a material
adverse effect upon the Business.
(c) The Company has not received any written notice from any court,
tribunal, arbitrator, governmental agency or regulatory body with
respect to a violation and/or failure to comply with any such
applicable law, regulation, or requiring it to take or omit any action
which in any case would have a material adverse effect on the
Business.
(d) So far as the Sellers are aware, the Company is conducting and, during
the two year period prior to Completion, has conducted the Business as
carried on at the Property in material compliance with Environmental
Law.
30
5. LITIGATION
5.1 There is no claim, legal action, proceeding, suit, litigation, prosecution,
investigation, enquiry or arbitration in which the Company is involved
whether as claimant or defendant or as another party (other than as
claimant in the collection of debts arising in the ordinary and usual
course of its business (none of which exceeds L50,000)) in respect of which
the amount claimed is more than L10,000 or which is otherwise material to
the Business.
5.2 So far as the Sellers are aware, no such claim, legal action, proceeding,
suit, litigation, prosecution, investigation, enquiry or arbitration is
pending or threatened by or against the Company.
6. ACCOUNTS
6.1 The Accounts:
(a) have been prepared on a basis consistent with UK GAAP; and
(b) fairly present in all material respects the state of affairs of the
Company as at the Accounts Date for the financial year ended on that
date.
6.2 (a) So far as the Sellers are aware, the management accounts relating to
the Company for the period ended 31 August 2007 (the "MANAGEMENT
ACCOUNTS" and the "MANAGEMENT ACCOUNTS DATE", respectively) (which it
is acknowledged have not been the subject of an audit report):
(i) have been accurately prepared with due care and attention in
compliance with the Company's procedures and good commercial
practice; and
(ii) have been prepared on a basis consistent with the management
accounts of the Company for the preceding 12 months.
(b) The Management Accounts do not materially misstate the assets and
liabilities of the Company as at the Management Accounts Date nor the
profits or losses of the Company for the period concerned.
6.3 The audited accounts of the Company for the last two financial years have
been duly filed with the appropriate body in the relevant jurisdiction on a
timely basis.
6.4 The Accounts make full provision for all actual liabilities, proper
provision (or note) for all contingent liabilities and provision reasonably
regarded as adequate for bad and doubtful debts in each case if and to the
extent required by UK generally accepted accounting principles.
6.5 The rights of the Company in respect of debts shown in the books and
records of the Company
(a) are valid and subject to a legal right of enforcement; and
31
(b) are not subject to any valid defence, right of set-off or
counter-claim, withholding or other deduction, subject always to any
provisions made in respect of such debts in the Completion Statement
or in the Accounts.
6.6 Save in respect of the Five Arrows Agreement, the Company has not factored
or discounted any of its debts or other receivables or agreed to do so.
6.7 The books of account and financial records of the Company are up to date
and maintained in accordance with all applicable legal requirements on a
proper and consistent basis and contain appropriate records of all matters
to be dealt with in such books and all such books and records and all other
documents (including documents of title) which are the property of the
Company or ought to be in its possession are in its possession (or under
its control).
7. FINANCIAL OBLIGATIONS
7.1 Material details of all financial facilities (including loans, derivatives
and hedging arrangements) available to the Company and the amounts
outstanding under them are set out in the Disclosure Letter and the Sellers
have supplied true and correct copies of all terms relating thereto.
7.2 The total amount borrowed by the Company:
(a) from its bankers does not exceed its facilities at the Completion
Date; and
(b) does not exceed any limitation on its borrowings contained in its
constitutional documents or in any debenture or loan stock deed or
credit agreement or other instrument.
7.3 The Company has not engaged in any borrowing or financing which would not
have been required to be reflected in the audited balance sheet of the
Company as at the Accounts Date.
7.4 There is no outstanding guarantee, indemnity or security (whether or not
legally binding) given:
(a) by the Company; or
(b) for the benefit of the Company.
7.5 There are no loans due to the Company from any Seller or any person
beneficially interested in any part of the share capital of the Company, or
any director of the Company or any person connected with any such director,
which are not of an entirely arm's length nature and/or in the ordinary
course of business, and which will not be settled prior to or at
Completion.
8. PROPERTY AND ASSETS
8.1 REPLIES TO ENQUIRIES
So far as the Sellers are aware, the CPSE Replies are true, accurate and
not misleading.
32
8.2 THE PROPERTY
(a) The Property comprises all of the premises and land owned, occupied or
otherwise used in connection with the business of the Company or in
which the Company has an interest.
(b) The details of the Property set out in Schedule 5 are true, complete
and not misleading.
(c) The Company is the lessee of the whole Property and is in possession
of the whole of the Property and the Company has not received notice
in writing that any other person is in, or otherwise entitled to,
occupation or use.
(d) The Company has no continuing liability in respect of any leasehold
property other than the Property.
(e) Save as disclosed by the title deeds and documents which have been
disclosed to the Purchaser, there are no mortgages, charges (whether
legal or equitable and whether fixed or floating) or debentures, rent
charges, liabilities to maintain roadways, liens (whether for costs or
to an unpaid vendor or otherwise), annuities or other unusual
outgoings, or trusts (whether for securing money or otherwise),
affecting the Property or the proceeds of sale thereof.
8.3 All assets included in the Accounts or acquired by the Company since the
Accounts Date, other than any assets disposed of or realised in the
ordinary and usual course of business, and excepting rights and retention
of title arrangements arising by operation of law in the ordinary and usual
course of business are:
(a) legally and beneficially owned by the Company;
(b) where capable of possession, in the possession of, or under the
control of the Company,
and none of such assets is the subject of an Encumbrance. True and accurate
details of the Fixed Assets are set out in Schedule 8.
8.4 The plant and machinery, vehicles and other equipment owned by the Company
are suitable for the purposes for which they are used in the Business.
8.5 So far as the Sellers are aware, the property, rights and assets owned,
leased or otherwise used by the Company comprise all the property, rights
and assets necessary or convenient for the carrying on of the Business
fully and effectively in, and to the extent to, which it is presently
conducted.
9. INTELLECTUAL PROPERTY AND INFORMATION TECHNOLOGY
9.1 (a) So far as the Sellers are aware, all the Material Intellectual
Property is legally owned by, licensed to or used under the authority
of the owner by the Company. Brief details of all such licences and
authorities (excluding any shrink-wrap licences for computer software)
are set out in paragraph 4 of Schedule 6.
33
(b) All the Material Intellectual Property which is owned by the Company
is:
(i) not being infringed or attacked or opposed by any person;
(ii) not licensed to a third party except under those licences, brief
details of which are set out in paragraph 3 of Schedule 6 or
subject to any encumbrance; and
(iii) listed and briefly described in paragraphs 1 and 2 of Schedule
6.
9.2 The several licences and agreements included in the Material Intellectual
Property (including all amendments, novations, supplements or replacements
to those licences and agreements), brief details of which are set out in
paragraphs 3 and 4 of Schedule 6 and true and accurate copies of which are
included in the Disclosure Bundle, are in full force and effect and no
notice has been given on either side to terminate them and the obligations
of all parties have been fully complied with.
9.3 So far as the Sellers are aware, all patentable inventions made by
Employees of the Company and used in the Business were made in the normal
course of the duties of the Employees concerned and there are no
outstanding or expected claims against the Company under any contract or
under any law providing for employee compensation in respect of any rights
or interests in Intellectual Property.
9.4 For the purposes of this paragraph 9.4
(a) "INFORMATION TECHNOLOGY" means computer systems, communication
systems, software and hardware which at or before Completion is used
in the Business.
(b) In the 24 months prior to the date of this Agreement, there have been
no failures or breakdowns of any Information Technology which have
caused any substantial disruption or interruption in or to the
Business or which have had a material adverse effect on the Business.
(c) The Company has in place reasonably adequate procedures to prevent
unauthorised access to and the introduction of viruses into the
Information Technology, and for the taking and storing on-site and
off-site of back-up copies of the software and data contained in the
Information Technology.
(d) Details of all agreements or arrangements material to the Business
relating to the maintenance and support, security, disaster recovery,
management and utilisation (including escrow arrangements relating to
the deposit of source codes, facilities management and computer bureau
services agreements) of the Information Technology are disclosed in
the Disclosure Bundle.
9.5 (a) So far as the Sellers are aware, the Company has complied throughout
the last 24 months in all material respects with applicable
requirements (including registration or notification requirements) of
applicable data protection legislation.
34
(b) No notice alleging non-compliance with any such legislation (including
any enforcement notice, deregistration notice, transfer prohibition
notice or equivalent notice) has been received by the Company.
(c) The Company has not received any claim from any individual in respect
of any infringement or alleged infringement of any applicable data
protection legislation.
10. EMPLOYEES AND EMPLOYEE BENEFITS
10.1 GENERAL
Full and accurate details are contained in the Disclosure Letter of:
(a) the Employees (including details of their respective salaries, length
of service, notice periods and benefits);
(b) the terms of all current contracts of employment of the directors and
any Senior Employees;
(c) all terms of employment or benefits provided of general application or
of application to a particular grade of or category of Employee
including but not limited to copies of any staff handbooks and
policies or arrangements which apply to any Employee;
(d) the terms of all current recognition, procedural, collective or other
agreements between the Company and any trade union, works council or
other body representing the Employees of any of them;
(e) the terms of all share incentive schemes, share option schemes, profit
sharing, bonus, commission or other incentive schemes, permanent
health insurance, medical, directors' and officers' insurance, travel,
car, redundancy and any other benefit schemes applicable to the
directors or any of the Employees or their dependents (the "SCHEMES");
and
(f) copies of all Consultancy Agreements with the Company.
10.2 No payment has been made or promised to be made or benefit given or
promised to be given by the Company in connection with the actual or
proposed termination or suspension of employment or variation of any
contract of employment of any director, Employee or former employee or
former director.
10.3 In the last 12 months no employee has been made redundant or has been given
notice of redundancy and the Company has not given notice of redundancies
to the Secretary of State or started consultations with appropriate
representatives under the provisions of Part IV of the Trade Union and
Labour Relations (Consolidation) Act 1992.
10.4 The Disclosure Letter sets out details of redundancy payments made by the
Company. There is no agreed procedure for selection of employees for
redundancy. In the event of termination of employment by reason of
redundancy, none of the Employees would have an express or implied
contractual right to receive redundancy payments from the
35
Company in excess of minimum statutory redundancy payments provided under
UK law.
10.5 The Company has paid or discharged in full or will pay or discharge in full
in respect of the period up to and including the last regular date for such
payments prior to the date of Completion the salaries and wages and other
benefits of all of its directors, Employees, former employees and former
directors (including reimbursement of all expenses properly due to such
persons) and shall make or have made all related payments to third party
benefit providers and all related payments (including but not limited to
payments of income tax and National Insurance contributions) to the
relevant authorities in respect of that period.
10.6 There are no amounts owing or agreed to be loaned or advanced by the
Company to any of its Employees, directors or former employees or former
directors (other than amounts representing remuneration accrued due for the
current pay period, accrued holiday pay for the current holiday year or for
reimbursement of business expenses).
10.7 The Company has in relation to each of its Employees and former employees
complied in all material respects with all applicable legislation,
regulations, codes of conduct, codes of practice, collective agreements,
terms and conditions of employment, orders, agreements with third parties,
and awards relevant to their conditions of service or to the relations
between it and the Employees and former employees or any recognised trade
union or body representing the Employees and has complied in all material
respects with all its obligations concerning the health and safety at work
of each of the Employees and former employees and has not incurred any
liability to any Employee or former employee in respect of any accident or
injury.
10.8 No Senior Employee nor any material number, grade or category of Employees
has given or received notice of termination of his or their contract of
employment.
10.9 No Employees are on secondment, maternity leave or absent on grounds of
disability, long term sickness or other leave of absence and have, or may
have, a statutory or contractual right to return to work.
10.10 There are no outstanding offers of employment or engagement to work in the
Company and no person has accepted such an offer but not yet taken up the
position accepted, and, so far as the Sellers are aware, no Employee
intends to resign as a result of the acquisition of the Shares by the
Purchaser or other performance of the terms of this Agreement.
10.11 The acquisition of the Shares or change of control or ownership of the
Company under this Agreement will not entitle any of the directors or
Employees of the Company to terminate his employment or engagement nor
trigger any entitlement on the part of any director or Employee to receive
a right or benefit or to receive an increased right or benefit.
10.12 The Company has not entered into any arrangement regarding any future
variation of any contract of employment in respect of any Employee or any
agreement imposing an obligation on the Company to increase the basis
and/or rates of remuneration and/or the provision of benefits in kind to or
on behalf of any of the Employees at any future date.
36
10.13 There are no contracts of employment (written or unwritten) with any
director or Employee which require the employing company to give more than
three months' notice to terminate the employment of such person.
10.14 There are no complaints, disputes or claims pending or threatened against
the Company of whatsoever nature in relation to any Employee or former
employee and, so far as the Sellers are aware, there are no matters which
could give rise to any such complaints, disputes or claims.
10.15 So far as the Sellers are aware, since the API Acquisition Date all
disciplinary matters and grievances have materially complied with the
requirements of the Employment Act 2002 and the Employment Act 2002
(Dispute Resolution) Regulations 2004.
10.16 The Company has not since the API Acquisition Date entered into any
agreement, which involved or may involve the Company acquiring or disposing
of any undertaking or part of one, to which the Transfer of Undertaking
(Protection of Employment) Regulations 1981 or 2006 as amended from time to
time may apply and which affected or may affect any Employee.
10.17 Save as disclosed in the Disclosure Letter no Employees are member of a
trade union or any other body representing workers and there is no trade
union recognised or works council in existence in relation to any of the
Employees for the purposes of collective bargaining or any other purposes.
10.18 Since the API Acquisition Date no written request has been received by the
Company for recognition of a trade union in respect of all or any of the
Employees.
10.19 Since the API Acquisition Date the Company has not been engaged or
involved in any industrial or trade dispute or any dispute or negotiation
with any Employees, former employees, trade union, works council or any
other body representing any Employee or any number or category of Employees
or former employees.
10.20 There are no enquiries or investigations affecting the Company in relation
to any of the Employees by the Equal Opportunities Commission, the
Commission for Racial Equality, the Health and Safety Executive, the
Disability Rights Commission or by any other regulatory or governmental
body which is responsible for employment matters.
10.21 Full details of all health and safety policies and procedures, health and
safety committees, health and safety representatives, and any written
complaints, recommendations by the Health and Safety Executive,
investigations by the Health and Safety Executive or claims relating to
health and safety issues made or carried out since the API Acquisition Date
and affecting the Company and the Employees or former employees have been
disclosed in the Disclosure Letter.
10.22 PENSIONS
The Company has complied and continues to comply with all legal obligations
to offer the Employees access to a stakeholder pension scheme in accordance
with UK law. Otherwise, the Company does not have any arrangements or
agreements to provide any sort of pension of retirement benefits to the
Employees or any former
37
employees or their dependents, nor is the Company under any obligation to
make any contributions to any personal pension arrangements of any of the
Employees. None of the Employees have any rights that relate to or are in
any way connected with an occupational pension scheme which rights were or
may have been preserved by operation of the Transfer of Undertakings
(Protection of Employment) Regulations 1981 on the transfer which occurred
on the API Acquisition Date.
11. ENVIRONMENT
11.1 So far as the Sellers are aware all relevant documentation in the
possession, control or actual knowledge of the Sellers in connection with
the Environment in respect of the Property has been provided to the
relevant Insurer in connection with the Environmental Insurance Policy.
12. ANTI-TRUST
12.1 So far as the Sellers are aware, the Company is not a party to any
agreement, arrangement or concerted practice nor is it carrying on any
practice material to the Business:
(a) which in whole or in part may contravene or may be invalidated by any
anti-trust, fair trading, dumping, consumer protection or similar
legislation in any jurisdiction where the Company has assets or
carries on business or sells its goods and services;
(b) in particular and without prejudice to the generality of the
foregoing, which in whole or in part contravenes Article 81(1) or 82
of the Treaty of Rome, Chapters I or II of the Competition Act 1998 or
any equivalent national legislation in any member state of the
European Economic Area; or
(c) in respect of which any filing, registration or notification is
required or is advisable pursuant to the legislation referred to in
(a) or (b) above (whether or not the same has in fact been made).
12.2 So far as the Sellers are aware, the Company has not received directly or
indirectly any advantage in any form whatsoever from state resources which
could amount to state aid within the meaning of Article 87(1) EC Treaty
requiring exemption by the European Commission and which has not received
such exemption.
12.3 So far as the Sellers are aware, the Company has not been awarded any
contract by a state entity in breach of EC Council Directive 93/36 (as
amended), EC Council Directive 93/37 (as amended); EC Council Directive
93/38 (as amended) and EC Council Directive 92/50 (as amended) (together
"the Procurement Directives") or national legislation implementing the
Procurement Directives.
13. INSURANCE
13.1 Summary particulars of the insurances of the Company material to the
Business are contained in the Disclosure Letter.
13.2 In respect of the insurances referred to in paragraph 13.1:
38
(a) all premiums have been duly paid to date;
(b) no Seller has received any notification that such insurances are not
valid or enforceable;
(c) so far as the Sellers are aware, no act, omission, misrepresentation
or non-disclosure by or on behalf of the Company has occurred which
makes any of these policies voidable;
(d) so far as the Sellers are aware, no circumstances have arisen which
would render any of the policies void or unenforceable for illegality
or otherwise; and
(e) so far as the Sellers are aware, there has been no breach of the
terms, conditions and warranties of any of the policies that would
entitle insurers to decline to pay all or any part of any claim made
under the policies or to terminate any policy.
13.3 INSURANCE CLAIMS
(a) Details of all insurance claims in excess of L25,000 made by the
Company during the past two years are contained in the Disclosure
Letter.
(b) No insurance claim by the Company in excess of L25,000 is
outstanding and no circumstances exist which are likely to give rise
to any insurance claim.
13.4 CLAIMS REFUSED
Since 31 March 2007 no claim has been refused by an insurer and no amount
paid by an insurer in respect of any claim has been less than the amount
owing in respect of any such claim.
14. PRODUCTS
During the 12 month period prior to Completion, no individual claims where
the net cost value to the Company in respect of such claims is greater than
L50,000 have been made against the Company in relation to any products or
services which have been manufactured, sold or supplied by the Company.
15. TAX
15.1 The Company has duly and punctually paid all Tax which it has become liable
to pay and is not under any liability to pay any penalty, interest,
surcharge or fine in connection with any Tax.
15.2 The Company has made all returns, maintained all records, supplied all
information and given all notices to any Taxation Authority as requested or
required by law within any requisite period and all such returns,
information and notices are correct and accurate in all respects and are
not the subject of any dispute and, so far as the Sellers are aware, there
are no facts or circumstances likely to give rise to or be the subject of
any such dispute.
39
15.3 The Company is not involved in any dispute in relation to Tax and no
Taxation Authority has investigated or indicated that it intends to
investigate the Tax affairs of the Company other than under the normal tax
audit procedures of the relevant Taxation Authority.
15.4 The Company has duly submitted all claims, disclaimers, elections,
surrenders and applications which have been assumed to have been made for
the purposes of the Accounts and details of all such claims, disclaimers,
elections, surrenders and applications are set out in the Disclosure
Letter.
15.5 No Taxation Authority has operated or agreed to operate any special
arrangement (being an arrangement which is not based on relevant
legislation, published practice or convention) in relation to the affairs
of the Company.
15.6 No claim has been made for the depreciation of any asset of the Company for
Tax purposes in circumstances in which the claim is likely to be
disallowed.
15.7 The Disclosure Letter sets out full particulars of all claims and elections
made (or assumed in the Accounts to be made) under sections 23, 152-162,
165, 247, 247A or 248 of the TCGA insofar as they could affect the
chargeable gain or allowable loss which would arise in the event of a
disposal after the Accounts Date by the Company of any of its assets.
15.8 All documents in the enforcement of which the Company is or may be
interested in order to establish legal entitlement or any other right have
been duly stamped and since the Accounts Date the Company has not been a
party to any transaction whereby the Company was or is or could become
liable to stamp duty reserve tax.
15.9 So far as the Sellers are aware, the Accounts for the Company make full
provision or reserve in respect of any period ended on or before the
Accounts Date for all Tax assessed or liable to be assessed on the Company
or for which it is accountable at the Accounts Date whether or not the
Company has or may have any right of reimbursement against any other person
including in particular (but without prejudice to the generality of the
foregoing) Tax in respect of property (of whatever nature) income, profits
or gains held, earned, accrued or received by or to a person on or before
the Accounts Date or by reference to any event occurring, acts done or
circumstances existing on or before that date including distributions made
down to such date or provided for in the Accounts and proper provision has
been made and shown in the Accounts for deferred taxation in accordance
with UK GAAP.
15.10 The Company is a registered taxable person for the purpose of the VATA and
all regulations and orders made thereunder (the "VAT LEGISLATION") and the
Company has complied in all material respects with the requirements and
provisions of the VAT legislation.
15.11 So far as the Sellers are aware, no transaction, act, omission or event
has occurred (including without limitation the execution or implementation
of this agreement) in consequence of which the Company is or may be held
liable for any Tax or may otherwise be held liable for or to indemnify any
person in respect of any Tax which is primarily or directly chargeable
against or attributable to any person other than the Company.
40
15.12 The Company has no liability to make any payment pursuant to an indemnity,
guarantee or covenant entered into before Completion under which the
Company has agreed to meet or pay a sum equivalent to or by reference to
another person's liability to Tax.
15.13 The Company will not become liable to pay any Tax or suffer an alteration
in the manner in which it is assessed for Tax, or lose any relief or
allowances otherwise available to it as a result of entering into this
Agreement other than by virtue of it becoming associated with the
Purchaser.
15.14 All transactions entered into by the Company have been entered into on an
arm's length basis and the consideration (if any) charged or received or
paid by the Company on all transactions entered into by it has been equal
to the consideration which might have been expected to be charged, received
or paid (as appropriate) between independent persons dealing at arm's
length and no notice or enquiry by any Taxation Authority has been made in
connection with any such transaction.
15.15 The Company is not liable to Tax in any jurisdiction other than the
jurisdiction in which it is incorporated nor does the Company have or has
ever had a permanent establishment in a jurisdiction other than the
jurisdiction of incorporation.
15.16 The Company has deducted Tax from all payments made where required by
applicable legislation and accounted to the relevant Taxation Authority for
Tax so deducted within all applicable time limits.
15.17 The Company is not and has never been a member of a group of companies for
the purposes of any corporate income Tax.
15.18 The Company has made no transfer of value such as is specified in section
94(1) (or section 99(2)) of the IHTA.
15.19 The Company has not made any loan advance or payment or given any
consideration falling within sections 419-420 or 422 of the TA.
15.20 The Company has made no payments and conferred no benefits falling to be
treated as distributions under section 418 of the TA.
15.21 The Company has not made a transfer at an undervalue so that section 125
of the TCGA could apply.
15.22(a) The Company is not, and, so far as the Sellers are aware, will
not become, liable to be assessed to inheritance tax as donor or donee
of any gift or transferor or transferee of value (actual or deemed)
nor as a result of any disposition chargeable transfer or transfer of
value (actual or deemed) made by or deemed to be made by any other
person where such gift, transfer or disposition was made prior to
Completion.
(b) There is no unsatisfied liability to inheritance tax attached or
attributable to the Shares or any asset of the Company and in
consequence no person has the power to raise the amount of such Tax by
sale or mortgage of or by a terminable charge on any of the Shares or
assets of the Company as mentioned
41
in section 212 of the IHTA and none of the Shares or assets of the Company
are subject to a charge by HM Revenue & Customs within section 237 of the
IHTA.
16. EVENTS SINCE THE ACCOUNTS DATE
Since the Accounts Date:
16.1 there has been no material adverse change in the financial or trading
position or prospects of the Company (other than a change affecting or
likely to affect all companies carrying on business in similar countries in
which the Company carries on business) and no event, fact or matter has
occurred or is likely to occur which will or is likely to give rise to any
such change;
16.2 the Business has not been materially and adversely affected by any abnormal
factor whether or not affecting similar businesses to a like extent and
there are no facts which are likely to give rise to any such effects;
16.3 the Business has been carried on as a going concern in the ordinary and
usual course.
16.4 the Company has not entered into any transaction or assumed or incurred any
liabilities (including contingent liabilities) or made any payment not
provided for in the Accounts otherwise than in the ordinary and usual
course of carrying on its business;
16.5 no material capital commitments have been entered into or proposed by the
Company. For these purposes a material capital commitment is one involving
capital expenditure of over L150,000;
16.6 the Business has not been materially and adversely affected by the loss of
any important customer or source of supply and there are no facts or
circumstances which are likely to give rise to any such effect. For these
purposes, an important customer or source of supply in relation to the
Company means one which in either of the two financial periods immediately
preceding the Accounts Date accounted for 5 per cent or more (in the case
of a customer) of the turnover of the Company or (in the case of a source
of supply) of the goods, services or equipment supplied to the Company;
16.7 the Company has not declared, made or paid any dividend or other
distribution to its members;
16.8 the Company has not allotted or issued or agreed to allot or issue any
share capital or any other security giving rise to a right over its
capital;
16.9 the Company has not redeemed or purchased or agreed to redeem or purchase
any of its share capital; and
16.10 otherwise than in the ordinary and usual course of carrying on its
business, the Company has not incurred any additional borrowings or
incurred any other indebtedness.
42
17. INSOLVENCY
(a) The Company is not insolvent under the laws of its jurisdiction or
incorporation or unable to pay its debts as they fall due.
(b) The Company has not been held in default by lenders under any debt
financing.
(c) There are no proceedings in relation to any compromise or arrangement
with creditors or any winding up, bankruptcy or other insolvency
proceedings concerning the Company and, so far as Sellers are aware,
no events have occurred which, under applicable laws, would justify
such proceedings.
(d) So far as the Sellers are aware, no steps have been taken to enforce
any security over any assets of the Company and no event has occurred
to give the rights to enforce such security.
43
PART B
WARRANTIES GIVEN BY THE PURCHASER
1. AUTHORITY AND CAPACITY
1.1 The Purchaser is a company validly existing and duly incorporated and
registered under the law of its jurisdiction of incorporation.
1.2 The Purchaser has the legal right and full power and authority to enter
into and perform this Agreement, and the Transaction Documents to which it
is a party and to be executed by it pursuant to or in connection with this
Agreement or the Transaction Documents.
1.3 The documents referred to in paragraph 1.2 above will, when executed,
constitute valid and binding obligations on the Purchaser in accordance
with their respective terms.
1.4 The Purchaser has taken all corporate action required by it to authorise it
to enter into and perform this Agreement, any Transaction Document to which
it is a party and any other documents to be executed by it pursuant to or
in connection with this Agreement or any Transaction Document.
44
SCHEDULE 3
COMPLETION OBLIGATIONS
PART A
SELLERS' OBLIGATIONS
1. At Completion the Sellers shall:
1.1 Deliver to the Purchaser:
(a) evidence that the unpaid Tax liability in relation to the Company's
2006 financial year has been settled in full with the relevant Tax
Authority;
(b) transfers in respect of the Shares duly executed by the registered
holders in favour of the Purchaser (or such person as the Purchaser
may nominate in writing prior to Completion) and share certificates
for the Shares in the name of the relevant transferors (or an express
indemnity in a form satisfactory to the Purchaser in the case of any
certificate found to be missing) and any power of attorney under which
any transfer is executed on behalf of any Seller or nominee;
(c) such waivers or consents as the Purchaser may require to enable the
Purchaser or its nominees to be registered as holders of the Shares;
(d) powers of attorney in such form as the Purchaser may reasonably
require executed by each of the holders of the Shares in favour of the
Purchaser to enable the Purchaser (pending registration of the
relevant transfers) to exercise all voting and other rights attaching
to the Shares and to appoint proxies for this purpose; and
(e) the Disclosure Letter duly executed by the Seller.
1.2 Procure that the Tax Deed is executed and delivered to the Purchaser by the
Covenantors named therein;
1.3 Procure that First Propco Limited enters into:
(a) the Deed of Variation of the Property with the Company; and
(b) the Property Pre-Emption Agreement with the Purchaser.
1.4 Procure that the Company and First Propco Limited enter into the
Environmental Insurance Policy.
1.5 Procure that the Company and First Propco Limited enter into the
Environmental Deed.
1.6 Procure that the Company and Top Propco Limited enter into the Shares
Pre-Emption Agreement.
45
1.7 Procure that the Company and MW Associates Limited enter into the M Licence
Agreement.
1.8 Procure that the Company and MW Associates Limited enter into the
Assignment.
1.9 Deliver to the Purchaser (or to any person whom the Purchaser may nominate
(for the Purchaser itself and as agent for the Company and the
Subsidiaries) (or otherwise make available in a manner reasonably
acceptable to the Purchaser) such of the following as the Purchaser may
require:
(a) the statutory books (which shall be written up to but not including
the Completion Date), the certificate of incorporation (and any
certificate of incorporation on change of name) and common seal (if
any) of the Company and share certificates or other documents of title
in respect of all the issued share capital of each Subsidiary which is
owned directly or indirectly by the Company;
(b) the written resignations of each of the directors and secretaries of
the Company from his office as a director or secretary in agreed terms
in each case acknowledging that he relinquishes any rights which he
may have under any contract of employment with the Company or under
any statutory provision including any right to damages for wrongful
dismissal, redundancy payment or compensation for loss of office or
unfair dismissal;
(c) the written resignations of the auditors of the Company with
acknowledgements signed by each of them in agreed terms to the effect
that they have no claim against the Company and containing the
statement referred to in section 394 of the Companies Act 1985 to the
effect that there are no circumstances connected with their
resignation which they consider should be brought to the notice of the
members or creditors of the Company;
(d) a statement of the current balance owed by the Company to Five Arrows
Commercial Finance Limited as at the Completion Date in relation to
the Five Arrows Agreement;
1.10 Deliver to the Purchaser (or otherwise make available in a manner
reasonably acceptable to the Purchaser) all the financial and accounting
books and records of the Company, together with the cheque books of the
Company;
1.11 Procure board meetings of the Company to be held at which:
(a) in the case of the Company, it shall be resolved that each of the
transfers relating to the Shares shall be approved for registration
and (subject only to the transfer being duly stamped) each transferee
registered as the holder of the Shares concerned in the register of
members;
(b) each of the persons nominated by the Purchaser (such persons to be
nominated in writing prior to Completion) shall be appointed directors
and/or secretary, as the case may be, such appointments to take effect
on the Completion Date;
46
(c) the resignations of the directors and secretaries referred to in
paragraph (a) above shall be tendered and accepted;
(d) the resignations of the auditors referred to in paragraph (b) above
shall be accepted and Deloitte shall be appointed as auditors of the
Company;
(e) all existing instructions to banks shall be revoked and new
instructions shall be given to such banks in such form as the
Purchaser may direct (provided that any such direction shall be given
by the Purchaser to the Sellers in writing prior to Completion);
(f) the situation of the registered office shall be changed to such
address as the Purchaser may nominate and (subject to any requirements
of law) the accounting reference date shall be changed in accordance
with any instructions given by the Purchaser (provided that any such
nomination and instruction shall be given by the Purchaser to the
Sellers in writing prior to Completion);
and the Sellers shall procure that minutes of each duly held board meeting,
certified as correct by the secretary of the relevant company, referred to
above are delivered to the Purchaser.
1.12 Procure that First Propco pays the full amount of the premium relating to
the Environmental Insurance Policy as directed in the invoice provided by
Giles Insurance Brokers Limited.
PART B
PURCHASER'S OBLIGATIONS
At Completion:
1. The Purchaser shall deliver to the Sellers' Lawyers:
1.1 The Tax Deed, the Environmental Deed, the Disclosure Letter and the
Escrow Letter duly executed by the Purchaser; and
1.2 A copy of the minutes of a duly held meeting of the directors of the
Purchaser authorising the execution by the Purchaser of the
Transaction Documents to which the Purchaser is a party (such copy
minutes being certified as correct by the secretary of the Purchaser).
2. The Purchaser shall procure that the Company shall maintain the credit
insurance policy held by the Company at Completion in terms no less
beneficial to the Company as at the date of Completion for a period of at
least six months from the date of Completion.
3. The Purchaser shall enter into the Environmental Policy.
47
4. The Purchaser shall procure that the Company shall pay to First Propco 50
per cent of:
4.1 the premium payable in respect of the Environmental Insurance Policy;
and
4.2 the commission payable to Giles Insurance Brokers Limited,
within 3 days of receipt of the invoice from First PropCo requesting
payment.
PART C
SELLERS' AND PURCHASER'S OBLIGATIONS
1. At Completion the Purchaser and Sellers shall Sign the Escrow Letter and
procure that the Escrow Agents sign and deliver the Bank Instruction Letter
to the Escrow Bank.
48
SCHEDULE 4
COMPLETION STATEMENT
PART A
COMPLETION STATEMENT
1. The Purchaser shall use all reasonable endeavours to procure that a draft
Completion Statement in the agreed form set out in Part B of this Schedule
is produced and delivered to the Sellers within 90 days of Completion.
2. Following receipt of the draft Completion Statement, the Sellers and their
advisers shall be given such reasonable access as they may reasonably
request by giving written notice to Chris Jowsey (or such other person who
shall be notified to the Sellers in writing) to:
2.1 the working papers of the Purchaser relating to the draft Completion
Statement;
2.2 the Property; and
2.3 the relevant employees of the Company,
in order to properly consider the draft Completion Statement and the
Sellers and their advisers shall also be given reasonable opportunity to
gain explanations from the Purchaser in respect of any matter directly
arising from such review of those papers.
3. Within 30 Business Days of the date of receipt of the draft Completion
Statement, the Sellers shall serve a notice on the Purchaser stating either
that the Sellers:
3.1 agree that the draft Completion Statement has been drawn up in the
correct form and in accordance with this Agreement (an "ACCEPTANCE
NOTICE"), or
3.2 do not agree with the draft Completion Statement on the grounds that:
(a) it has not been drawn up in the correct form; and/or
(b) it is not in accordance with this Agreement (a "DISPUTE NOTICE").
4. The Dispute Notice shall set out:
4.1 the items being disputed;
4.2 the reasons for disputing the items, and
4.3 to the extent possible, a quantification of the proposed adjustments
to the draft Completion Statement.
For the avoidance of doubt (i) items not set out in the Dispute Notice
shall be deemed to be agreed, and (ii) none of the items set out in the
Dispute Notice shall be deemed to be agreed until the Completion Statement
has been agreed as a whole between the parties in accordance with this
Schedule 4.
49
5. If the Sellers, following the 30 Business Day period referred to at
paragraph 3 above:
5.1 serve an Acceptance Notice pursuant to paragraph 3.1 above; or
5.2 do not serve any notice pursuant to paragraph 3 above,
the draft Completion Statement delivered pursuant to paragraph 1 above
shall be accepted as final and the Consideration shall be subject to the
adjustment provisions set out in Clause 4 of this Agreement.
6. If the Sellers serve a Dispute Notice pursuant to paragraph 3.2 above, the
parties shall use all reasonable endeavours to agree upon a solution to the
items contained therein. If such agreement is reached and agreed in writing
between the parties either (i) on all of the items stated in the Dispute
Notice, or (ii) on any item within the Dispute Notice, it shall be final
and binding on the parties.
7. If the parties cannot agree upon a solution to either (i) all of the
disputed items, or (ii) can only agree upon a solution to some of the
disputed items (the remaining item or items being the "DISPUTED ITEM" or
"DISPUTED ITEMS", as the case may be), within 30 Business Days of the
receipt of the Dispute Notice, they shall:
7.1 jointly instruct an independent auditor to resolve the dispute in
relation to such Disputed Items;
7.2 make available to the independent auditor all relevant data,
documentation and information as it may from time to time reasonably
require; and
7.3 use all reasonable endeavours to procure that the independent auditor
shall determine the dispute in relation to such Disputed Item or
Disputed Items as soon as possible.
8. If the parties are unable to agree on an independent auditor within 5
Business Days of either party serving details of a suggested independent
auditor on the other, either party shall be entitled to request the then
President of the Institute of Chartered Accountants in England and Wales to
appoint an independent auditor who is an accountant of repute with relevant
experience.
9. The independent auditor shall act as an expert and not an arbitrator and
the parties agree that the decision of the independent auditor shall be
final and binding on the parties in the absence of manifest error or fraud.
10. Following the decision of the independent auditor, the Consideration shall
be subject to the adjustment provisions in Clause 4 of this Agreement.
11. The Sellers and the Purchaser shall be responsible for their own costs of
presenting their case to the independent auditor. The fees and properly
incurred costs of the independent auditor shall be borne in such
proportions as the independent auditor decides.
50
PART B
BASIS OF PREPARATION OF NET CURRENT ASSETS AND COMPLETION STATEMENT
1. The Net Current Assets and Completion Statement shall be calculated
(a) To reflect the provisions of paragraph 2 (below);
(b) Subject to and to the extent not inconsistent with the provisions in
paragraph 2 (below), then insofar as it results in a treatment
consistent with UK GAAP, by applying principles, bases, policies,
practices and categorisations consistent in all respects with those
applied in the preparation of the Accounts, and subject thereto;
(c) Subject to and to the extent not inconsistent with the provisions in
paragraph 2 (below) and the principles, bases, policies, practices and
categorisations consistent in all respects with those referred to in
paragraph 9.1(b), then by applying principles, bases, policies,
practices and categorisations consistent in all respects with those
applied in UK GAAP.
2. In calculating the Net Current Assets and the Completion Statement
Fixed Assets
(a) For all Fixed Assets currently under construction, or for any
commitment made for spare parts or maintenance items, any amount
already paid shall be shown as a cash reduction and any amounts owed
to third parties shall be classified as a current short-term liability
of the Company and included in Creditors. These amounts will be
included in the Net Current Asset calculation.
Negative Goodwill
(b) The payment to API plc in the sum of L105,000 shall be deducted
from the amount of negative goodwill. For the avoidance of doubt, the
API plc payment will not be included in the Net Current Assets.
Stock
(c) A physical stock take will be completed by the Purchaser as at
Completion, provided that the Sellers and their advisers will be
entitled to be present at such stock take and to have reasonable
access to and, at the Sellers' expense, to take copies of directly
relevant papers produced by the Purchaser and/or the Company
specifically in respect of such stock take.
(d) Provisions made in respect of stock should reflect the valuation of
stock at the lower of cost or net realisable value in accordance with
UK GAAP.
Debtors and Creditors
(e) Debtors and Creditors which are denominated in a foreign currency
shall be valued in full at the sell-side sterling exchange rate
offered at Completion by
51
Barclays Bank Plc in respect of that foreign currency and be
consistently applied to both debtors and Creditors.
(f) Any provisions made for bad and doubtful debts shall reflect the
recoveries that have been claimed (or could have been claimed save for
a breach or invalidation of the Company's credit insurance policy
after Completion) and are entitled to be compensated in accordance
with the Company's credit insurance policy.
(g) Any provisions made for bad and doubtful debts or customer credit
notes shall reflect the full value of the liability of the Company
provided that any credit notes issued in the ordinary course of
business by the Company after Completion in respect of supplies made
before Completion should be issued subject to the bases, principles,
policies and practices consistent with historic practices of the
Company in issuing credit notes for the 12 month period prior to
Completion.
(h) All customer credit notes shall be deducted in full provided that if
any credit notes are issued for amounts higher than should have been
issued as a result of the Company not complying with the historic
practices referred to at sub-paragraph (g) above, there will be an
upwards adjustment to the Net Current Assets in respect of the
difference.
(i) Any customer claims in respect of supplies made by the Company before
Completion which remain unresolved at the date on which the draft
Completion Statement is issued should reflect the net loss to the
Company in respect of such claim or claims in the view of the
Company's technical department using the bases, principles, policies
and practices consistent with historic practices of the Company in
respect of customer claims for the 12 month period prior to
Completion.
(j) Any provisions for trade creditors shall reflect any recoveries made
against and already accepted in writing by suppliers to the Company.
(k) Cash receipts from customers will be applied against the earliest
invoice that is not disputed by a customer, unless the customer
specifically states otherwise in writing.
(l) The proportion of the premium paid by the Company in respect of the
Environmental Insurance Policy shall not be taken into account in the
determination of Net Current Assets.
(m) The amount due to the Carbon Trust shall be classified as a current
liability and listed in the Creditors of the Company.
(n) Any amount actually received in respect of the Welsh Assembly Grant is
to be classified as cash in the Current Assets. The obligation to
amortise this amount in the profit and loss statement will be
classified as a long-term liability. For the avoidance of doubt, this
long-term liability amount will be excluded from the calculation of
Net Current Assets.
52
(o) Any amounts in respect of deferred tax shall be classified as
long-term liabilities and excluded from the calculation of Net Current
Assets.
(p) Trade Creditors shall reflect amounts receivable in respect of volume
related rebates or discounts already agreed with suppliers on or
before the Completion Date to the extent that they have already been
achieved and agreed with suppliers.
Contingent Liabilities
(q) No provision shall be made for any contingent liabilities whatsoever.
Tax
(r) No provision shall be made for corporation tax whatsoever.
Going Concern
(s) The Net Current Assets calculation and the Completion Statement shall
be prepared on a going concern basis.
Cut-off Date and post-balance sheet events
(t) For the purposes of post-balance sheet events, the final cut-off date
is the date falling 90 days after the Completion Date. The Completion
Statement speaks as at Completion and the only post-balance sheet
events that will be recognised are those referred to at sub-paragraphs
(f), (g), (h), (i), (j) and (p), in each case in respect of supplies
received or goods shipped by the Company on or before the Completion
Date.
53
SCHEDULE 5
THE PROPERTY
CURRENT RENT AND
CURRENT DATE OF NEXT RENT REVIEW
ADDRESS TENANT LANDLORD LEASE TERM DATE NATURE OF USE
------------ ---------- -------- ------- -------- ---------------- -------------------
Land and Metallised First 16 May 20 years L 200,000 per Uses within classes
buildings Products Propco 2005 from 16 annum B1 and B2 as defined
registered Limited Limited May 2005 in the Schedule
at HM Land Review date is to the Town and
Registry 16 May 2010 and Country Planning
under title every fifth (Use Classes)
number anniversary of Order 1987
CYM259834 that date
(including the
last date of
that contractual
term).
54
SCHEDULE 6
INTELLECTUAL PROPERTY
MATTERS INCLUDED IN "MATERIAL INTELLECTUAL PROPERTY"
1. LIST OF REGISTERED INTELLECTUAL PROPERTY INCLUDED IN "MATERIAL INTELLECTUAL
PROPERTY"
TRADE MARK COUNTRY REG. NO
---------- ----------- ---------
ATALFA CTM 1301803
ATALFA Norway 202993
HiBrite (stylised) Argentina 1.738.709
HiBrite (stylised) Brazil 821426788
HiBrite (stylised) Czech Rep 225484
HiBrite (stylised) EU 1038264
HiBrite (stylised) Hungary 162001
HiBrite (stylised) Poland NR134825
HiBrite (stylised) Romania 39527
Holobrite Bulgaria 43678
Holobrite Czech Rep 244926
Holobrite EU 2008712
Holobrite Russian Fed 229858
2. LIST OF UNREGISTERED INTELLECTUAL PROPERTY INCLUDED IN "MATERIAL
INTELLECTUAL PROPERTY"
Bespoke shop floor data collection software which has been created by the
Company's in-house IT department.
Domain name: www.metpap.com
3. LICENCE AGREEMENTS INCLUDED IN "MATERIAL INTELLECTUAL PROPERTY" IN RESPECT
OF WHICH THE COMPANY IS LICENSOR
None.
4. LICENCE AGREEMENTS INCLUDED IN "MATERIAL INTELLECTUAL PROPERTY" IN RESPECT
OF WHICH THE COMPANY IS LICENSEE
"Slaterbrite" Trademark licence agreement entered into between API
Laminates Limited and the Company on 23 November 2007.
Usual shrinkwrap software licences.
55
SCHEDULE 7
PROTECTIONS FOR THE SELLER
1. ACCOUNTING
1.1 The Sellers shall not be liable under the Warranties (excluding the Tax
Warranties):
(a) to the extent that provision, reserve or allowance for the matter or
liability giving rise to the claim has been made in the Completion
Statement or is otherwise directly noted or reflected in the
Completion Statement; or
(b) to the extent that the claim would not have arisen but for, or is
increased because of, timing differences or changes in accounting
policy or practice of or affecting the Company where such changes are
introduced after Completion other than a change which is required in
order to comply with UK GAAP, as in force at Completion.
2. GENERAL LIMITATIONS
2.1 The Sellers shall not be liable under the Warranties (excluding the Tax
Warranties) in respect of any claim:
(a) to the extent that the claim arises as a result of, or would not have
arisen but for, or a liability is increased as a result of, any
statutory or other binding or advisory legislative or regulatory
provision not in force at the date of this Agreement; or
(b) to the extent that the claim arises as a result of, or would not have
arisen but for, or a liability is increased as a result of, any change
in any statutory or other binding or advisory legislative or
regulatory provision after the date of this Agreement; or
(c) to the extent that the claim is based upon a liability which is
contingent only, unless and until such contingent liability becomes an
actual liability.
3. ACTS OF THE PURCHASER
3.1 The Sellers shall not be liable under the Warranties (excluding the Tax
Warranties) in respect of any claim:
(a) to the extent that such claim arises, or would not have arisen but
for, or a liability is increased directly as a result of the
notifications made by the Purchaser to the Office of Fair Trading and
the German Federal Cartel Office prior to Completion;
(b) to the extent that the claim arises, or would not have arisen but for
or a liability is increased as a result of any transaction,
arrangement, act or omission (or any combination of them) carried out
or effected at any time after Completion by the Purchaser or any
member of the Purchaser's Group:
56
(i) outside the ordinary course of Business; or
(ii) to the extent that the claim arises as a result of, or would not
have arisen but for, or a liability is increased as a result of
the Purchaser ceasing to be resident in the United Kingdom for
Taxation purposes after Completion; or
(c) to the extent that the Purchaser had actual knowledge of the facts,
matters or circumstances giving rise to such claim at or before
Completion.
4. TAXATION
4.1 Save for paragraphs 6, 7.1, 7.3, 8 and 9.21, this Schedule 7 shall Schedule
7 shall not apply to Tax Claims.
5. THIRD PARTY RECOVERIES
5.1 The Sellers shall not be liable for any claim under the Warranties
(excluding the Tax Warranties) in relation to:
(a) any matter or thing to the extent that the Company is entitled to
claim under any policy of insurance in which case no such matter shall
be the subject of a claim under the Warranties unless and until the
Company shall have made a claim against its insurers under any such
policy of insurance and any such insurance claim shall then reduce by
the amount recovered or extinguish any such claim for breach of the
Warranties; or
(b) any claim which has been or is made good or is otherwise compensated
for otherwise than by the Purchaser.
5.2 Where the Purchaser and/or the Company are at any time entitled to recover
from some other person (other than its insurers) any sum in respect of any
matter giving rise to a claim under the Warranties (excluding the Tax
Warranties), the Purchaser shall and shall, at the Sellers' expense,
procure that the Company shall undertake all commercially reasonable steps
to enforce such recovery prior to taking any action (other than notifying
the Sellers of the potential claim) against the Sellers and in the event
that the Purchaser or the Company shall recover any amount from such other
person the amount of the claim against the Sellers shall be reduced by the
amount recovered, less all reasonable costs, charges and expenses properly
incurred by the Purchaser or the Company (to the extent that such costs,
charges and expenses (or any part of them) have not already been met by the
Sellers) in recovering that sum from such other person.
5.3 If the Sellers at any time make a payment to the Purchaser from the Escrow
Account in respect of any Relevant Claim in accordance with the provisions
of this Agreement (such payment being an "AGREED PAYMENT") and the
Purchaser or the Company subsequently becomes entitled to make recovery in
whole or in part from any third party in respect of any matter giving rise
to such Relevant Claim:
57
(a) if the Sellers so request, the Purchaser shall assign or procure the
assignment to the Sellers (subject to payment by the Sellers of
associated costs and expenses) of such right; or
(b) if such right is not legally capable of effective assignment, or if
the Sellers do not request an assignment of such right the Purchaser
shall and shall, at the Sellers' expense, procure that the Company
shall take all commercially reasonable steps to enforce such recovery.
5.4 Where either the Seller or the Purchaser recovers from some other person a
sum that is referable to an Agreed Payment then they shall:
(a) in the event that any such recovery occurs prior to the Second Release
Date, repay to the Escrow Account; or
(b) in the event that any such recovery occurs after the Second Release
Date, pay to the Sellers or, in the case of a recovery by the Sellers
pursuant to paragraph 5.3(a) retain,
an amount equal to the amount recovered upon receipt or, if lower, the
amount of the Agreed Payment to the Purchaser less, in either case, any
amount payable by either the Purchaser, Seller or the Company in respect of
Taxation on the amount recovered.
6. TIME LIMITS FOR BRINGING CLAIMS
6.1 The Purchaser shall give written notice of any Relevant Claim to each of
the Sellers and to the Sellers' Lawyers (the "CLAIM NOTICE") and written
notice in respect of any Tax Claim to the Representative Covenantor (as
defined in the Tax Deed) and to the Sellers' Lawyers specifying (in
reasonable detail) the matter which gives rise to the Relevant Claim or Tax
Claim (as the case may be), the nature of the claim and the amount claimed
(to the extent known and if not known a best estimate of the amount
claimed) (detailing in case of a Relevant Claim or a claim for a breach of
the Tax Warranties) the Purchaser's calculation of the loss alleged to have
been suffered by it or the Company (as the case may be), as a result of the
breach of the Warranties) (the "ESTIMATED LIABILITY") as soon as
practicable after the Purchaser becomes aware of the possibility of a claim
and in any event:
(a) in the case of a Tax Claim within the period of seven years beginning
with the Completion Date; and
(b) in any other case, within the period of two years beginning with the
Completion Date.
7. LIMITATIONS ON QUANTUM
7.1 Subject to paragraphs 7.2, 7.4 and 7.4, the aggregate liability of the
Sellers in respect of all claims under the Warranties (including the Tax
Warranties), the Indemnities, the Tax Deed and the Transaction Documents (a
"TRANSACTION CLAIM") shall not in any circumstances exceed the amount held
in the Escrow Account from time to time (which amount for the avoidance of
doubt can never exceed L500,000) and a payment
58
to the Purchaser in respect of any such Transaction Claim may only be made
out of the Escrow Account.
7.2 Notwithstanding any other provision of this Agreement no Transaction Claim
shall be brought and the Purchaser shall not be entitled to make any
recovery from the Escrow Account in respect of any Transaction Claim unless
the amount in respect of which such Transaction Claim may properly be
brought following the application of the other provisions of this Schedule
when aggregated with any other claims is equal to or exceeds L10,000
in which case the Purchaser shall be able to claim for the full amount of
all such claims and not merely the excess over L10,000.
7.3 The aggregate liability of the Sellers in respect of the Indemnities shall
not in any circumstances exceed the amount stated against the relevant
matter in the table set out below:
INDEMNITY MAXIMUM AGGREGATE LIABILITY
--------- ---------------------------
Workplace Indemnity L30,000
ATEX Study Indemnity L20,000
PCB Inspection Indemnity L30,000
Asbestos Indemnity L10,000
Distribution and Agency Indemnity L50,000
For the avoidance of doubt, any payment to the Purchaser in respect of any
matter referred to in this paragraph 7.3 may only be made out of the Escrow
Account.
7.4 In the event that there is any Tax Claim at any time:
(a) after Completion but on or before the Second Release Date which
exceeds the amount held in the Escrow Account at that time; or
(b) after the end of the Second Release Date,
then the Sellers shall, during the period from the Completion Date to the
seventh anniversary of Completion only, have a liability in respect of any
such Tax Claim in addition to the aggregate liability referred to at
paragraph 7.1. Such additional liability shall not in any circumstances
exceed L75,000. For the avoidance of doubt, if at any time during the
period from the Completion Date to the seventh anniversary of Completion
there is a positive balance held in the Escrow Account then any Tax Claim
that is due and payable in accordance with the terms of the Tax Deed shall
first be paid to the Purchaser out of the Escrow Account to the extent that
there are
59
sufficient funds available in the Escrow Account to meet such liability
before the additional liability of L75,000 is called upon.
8. NO DOUBLE COUNTING
8.1 The Seller shall have no liability under the Warranties, Indemnities or Tax
Deed more than once in respect of the same loss arising out of or in
respect of the same act, matter or thing to the extent that the Seller has
made a payment to the Purchaser in respect of such matter under the
Warranties, Indemnities or under the Tax Deed as the case may be.
9. CONDUCT OF CLAIMS
9.1 Wherever any Claim Notice is duly served in accordance with this Agreement,
the parties irrevocably agree that any dispute, difference or claim
pursuant to such Claim Notice shall be resolved in accordance with the
provisions of this paragraph 9.
9.2 Subject to the Purchaser being indemnified and secured to its satisfaction
in accordance with paragraph 9.7, upon serving a Claim Notice on the
Sellers, the Purchaser shall (and shall procure that the Company shall) at
the cost of the Sellers, give such information and access to personnel,
premises, chattels, documents and records relevant to the Claim Notice to
the Sellers and their professional advisers as the Sellers may reasonably
request.
9.3 The Purchaser shall inform, or shall procure that the Company shall inform
the Sellers in writing of a Third Party Claim which comes to the notice of
the Purchaser whereby it appears that the Sellers are likely to become
liable under the Warranties or indemnities in this Agreement as soon as
reasonably practicable after such Third Party Claim comes to the notice of
the Purchaser, or the Company as the case may be.
9.4 Subject to the Purchaser being indemnified and secured to its satisfaction
in accordance with paragraph 9.7, where a Third Party Claim has been made,
the Purchaser shall take (or shall procure the Company shall take) such
action and give (or procure the giving of) such information as the Sellers
may reasonably request in order to avoid, dispute, resist, mitigate,
compromise, defend or appeal against any such Third Party Claim and any
adjudication with respect to any such Third Party Claim.
9.5 On the written request of the Sellers, the sole conduct of any legal
proceedings of whatsoever nature arising out of any Third Party Claim (the
"PROCEEDINGS") shall be delegated to the Sellers. For this purpose, the
Purchaser shall give or procure that the Company gives to the Sellers all
such relevant assistance as the Sellers may reasonably require.
9.6 Where Proceedings are delegated to the Sellers in accordance with paragraph
9.5 above:
(a) the Sellers shall keep the Purchaser fully and promptly informed of
the Proceedings and shall consult with the Purchaser on any matter
which is or is likely to be, in the opinion of the Purchaser, material
in relation to the Proceedings; and
60
(b) the Sellers shall not make any settlement or compromise of the Third
Party Claim which is the subject of Proceedings, or agree to any
matter in the conduct of such Proceedings which may affect the amount
of liability in connection with such Third Party Claim without the
prior written consent of the Purchaser.
9.7 The Sellers shall indemnify and secure the Purchaser to its reasonable
satisfaction in respect of all costs, charges and expenses reasonably and
properly incurred by the Purchaser or the Company, as the case may be, as a
consequence of any actions taken at the request of the Sellers pursuant to
paragraphs 9.2 to 9.5.
9.8 Within 20 Business Days of service of a Claim Notice by the Purchaser
served pursuant to paragraph 6, the Sellers shall serve a notice on the
Purchaser stating that they either:
(a) accept liability for the Notified Claim and the Estimated Liability
(the "ACCEPTANCE NOTICE"); or
(b) dispute the Notified Claim and/or the Estimated Liability (the
"REJECTION NOTICE"),
provided that where there is a Third Party Claim, such 20 Business Day time
limit shall only start to run from the date on which the Third Party Claim
is settled and, for the purposes of this paragraph 9, a Third Party Claim
shall be settled if the parties to the Third Party Claim irrevocably and
unconditionally so agree in writing; or the Third Party Claim has been
determined by a court of competent jurisdiction from which there is no
right of appeal, or from whose judgment the parties to the Third Party
Claim are debarred by passage of time or otherwise from making an appeal.
9.9 If the Sellers serve a Rejection Notice in respect of a Notified Claim,
then the parties shall collaborate in good faith to identify the areas of
disagreement and shall each use their reasonable endeavours to agree a
solution to the dispute.
9.10 If within 20 Business Days of the date of service of a Rejection Notice,
the parties cannot agree a solution in respect of a Notified Claim, then
either party that wishes to appoint or to refer the Notified Claim to an
expert for determination (the "EXPERT") shall give written notice to that
effect to the other party and, with such notice, shall give details of the
reason for the appointment of, and the matter to be referred to, the
Expert.
9.11 Following such notice, the parties shall promptly meet and endeavour to
agree upon a person to be the Expert. If, within five (5) Business Days
from the date of the notice under 9.10 above, the parties have failed to
agree upon an Expert, the matter shall forthwith be referred by the party
wishing the appointment to be made to the President or Vice President of
the Chartered Institute of Arbitrators for England & Wales (the
"APPOINTER"), which shall be requested, but not bound, to make the
appointment of the Expert within five (5) Business Days and, in so doing,
may take such independent advice as it thinks fit.
9.12 Upon an Expert being appointed under the foregoing provisions, the parties
shall forthwith notify the Expert of his selection and shall request him to
confirm in writing
61
within five (5) Business Days whether or not he is willing and able to
accept the appointment and that he will comply with the time periods set
out in paragraph 9.14(d) below. If such Person is either unwilling or
unable to accept such appointment or will not agree to comply with the
periods set out in paragraph 9.14(d) below, or shall not have confirmed his
willingness and ability to accept such appointment within the said period
of five (5) Business Days, then (unless the parties are able to agree upon
the appointment of another Expert) the matter shall be referred to the
Appointer to select an alternative Expert.
9.13 A person shall not be appointed as the Expert if he has an interest or duty
which would materially conflict with his role (including being a director,
officer, employee or consultant to a party or to any affiliate of a party).
9.14 The following provisions shall apply to the Expert determination:
(a) each party shall supply to the Expert such data, documents and
information as the Expert may request;
(b) each party may provide the Expert with such further data, documents
and information as it sees fit;
(c) the Expert may make such further procedural directions as he sees fit
save that any meetings or hearings with the Expert shall take place in
England & Wales or any other location agreed by the parties;
(d) the Expert shall make his decision as soon as reasonably practicable
after receiving data, information and submissions supplied and made to
him by the parties and, in any event, not later than thirty (30)
Business Days after he has confirmed to the parties acceptance of his
appointment, or such longer period as the Sellers and the Purchaser
may agree in writing; and
(e) the Expert shall be entitled to obtain such independent professional
and/or technical advice as he may reasonably require and to obtain any
necessary secretarial assistance as is reasonably necessary.
9.15 If the Expert fails to notify the parties of his decision with respect to
any Notified Claim referred to him pursuant to this Schedule 7 within the
time-limit specified herein, either party may give notice within ten (10)
Business Days after expiration of such time-limit that the dispute is to be
decided pursuant to clause 26 of this Agreement whereupon the Expert shall
give no further consideration to the Dispute and shall not issue a
decision.
9.16 All communications between the parties and the Expert or the Appointer
shall be made in writing and a copy of such communications shall be
provided simultaneously to the other party.
9.17 The Expert shall be deemed not to be an arbitrator but shall render his
decision as an expert and the laws governing arbitrations, including but
not limited to the Arbitration Act 1996, shall not apply to the Expert or
his determination or the procedure by which he reaches his decision.
62
9.18 The costs of the Expert (including the costs of the Seller and the
Purchaser in presenting their respective cases to the Expert) shall be
borne in such proportions and by such parties as the Expert decides.
9.19 The decision of the Expert shall be final and binding on the parties.
9.20 If, in respect of any Notified Claim:
(a) the Sellers fail to serve either an Acceptance Notice or Rejection
Notice within the time period specified in paragraph 9.4; or
(b) the Sellers serve an Acceptance Notice; or
(c) the Expert finds in favour of the Purchaser,
then the Seller shall be deemed to accept liability for the Notified Claim
and agree to pay an amount equal to the Estimated Liability (or, where the
Expert has determined the claim, an amount equal to the amount that the
Expert determines is payable by the Sellers in respect of that claim (such
amount being the "DETERMINED LIABILITY")) and the Purchaser shall be
permitted to withdraw from the Escrow Account an amount equal to the
Estimated Liability or Determined Liability (as the case may be), or where
the Estimated Liability or Determined Liability is more than the amount
standing to the credit of the Escrow Account, the entire amount of the
Escrow Account.
9.21 For the avoidance of doubt the conduct of any Claim for Tax (as defined in
the Tax Deed) shall be governed by Clause 5 of the Tax Deed.
10. MITIGATION
10.1 Nothing in this Agreement shall relieve the Purchaser of any common law or
other duty to mitigate any loss, liability or damage suffered or incurred
by it.
11. FRAUD
11.1 Nothing in this Schedule 7 will operate to exclude any liability for fraud.
63
SCHEDULE 8
FIXED ASSETS
Ashe 160-60 Slitter
Henderson 3364-69 Reel to Reel Embosser
Atlas 97007 Reel To Reel Embosser
Galileo Vacuum Metalliser
Galileo Mega Vacuum Metalliser
GV 1650PD Metalliser
GV Vacuum Metalliser
Kroenert Reco 880A Reel to Reel Coating Line
Prandi Coating Line
Maxon Mamco Reel Unwind Sheeter
Atlas Slitter Rewinder
Pascaban Slitter
Strachen and Henshaw Sheeter
TEC Coating Line
Wickelteknic Slitter
Lacquer Handling System
LTG3 Oxidiser
LTG Oxidiser
Water Tower
Trim Extraction and Baler
Ashe 45-60 Rewinder
Ashe 30-60 Rewinder
Parkland TC40 Automatic core cutter
64
Parkland TC10/100 manuel core cutter
Polar 155 VTX Guillotine
65
SIGNED by Alan Richard Morris )
SIGNED by Edwin Rhys Morris )
SIGNED by Morgan Lawn Morris )
SIGNED by )
and )
on behalf of Glatfelter Lydney Limited )
66
Exhibit 3(a)xix
PENNSYLVANIA DEPARTMENT OF STATE
CORPORATION BUREAU
Articles of Amendment-Domestic Corporation
(15 Pa.C.S.)
Entity Number
140599
[X] Business Corporation (Section 1915)
[ ] Nonprofit Corporation (Section 5915)
Name DOCUMENT WILL BE RETURNED TO THE
NAME AND ADDRESS YOU ENTER TO
ESQUIRE ASSIST THE LEFT.
Address
COUNTER PICK-UP
City State Zip Code
_____________________________________________
--------------------------------------------------------------------------------
Fee: $70 ----------------------------------------------
Filed in the Department of State on 12/20/2007
Pedro A. Cortes
Secretary of the Commonwealth
----------------------------------------------
In compliance with the requirements of the applicable provisions (relating
to articles of amendment), the undersigned, desiring to amend its articles,
hereby states that:
1. The name of the corporation is:
P. H. GLATFELTER COMPANY
2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) name of its commercial registered office provider and
the county of venue is (the Department is hereby authorized to correct the
following information to conform to the records of the Department):
(a) Number and Street City State Zip County
(b) Name of Commercial Registered Office Provider County
c/o CORPORATION SERVICE COMPANY
3. The statute by or under which it was incorporated: Pennsylvania Business
Corporation Law
4. The date of its incorporation: DECEMBER 16, 1905
5. Check, and if appropriate complete, one of the following:
[X] The amendment shall be effective upon filing these Articles of Amendment in
the Department of State.
[ ] The amendment shall be effective on: ____________ at ____________
Date Hour
DSCB:15-1915/5915-2
6. Check one of the following:
[ ] The amendment was adopted by the shareholders or members pursuant to 15
Pa.C.S. Section 1914(a) and (b) or Section 5914(a).
[X] The amendment was adopted by the board of directors pursuant to 15 Pa. C.S.
Section 1914(c) or Section 5914(b).
7. Check, and if appropriate, complete one of the following:
[ ] The amendment adopted by the corporation, set forth in full, is as follows:
[X] The amendment adopted by the corporation is set forth in full in Exhibit A
attached hereto and made a part hereof.
8. Check if the amendment restates the Articles:
[ ] The restated Articles of Incorporation supersede the original articles and
all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned
corporation has caused these Articles of
Amendment to be signed by a duly
authorized officer thereof this 20th day
of December, 2007.
P. H. GLATFELTER COMPANY
Name of Corporation
/s/ Jeffery J. Norton
----------------------------------------
Signature
V.P., General Counsel and Secretary
Title
EXHIBIT A
TO
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
P. H. GLATFELTER COMPANY
The first paragraph of Article 5 of the Company's Articles of Incorporation, as
amended and restated and subsequently amended, is further amended to add the
following two sentences to the end of the first paragraph, effective as of the
filing of the Articles of Amendment with the Pennsylvania Department of State:
Any or all classes and series of shares, or any part thereof, may be represented
by certificates or may be uncertificated shares, provided, however, that any
shares represented by a certificate that are issued and outstanding shall
continue to be represented thereby until the certificate is surrendered to the
Corporation. The rights and obligations of the holders of shares represented by
certificates and the rights and obligations of the holders of uncertificated
shares of the same class and series shall be identical.
Exhibit 3(b)
P. H. GLATFELTER COMPANY
ARTICLES OF INCORPORATION
1. The name of the corporation is
P. H. GLATFELTER COMPANY
2. The location and post office address of its registered office in this
Commonwealth is Spring Grove, York County, Pennsylvania.
3. The purpose or purposes for which the corporation is organized are to
acquire by purchase, or otherwise, own, buy, sell and deal in standing timber
lands, and to buy, cut, haul, drive and sell timber and logs, and to saw and
otherwise work the same, and to buy, manufacture and sell lumber, bark, wood,
pulp and all products made therefrom; to manufacture, produce, purchase, sell
and deal in any and all kinds of papers, and in all ingredients, products and
compounds thereof, and in any and all materials that now are or hereafter may be
used in or in connection with such manufacture, including the manufacture of
wood pulp and any other fibre; and to engage in, and to do, any other lawful act
concerning any or all lawful business for which corporations may be incorporated
under the Business Corporation Law of the Commonwealth of Pennsylvania,
including, but not limited to, manufacturing, processing, owning, using and
dealing in personal property of every class and description, engaging in
research and development, furnishing services, and acquiring, owning, using and
disposing of real property of any nature whatsoever.
4. The term for which the corporation is to exist is perpetual.
5. The aggregate number of shares which the corporation (hereinafter
referred to as the "Company") has authority to issue is 120,040,000 shares
divided into two classes consisting of (a) 40,000 shares of Preferred Stock of
the par value of $50 each; and (b) 120,000,000 shares of Common Stock of the par
value of $.01 each. Each share of Common Stock of the par value of $.01 each
which is issued and outstanding when this provision becomes effective, including
each share owned by the Company, shall be reclassified as two fully paid and
non-assessable shares of Common Stock of the par value of $.01 each, which shall
be included in the 120,000,000 shares of Common Stock herein authorized. Any or
all classes and series of shares, or any part thereof, may be represented by
certificates or may be uncertificated shares, provided, however, that any shares
represented by a certificate that are issued and outstanding shall continue to
be represented thereby until the certificate is surrendered to the Corporation.
The rights and obligations of the holders of shares represented by certificates
and the rights and obligations of the holders of uncertificated shares of the
same class and series shall be identical.
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof, of the classes of stock of
the Company which are fixed by the Articles of Incorporation, and the express
grant of authority to the Board of Directors of the Company (hereinafter
referred to as the "Board of Directors") to fix by resolution or resolutions the
designations and the powers, preferences and rights, and the qualifications,
limitations or
restrictions thereof, of the shares of Preferred Stock, which are not fixed by
the Articles of Incorporation, are as follows:
PREFERRED STOCK
1. The Preferred Stock may be issued at any time or from time to time in
any amount, not exceeding in the aggregate the total number of shares of
Preferred Stock hereinabove authorized, as Preferred Stock of one or more
series, as hereinafter provided, and for such lawful consideration as shall be
fixed from time to time by the Board of Directors. All shares of any one series
of Preferred Stock shall be alike in every particular, each series of Preferred
Stock shall be distinctively designated by letter or descriptive words, and all
series of Preferred Stock shall rank equally and be identical in all respects
except as permitted by the provisions of Section 2 of this Article.
2. To the extent that this Article does not establish series of Preferred
Stock and fix and determine the variations in the relative rights and
preferences as between series, authority is hereby expressly granted to and
vested in the Board of Directors at any time, or from time to time, to authorize
the issue of Preferred Stock as Preferred Stock of one or more series and, in
connection with the creation of each such series, to fix by resolution or
resolutions providing for the issue of shares thereof the designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, of such series, to the full
extent now or hereafter permitted by the laws of the Commonwealth of
Pennsylvania, in respect of the matters set forth in the following subdivisions
(a) to (g), inclusive:
(a) The designation of such series;
(b) The dividend rate of such series;
(c) The price at, and the terms and conditions on, which shares of
such series may be redeemed, subject to the provisions of subdivision (e) of
Section 3 of this Article;
(d) The amounts payable upon shares of such series in the event of
voluntary liquidation of the Company;
(e) Subject to the limitations provided by law, whether or not the
shares of such series shall be entitled to the benefit of a sinking fund to be
applied to the purchase or redemption of shares of such series, and if so
entitled, the amount of such fund, the manner of its application and the sinking
fund redemption price;
(f) Whether or not the shares of such series shall be made convertible
into, or exchangeable for, shares of any other class or classes or of any other
series of the same or any other class or classes of stock of the Company, and,
if made so convertible or exchangeable, the conversion price or prices, or the
rates of exchange, and the adjustments, if any, at which, and all other terms
and conditions upon which, such conversion or exchange may be made; and
(g) Whether or not the shares of such series shall be entitled to
other special rights in addition to those in this Article provided for,
including, without limitation, restrictive provisions with respect to the issue
of additional shares of stock of the same class or series or of
2
any other class of the Company or of any subsidiary, restrictive provisions with
respect to the payment of dividends upon, or the making of any other
distribution in respect of, or the making of any purchase or redemption of,
stock of any class of the Company or of any subsidiary, and the incurring of
indebtedness, secured or unsecured, by the Company or by any subsidiary, and, if
so, the nature thereof.
The Board of Directors may from time to time authorize and direct by
resolution or resolutions an increase in the number of shares of any series of
Preferred Stock already created by specifying that any or all unissued shares of
Preferred Stock shall be assigned to and included in such series and/or a
decrease in the number of shares of any such series (but not below the number of
shares thereof then outstanding) by specifying that any or all unissued shares
of Preferred Stock previously assigned to such series shall no longer be
included therein.
4-1/2% Cumulative Preferred Stock
The series of the authorized shares of Preferred Stock of the par value of
Fifty Dollars ($50) per share designated at 4-1/2% Cumulative Preferred Stock
(hereinafter called "4-1/2% Preferred Stock"), of which 20,000 shares were
issued and at one time outstanding, shall consist of 7,000 shares; and the
shares of said series shall have, in addition to the rights and preferences
granted by law and the other provisions of this Article, the following relative
rights and preferences:
(i) The dividend rate of the 4-1/2% Preferred Stock shall be four
and one-half percent (4-1/2%) per share per annum, and no more, upon
the par value thereof.
(ii) The redemption price per share of the 4-1/2% Preferred Stock
shall be $50 plus an amount equal to full cumulative dividends, as
defined in Section 3(f) of this Article, thereon to the date fixed by
the Board of Directors as the redemption date.
(iii) In the event of any voluntary liquidation, dissolution or
winding up of the Company, the holders of the 4-1/2% Preferred Stock
shall be entitled to receive an amount equal to the redemption price
specified in subsection (ii) above for every share thereof
respectively held by them, before any distribution shall be made to
the holders of the Common Stock.
(iv) The 4-1/2% Preferred Stock shall be entitled to the benefit
of a sinking fund to be applied to the purchase or redemption of such
series as follows:
The 4-1/2% Preferred Stock shall be subject to redemption through
the operation of a Sinking Fund hereinbelow provided for at the
Sinking Fund redemption price which shall be $50 per share plus an
amount equal to all accumulated and unpaid dividends thereon, whether
or not earned or declared, to the date fixed for redemption.
On or before March 25 in each year, if any 4-1/2% Preferred Stock
remains outstanding or owned by the Company and if the amount in the
Sinking
3
Fund shall be less than the Sinking Fund redemption price of all
outstanding 4-1/2% Preferred Stock (including 4-1/2% Preferred Stock
owned by the Company) the Company shall, subject to the conditions
hereinafter set forth, set aside a sum (hereinafter called "Sinking
Fund Installment") in cash equal to the aggregate par value of 2-1/2%
of the greatest number of shares of 4-1/2% Preferred Stock at any one
time theretofore outstanding (including 4-1/2% Preferred Stock owned
by the Company); provided, however, that such amount may be reduced,
at the option of the Company, by the aggregate par value of such
number of shares of 4-1/2% Preferred Stock theretofore acquired by the
Company by purchase other than through the Sinking Fund or by
voluntary redemption and not therefore used to reduce the amount of
any Sinking Fund Installment or theretofore restored to the status of
authorized and unissued Preferred Stock and classified as to series,
as the Board of Directors shall specify by resolution. The Company may
omit to set aside in any year such portion of any Sinking Fund
Installment as shall be in excess of the net income of the Company for
the immediately preceding fiscal year, determined in accordance with
sound accounting practice, after deducting therefrom dividend
requirements during such year on all outstanding Preferred Stock, and
the Company shall not set aside any Sinking Fund Installment unless
full cumulative dividends on the Preferred Stock to the end of the
then current dividend period shall have been paid or declared and set
apart for payment. If, however, the Company shall omit to set aside
the full amount of any Sinking Fund Installment owing to any
deficiency in net income as above provided, or if for any other reason
(including the fact that dividends have not been provided for) the
Company shall fail to set aside on or before the date due the full
amount of any Sinking Fund Installment, or if the Company shall fail
to apply amounts in the Sinking Fund as herein provided, the Company
shall be deemed to be in arrears in connection with its Sinking Fund
obligations in respect of the 4-1/2% Preferred Stock until such time
as the full amount which the Company shall have omitted or failed to
set aside shall have been set aside and applied as herein provided.
From each Sinking Fund Installment, together with all amounts
from prior installments not theretofore applied to the purchase or
redemption of 4-1/2% Preferred Stock, the Company shall use its best
efforts to purchase, from time to time, in the open market, on any
stock exchange or at private sale, as the Board of Directors may
determine, and at the lowest available price (not exceeding the
Sinking Fund redemption price) such number of outstanding shares of
4-1/2% Preferred Stock as the amount then in the Sinking Fund shall be
sufficient to purchase, as nearly as may be. On July 1 of each year,
if the unexpended balance in the Sinking Fund shall be sufficient to
redeem one hundred or more shares of 4-1/2% Preferred Stock (or less
than one hundred shares if the Company so desires) the Company shall
apply such unexpended balance to the redemption on August 1 of such
year of such number of outstanding shares of 4-1/2% Preferred Stock at
the Sinking Fund redemption price as said balance shall be sufficient
to redeem, as nearly as may be. Any such redemption shall be
accomplished in the manner and with the effect provided in Section
3(e) of this Article.
4
(v) The 4-1/2% Preferred Stock shall not be convertible.
(vi) So long as any shares of 4-1/2% Preferred Stock shall be
outstanding, the Company shall not create, assume or guarantee or
permit any subsidiary to create, assume or guarantee at any one time
or from time to time any funded debt in excess of $36,000,000 at any
one time outstanding (except any purchase money mortgage upon property
acquired after January 1, 1947, and any mortgage to which such
property may be subject at the time of its acquisition) unless notice
of the intention of the Company to create, assume or guarantee such
funded debt shall be given to the holders of the 4-1/2% Preferred
Stock and a meeting of said shareholders called upon thirty days'
written notice or on such longer notice as may be provided by law. At
said meeting the holders of 4-1/2% Preferred Stock shall vote for or
against the creation, assumption or guaranty of such proposed funded
debt and the negative vote of the holders of forty percent (40%) of
the 4-1/2% Preferred Stock then outstanding shall absolutely prevent
the creation, assumption or guaranty of any such funded debt by the
Company.
4-5/8% Cumulative Preferred Stock, Series of 1955
The series of the authorized shares of Preferred Stock of the par value of
Fifty Dollars ($50) per share designated as 4-5/8% Cumulative Preferred Stock,
Series of 1955 (hereinafter called "Preferred Stock, Series of 1955"), of which
40,000 shares were issued and at one time outstanding, shall consist of 21,000
shares; and the shares of said series shall have, in addition to the rights and
preferences granted by law and the other provisions of this Article, the
following relative rights and preferences:
(i) The dividend rate of the Preferred Stock, Series of 1955,
shall be four and five-eighths percent (4-5/8%) per share per annum,
and no more, upon the par value thereof.
(ii) The redemption price per share of the Preferred Stock,
Series of 1955, shall be $50.75 plus an amount equal to full
cumulative dividends, as defined in Section 3(f) of this Article,
thereon to the date fixed by the Board of Directors as the redemption
date.
(iii) In the event of any voluntary liquidation, dissolution or
winding up of the Company, the holders of the Preferred Stock, Series
of 1955, shall be entitled to receive an amount equal to the
redemption price specified in subsection (ii) above for every share
thereof respectively held by them, before any distribution shall be
made to the holders of the Common Stock.
(iv) The Preferred Stock, Series of 1955, shall be entitled to
the benefit of a sinking fund to be applied to the purchase or
redemption of such series as follows:
The Preferred Stock, Series of 1955, shall be subject to
redemption through the operation of a Sinking Fund for the Preferred
Stock, Series of 1955, herein below provided for at the Sinking Fund
redemption price which shall be
5
$50 per share plus an amount equal to all accumulated and unpaid
dividends thereon, whether or not earned or declared, to the date
fixed for redemption.
On or before March 25 in each year, if any Preferred Stock,
Series of 1955, remains outstanding or owned by the Company and if the
amount in the Sinking Fund shall be less than the Sinking Fund
redemption price of all outstanding Preferred Stock, Series of 1955
(including Preferred Stock, Series of 1955, owned by the Company), the
Company shall, subject to the conditions hereinafter set forth, set
aside a sum (hereinafter called "Sinking Fund Installment") in cash
equal to the aggregate par value of 2-1/2% of the greatest number of
shares of Preferred Stock, Series of 1955, at any one time theretofore
outstanding (including Preferred Stock, Series of 1955, owned by the
Company); provided, however, that any such amount may be reduced, at
the option of the Company, by the aggregate par value of such number
of shares of Preferred Stock, Series of 1955, theretofore acquired by
the Company by purchase other than through the Sinking Fund or by
voluntary redemption and not therefore used to reduce the amount of
any Sinking Fund Installment or theretofore restored to the status of
authorized and unissued Preferred Stock and classified as to series,
as the Board of Directors shall specify by resolution. The Company may
omit to set aside in any year such portion of any Sinking Fund
Installment as shall be in excess of the net income of the Company for
the immediately preceding fiscal year, determined in accordance with
sound accounting practice, after deducting therefrom dividend
requirements during such year on all outstanding Preferred Stock, and
the Company shall not set aside any Sinking Fund Installment unless
full cumulative dividends on all outstanding Preferred Stock to the
end of the then current dividend period shall have been paid or
declared and set apart for payment. If, however, the Company shall
omit to set aside the full amount of any Sinking Fund Installment
owing to any deficiency in net income as above provided, or if for any
other reason (including the fact that dividends have not been provided
for) the Company shall fail to set aside on or before the date due the
full amount of any Sinking Fund Installment, or if the Company shall
fail to apply amounts in the Sinking Fund as herein provided, the
Company shall be deemed to be in arrears in connection with its
Sinking Fund obligations in respect of the Preferred Stock, Series of
1955, until such time as the full amount which the Company shall have
omitted or failed to set aside shall have been set aside and applied
as herein provided.
From each Sinking Fund Installment, together with all amounts
from prior installments not theretofore applied to the purchase or
redemption of Preferred Stock, Series of 1955, the Company shall use
its best efforts to purchase, from time to time, in the open market,
on any stock exchange or at private sale, as the Board of Directors
may determine, and at the lowest available price (not exceeding the
Sinking Fund redemption price) such number of outstanding shares of
Preferred Stock, Series of 1955, as the amount then in the Sinking
Fund shall be sufficient to purchase, as nearly as may be. On July 1
of each year, if the unexpended balance in the Sinking Fund shall be
sufficient to redeem one hundred or more shares of Preferred Stock,
Series of 1955, (or less than one
6
hundred shares if the Company so desires) the Company shall apply such
unexpended balance to the redemption on August 1 of such year of such
number of outstanding shares of Preferred Stock, Series of 1955, at
the Sinking Fund redemption price as said balance shall be sufficient
to redeem, as nearly as may be. Any such redemption shall be
accomplished in the manner and with the effect provided in Section
3(e) of this Article.
(v) The Preferred Stock, Series of 1955, shall not be
convertible.
(vi) The Preferred Stock, Series of 1955, shall be entitled to no
other special rights in addition to those provided herein and in the
other provisions of this Article.
3. (a) The holders of shares of Preferred Stock of each series shall be
entitled to receive, when and as declared by the Board of Directors, dividends
at the rate for such series fixed in Section 2 of this Article or fixed by
resolution or resolutions as provided in Section 2 of this Article and no more,
payable quarterly on the first days of February, May, August and November in
each year (the quarterly periods ending on the first days of such months,
respectively, being herein designated as dividend periods), in each case from
the date of cumulation, as hereinafter in subdivision (f) of this Section 3
defined, of such series. Such dividends shall be cumulative (whether or not in
any dividend period or periods there shall be net profits or net assets of the
Company legally available for the payment of such dividends), so that if at any
time full cumulative dividends upon the outstanding Preferred Stock of all
series to the end of the then current dividend period shall not have been paid
or declared and set apart for payment, the amount of the deficiency shall be
fully paid, but without interest, either by redemption and the payment or
deposit, as provided in subdivision (e) hereof, of the redemption price thereof
or by dividends in the amount of such deficiency paid or declared and set apart
for payment on each such series, before any sum or sums shall be set aside for
or applied to the purchase or redemption of Preferred Stock of any series,
Common Stock or any other class of stock ranking junior to the Preferred Stock
and before any dividend shall be paid or declared or any other distribution
ordered or made upon the Common Stock or any other class of stock ranking junior
to the Preferred Stock, provided that any moneys theretofore set aside for any
sinking fund provided for in Section 2 of this Article or by resolution or
resolutions as provided in Section 2 of this Article may be applied to the
purchase or redemption of the Preferred Stock in accordance with the terms of
Section 2 of this Article or in accordance with the terms of such resolution or
resolutions.
All dividends declared on the Preferred Stock of the respective series
outstanding shall be declared pro rata, so that the amounts of dividends
declared per share on the Preferred Stock of different series shall in all cases
bear to each other the same ratio that full cumulative dividends on such
respective series bear to each other.
(b) After full cumulative dividends to the end of the then current
dividend period upon the outstanding Preferred Stock of all series shall have
been paid or declared and set apart for payment, and before any sum or sums
shall be set aside for, or applied to, the purchase of Common Stock or any other
class of stock ranking junior to the Preferred Stock and before any dividend
shall be paid or declared or any other distribution ordered or made upon the
7
Common Stock or any other class of stock ranking junior to the Preferred Stock,
the Company shall set aside as a sinking fund, when and as required, out of any
funds legally available for that purpose, in respect of each series of Preferred
Stock any shares of which shall at the time be outstanding and in respect of
which a sinking fund for the purchase or redemption thereof has been provided
for in Section 2 of this Article or by resolution or resolutions as provided in
Section 2 of this Article, the sum or sums required by the terms of Section 2 of
this Article or by the terms of such resolution or resolutions as a sinking fund
to be applied in the manner specified therein.
Preferred Stock of any series purchased or redeemed by the use of sinking
fund moneys or purchased or redeemed otherwise than by the use of sinking fund
moneys and applied by the Company as a credit against sinking fund payments,
shall be cancelled and shall not be reissued.
(c) After full cumulative dividends to the end of the then current
dividend period upon the Preferred Stock of all series then outstanding shall
have been paid or declared and set apart for payment, and after the Company
shall have complied with the provisions of the foregoing subdivision (b) of this
Section 3 in respect of any and all amounts then or theretofore required to be
set aside or applied in respect of any sinking fund mentioned in said
subdivision (b), then and not otherwise, the holders of the Common Stock shall,
subject to the provisions of this Article and of any resolution providing for
the issue of any series of the Preferred Stock, be entitled to receive such
dividends as may be declared by the Board of Directors.
(d) In the event of any liquidation, dissolution or winding up of the
Company, the holders of the Preferred Stock of each series then outstanding
shall be entitled to receive out of the assets of the Company available for
distribution to its stockholders, whether from capital, surplus or earnings,
before any distribution of the assets shall be made to the holders of the Common
Stock or any other class of stock ranking junior to the Preferred Stock, if such
liquidation, dissolution or winding up shall be involuntary, the sum of $50 for
every share of their holdings of Preferred Stock of such series plus full
cumulative dividends thereon to the date of final distribution, and if such
liquidation, dissolution or winding up shall be voluntary, the amount fixed in
Section 2 of this Article or fixed by resolution or resolutions as provided in
Section 2 of this Article for every share of their holdings of Preferred Stock
of such series; and in the event of any such distribution of assets, the holders
of the Common Stock shall be entitled, to the exclusion of the holders of the
Preferred Stock, to share ratably in all assets of the Company thereafter
remaining according to the number of shares of the Common Stock held by them
respectively. If upon any liquidation, dissolution or winding up of the Company
the amounts payable on or with respect to the Preferred Stock of all series are
not paid in full, the holders of shares of Preferred Stock of all series shall
share ratably in any distribution of assets in proportion to the respective
amounts which would be payable in respect of the shares held by them upon such
distribution if all amounts payable on or with respect to the Preferred Stock of
all series were paid in full. Neither the merger or consolidation of the Company
into or with any other corporation, nor the merger or consolidation of any other
corporation into or with the Company, nor a sale or lease of all or
substantially all the assets of the Company, shall be deemed to be a
liquidation, dissolution or winding up of the Company.
(e) The Preferred Stock of all series, or of any series thereof, or
any part of any series thereof, at any time outstanding, may be redeemed by the
Company, at its election
8
expressed by resolution of the Board of Directors, at any time or from time to
time (which time, when fixed in each case, is hereinafter called the "redemption
date"), upon not less than thirty (30) days' previous notice to the holders of
record of the Preferred Stock to be redeemed, given by mail in such manner as
may be prescribed by resolution or resolutions of the Board of Directors, at the
redemption price or prices fixed in Section 2 of this Article or fixed by
resolution or resolutions as provided in Section 2 of this Article for the
Preferred Stock to be redeemed. If less than all the outstanding shares of the
Preferred Stock of any series is to be redeemed, the redemption may be made
either by lot or pro rata in such manner as may be prescribed by resolution of
the Board of Directors. The Company may, if it so elects, provide moneys for the
payment of the redemption price by depositing the amount thereof, after notice
of redemption has first been mailed, for the account of the holders of Preferred
Stock entitled thereto with a bank or trust company doing business in the City
of Philadelphia, Pennsylvania, or in the Borough of Manhattan, in the City of
New York, and having capital and surplus of at least Five Million Dollars
($5,000,000) (the date of any such deposit being hereinafter called the "date of
deposit"). In such event, the notice of redemption shall include a statement of
the date of deposit and the name and address of the bank or trust company with
which the deposit will be made. From and after the redemption date (unless
default shall be made by the Company in providing moneys for the payment of the
redemption price), or, if the Company shall make such deposit on or before the
date specified therefor in the notice, then on and after the date of deposit,
all rights of the holders thereof as stockholders of the Company shall cease and
terminate, except the right to receive the redemption price as hereinafter
provided and except any conversion rights not theretofore expired. Anything
herein or in any resolution providing for the issue of any series of the
Preferred Stock to the contrary notwithstanding, said redemption price shall
include an amount equal to full cumulative dividends on the Preferred Stock to
be redeemed to the redemption date thereof, and the Company shall not be
required to declare or pay on such Preferred Stock to be redeemed, and the
holders thereof shall not be entitled to receive, any dividends in addition to
those thus reflected in the redemption price; provided, however, that the
Company may pay in regular course any dividends thus reflected in the redemption
price either to the holders of record on the record date fixed for determination
of stockholders entitled to receive such dividends (in which event, anything
herein to the contrary notwithstanding, the amount so deposited need not include
any dividends so paid or to be paid), or as part of the redemption price upon
surrender of the certificates for the shares redeemed. On and after the
redemption date, or, if the Company shall elect to deposit the moneys for such
redemption as herein provided, then on and after the date of deposit, the
holders of record of the Preferred Stock to be redeemed shall be entitled to
receive the redemption price upon actual delivery to the Company or, in the
event of such a deposit, to the bank or trust company with which such deposit is
made, of certificates for the number of shares to be redeemed (such
certificates, if required, to be properly stamped for transfer and duly endorsed
in blank or accompanied by proper instruments of assignment and transfer duly
endorsed in blank). Any moneys so deposited which shall remain unclaimed by the
holders of such Preferred Stock at the end of six (6) years after the redemption
date shall be paid by such bank or trust company to the Company; provided,
however, that all moneys so deposited, which shall not be required for such
redemption because of the exercise of any right of conversion or exchange, shall
be returned to the Company forthwith. Any interest accrued on moneys so
deposited shall be paid to the Company from time to time.
9
Preferred Stock redeemed pursuant to the provisions of this subdivision (e)
shall be cancelled and shall not be reissued.
(f) The term "full cumulative dividends" whenever used in this Article
with reference to any share of any series of the Preferred Stock shall be deemed
to mean (whether or not in any dividend period, or any part thereof, in respect
of which such term is used there shall have been net profits or net assets of
the Company legally available for the payment of such dividends) that amount
which shall be obtained by multiplying the full dividend rate for such series
fixed in Section 2 of this Article or fixed by resolution or resolutions as
provided in Section 2 of this Article by the period of time elapsed from the
date of cumulation of such series to the date as of which full cumulative
dividends are to be computed (including the elapsed portion of the current
dividend period), less the amount of all dividends paid, or deemed paid upon
such share.
The term "date of cumulation" as used in this Article with reference to any
series of the Preferred Stock shall be deemed to mean the February 1, May 1,
August 1 or November 1 on which, or next preceding the date on which, shares of
Preferred Stock of such series shall first be issued.
In the event of the issue of additional Preferred Stock of any then
existing series, all dividends paid on Preferred Stock of such series prior to
the issue of such additional Preferred Stock, and all dividends declared and
payable to holders of Preferred Stock of such series of record on any date prior
to such additional issue, shall be deemed to have been paid on the additional
Preferred Stock so issued.
The term "stock ranking junior to the Preferred Stock", whenever used in
this Article, shall mean any stock of the Company over which the Preferred Stock
has preference or priority in the payment of dividends or in the distribution of
assets on any dissolution, liquidation or winding up of the Company.
(g) Except as otherwise required by the statutes of the Commonwealth
of Pennsylvania and as otherwise provided in this Article, and subject to the
provisions of the by-laws of the Company, as from time to time amended, with
respect to the closing of the transfer books and the fixing of a record date for
the determination of stockholders entitled to vote, the holders of the Common
Stock shall exclusively possess voting power for the election of directors and
for all other purposes, and the holders of the Preferred Stock shall have no
voting power and shall not be entitled to any notice of any meeting of
stockholders.
Provided, however, that if and whenever a default in preferred dividends,
as hereinafter defined, shall exist, the holders of the outstanding Preferred
Stock, voting separately as a class, shall have the right to elect two directors
at the annual meeting of stockholders of the Company for the election of
directors next succeeding the occurrence of such default, and at each such
annual meeting thereafter so long and only so long as such default shall exist.
The term of office of each such director elected by the holders of the Preferred
Stock as aforesaid shall continue until the next annual meeting of stockholders
of the Company for the election of directors, notwithstanding that prior to the
end of such term the default in preferred dividends shall cease to exist. If,
prior to the end of such term, a vacancy in the office of such director shall
occur by
10
reason of his death, resignation, removal or disability, or for any other cause,
such vacancy shall be filed for the remainder of the term in the manner provided
in the by-laws of the Company; provided, that, if such vacancy shall be filled
by election by the stockholders at a meeting thereof, the holders of the then
outstanding Preferred Stock, voting separately as a class, shall have the right
to fill such vacancy for the remainder of the term, unless at the time of such
election o default in preferred dividends shall exist. At any meeting of
stockholders at which the holders of Preferred Stock shall be entitled to vote
for the election of a director or directors as aforesaid, the holders of
twenty-five percent (25%) of the then outstanding Preferred Stock present in
person or by proxy shall be sufficient to constitute a quorum for the election
of such director or directors and for no other purpose, and the vote of the
holders of a majority of the Preferred Stock so present at such meeting at which
there shall be a quorum, shall be sufficient to elect such director or
directors. For the purposes of this subdivision (g), a default in preferred
dividends shall be deemed to have occurred whenever, on any dividend payment
date, the amount of unpaid full cumulative dividends upon any series of the
Preferred Stock shall be equivalent to eight (8) quarterly dividends thereon or
more, and, having so occurred, such default shall be deemed to exist thereafter
until, but only until, full cumulative dividends on all shares of Preferred
Stock then outstanding of each and every series, to the end of the last
preceding dividend period, shall have been paid. Nothing herein contained shall
be deemed to prevent an amendment of the by-laws of the Company, in the manner
therein provided, which shall increase the number of directors of the Company or
to prevent any other change in the number of directors of the Company.
(h) So long as any shares of the Preferred Stock of any series shall
be outstanding, the Company shall not without the consent given by resolution
adopted at a meeting duly called for that purpose of the holders of record of at
least two-thirds of the number of shares of the Preferred Stock of all series
then outstanding:
(1) alter or change the designations or the powers, preferences
or rights, or the qualifications, limitations or restrictions thereof, of the
Preferred Stock or of any series thereof in any material respect prejudicial to
the holders thereof;
(2) create any new class of stock having preference over the
Preferred Stock as to dividends or assets, or create any obligation or security
of the Company convertible into shares of stock of any class having such
preference over the Preferred Stock;
(3) sell, transfer or lease all, or substantially all, the assets
of the Company unless as a part of such transaction or prior thereto the
Preferred Stock of all series shall be retired or called for redemption and the
necessary funds therefor deposited as provided in subdivision (e) hereof; or
(4) effect a statutory merger or consolidation of or with any
other corporation or corporations; provided that such consent shall not be
necessary if as a result of such merger or consolidation (A) the Company shall
be the surviving corporation and the Preferred Stock then outstanding shall
continue to be outstanding, there shall be no alteration or change in the
designations or the powers, preferences or rights, or the qualifications,
limitations or restrictions thereof, in any material respect prejudicial to the
holders thereof, there shall be no increase in the authorized number of shares
of Preferred Stock, and there shall not be created any
11
new class of stock having preference over, or being on a parity with, the
Preferred Stock as to dividends or assets, or (B) if the Company shall not be
the surviving corporation, the shares of the Preferred Stock of each series then
outstanding shall be converted into, or be exchangeable for, a like number of
shares of preferred stock of the surviving corporation which preferred stock
shall have substantially the same designations, powers, preferences and rights,
and qualifications, limitations or restrictions thereof, as the Preferred Stock
of such series, and there shall not be outstanding or created any class of stock
of the surviving corporation having preference over, or being on a parity with,
such preferred stock as to dividends or assets.
(i) So long as any shares of the Preferred Stock of any series
shall be outstanding, the Company shall not, without the consent given by
resolution adopted at a meeting duly called for that purpose of the holders of
record of at least a majority of the number of shares of the Preferred Stock of
all series then outstanding, increase the authorized number of shares of the
Preferred Stock or create any new class of stock which shall be on a parity with
the Preferred Stock as to dividends or assets, or create any obligation or
security of the Company convertible into shares of stock of any class which
shall be on a parity with the Preferred Stock as to dividends or assets.
The holders of the Preferred Stock shall not be entitled to subscribe to
any increased issue of the Preferred Stock or the Common Stock unless such
privilege is provided for by resolution of the holders of the Common Stock and
the Board of Directors of the Company.
Anything in this Article hereof or in any resolution or resolutions
providing for the issue of Preferred Stock of any series contained to the
contrary notwithstanding, dividends upon shares of stock of any class of the
Company shall be payable only out of unreserved and unrestricted earned surplus
of the Company legally available for dividends, and the rights of the holders of
all classes of stock of the Company in respect of the payment of dividends shall
at all times be subject to the power of the Board of Directors from time to time
to set aside such reserves and to make such other provisions, if any, as said
Board shall deem to be necessary or advisable for working capital, for additions
and improvements to plant and equipment, for expansion of the Company's business
(including the acquisition of real and personal property for that purpose) or
for any other proper purpose of the Company.
COMMON STOCK
The holders of Common Stock shall have no preemptive rights and the Company
shall have the right to issue any shares of its capital stock, option rights or
securities having conversion or option rights without first offering such
shares, rights or securities to the holders of the Common Stock.
12
Exhibit 3(c)
As amended by the
Board of Directors
at a meeting held
December 18, 2007
(Effective December 18, 2007)
P. H. GLATFELTER COMPANY
BY-LAWS
ARTICLE I
MEETINGS OF SHAREHOLDERS AND RECORD DATE
1.1 ANNUAL MEETING. An annual meeting of shareholders for the election of
directors and the transaction of such other business as may properly come before
the meeting shall be held on the date and time fixed and designated by the Board
of Directors, but, if no such date and time is fixed and designated by the Board
for a calendar year, then the meeting for such calendar year shall be held on
the fourth Wednesday in April of such year at 10:00 A.M., if not a legal
holiday, and, if a legal holiday, then on the next succeeding full business day
which is not a legal holiday at the same hour.
1.2 SPECIAL MEETINGS. Special meetings of the shareholders may be called at
any time by the Board of Directors, the Chairman of the Board, the Chief
Executive Officer or the President.
1.3 PLACE. All meetings of the shareholders shall be held at the principal
office of the Company, such other place within or without the Commonwealth of
Pennsylvania as may be designated by the Board of Directors in the notice of a
meeting, or by means of the Internet or other electronic communications
technology in a fashion pursuant to which the shareholders have the opportunity
to read or hear the proceedings substantially concurrently with their
occurrence, vote on matters submitted to the shareholders and pose questions to
the directors of the Company.
1.4 NOTICE. Written notice stating the place, day and hour of each meeting
of shareholders and, in the case of a special meeting, the general nature of the
business to be transacted shall be given by the Secretary or other
duly-authorized officer of the Company at least ten days before the meeting to
each shareholder of record entitled to vote at the meeting.
1.5 QUORUM. Except as otherwise provided in the Articles of Incorporation,
the presence in person or by proxy of shareholders entitled to cast at least a
majority of the votes which all shareholders are entitled to cast on a
particular matter shall constitute a quorum for the purpose of considering such
matter at a meeting of shareholders, but less than a quorum may adjourn from
time to time to reconvene at such time and place as they may determine. When a
quorum is present, except as may be otherwise specified in the Articles of
Incorporation or provided by law, all matters shall be decided by the vote of
the holders of a majority of the votes entitled to be cast at the meeting, in
person or by proxy.
1.6 RECORD DATES. The Board of Directors may fix a time not more than
ninety days prior to the date of any meeting of shareholders, or the date fixed
for the payment of any dividend or distribution, or the date for the allotment
of rights, or the date when any change or conversion or exchange of shares will
be made or go into effect, as a record date for the determination of the
shareholders entitled to notice of or to vote at any such meeting, or to receive
payment of any such dividend or distribution, or to receive any such allotment
of rights, or to exercise the rights in respect to any such change, conversion
or exchange of shares. In such case, only such shareholders as shall be
shareholders of record at the close of business on the date so fixed shall be
entitled to notice of or to vote at such meeting, or to receive payment of such
dividend or distribution, or to receive such allotment of rights, or to exercise
such rights in respect to any change, conversion or exchange of shares, as the
case may be, notwithstanding any transfer of any shares on the books of the
Company after the record date so fixed.
2
1.7 NOMINATIONS AND NOTICE OF BUSINESS AT MEETINGS. At any annual meeting
of shareholders only persons who are nominated or business that is proposed in
accordance with the procedures set forth in this Section 1.7 shall be eligible
for election as directors or considered for action by shareholders. Nominations
of persons for election to the Board of Directors of the Company may be made or
business proposed at a meeting of shareholders (i) by or at the direction of the
Board of Directors or (ii) by any shareholder of the Company entitled to vote at
the meeting who complies with the notice and other procedures set forth in this
Section 1.7. Such nominations or business proposals, other than those made by or
at the direction of the Board of Directors, shall be made pursuant to timely
notice in writing to the Secretary of the Company and such proposals must, under
applicable law, be a proper matter for shareholder action. To be timely, a
shareholder's notice shall be delivered to or mailed and received at the
principal office of the Company not less than 120 days in advance of the date
which is the anniversary of the date the Company's proxy statement was released
to shareholders in connection with the previous year's annual meeting or if the
date of the applicable annual meeting has been changed by more than 30 days from
the date contemplated at the time of the previous year's proxy statement, not
less than 90 days before the date of the applicable annual meeting. Such
shareholder's notice shall set forth (i) as to each person who such shareholder
proposes to nominate for election or reelection as a director, all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a Director if elected); (ii) as to any other
business that the shareholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the annual meeting, the
reasons for conducting such business at the annual meeting and any material
interest in such business of such person on whose behalf such proposal is made;
and (iii) as to the shareholder giving the notice and the beneficial owner, if
any, on whose
3
behalf the nomination or proposal is made, (a) the name and address of such
shareholder and beneficial owner, if any, (b) the class and number of shares of
the Company which are beneficially owned, (c) a description of all arrangements
or understandings between such shareholder and each proposed nominee and any
other person or persons (including their names) with respect to any such
nomination(s) or proposal(s) and (d) a representation that such shareholder
intends to appear in person or by proxy at the meeting to nominate the person(s)
named, or move the proposal identified, in its notice. The Company may require
any proposed nominee to furnish such other information as may reasonably be
required by the Company to determine the eligibility of such proposed nominee to
serve as a director of the Company. No person shall be eligible for election as
a director of the Company and no business shall be conducted at the annual
meeting of shareholders, other than those made by or at the direction of the
Board of Directors, unless nominated or proposed in accordance with the
procedures set forth in this Section 1.7. The Chairman of the meeting may, if
the facts warrant, determine and declare to the meeting that a nomination or
proposal was not made in accordance with the provisions this Section 1.7 and, if
he should so determine, he shall so declare to the meeting and the defective
nomination or proposal shall be disregarded.
ARTICLE II
DIRECTORS
2.1 NUMBER AND TERM. The Board of Directors shall consist of eight persons,
comprising two classes of three directors each, and one class of two directors.
At each annual meeting of shareholders, the successors to those directors whose
terms expire in that year shall be elected to hold office for a term of three
years each, so that the term of office of one class of directors shall expire
each year.
2.2 AGE QUALIFICATION. No person, other than an officer or employee of the
Company, shall be elected or reelected a director after reaching 72 years of
age. When
4
the term of any director, other than an officer or employee of the Company,
extends beyond the date when the director reaches 72 years of age, such director
shall resign from the Board of Directors effective at the annual meeting of
shareholders next succeeding his 72nd birthday.
2.3 VACANCIES. In the case of any vacancy in the Board of Directors by
death, resignation or for any other cause, including an increase in the number
of directors, the Board may fill the vacancy by choosing a director to serve
until the next selection of the class for which such director has been chosen
and until his successor has been selected and qualified or until his earlier
death, resignation or removal.
2.4 ANNUAL MEETING. An annual meeting of the Board of Directors shall be
held each year as soon as practicable after the annual meeting of shareholders,
at the place where such meeting of shareholders was held or at such other place
as the Board of Directors may determine, for the purposes of organization,
election of officers and the transaction of such other business as shall come
before the meeting. No notice of the meeting need be given.
2.5 REGULAR MEETINGS. Regular meetings of the Board of Directors may be
held without notice at such times and at such places as the Board of Directors
may determine.
2.6 SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called by the Chairman of the Board, the Chief Executive Officer or the
President. Notice of every special meeting shall be given to each director not
later than the second day immediately preceding the day of such meeting in the
case of notice by mail, telegram or courier service, and not later than the day
immediately preceding the day of such meeting in the case of notice delivered
personally or by telephone, telex, TWX, facsimile transmission, e-mail or other
electronic communication. Such notice shall state the time and place of the
meeting, but, except as otherwise provided in the by-laws, neither the business
to be transacted at, nor the purpose of, any special meeting of the Board of
Directors need be specified in the notice, or waiver of notice, of such meeting.
5
2.7 QUORUM AND ACTION BY UNANIMOUS CONSENT.
(a) Quorum. A majority of the directors in office shall constitute a
quorum for the transaction of business but less than a quorum may adjourn from
time to time to reconvene at such time and place as they may determine.
(b) Action by Unanimous Consent. Any action required or permitted to
be taken at a meeting of the Board of Directors may be taken without a meeting
if, prior or subsequent to the action, a consent or consents thereto by all of
the directors in office is filed with the secretary of the Company. For the
purposes of this Section 2.7(b), consent may be given by means of a physical
written copy or transmitted by facsimile transmission, e-mail or similar
electronic communications technology; provided that the means of giving consent
shall enable the Company to keep a record of the consents in a manner satisfying
the requirements of Section 107 of the Pennsylvania Associations Code.
2.8 COMPENSATION. Directors shall receive such compensation for their
services as shall be fixed by the Board of Directors.
2.9 COMMITTEES. The Board of Directors may, by resolution adopted by a
majority of the whole Board, designate one or more committees, each committee to
consist of two or more of the directors of the Company. The Board may designate
one or more directors as alternate members of any Committee, who may replace any
absent or disqualified member at any meeting of the committee. Any such
committee to the extent provided in such resolution shall have and exercise the
authority of the Board of Directors in the management of the business and
affairs of the Company.
2.10 PARTICIPATION IN MEETINGS BY COMMUNICATIONS EQUIPMENT. One or more
directors may participate in a meeting of the Board of Directors or a committee
of the Board by means of conference telephone or other electronic technology by
means of which all persons participating in the meeting can hear each other.
Directors so participating shall be deemed present at the meeting.
6
2.11 LIABILITY OF DIRECTORS. A director of the Company shall not be
personally liable for monetary damages for any action taken, or any failure to
take any action, on or after January 27, 1987 unless he has breached or failed
to perform the duties of his office as provided for under Section 1713 of the
Pennsylvania Business Corporation Law of 1988, as amended, and the breach or
failure to perform constitutes self-dealing, willful misconduct or recklessness.
Any repeal, amendment, or modification of this Paragraph shall be prospective
only and shall not increase, but may decrease, the liability of a director with
respect to actions or failures to act occurring prior to such change.
2.12 OFFICERS. The officers of the Company shall be a Chairman of the
Board, a Chief Executive Officer, a President, one or more Vice Presidents, a
Secretary, a Treasurer, a Controller and such other officers as the Board of
Directors may deem advisable. In the absence or disability of the Chairman of
the Board and the Chief Executive Officer, the President, a Director designated
by the Board or the officer or officers in the order designated by the Board of
Directors shall have the authority and perform the duties of the Chairman of the
Board and Chief Executive Officer. Any two or more offices may be held by the
same person.
2.13 TERM. Each officer shall hold office until his successor is elected or
appointed and qualified or until his death, resignation or removal by the Board
of Directors.
2.14 AUTHORITY, DUTIES AND COMPENSATION. All officers shall have such
authority, perform such duties and receive such compensation as may be provided
in the by-laws or as may be determined by the Board of Directors.
2.15 CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside at all
meetings of the Board of Directors and shall perform such other duties as may be
assigned by the Board of Directors.
7
2.16 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be the
chief executive officer of the Company and shall preside at all meetings of the
shareholders and, if a director of the Company, in the absence or disability of
the Chairman of the Board, or if that office is vacant, shall preside at all
meetings of the Board of Directors. He or she shall be responsible for the
general management of the business of the Company, subject to the control of the
Board of Directors. In the absence or disability of the President, or if that
office is vacant, the Chief Executive Officer shall have the authority and
perform the duties of the President.
2.17 PRESIDENT. The President shall perform such duties as may be assigned
by the Board of Directors and, in the absence or disability of the Chief
Executive Officer, or if that office is vacant, shall have the authority and
perform the duties of the Chief Executive Officer.
2.18 VICE PRESIDENT. In the absence or disability of the Chief Executive
Officer and the President, or any other officer or officers, the Vice Presidents
in the order designated by the Board of Directors shall have the authority and
perform the duties of the Chief Executive Officer, the President or other
officer as the case may be.
2.19 SECRETARY. The Secretary shall give notice of meetings of the
shareholders, of the Board of Directors and of the Executive Committee, attend
all such meetings and record the proceedings thereof. In the absence or
disability of the Secretary, an Assistant Secretary or any other person
designated by the Board of Directors or the Chief Executive Officer shall have
the authority and perform the duties of the Secretary.
2.20 TREASURER. The Treasurer shall have charge of the securities of
Company and the deposit and disbursement of its funds, subject to the control of
the Board of Directors. In the absence or disability of the Treasurer, as
Assistant Treasurer or any other
8
person designated by the Board of Directors of the Chief Executive Officer shall
have the authority and perform the duties of the Treasurer.
2.21 CONTROLLER. The Controller shall be the principal accounting officer
and shall keep books recording the business transactions of the Company. He
shall be in charge of the accounts of all of its offices and shall promptly
report and properly record in the books of the Company all relevant date
relating to the Company's business.
ARTICLE III
INDEMNIFICATION
3.1 INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER PERSONS. The Company
shall indemnify any director or officer of the Company or any of its
subsidiaries who was or is an "authorized representative" of the Company (which
shall mean for the purposes of Paragraphs 3.1. through 3.7, a director or
officer of the Company, or a person serving at the request of the Company as a
director, officer, partner, fiduciary or trustee of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise)
and who was or is a "party" (which shall include for purposes of Paragraphs 3.1
through 3.7 the giving of testimony or similar involvement) or is threatened to
be made a party to any "proceeding" (which shall mean for purposes of Paragraphs
3.1 through 3.7 any threatened, pending or completed action, suit, appeal or
other proceeding of any nature, whether civil, criminal, administrative or
investigative, whether formal or informal, and whether brought by or in the
right of the Company, its shareholders or otherwise) by reason of the fact that
such person was or is an authorized representative of the Company to the fullest
extent permitted by law, including without limitation indemnification against
expenses (which shall include for purposes of Paragraphs 3.1 through 3.7
attorneys' fees and disbursements), damages, punitive damages, judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such proceeding unless
9
the act or failure to act giving rise to the claim is finally determined by a
court to have constituted willful misconduct or recklessness. If an authorized
representative is not entitled to indemnification in respect of a portion of any
liabilities to which such person may be subject, the Company shall nonetheless
indemnify such person to the maximum extent for the remaining portion of the
liabilities.
3.2 ADVANCEMENT OF EXPENSES. The Company shall pay the expenses (including
attorneys' fees and disbursements) actually and reasonably incurred in defending
a proceeding on behalf of any person entitled to indemnification under Paragraph
3.1 in advance of the final disposition of such proceeding upon receipt of an
undertaking by or on behalf of such person to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified by
the Company as authorized in Paragraphs 3.1 through 3.7 and may pay such
expenses in advance on behalf of any employee or agent on receipt of a similar
undertaking. The financial ability of such authorized representative to make
such repayment shall not be prerequisite to the making of an advance.
3.3 EMPLOYEE BENEFIT PLANS. For purposes of Paragraphs 3.1 through 3.7, the
Company shall be deemed to have requested an officer or director to serve as
fiduciary with respect to an employee benefit plan where the performance by such
person of duties to the Company also imposes duties on, or otherwise involves
services by, such person as a fiduciary with respect to the plan; excise taxes
assessed on an authorized representative with respect to any transaction with an
employee benefit plan shall be deemed "fines"; and action taken or omitted by
such person with respect to an employee benefit plan in the performance of
duties for a purpose reasonably believed to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Company.
3.4 SECURITY FOR INDEMNIFICATION OBLIGATIONS. To further effect, satisfy or
secure the indemnification obligations provided herein or otherwise, the Company
may maintain insurance, obtain a letter of credit, act as self-insurer, create a
10
reserve, trust, escrow, cash collateral or other fund or account, enter into
indemnification agreements, pledge or grant a security interest in any assets or
properties of the Company, or use any other mechanism or arrangement whatsoever
in such amounts, at such costs, and upon such other terms and conditions as the
Board of Directors shall deem appropriate.
3.5 RELIANCE UPON PROVISIONS. Each person who shall act as an authorized
representative of the Company shall be deemed to be doing so in reliance upon
the rights of indemnification provided by these Paragraphs 3.1 through 3.7.
3.6 AMENDMENT OR REPEAL. All rights of indemnification under Paragraphs 3.1
through 3.7 shall be deemed a contract between the Company and the person
entitled to indemnification under these Paragraphs 3.1 through 3.7 pursuant to
which the Company and each such person intend to be legally bound. Any repeal,
amendment or modification hereof shall be prospective only and shall not limit,
but may expand, any rights or obligations in respect of any proceeding whether
commenced prior to or after such change to the extent such proceeding pertains
to actions or failures to act occurring prior to such change.
3.7 SCOPE. The indemnification, as authorized by these Paragraphs 3.1
through 3.7, shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
statute, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in an official capacity and as to action in any
other capacity while holding such office. The indemnification and advancement of
expenses provided by or granted pursuant to these Paragraphs 3.1 through 3.7
shall continue as to a person who has ceased to be an officer or director in
respect of matters arising prior to such time, and shall inure to the benefit of
the heirs and personal representatives of such person.
ARTICLE IV
STOCK CERTIFICATES AND CORPORATE SEAL
11
4.1 EXECUTION. Certificates representing shares of capital stock of the
Company shall be signed by the Chairman of the Board, the Chief Executive
Officer, the President or a Vice President and by the Secretary, an Assistant
Secretary, the Treasurer or an Assistant Treasurer, but where a certificate is
signed by a transfer agent or a registrar, the signature of any corporate
officer may be facsimile, engraved or printed.
4.2 UNCERTIFICATED SHARES.
(a) Notwithstanding anything herein to the contrary, any or all
classes and series of shares, or any part thereof, may be represented by
uncertificated shares, except that shares represented by a certificate that are
issued and outstanding shall continue to be represented thereby until the
certificate is surrendered to the Company. Within a reasonable time after the
issuance or transfer of uncertificated shares, the Company shall, or shall
instruct its transfer agent to, send to the registered owner (holder) thereof a
written notice containing the information required to be set forth or stated on
certificates. The rights and obligations of the holders of uncertificated shares
and those of certificated shares, of the same class or series, shall be
identical.
(b) The Board of Directors may prescribe procedures for the issuance
and registration of transfer of uncertificated shares, and with respect to such
other matters relating to uncertificated shares as the Board of Directors may
deem appropriate.
(c) Each registered holder of capital stock represented by
uncertificated shares shall be entitled, upon request to the custodian of the
stock transfer books of the Company, or other person designated as the custodian
of the records of uncertificated shares, to have physical certificates
representing such shares registered in such holder's name.
12
4.3 SEAL. The Company shall have a corporate seal which shall bear the name
of the Company and State and year of its incorporation. The seal shall be in the
custody of the Secretary and may be used by causing it or a facsimile to be
impressed or reproduced upon or affixed to any document.
ARTICLE V
NOTICES
5.1 FORM OF NOTICE. Whenever written notice is required to be given to any
person under the provisions of the Pennsylvania Business Corporation Law of 1988
(as amended from time to time, the "Business Corporation Law") or by the
Articles of Incorporation or these by-laws, it may be given to the person: (i)
by personal delivery, (ii) by facsimile number, e-mail or other electronic
communication to his or her facsimile number or address for e-mail or other
electronic communications supplied by him or her to the Company for the purpose
of notice, or (iii) by sending a copy thereof by first class or express mail,
postage prepaid, or by telegram (with messenger service specified), telex or TWX
(with answer back received) or courier service, charges prepaid, to the address
(or to the telex or TWX number) of the person appearing on the books of the
Company or, in the case of notice to be given to a director, to the address (or
to the telex or TWX number) supplied by the director to the Company for the
purpose of notice. If the notice is sent by mail, telegraph or courier service,
it shall be deemed to have been given to the person entitled thereto when
deposited in the United States mail or with a telegraph office or courier
service for delivery to that person or, in the case of telex or TWX, when
dispatched. Notice given by facsimile transmission, e-mail or other electronic
communication shall be deemed to have been given to the person entitled thereto
when sent. A notice of meeting shall specify the place, day and hour of the
meeting and any other information required by any other provision of the
Business Corporation Law, the Articles or these by-laws.
13
5.2 ADJOURNED SHAREHOLDER MEETINGS. When a meeting of shareholders is
adjourned, it shall not be necessary to give any notice of the adjourned meeting
or of the business to be transacted at an adjourned meeting, other than by
announcement at the meeting at which the adjournment is taken, unless the Board
of Directors fixes a new record date for the adjourned meeting, in which event
the notice shall be given in accordance with this section.
5.3 WAIVER OF NOTICE. Any notice required to be given under these by-laws
may be effectively waived by the person entitled thereto by written waiver
signed before or after the meeting to which such notice would relate or by
attendance at such meeting otherwise than for the purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
was not lawfully called or convened.
ARTICLE VI
AMENDMENTS
6.1 AMENDMENTS. These by-laws may be amended or repealed and new by-laws
may be adopted by the affirmative vote of a majority of the directors of the
Company or by the affirmative vote of shareholders entitled to cast a majority
of the votes which all shareholders are entitled to cast at any annual, regular
or special meeting of directors or shareholders, as the case may be; provided,
however, that new by-laws may not be adopted and these by-laws may not be
amended or repealed in any way that limits indemnification rights, increases the
liability of directors or changes the manner or vote required for any such
adoption, amendment or repeal, except by the affirmative vote of the
shareholders entitled to cast at least a majority of the votes which all
shareholders are entitled to cast thereon. In the case of a meeting of
shareholders, written notice shall be given to each shareholder entitled to vote
thereat that the purpose, or one of the purposes, of the meeting is to consider
the adoption, amendment or repeal of the by-laws.
14
ARTICLE VII
EMERGENCY BY-LAWS
7.1 WHEN OPERATIVE. The emergency by-laws provided by the following
Paragraphs shall be operative during any emergency resulting from warlike damage
or an attack on the United States or any nuclear or atomic disaster,
notwithstanding any different provision in the preceding Paragraphs of the
by-laws or in the Articles of Incorporation of the Company or in the
Pennsylvania Business Corporation Law. To the extent not inconsistent with these
emergency by-laws, the by-laws provided in the preceding Paragraphs shall remain
in effect during such emergency and upon the termination of such emergency the
emergency by-laws shall cease to be operative unless and until another such
emergency shall occur.
7.2 MEETINGS. During any such emergency:
(a) Any meeting of the Board of Directors may be called by any
director. Whenever any officer of the Company who is not a director has reason
to believe that no director is available to participate in a meeting, such
officer may call a meeting to be held under the provisions of this Paragraph.
(b) Notice of each meeting called under the provisions of this
Paragraph shall be given by the person calling the meeting or at his request by
any officer of the Company. The notice shall specify the time and the place of
the meeting, which shall be the head office of the Company at the time if
feasible and otherwise any other place specified in the notice. Notice need be
given only to such of the directors as it may be feasible to reach at the time
and may be given by such means as may be feasible at the time, including
publication or radio. If given by mail, messenger, telephone or telegram, the
notice shall be addressed to the director at his residence or business address
or such other place as the person giving the notice shall deem suitable. In the
case of meetings called by an officer who is not a director, notice shall also
be given similarly, to the extent feasible, to the persons named on
15
the list referred to in part (c) of this Paragraph. Notice shall be given at
least two days before the meeting if feasible in the judgment of the person
giving the notice and otherwise the meeting may be held on any shorter notice he
shall deem suitable.
(c) At any meeting called under the provisions of this Paragraph, the
director or directors present shall constitute a quorum for the transaction of
business. If no director attends a meeting called by an officer who is not a
director and if there are present at least three of the persons named on a
numbered list of personnel approved by the Board of Directors before the
emergency, those present (but not more than the seven appearing highest in
priority on such list) shall be deemed directors for such meeting and shall
constitute a quorum for the transaction of business.
7.3 LINES OF SUCCESSION. The Board of Directors, during as well as before
any such emergency, may provide, and from time to time modify, lines of
succession in the event that during such an emergency any or all officers or
agents of the Company shall for any reason be rendered incapable of discharging
their duties.
7.4 OFFICES. The Board of Directors, during as well as before any such
emergency, may, effective in the emergency, change the head office or designate
several alternative head offices or regional offices, or authorize the officers
so to do.
7.5 LIABILITY. No officer, director or employee acting in accordance with
these emergency by-laws shall be liable except for willful misconduct.
7.6 REPEAL OR CHANGE. These emergency by-laws shall be subject to repeal or
change by further action of the Board of Directors or by action of the
shareholders, except that no such repeal or change shall modify the provisions
of the next preceding Paragraph with regard to action or inaction prior to the
time of such repeal or change.
16
ARTICLE VIII
PENNSYLVANIA ACT 36 OF 1990
8.1 FIDUCIARY DUTY. Subsections (a) through (d) of Section 1715 of the
Pennsylvania Business Corporation Law of 1988, as amended, shall not be
applicable to the Company.
8.2 CONTROL-SHARE ACQUISITIONS. Subchapter G of Chapter 25 of the
Pennsylvania Business Corporation Law of 1988, as amended, (relating to
control-share acquisitions), shall not be applicable to the Company.
8.3 DISGORGEMENT. Subchapter H of Chapter 25 of the Pennsylvania Business
Corporation Law of 1988, as amended, (relating to disgorgement by certain
controlling shareholders following attempts to acquire control), shall not be
applicable to the Company.
17
Exhibit 10(i)
CHANGE IN CONTROL
EMPLOYMENT AGREEMENT
AGREEMENT by and between P.H. Glatfelter Company (the "Company"), and
George H. Glatfelter II (the "Employee"), dated as of the 7th day of March,
2008.
The Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company and its shareholders to ensure
that the Company and its subsidiaries will have the continued dedication of the
Employee, notwithstanding the possibility, threat, or occurrence of a Change in
Control (as defined below) of the Company. The Board believes it is imperative
to diminish the inevitable distraction of the Employee by virtue of the personal
uncertainties and risks created by a threatened or pending Change in Control, to
encourage the Employee's full attention and dedication to the Company currently
and in the event of any threatened or pending Change in Control, and to provide
the Employee with compensation arrangements upon a Change in Control that
provide the Employee with individual financial security and which are
competitive with those of other comparably situated companies and, in order to
accomplish these objectives, the Board has authorized the Company to enter into
this Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. EFFECTIVE DATE.
(a) The "Effective Date" shall be the first date during the
"Change in Control Period" (as defined in Section 1(b)) on which a Change in
Control occurs. Anything in this Agreement to the contrary notwithstanding, if
the Employee's employment with the Company is terminated prior to the date on
which a Change in Control occurs, and it is
reasonably demonstrated that such termination (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change in Control or
(ii) otherwise arose in connection with or anticipation of a Change in Control,
then for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination.
(b) The "Change in Control Period" is the period commencing on
the date hereof and ending on the second December 31 immediately following such
date; provided, however, that commencing on the first December 31 immediately
following the date hereof, and on each annual anniversary of such December 31
(such December 31 and each annual anniversary thereof is hereinafter referred to
as the "Renewal Date"), the Change in Control Period shall be automatically
extended so as to terminate two years from such Renewal Date, unless at least 60
days prior to the Renewal Date the Company shall give notice that the Change in
Control Period shall not be so extended.
2. CHANGE IN CONTROL. For the purpose of this Agreement, a "Change in
Control" shall mean:
(a) Any person, entity or "group" (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), excluding, for this purpose, the Company, its subsidiaries, any
employee benefit plan of the Company or its subsidiaries, and any purchaser or
group of purchasers who are descendants of, or entities controlled by
descendants of, P.H. Glatfelter which acquires beneficial ownership of voting
securities of the Company) (a "Third Party") becomes the beneficial owner
(within the meaning of Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company's
2
then outstanding voting securities entitled to vote generally in the election of
directors, other than in connection with an acquisition from the Company; or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Directors") cease in any twelve (12) month period for any reason
to constitute at least a majority of the Board, provided that any person
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of at least a
majority of the Incumbent Directors who are directors at the time of such vote
shall be, for purposes of this Agreement, an Incumbent Director, but, excluding
for this purpose, any such person whose initial election as a member of the
Board occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Third Party other than
the Board; or
(c) Consummation of (i) a reorganization, merger or
consolidation, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation (other than the acquiror) do not, immediately thereafter,
beneficially own more than 50% of the combined voting power of the reorganized,
merged or consolidated company's then outstanding voting securities entitled to
vote generally in the election of directors, or (ii) a liquidation or
dissolution of the Company or the sale of all or substantially all of the assets
of the Company (whether such assets are held directly or indirectly) to a Third
Party.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the
Employee in its employ, and the Employee hereby agrees to remain in the employ
of the
3
Company, for the period commencing on the Effective Date and ending on the
second anniversary of such date (the "Employment Period").
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period,
(A) the Employee's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 90-day period
immediately preceding the Effective Date and
(B) the Employee's services shall be performed at the
location where the Employee was employed immediately preceding the Effective
Date or any office or location less than forty (40) miles from such location.
(ii) During the Employment Period, excluding any periods of
vacation and sick leave to which the Employee is entitled, the Employee agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Employee hereunder, to use the Employee's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Employee to
(A) serve on corporate, civic or charitable boards or
committees,
(B) deliver lectures, fulfill speaking engagements or
teach at educational institutions, and
4
(C) manage personal investments, so long as such
activities do not significantly interfere with the performance of the Employee's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Employee prior to the Effective Date,
the continued conduct of such activities (or the conduct of activities similar
in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Employee's
responsibilities to the Company.
(iii) During the Employment Period, the Employee shall be
subject to, and shall comply with, the Company's policies regarding sexual
harassment, insider trading, confidentiality, non-disclosure, non-competition,
non-disparagement, substance abuse, and conflicts of interest and any other
written policy of the Company, the violation of which could result in
termination of employment.
(b) COMPENSATION.
(i) Base Salary. During the Employment Period, the Employee
shall receive a base salary ("Base Salary") at a monthly rate at least equal to
the highest monthly base salary paid or payable to the Employee by the Company
during the twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Base Salary shall be
reviewed at least annually and shall be increased at any time and from time to
time as shall be substantially consistent with increases in base salary awarded
in the ordinary course of business to other key employees of the Company and its
subsidiaries in the same salary grade (or, if there are no salary grades, to
other key employees of the Company and its subsidiaries in comparable
positions). Any increase in Base
5
Salary shall not serve to limit or reduce any other obligation to the Employee
under this Agreement. Base Salary shall not be reduced after any such increase.
(ii) Annual Bonus. In addition to Base Salary, the Employee
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (an "Annual Bonus"), either pursuant to the Company's Management
Incentive Plan or otherwise, in cash at least equal to the average Annual Bonus
paid to the Employee for each of the three fiscal years immediately preceding
the Effective Date (or for such fewer number of such years as the Employee has
been employed by the Company, with the bonus for any partial year in such period
being annualized), but not less than the target bonus for the Employee under the
Company's Management Incentive Plan for the fiscal year during which the
Effective Date occurs, provided that the Employee is employed as of the last day
of the fiscal year in respect of which such Annual Bonus is paid.
(iii) Incentive, Savings and Retirement Plans. In addition
to Base Salary and Annual Bonus payable as hereinabove provided, the Employee
shall be entitled to participate during the Employment Period in all incentive,
savings and retirement plans, practices, policies and programs applicable to
other key employees of the Company and its subsidiaries (including the 2005
Long-Term Incentive Plan or any successor thereto). Such plans, practices,
policies and programs, in the aggregate, shall provide the Employee with
compensation, benefits and reward opportunities at least as favorable as the
most favorable of such compensation, benefits and reward opportunities provided
by the Company to the Employee under such plans, practices, policies and
programs as in effect at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Employee, as provided at any
time thereafter with respect to other key employees of the Company and its
6
subsidiaries in the same salary grade (or, if there are no salary grades, to
other key employees of the Company and its subsidiaries in comparable
positions).
(iv) Welfare Benefit Plans. During the Employment Period,
the Employee and/or the Employee's covered dependents, as the case may be, shall
be eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and its
subsidiaries (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs), at least as favorable as the most
favorable of such plans, practices, policies and programs of the Company and its
subsidiaries in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Employee and/or the
Employee's covered dependents, as applicable, as in effect at any time
thereafter with respect to other key employees of the Company and its
subsidiaries in the same salary grade (or, if there are no salary grades, to
other key employees of the Company and its subsidiaries in comparable
positions).
(v) Expenses. During the Employment Period, the Employee
shall be entitled to receive prompt reimbursement for all reasonable business
expenses incurred by the Employee in accordance with the most favorable
policies, practices and procedures of the Company and its subsidiaries in effect
at any time during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Employee, as in effect at any time thereafter with
respect to other key employees of the Company and its subsidiaries in the same
salary grade (or, if there are no salary grades, to other key employees of the
Company and its subsidiaries in comparable positions). Notwithstanding anything
to the contrary in the preceding sentence, the amount of expenses eligible for
reimbursement during a calendar year may not
7
affect the expenses eligible for reimbursement in any other calendar year and
all reimbursements must be made on or before the last day of the calendar year
following the calendar year in which the expense was incurred.
(vi) Fringe Benefits. During the Employment Period, the
Employee shall be entitled to fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company and its
subsidiaries in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Employee, as in effect
at any time thereafter with respect to other key employees of the Company and
its subsidiaries in the same salary grade (or, if there are no salary grades, to
other key employees of the Company and its subsidiaries in comparable
positions).
(vii) Vacation. During the Employment Period, the Employee
shall be entitled to paid holidays and vacation in accordance with the most
favorable plans, policies, programs and practices of the Company and its
subsidiaries as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Employee, as in effect
at any time thereafter with respect to other key employees of the Company and
its subsidiaries in the same salary grade (or, if there are no salary grades, to
other key employees of the Company and its subsidiaries in comparable
positions).
5. TERMINATION.
(a) DEATH OR DISABILITY. This Agreement shall terminate
automatically upon the Employee's death. If the Company determines in good faith
that the Disability of the Employee has occurred (pursuant to the definition of
"Disability" set forth below), it may give to the Employee written notice of its
intention to terminate, or its intention to cause its subsidiary to terminate,
the Employee's employment. In such event, the Employee's employment with the
8
Company shall terminate effective on the 30th day after receipt of such notice
by the Employee (the "Disability Effective Date"), provided that, within 30 days
after such receipt, the Employee shall not have returned to full-time
performance of the Employee's duties. For purposes of this Agreement, a
"Disability" shall occur if the Employee, by reason of any medically
determinable physical or mental impairment, is determined to be disabled and
eligible for benefits under the terms of the Company's long-term disability plan
or policy applicable to the Employee. Such determination of Disability shall be
made by the plan administrator or insurer with respect to such Company long-term
disability plan or policy.
(b) CAUSE. The Company may terminate the Employee's employment
for "Cause." For purposes of this Agreement, "Cause" means (i) an act or acts of
personal dishonesty taken by the Employee and intended to result in substantial
personal enrichment of the Employee at the expense of the Company, (ii) repeated
violations by the Employee of the Employee's obligations under Section 4(a) of
this Agreement or illegal conduct or gross misconduct by the Employee which is
materially injurious to the Company and which violations, conduct or misconduct
are demonstrably willful and deliberate on the Employee's part and which are not
remedied within thirty (30) days after receipt of written notice from the
Company, (iii) violation by the Employee of any of the Company's policies,
including, but not limited to, policies regarding sexual harassment, insider
trading, confidentiality, non-disclosure, non-competition, non-disparagement,
substance abuse and conflicts of interest and any other written policy of the
Company, which violation could result in the termination of the Employee's
employment; or (iv) the conviction of the Employee of a felony which is
materially injurious to the Company or a plea by the Employee of guilty or no
contest to a charge of a felony which is materially injurious to the Company.
9
(c) GOOD REASON. The Employee's employment may be terminated by
the Employee for Good Reason. For purposes of this Agreement, "Good Reason"
means
(i) the assignment to the Employee of any duties
inconsistent in any respect with the Employee's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or any other
action by the Company which results in a material diminution in such position,
authority, duties or responsibilities;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement;
(iii) the Company's requiring the Employee to be based at
any office or location other than that described in Section 4(a)(i)(B) hereof,
except for travel reasonably required in the performance of the Employee's
responsibilities;
(iv) any purported termination by the Company of the
Employee's employment otherwise than as expressly permitted by this Agreement;
or
(v) any failure by the Company to comply with and satisfy
Section 11(c) of this Agreement;
provided that within ninety (90) days after the occurrence of any of the events
listed in clauses (i), (ii), (iii), (iv) or (v) above the Employee delivers
written notice to the Company of his intention to terminate for Good Reason
specifying in reasonable detail the facts and circumstances claimed to give rise
to the Employee's right to terminate his employment for Good Reason and the
Company shall not have cured such facts and circumstances within thirty (30)
days after delivery of such notice by the Employee to the Company (unless the
Company shall have waived its right to cure by written notice to the Employee),
and provided further that
10
within thirty (30) days after the expiration of such thirty (30) day period or
the date of receipt of such waiver notice, if earlier, the Employee delivers a
Notice of Termination to the Company under Section 5(d) based on the same Good
Reason specified in the notice of intent to terminate delivered to the Company
under this Section 5(c).
For purposes of this Section 5(c), any good faith determination of the
facts and circumstances giving rise to "Good Reason" made by the Employee shall
be conclusive, subject to the Company's right to cure such facts and
circumstances as described above.
(d) NOTICE OF TERMINATION. Any termination by the Company for
Cause or by the Employee for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 14(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall not be prior to the date of receipt of
such notice). The failure by the Employee to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason shall not waive any right of the Employee hereunder or preclude the
Employee from asserting such fact or circumstance in enforcing his rights
hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means the date of
receipt of the Notice of Termination or any later date specified therein as
permitted by Section 5(d), as the case may be; provided, however, that (i) if
the Employee's employment is terminated by the Company or a subsidiary of the
Company other than for Cause, death or Disability, the
11
Date of Termination shall be the date on which the Employee receives notice from
the Company or such subsidiary of such termination and (ii) if the Employee's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Employee or the Disability
Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) DEATH. If the Employee's employment is terminated during the
Employment Period by reason of the Employee's death, this Agreement shall
terminate without further obligations to the Employee's legal representatives
under this Agreement, other than (i) those obligations accrued or earned and
vested (if applicable) by the Employee as of the Date of Termination, including,
for this purpose (i) the Employee's full Base Salary through the Date of
Termination at the rate in effect on the Date of Termination and (ii) accrued
vacation pay not yet paid by the Company (such amounts are collectively
hereinafter referred to as "Accrued Obligations"). All such Accrued Obligations
shall be paid to the Employee's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days after the Date of Termination.
(b) DISABILITY. If the Employee's employment is terminated during
the Employment Period by reason of the Employee's Disability, this Agreement
shall terminate without further obligations to the Employee, other than Accrued
Obligations and such obligations as may exist under the terms of the Company's
long term disability plan or policy applicable to the Employee. All such Accrued
Obligations shall be paid to the Employee in a lump sum in cash within 30 days
after the Date of Termination.
(c) TERMINATION FOR CAUSE; TERMINATION BY EMPLOYEE OTHER THAN FOR
GOOD REASON. If, during the Employment Period, the Employee's employment is
terminated for Cause or the Employee terminates employment other than for Good
Reason, this Agreement
12
shall terminate without further obligations to the Employee, other than Accrued
Obligations. All such Accrued Obligations shall be paid to the Employee in a
lump sum in cash within 30 days after the Date of Termination.
(d) TERMINATION FOR GOOD REASON; TERMINATION BY THE COMPANY OTHER
THAN FOR CAUSE, DISABILITY OR DEATH. If, during the Employment Period, the
Company terminates the Employee's employment other than for Cause, Disability,
or Death, or if the Employee terminates his employment for Good Reason:
(i) the Company shall pay to the Employee the Accrued
Obligations;
(ii) the Company shall pay as a severance benefit to the
Employee in a lump sum in cash (less applicable withholdings) the aggregate of
the following amounts:
(A) the product of the average Annual Bonus paid to the
Employee for each of the three full fiscal years immediately preceding the Date
of Termination (or for such fewer number of such years as the Employee has been
employed by the Company, with the bonus for any partial year in such period
being annualized), but not less than the greater of the target bonus for the
Employee for the fiscal year during which the Effective Date occurs and the
target bonus for the Employee for the fiscal year during which the Date of
Termination occurs, and a fraction, the numerator of which is the number of days
in the current fiscal year through the Date of Termination, and the denominator
of which is 365; and
(B) three times the sum of (1) the Employee's annual
Base Salary at the highest rate in effect at any time during the period
beginning 90 days before the Effective Date through the Date of Termination and
(2) the average Annual Bonus paid to the
13
Employee for each of the three full fiscal years immediately preceding the Date
of Termination (or for such fewer number of such years as the Employee has been
employed by the Company, with the bonus for any partial year in such period
being annualized), but not less than the greater of the target bonus for the
Employee for the fiscal year during which the Effective Date occurs and the
target bonus for the Employee for the fiscal year during which the Date of
Termination occurs.
Payment of the lump sum amount described in this clause (ii)
shall be made within 30 days after the Date of Termination, provided however,
that if the Employee is a "specified employee" within the meaning of Section
409A(a)(2)(B)(i) of the Internal Revenue Code ("Code"), payment shall be made
within 30 days following the date which is six (6) months following the
Employee's separation from service following a Notice of Termination. In the
event that payment is delayed for six months pursuant to the preceding sentence,
not later than 30 days following the Date of Termination, the Company shall
establish a grantor trust that qualifies as a grantor trust or trust fund within
the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the
Code (a "Rabbi Trust") and deposit in the Rabbi Trust an amount equal to the
lump sum payable to the Employee, plus interest for the six-month delay period
at the applicable Federal rate on the Employee's separation from service. The
Employee shall remain during such time a general unsecured creditor of the
Company and amounts held in the Rabbi Trust shall remain subject to the claims
of the Company's creditors in the event of the Company's insolvency.
(iii) for a period of three years after the Date of
Termination, or such longer period as any plan, program, practice or policy may
provide, the Company shall continue group medical, prescription, dental,
disability, salary continuance, group life, accidental
14
death and dismemberment and travel accident insurance benefits (each, a "Welfare
Benefit" and, together "Welfare Benefits") to the Employee and/or the Employee's
covered dependents, as applicable, at levels substantially equal to those which
would have been provided to them in accordance with the Company's plans,
programs, practices and policies with respect to such benefits if the Employee's
employment had not been terminated, in accordance with the most favorable plans,
practices, programs or policies of the Company and its subsidiaries in effect
during the 90-day period immediately preceding the Date of Termination or, if
more favorable to the Employee, as in effect at any time thereafter with respect
to other key employees in the same salary grade (or, if there are no salary
grades, to other key employees of the Company and its subsidiaries in comparable
positions) and their dependents. To the extent that a Welfare Benefit is taxable
to the Employee, the following rules shall apply to the provision of such
benefits pursuant to this paragraph: (1) the benefits provided during any
calendar year shall not affect the benefits provided in any other calendar year
and (2) if the Employee is a "specified employee" within the meaning of Section
409A(a)(2)(B)(i) of the Code, the Employee shall pay the cost of such benefit
for the first six months following the Date of Termination and shall be
reimbursed by the Company for such costs, with interest at the applicable
federal rate, within thirty days of the end of such six month period, provided
that the amount of such expenses eligible for reimbursement in any calendar year
shall not affect the expenses eligible for reimbursement in any other calendar
year. For purposes of eligibility for post-retirement benefits pursuant to such
plans, practices, programs and policies and for purposes of health benefit
continuation coverage pursuant to Section 601 et seq of ERISA ("COBRA"), the
Employee shall be considered to have remained employed until the end of the
Employment Period and to have retired on the last day of such period.
15
(iv) in the event that the Employee has not, as of the Date
of Termination, earned sufficient vesting service to have earned (A) a
nonforfeitable interest in his matching contribution account under the P.H.
Glatfelter Company 401(k) Retirement Savings Plan (the "401(k) Plan"), and (B) a
nonforfeitable interest in his accrued benefit under the terms of the P.H.
Glatfelter Company Retirement Plan for Salaried Employees (the "Retirement
Plan") (or any successors to those plans), the Company shall pay to the Employee
a lump sum in cash (less applicable withholdings) in an amount equal to the sum
of:
(A) the Employee's unvested matching contribution
account under the 401(k) Plan, valued as of the Date of Termination; and
(B) the actuarial present value of the Employee's
unvested normal retirement pension under the Retirement Plan, based on the
Employee's accrued benefit under the terms of the Retirement Plan as determined
by the Company's actuary utilizing actuarial equivalency factors for determining
single sum amounts under the terms of the Retirement Plan.
Payment of the lump sum amount described in this clause (iv) shall be
made within 30 days after the Date of Termination, provided however, that if the
Employee is a "specified employee" within the meaning of Section
409A(a)(2)(B)(i) of the Code, payment shall be made within 30 days following the
date which is six (6) months following the Employee's separation from service
following a Notice of Termination (or, if earlier, the Employee's death).
In the event that the Employee should return to employment with the
Company and acquire a vested, nonforfeitable interest in any of the plans with
respect to which the payment in this clause (iv) is determined, the Employee
shall return an amount equal to the payment made under this subsection, within
30 days of demand by the Company.
16
(v) If the Employee is, as of the Date of Termination, a
participant in the Restoration Pension (the "Restoration Pension") or the Final
Average Compensation Pension ("FAC Pension") under the terms of the P.H.
Glatfelter Company Supplemental Early Retirement Plan (the "SERP"), the Employee
will become fully vested in his accrued benefit under the terms of the
Restoration Pension or FAC Pension, as applicable, and the Employee's vested
benefit thereunder shall be paid to the Employee in accordance with the terms of
the SERP subject to the applicable requirements of Section 409A of the Code and
its implementing regulations ("Section 409A"). In addition, the Company shall be
obligated to contribute funds, to the extent it has not already done so, to the
Trust serving as a funding vehicle for the SERP (the P.H. Glatfelter Company
Nonqualified Plans Master Trust), in sufficient amount to pay the Employee's
accrued benefit under the Restoration Pension or the FAC Pension, as
appropriate, within five days of the Date of Termination.
(vi) If the Employee is, as of the Date of Termination, a
participant in the P.H. Glatfelter Company Supplemental Management Pension Plan
(the "SMPP") with at least five years of vesting service (as measured for
purposes of the Retirement Plan), then the Company shall be obligated to
contribute funds, to the extent it has not already done so, to the Trust serving
as a funding vehicle for that plan (the P.H. Glatfelter Company Nonqualified
Plans Master Trust) as follows:
(A) If the Employee is a participant in the MIP
Adjustment Supplement under the SMPP, the Company shall fund the Trust with
sufficient assets to pay the Employee's accrued benefit under the MIP Adjustment
Supplement within five days of the Date of Termination.
17
(B) If the Employee is eligible to receive the Early
Retirement Supplement under the SMPP, the Company shall fund the Trust with
sufficient assets to pay the Employee's accrued benefit under the Early
Retirement Supplement, within five days following the later to occur of (1) the
Date of Termination or (2) the benefit commencement date with respect to the
Employee's Early Retirement Supplement.
(vii) Amounts contributed to the P.H. Glatfelter
Nonqualified Plans Master Trust pursuant to paragraphs 6(d)(iv) or (v) above
shall in no event be invested in assets located outside the United States or
otherwise violate the requirements of Section 409A(b).
(viii) If the Employee has previously deferred compensation
under a plan or arrangement not described above which has not yet been paid by
the Company, the Employee's right to payment of such compensation shall be
considered vested and nonforfeitable as of the Date of Termination. Such
deferred compensation shall be paid to the Employee in accordance with the terms
of the deferred compensation plan or arrangement subject to the applicable
requirements of Section 409A.
(ix) Notwithstanding the foregoing, the Company shall have
no obligation under this Section 6(d) unless the Employee executes and delivers
to the Company a valid general release agreement in a form reasonably acceptable
to the Company in which the Employee releases the Company from any and all
possible liability, including, without limitation, any and all liability based
on the Employee's employment or the termination of his employment; provided,
however, that nothing in such release shall include any release of the Company's
indemnification obligations to or for the benefit of the Employee.
18
(x) Notwithstanding the foregoing, any benefit or payment
that is due upon termination of Employee's employment under this Agreement and
that represents a "deferral of compensation" within the meaning of Section 409A
shall only be paid or provided to Employee upon a "separation from service" as
defined in Section 409A. For purposes of this Agreement, amounts payable under
this Agreement shall be deemed not to be a "deferral of compensation" subject to
Section 409A to the extent provided in the exceptions in Treasury Regulation
Sections 1.409A-1(b)(4) ("short-term deferrals") and (b)(9) ("separation pay
plans," including the exception under subparagraph (iii)) and other applicable
provisions of Treasury Regulation Section 1.409A-1 through A-6 (or any successor
to any of the foregoing provisions). To the extent that any provision of this
Agreement would, if enforced as written, cause adverse tax consequences to
either party under Section 409A, the parties shall work together in good faith
to seek to avoid, or minimize, such consequences.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Employee's continuing or future participation in any benefit,
bonus, incentive or other plans, programs, policies or practices provided by the
Company or its subsidiaries and for which the Employee may qualify, nor shall
anything herein limit or otherwise affect such rights as the Employee may have
under any stock option, restricted stock, restricted stock unit, performance
share or other agreements with the Company or any of its subsidiaries. Amounts
which are vested benefits or which the Employee is otherwise entitled to receive
under any plan, policy, practice or program of the Company or any of its
subsidiaries at or subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program.
8. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be
19
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Employee or others. In no event
shall the Employee be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Employee under any of
the provisions of this Agreement.
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any payment or distribution by the
Company to or for the benefit of the Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties with respect to such excise tax
(such excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Employee shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Employee of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax, imposed
upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether a Gross-Up Payment
is required and the amount of such Gross-Up Payment, shall be made by a firm of
independent accountants selected by the Audit Committee of the Board, which firm
may, if consistent with applicable securities laws, be the firm of independent
accountants engaged to audit the Company's financial statements (the "Accounting
Firm") which shall provide detailed supporting calculations both to the Company
and the Employee within 15 business days after the Date of Termination or such
20
earlier time as is requested by the Company. The initial Gross-Up Payment, if
any, as determined pursuant to this Section 9(b), shall be paid to the Employee
within five days of the receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by the Employee, it
shall furnish the Employee with an opinion that he has substantial authority not
to report any Excise Tax on his federal income tax return. Any determination by
the Accounting Firm shall be binding upon the Company and the Employee. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that a Gross-Up Payment which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 9(c) and the Employee thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be paid by
the Company to or for the benefit of the Employee promptly thereafter, but in no
event later than the end of the calendar year following the calendar year in
which the Employee pays the Excise Tax to which the Gross-Up Payment relates.
(c) The Employee shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the Employee knows of
such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. The Employee shall not pay
such claim prior to the expiration of the thirty-day period following the date
on which it gives such notice to the Company (or such shorter period ending on
the date that any
21
payment of taxes with respect to such claim is due). If the Company notifies the
Employee in writing prior to the expiration of such period that it desires to
contest such claim, the Employee shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim,
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest during the lifetime of the Employee (the "Contest Expenses")
and shall indemnify and hold the Employee harmless, on an after-tax basis, for
any Excise Tax or income tax, including interest and penalties with respect
thereto, imposed as a result of such representation and payment of costs and
expenses ("Tax Expenses"). The Company's obligation for the Contest Expenses
shall be subject to the following restrictions: (1) the Contest Expenses borne
and paid by the Company in one calendar year shall not affect the Contest
Expenses borne and paid by the Company in another calendar year and (2) the
Company's obligation to bear and pay the Contest Expenses is not subject to
liquidation or exchange for another benefit. The Company's reimbursement to the
22
Employee of the Tax Expenses shall be subject to the following restrictions:
such reimbursement must be made by the end of the calendar year following the
calendar year in which the Employee pays the taxes to which the reimbursement
relates.
Without limitation on the foregoing provisions of this Section 9(c), the Company
shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, if in compliance with applicable
securities laws, either direct the Employee to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Employee agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Employee to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Employee, on an interest-free basis, and shall
indemnify and hold the Employee harmless, on an after-tax basis, from any Excise
Tax or income tax, including interest or penalties with respect thereto, imposed
with respect to such advance or with respect to any imputed income with respect
to such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Employee
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Any tax reimbursement payment made by the
Company to the Employee with respect to the preceding sentence will be made by
the Company to the Employee no later than the end of the second calendar year
following the calendar year in which the Employee pays the taxes to which the
reimbursement relates. Furthermore, the Company's control of the contest shall
be limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the
23
Employee shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount advanced
by the Company pursuant to Section 9(c), the Employee becomes entitled to
receive any refund with respect to such claim, the Employee shall (subject to
the Company's complying with the requirements of Section 9(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Employee of an amount advanced by the Company pursuant to Section 9(c), a
determination is made that the Employee shall not be entitled to any refund with
respect to such claim and the Company does not notify the Employee in writing of
its intent to contest such denial of refund prior to the expiration of thirty
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
10. CONFIDENTIAL INFORMATION. The Employee shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its subsidiaries, and their
respective businesses, which shall have been obtained by the Employee during the
Employee's employment by the Company or any of its subsidiaries and which shall
not be or become public knowledge (other than by acts by the Employee or his
representatives in violation of this Agreement). After termination of the
Employee's employment with the Company, the Employee shall not, without the
prior written consent of the Company, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted
24
violation of the provisions of this Section 10 constitute a basis for deferring
or withholding any amounts otherwise payable to the Employee under this
Agreement.
11. SUCCESSORS.
(a) This Agreement is personal to the Employee and without the
prior written consent of the Company shall not be assignable by the Employee
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Employee's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company (whether such
assets are held directly or indirectly) to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
12. ARBITRATION.
(a) Any controversy or claim arising out of or relating to this
Agreement, or any breach hereof, shall be settled in accordance with the terms
of this Section 12. All claims by the Employee for benefits under this Agreement
shall first be directed to and determined by the Board and shall be in writing.
Any denial by the Board of a claim for benefits under this Agreement shall be
delivered to the Employee in writing within thirty (30) days and
25
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board shall afford a reasonable opportunity
to the Employee for a review of the decision denying a claim and shall further
allow the Employee to appeal to the Board a decision of the Board within thirty
(30) days after notification by the Board that the Employee's claim has been
denied. Any further dispute, controversy or claim arising out of or relating to
this Agreement, or the interpretation or alleged breach hereof, shall be settled
by arbitration in accordance with Employment Dispute Resolution Rules of the
American Arbitration Association (or such other rules as may be agreed upon by
the Employee and the Company). The place of the arbitration shall be
Philadelphia, Pennsylvania and judgment upon the award rendered by the
arbitrator(s) may be entered by any court having jurisdiction thereof. Such an
award shall be binding and conclusive upon the parties hereto.
(b) Judgment may be entered on the arbitrator's award in any
court having jurisdiction; provided, however, that the Employee shall be
entitled to seek specific performance of his or her right to be paid until the
Date of Termination during pendency of any dispute arising out of this
Agreement.
13. LEGAL EXPENSES. The Company agrees to reimburse the Employee, to
the full extent permitted by law, for all costs and expenses (including without
limitation reasonable attorneys' fees) which the Employee may reasonably incur
as a result of any contest of the validity or enforceability of, or the
Company's liability under, any provision of this Agreement, plus in each case
interest at the applicable Federal rate provided for in Section 7872(f)(2) of
the Code; provided, however, that such payment shall be made only if the
Employee prevails on at least one material issue provided, further, (1) that the
amount of such expenses eligible for reimbursement in any calendar year shall
not affect the expenses eligible for reimbursement in
26
any other calendar year and (2) all such reimbursements must be made on or
before the last day of the calendar year following the calendar year in which
the expense was incurred.
14. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania without reference
to principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement may
not be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) Any notices required or permitted to be given hereunder shall
be sufficient if in writing, and if delivered by hand, or sent by registered or
certified mail, return receipt requested, or overnight delivery using a national
courier service, or by facsimile or electronic transmission, with confirmation
as to receipt, to the Company at the address set forth below and to the Employee
at the address set forth in the personnel records of the Company, or such other
address as either party may from time to time designate in writing to the other,
and shall be deemed given as of the date of the delivery or mailing:
P.H. Glatfelter Company
96 South George Street
York, PA 17401
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
27
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Employee's failure to insist upon strict compliance with
any provision hereof shall not be deemed to be a waiver of such provision or any
other provision hereof.
(f) No material provisions of this Agreement may be waived or
discharged, unless such waiver or discharge is in writing signed by the party
who is making the waiver or discharge.
(g) This Agreement shall be binding upon and enforceable by the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributes, devisees and legatees and shall be binding upon
and enforceable by the Company's successors.
(h) This Agreement contains the entire understanding of the
Company and the Employee with respect to the subject matter hereof and
supersedes (i) all prior change in control employment agreements and (ii) all
other agreements or understandings between the Company and the Employee relating
to the subject matter hereof, but only during the two-year period commencing on
the Effective Date, if the Employee remains employed by the Company at the end
of such two-year period.
28
IN WITNESS WHEREOF, the Employee has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name and on its behalf, all as of
the day and year first above written.
/s/ George H. Glatfelter
----------------------------------------
George H. Glatfelter II
P.H. GLATFELTER COMPANY
By /s/ Jeffrey J. Norton
-------------------------------------
29
Exhibit 10(j)
CHANGE IN CONTROL
EMPLOYMENT AGREEMENT
AGREEMENT by and between P.H. Glatfelter Company (the "Company"), and
___________ (the "Employee"), dated as of the 7th day of March, 2008. The Board
of Directors of the Company (the "Board") has determined that it is in the best
interests of the Company and its shareholders to ensure that the Company and its
subsidiaries will have the continued dedication of the Employee, notwithstanding
the possibility, threat, or occurrence of a Change in Control (as defined below)
of the Company. The Board believes it is imperative to diminish the inevitable
distraction of the Employee by virtue of the personal uncertainties and risks
created by a threatened or pending Change in Control, to encourage the
Employee's full attention and dedication to the Company currently and in the
event of any threatened or pending Change in Control, and to provide the
Employee with compensation arrangements upon a Change in Control that provide
the Employee with individual financial security and which are competitive with
those of other comparably situated companies and, in order to accomplish these
objectives, the Board has authorized the Company to enter into this Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. EFFECTIVE DATE.
(a) The "Effective Date" shall be the first date during the
"Change in Control Period" (as defined in Section 1(b)) on which a Change in
Control occurs. Anything in this Agreement to the contrary notwithstanding, if
the Employee's employment with the Company is terminated prior to the date on
which a Change in Control occurs, and it is
reasonably demonstrated that such termination (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change in Control or
(ii) otherwise arose in connection with or anticipation of a Change in Control,
then for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination.
(b) The "Change in Control Period" is the period commencing on
the date hereof and ending on the second December 31 immediately following such
date; provided, however, that commencing on the first December 31 immediately
following the date hereof, and on each annual anniversary of such December 31
(such December 31 and each annual anniversary thereof is hereinafter referred to
as the "Renewal Date"), the Change in Control Period shall be automatically
extended so as to terminate two years from such Renewal Date, unless at least 60
days prior to the Renewal Date the Company shall give notice that the Change in
Control Period shall not be so extended.
2. CHANGE IN CONTROL. For the purpose of this Agreement, a "Change in
Control" shall mean:
(a) Any person, entity or "group" (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), excluding, for this purpose, the Company, its subsidiaries, any
employee benefit plan of the Company or its subsidiaries, and any purchaser or
group of purchasers who are descendants of, or entities controlled by
descendants of, P.H. Glatfelter which acquires beneficial ownership of voting
securities of the Company) (a "Third Party") becomes the beneficial owner
(within the meaning of Rule 13d-3 promulgated under the Exchange Act), directly
or indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company's
2
then outstanding voting securities entitled to vote generally in the election of
directors, other than in connection with an acquisition from the Company; or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Directors") cease in any twelve (12) month period for any reason
to constitute at least a majority of the Board, provided that any person
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of at least a
majority of the Incumbent Directors who are directors at the time of such vote
shall be, for purposes of this Agreement, an Incumbent Director, but, excluding
for this purpose, any such person whose initial election as a member of the
Board occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Third Party other than
the Board; or
(c) Consummation of (i) a reorganization, merger or
consolidation, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation (other than the acquiror) do not, immediately thereafter,
beneficially own more than 50% of the combined voting power of the reorganized,
merged or consolidated company's then outstanding voting securities entitled to
vote generally in the election of directors, or (ii) a liquidation or
dissolution of the Company or the sale of all or substantially all of the assets
of the Company (whether such assets are held directly or indirectly) to a Third
Party.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the
Employee in its employ, and the Employee hereby agrees to remain in the employ
of the
3
Company, for the period commencing on the Effective Date and ending on the
second anniversary of such date (the "Employment Period").
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period,
(A) the Employee's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 90-day period
immediately preceding the Effective Date and
(B) the Employee's services shall be performed at the
location where the Employee was employed immediately preceding the Effective
Date or any office or location less than forty (40) miles from such location.
(ii) During the Employment Period, excluding any periods of
vacation and sick leave to which the Employee is entitled, the Employee agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Employee hereunder, to use the Employee's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Employee to
(A) serve on corporate, civic or charitable boards or
committees,
(B) deliver lectures, fulfill speaking engagements or
teach at educational institutions, and
4
(C) manage personal investments, so long as such
activities do not significantly interfere with the performance of the Employee's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Employee prior to the Effective Date,
the continued conduct of such activities (or the conduct of activities similar
in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Employee's
responsibilities to the Company.
(iii) During the Employment Period, the Employee shall be
subject to, and shall comply with, the Company's policies regarding sexual
harassment, insider trading, confidentiality, non-disclosure, non-competition,
non-disparagement, substance abuse, and conflicts of interest and any other
written policy of the Company, the violation of which could result in
termination of employment.
(b) COMPENSATION.
(i) Base Salary. During the Employment Period, the Employee
shall receive a base salary ("Base Salary") at a monthly rate at least equal to
the highest monthly base salary paid or payable to the Employee by the Company
during the twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Base Salary shall be
reviewed at least annually and shall be increased at any time and from time to
time as shall be substantially consistent with increases in base salary awarded
in the ordinary course of business to other key employees of the Company and its
subsidiaries in the same salary grade (or, if there are no salary grades, to
other key employees of the Company and its subsidiaries in comparable
positions). Any increase in Base
5
Salary shall not serve to limit or reduce any other obligation to the Employee
under this Agreement. Base Salary shall not be reduced after any such increase.
(ii) Annual Bonus. In addition to Base Salary, the Employee
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (an "Annual Bonus"), either pursuant to the Company's Management
Incentive Plan or otherwise, in cash at least equal to the average Annual Bonus
paid to the Employee for each of the three fiscal years immediately preceding
the Effective Date (or for such fewer number of such years as the Employee has
been employed by the Company, with the bonus for any partial year in such period
being annualized), but not less than the target bonus for the Employee under the
Company's Management Incentive Plan for the fiscal year during which the
Effective Date occurs, provided that the Employee is employed as of the last day
of the fiscal year in respect of which such Annual Bonus is paid.
(iii) Incentive, Savings and Retirement Plans. In addition
to Base Salary and Annual Bonus payable as hereinabove provided, the Employee
shall be entitled to participate during the Employment Period in all incentive,
savings and retirement plans, practices, policies and programs applicable to
other key employees of the Company and its subsidiaries (including the 2005
Long-Term Incentive Plan or any successor thereto). Such plans, practices,
policies and programs, in the aggregate, shall provide the Employee with
compensation, benefits and reward opportunities at least as favorable as the
most favorable of such compensation, benefits and reward opportunities provided
by the Company to the Employee under such plans, practices, policies and
programs as in effect at any time during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Employee, as provided at any
time thereafter with respect to other key employees of the Company and its
6
subsidiaries in the same salary grade (or, if there are no salary grades, to
other key employees of the Company and its subsidiaries in comparable
positions).
(iv) Welfare Benefit Plans. During the Employment Period,
the Employee and/or the Employee's covered dependents, as the case may be, shall
be eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and its
subsidiaries (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs), at least as favorable as the most
favorable of such plans, practices, policies and programs of the Company and its
subsidiaries in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Employee and/or the
Employee's covered dependents, as applicable, as in effect at any time
thereafter with respect to other key employees of the Company and its
subsidiaries in the same salary grade (or, if there are no salary grades, to
other key employees of the Company and its subsidiaries in comparable
positions).
(v) Expenses. During the Employment Period, the Employee
shall be entitled to receive prompt reimbursement for all reasonable business
expenses incurred by the Employee in accordance with the most favorable
policies, practices and procedures of the Company and its subsidiaries in effect
at any time during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Employee, as in effect at any time thereafter with
respect to other key employees of the Company and its subsidiaries in the same
salary grade (or, if there are no salary grades, to other key employees of the
Company and its subsidiaries in comparable positions). Notwithstanding anything
to the contrary in the preceding sentence, the amount of expenses eligible for
reimbursement during a calendar year may not
7
affect the expenses eligible for reimbursement in any other calendar year and
all reimbursements must be made on or before the last day of the calendar year
following the calendar year in which the expense was incurred.
(vi) Fringe Benefits. During the Employment Period, the
Employee shall be entitled to fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Company and its
subsidiaries in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Employee, as in effect
at any time thereafter with respect to other key employees of the Company and
its subsidiaries in the same salary grade (or, if there are no salary grades, to
other key employees of the Company and its subsidiaries in comparable
positions).
(vii) Vacation. During the Employment Period, the Employee
shall be entitled to paid holidays and vacation in accordance with the most
favorable plans, policies, programs and practices of the Company and its
subsidiaries as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Employee, as in effect
at any time thereafter with respect to other key employees of the Company and
its subsidiaries in the same salary grade (or, if there are no salary grades, to
other key employees of the Company and its subsidiaries in comparable
positions).
5. TERMINATION.
(a) DEATH OR DISABILITY. This Agreement shall terminate
automatically upon the Employee's death. If the Company determines in good faith
that the Disability of the Employee has occurred (pursuant to the definition of
"Disability" set forth below), it may give to the Employee written notice of its
intention to terminate, or its intention to cause its subsidiary to terminate,
the Employee's employment. In such event, the Employee's employment with the
8
Company shall terminate effective on the 30th day after receipt of such notice
by the Employee (the "Disability Effective Date"), provided that, within 30 days
after such receipt, the Employee shall not have returned to full-time
performance of the Employee's duties. For purposes of this Agreement, a
"Disability" shall occur if the Employee, by reason of any medically
determinable physical or mental impairment, is determined to be disabled and
eligible for benefits under the terms of the Company's long-term disability plan
or policy applicable to the Employee. Such determination of Disability shall be
made by the plan administrator or insurer with respect to such Company long-term
disability plan or policy.
(b) CAUSE. The Company may terminate the Employee's employment
for "Cause." For purposes of this Agreement, "Cause" means (i) an act or acts of
personal dishonesty taken by the Employee and intended to result in substantial
personal enrichment of the Employee at the expense of the Company, (ii) repeated
violations by the Employee of the Employee's obligations under Section 4(a) of
this Agreement or illegal conduct or gross misconduct by the Employee which is
materially injurious to the Company and which violations, conduct or misconduct
are demonstrably willful and deliberate on the Employee's part and which are not
remedied within thirty (30) days after receipt of written notice from the
Company, (iii) violation by the Employee of any of the Company's policies,
including, but not limited to, policies regarding sexual harassment, insider
trading, confidentiality, non-disclosure, non-competition, non-disparagement,
substance abuse and conflicts of interest and any other written policy of the
Company, which violation could result in the termination of the Employee's
employment; or (iv) the conviction of the Employee of a felony which is
materially injurious to the Company or a plea by the Employee of guilty or no
contest to a charge of a felony which is materially injurious to the Company.
9
(c) GOOD REASON. The Employee's employment may be terminated by
the Employee for Good Reason. For purposes of this Agreement, "Good Reason"
means
(i) the assignment to the Employee of any duties
inconsistent in any respect with the Employee's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or any other
action by the Company which results in a material diminution in such position,
authority, duties or responsibilities;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement;
(iii) the Company's requiring the Employee to be based at
any office or location other than that described in Section 4(a)(i)(B) hereof,
except for travel reasonably required in the performance of the Employee's
responsibilities;
(iv) any purported termination by the Company of the
Employee's employment otherwise than as expressly permitted by this Agreement;
or
(v) any failure by the Company to comply with and satisfy
Section 11(c) of this Agreement;
provided that within ninety (90) days after the occurrence of any of the events
listed in clauses (i), (ii), (iii), (iv) or (v) above the Employee delivers
written notice to the Company of his intention to terminate for Good Reason
specifying in reasonable detail the facts and circumstances claimed to give rise
to the Employee's right to terminate his employment for Good Reason and the
Company shall not have cured such facts and circumstances within thirty (30)
days after delivery of such notice by the Employee to the Company (unless the
Company shall have waived its right to cure by written notice to the Employee),
and provided further that
10
within thirty (30) days after the expiration of such thirty (30) day period or
the date of receipt of such waiver notice, if earlier, the Employee delivers a
Notice of Termination to the Company under Section 5(d) based on the same Good
Reason specified in the notice of intent to terminate delivered to the Company
under this Section 5(c).
For purposes of this Section 5(c), any good faith determination of the
facts and circumstances giving rise to "Good Reason" made by the Employee shall
be conclusive, subject to the Company's right to cure such facts and
circumstances as described above.
(d) NOTICE OF TERMINATION. Any termination by the Company for
Cause or by the Employee for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 14(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall not be prior to the date of receipt of
such notice). The failure by the Employee to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason shall not waive any right of the Employee hereunder or preclude the
Employee from asserting such fact or circumstance in enforcing his rights
hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means the date of
receipt of the Notice of Termination or any later date specified therein as
permitted by Section 5(d), as the case may be; provided, however, that (i) if
the Employee's employment is terminated by the Company or a subsidiary of the
Company other than for Cause, death or Disability, the
11
Date of Termination shall be the date on which the Employee receives notice from
the Company or such subsidiary of such termination and (ii) if the Employee's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Employee or the Disability
Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) DEATH. If the Employee's employment is terminated during the
Employment Period by reason of the Employee's death, this Agreement shall
terminate without further obligations to the Employee's legal representatives
under this Agreement, other than (i) those obligations accrued or earned and
vested (if applicable) by the Employee as of the Date of Termination, including,
for this purpose (i) the Employee's full Base Salary through the Date of
Termination at the rate in effect on the Date of Termination and (ii) accrued
vacation pay not yet paid by the Company (such amounts are collectively
hereinafter referred to as "Accrued Obligations"). All such Accrued Obligations
shall be paid to the Employee's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days after the Date of Termination.
(b) DISABILITY. If the Employee's employment is terminated during
the Employment Period by reason of the Employee's Disability, this Agreement
shall terminate without further obligations to the Employee, other than Accrued
Obligations and such obligations as may exist under the terms of the Company's
long term disability plan or policy applicable to the Employee. All such Accrued
Obligations shall be paid to the Employee in a lump sum in cash within 30 days
after the Date of Termination.
(c) TERMINATION FOR CAUSE; TERMINATION BY EMPLOYEE OTHER THAN FOR
GOOD REASON. If, during the Employment Period, the Employee's employment is
terminated for Cause or the Employee terminates employment other than for Good
Reason, this Agreement
12
shall terminate without further obligations to the Employee, other than Accrued
Obligations. All such Accrued Obligations shall be paid to the Employee in a
lump sum in cash within 30 days after the Date of Termination.
(d) TERMINATION FOR GOOD REASON; TERMINATION BY THE COMPANY OTHER
THAN FOR CAUSE, DISABILITY OR DEATH. If, during the Employment Period, the
Company terminates the Employee's employment other than for Cause, Disability,
or Death, or if the Employee terminates his employment for Good Reason:
(i) the Company shall pay to the Employee the Accrued
Obligations;
(ii) the Company shall pay as a severance benefit to the
Employee in a lump sum in cash (less applicable withholdings) the aggregate of
the following amounts:
(A) the product of the average Annual Bonus paid to the
Employee for each of the three full fiscal years immediately preceding the Date
of Termination (or for such fewer number of such years as the Employee has been
employed by the Company, with the bonus for any partial year in such period
being annualized), but not less than the greater of the target bonus for the
Employee for the fiscal year during which the Effective Date occurs and the
target bonus for the Employee for the fiscal year during which the Date of
Termination occurs, and a fraction, the numerator of which is the number of days
in the current fiscal year through the Date of Termination, and the denominator
of which is 365; and
(B) two times the sum of (1) the Employee's annual Base
Salary at the highest rate in effect at any time during the period beginning 90
days before the Effective Date through the Date of Termination and (2) the
average Annual Bonus paid to the
13
Employee for each of the three full fiscal years immediately preceding the Date
of Termination (or for such fewer number of such years as the Employee has been
employed by the Company, with the bonus for any partial year in such period
being annualized), but not less than the greater of the target bonus for the
Employee for the fiscal year during which the Effective Date occurs and the
target bonus for the Employee for the fiscal year during which the Date of
Termination occurs.
Payment of the lump sum amount described in this clause (ii)
shall be made within 30 days after the Date of Termination, provided however,
that if the Employee is a "specified employee" within the meaning of Section
409A(a)(2)(B)(i) of the Internal Revenue Code ("Code"), payment shall be made
within 30 days following the date which is six (6) months following the
Employee's separation from service following a Notice of Termination. In the
event that payment is delayed for six months pursuant to the preceding sentence,
not later than 30 days following the Date of Termination, the Company shall
establish a grantor trust that qualifies as a grantor trust or trust fund within
the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the
Code (a "Rabbi Trust") and deposit in the Rabbi Trust an amount equal to the
lump sum payable to the Employee, plus interest for the six-month delay period
at the applicable Federal rate on the Employee's separation from service. The
Employee shall remain during such time a general unsecured creditor of the
Company and amounts held in the Rabbi Trust shall remain subject to the claims
of the Company's creditors in the event of the Company's insolvency.
(iii) for a period of two years after the Date of
Termination, or such longer period as any plan, program, practice or policy may
provide, the Company shall continue group medical, prescription, dental,
disability, salary continuance, group life, accidental
14
death and dismemberment and travel accident insurance benefits (each, a "Welfare
Benefit" and, together "Welfare Benefits") to the Employee and/or the Employee's
covered dependents, as applicable, at levels substantially equal to those which
would have been provided to them in accordance with the Company's plans,
programs, practices and policies with respect to such benefits if the Employee's
employment had not been terminated, in accordance with the most favorable plans,
practices, programs or policies of the Company and its subsidiaries in effect
during the 90-day period immediately preceding the Date of Termination or, if
more favorable to the Employee, as in effect at any time thereafter with respect
to other key employees in the same salary grade (or, if there are no salary
grades, to other key employees of the Company and its subsidiaries in comparable
positions) and their dependents. To the extent that a Welfare Benefit is taxable
to the Employee, the following rules shall apply to the provision of such
benefits pursuant to this paragraph: (1) the benefits provided during any
calendar year shall not affect the benefits provided in any other calendar year
and (2) if the Employee is a "specified employee" within the meaning of Section
409A(a)(2)(B)(i) of the Code, the Employee shall pay the cost of such benefit
for the first six months following the Date of Termination and shall be
reimbursed by the Company for such costs, with interest at the applicable
federal rate, within thirty days of the end of such six month period, provided
that the amount of such expenses eligible for reimbursement in any calendar year
shall not affect the expenses eligible for reimbursement in any other calendar
year. For purposes of eligibility for post-retirement benefits pursuant to such
plans, practices, programs and policies and for purposes of health benefit
continuation coverage pursuant to Section 601 et seq of ERISA ("COBRA"), the
Employee shall be considered to have remained employed until the end of the
Employment Period and to have retired on the last day of such period.
15
(iv) in the event that the Employee has not, as of the Date
of Termination, earned sufficient vesting service to have earned (A) a
nonforfeitable interest in his matching contribution account under the P.H.
Glatfelter Company 401(k) Retirement Savings Plan (the "401(k) Plan"), and (B) a
nonforfeitable interest in his accrued benefit under the terms of the P.H.
Glatfelter Company Retirement Plan for Salaried Employees (the "Retirement
Plan") (or any successors to those plans), the Company shall pay to the Employee
a lump sum in cash (less applicable withholdings) in an amount equal to the sum
of:
(A) the Employee's unvested matching contribution
account under the 401(k) Plan, valued as of the Date of Termination; and
(B) the actuarial present value of the Employee's
unvested normal retirement pension under the Retirement Plan, based on the
Employee's accrued benefit under the terms of the Retirement Plan as determined
by the Company's actuary utilizing actuarial equivalency factors for determining
single sum amounts under the terms of the Retirement Plan.
Payment of the lump sum amount described in this clause (iv) shall be
made within 30 days after the Date of Termination, provided however, that if the
Employee is a "specified employee" within the meaning of Section
409A(a)(2)(B)(i) of the Code, payment shall be made within 30 days following the
date which is six (6) months following the Employee's separation from service
following a Notice of Termination (or, if earlier, the Employee's death).
In the event that the Employee should return to employment with the
Company and acquire a vested, nonforfeitable interest in any of the plans with
respect to which the payment in this clause (iv) is determined, the Employee
shall return an amount equal to the payment made under this subsection, within
30 days of demand by the Company.
16
(v) If the Employee is, as of the Date of Termination, a
participant in the Restoration Pension (the "Restoration Pension") or the Final
Average Compensation Pension ("FAC Pension") under the terms of the P.H.
Glatfelter Company Supplemental Early Retirement Plan (the "SERP"), the Employee
will become fully vested in his accrued benefit under the terms of the
Restoration Pension or FAC Pension, as applicable, and the Employee's vested
benefit thereunder shall be paid to the Employee in accordance with the terms of
the SERP subject to the applicable requirements of Section 409A of the Code and
its implementing regulations ("Section 409A"). In addition, the Company shall be
obligated to contribute funds, to the extent it has not already done so, to the
Trust serving as a funding vehicle for the SERP (the P.H. Glatfelter Company
Nonqualified Plans Master Trust), in sufficient amount to pay the Employee's
accrued benefit under the Restoration Pension or the FAC Pension, as
appropriate, within five days of the Date of Termination.
(vi) If the Employee is, as of the Date of Termination, a
participant in the P.H. Glatfelter Company Supplemental Management Pension Plan
(the "SMPP") with at least five years of vesting service (as measured for
purposes of the Retirement Plan), then the Company shall be obligated to
contribute funds, to the extent it has not already done so, to the Trust serving
as a funding vehicle for that plan (the P.H. Glatfelter Company Nonqualified
Plans Master Trust) as follows:
(A) If the Employee is a participant in the MIP
Adjustment Supplement under the SMPP, the Company shall fund the Trust with
sufficient assets to pay the Employee's accrued benefit under the MIP Adjustment
Supplement within five days of the Date of Termination.
17
(B) If the Employee is eligible to receive the Early
Retirement Supplement under the SMPP, the Company shall fund the Trust with
sufficient assets to pay the Employee's accrued benefit under the Early
Retirement Supplement, within five days following the later to occur of (1) the
Date of Termination or (2) the benefit commencement date with respect to the
Employee's Early Retirement Supplement.
(vii) Amounts contributed to the P.H. Glatfelter
Nonqualified Plans Master Trust pursuant to paragraphs 6(d)(iv) or (v) above
shall in no event be invested in assets located outside the United States or
otherwise violate the requirements of Section 409A(b).
(viii) If the Employee has previously deferred compensation
under a plan or arrangement not described above which has not yet been paid by
the Company, the Employee's right to payment of such compensation shall be
considered vested and nonforfeitable as of the Date of Termination. Such
deferred compensation shall be paid to the Employee in accordance with the terms
of the deferred compensation plan or arrangement subject to the applicable
requirements of Section 409A.
(ix) Notwithstanding the foregoing, the Company shall have
no obligation under this Section 6(d) unless the Employee executes and delivers
to the Company a valid general release agreement in a form reasonably acceptable
to the Company in which the Employee releases the Company from any and all
possible liability, including, without limitation, any and all liability based
on the Employee's employment or the termination of his employment; provided,
however, that nothing in such release shall include any release of the Company's
indemnification obligations to or for the benefit of the Employee.
18
(x) Notwithstanding the foregoing, any benefit or payment
that is due upon termination of Employee's employment under this Agreement and
that represents a "deferral of compensation" within the meaning of Section 409A
shall only be paid or provided to Employee upon a "separation from service" as
defined in Section 409A. For purposes of this Agreement, amounts payable under
this Agreement shall be deemed not to be a "deferral of compensation" subject to
Section 409A to the extent provided in the exceptions in Treasury Regulation
Sections 1.409A-1(b)(4) ("short-term deferrals") and (b)(9) ("separation pay
plans," including the exception under subparagraph (iii)) and other applicable
provisions of Treasury Regulation Section 1.409A-1 through A-6 (or any successor
to any of the foregoing provisions). To the extent that any provision of this
Agreement would, if enforced as written, cause adverse tax consequences to
either party under Section 409A, the parties shall work together in good faith
to seek to avoid, or minimize, such consequences.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Employee's continuing or future participation in any benefit,
bonus, incentive or other plans, programs, policies or practices provided by the
Company or its subsidiaries and for which the Employee may qualify, nor shall
anything herein limit or otherwise affect such rights as the Employee may have
under any stock option, restricted stock, restricted stock unit, performance
share or other agreements with the Company or any of its subsidiaries. Amounts
which are vested benefits or which the Employee is otherwise entitled to receive
under any plan, policy, practice or program of the Company or any of its
subsidiaries at or subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program.
8. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be
19
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Employee or others. In no event
shall the Employee be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Employee under any of
the provisions of this Agreement.
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any payment or distribution by the
Company to or for the benefit of the Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties with respect to such excise tax
(such excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Employee shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Employee of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax, imposed
upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether a Gross-Up Payment
is required and the amount of such Gross-Up Payment, shall be made by a firm of
independent accountants selected by the Audit Committee of the Board, which firm
may, if consistent with applicable securities laws, be the firm of independent
accountants engaged to audit the Company's financial statements (the "Accounting
Firm") which shall provide detailed supporting calculations both to the Company
and the Employee within 15 business days after the Date of Termination or such
20
earlier time as is requested by the Company. The initial Gross-Up Payment, if
any, as determined pursuant to this Section 9(b), shall be paid to the Employee
within five days of the receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by the Employee, it
shall furnish the Employee with an opinion that he has substantial authority not
to report any Excise Tax on his federal income tax return. Any determination by
the Accounting Firm shall be binding upon the Company and the Employee. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that a Gross-Up Payment which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 9(c) and the Employee thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be paid by
the Company to or for the benefit of the Employee promptly thereafter, but in no
event later than the end of the calendar year following the calendar year in
which the Employee pays the Excise Tax to which the Gross-Up Payment relates.
(c) The Employee shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the Employee knows of
such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. The Employee shall not pay
such claim prior to the expiration of the thirty-day period following the date
on which it gives such notice to the Company (or such shorter period ending on
the date that any
21
payment of taxes with respect to such claim is due). If the Company notifies the
Employee in writing prior to the expiration of such period that it desires to
contest such claim, the Employee shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim,
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest during the lifetime of the Employee (the "Contest Expenses")
and shall indemnify and hold the Employee harmless, on an after-tax basis, for
any Excise Tax or income tax, including interest and penalties with respect
thereto, imposed as a result of such representation and payment of costs and
expenses ("Tax Expenses"). The Company's obligation for the Contest Expenses
shall be subject to the following restrictions: (1) the Contest Expenses borne
and paid by the Company in one calendar year shall not affect the Contest
Expenses borne and paid by the Company in another calendar year and (2) the
Company's obligation to bear and pay the Contest Expenses is not subject to
liquidation or exchange for another benefit. The Company's reimbursement to the
22
Employee of the Tax Expenses shall be subject to the following restrictions:
such reimbursement must be made by the end of the calendar year following the
calendar year in which the Employee pays the taxes to which the reimbursement
relates.
Without limitation on the foregoing provisions of this Section 9(c), the Company
shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, if in compliance with applicable
securities laws, either direct the Employee to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Employee agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Employee to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Employee, on an interest-free basis, and shall
indemnify and hold the Employee harmless, on an after-tax basis, from any Excise
Tax or income tax, including interest or penalties with respect thereto, imposed
with respect to such advance or with respect to any imputed income with respect
to such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Employee
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Any tax reimbursement payment made by the
Company to the Employee with respect to the preceding sentence will be made by
the Company to the Employee no later than the end of the second calendar year
following the calendar year in which the Employee pays the taxes to which the
reimbursement relates. Furthermore, the Company's control of the contest shall
be limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the
23
Employee shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount advanced
by the Company pursuant to Section 9(c), the Employee becomes entitled to
receive any refund with respect to such claim, the Employee shall (subject to
the Company's complying with the requirements of Section 9(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Employee of an amount advanced by the Company pursuant to Section 9(c), a
determination is made that the Employee shall not be entitled to any refund with
respect to such claim and the Company does not notify the Employee in writing of
its intent to contest such denial of refund prior to the expiration of thirty
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
10. CONFIDENTIAL INFORMATION. The Employee shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its subsidiaries, and their
respective businesses, which shall have been obtained by the Employee during the
Employee's employment by the Company or any of its subsidiaries and which shall
not be or become public knowledge (other than by acts by the Employee or his
representatives in violation of this Agreement). After termination of the
Employee's employment with the Company, the Employee shall not, without the
prior written consent of the Company, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted
24
violation of the provisions of this Section 10 constitute a basis for deferring
or withholding any amounts otherwise payable to the Employee under this
Agreement.
11. SUCCESSORS.
(a) This Agreement is personal to the Employee and without the
prior written consent of the Company shall not be assignable by the Employee
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Employee's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company (whether such
assets are held directly or indirectly) to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
12. ARBITRATION.
(a) Any controversy or claim arising out of or relating to
this Agreement, or any breach hereof, shall be settled in accordance with the
terms of this Section 12. All claims by the Employee for benefits under this
Agreement shall first be directed to and determined by the Board and shall be in
writing. Any denial by the Board of a claim for benefits under this Agreement
shall be delivered to the Employee in writing within thirty (30) days and
25
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board shall afford a reasonable opportunity
to the Employee for a review of the decision denying a claim and shall further
allow the Employee to appeal to the Board a decision of the Board within thirty
(30) days after notification by the Board that the Employee's claim has been
denied. Any further dispute, controversy or claim arising out of or relating to
this Agreement, or the interpretation or alleged breach hereof, shall be settled
by arbitration in accordance with Employment Dispute Resolution Rules of the
American Arbitration Association (or such other rules as may be agreed upon by
the Employee and the Company). The place of the arbitration shall be
Philadelphia, Pennsylvania and judgment upon the award rendered by the
arbitrator(s) may be entered by any court having jurisdiction thereof. Such an
award shall be binding and conclusive upon the parties hereto.
(b) Judgment may be entered on the arbitrator's award in any
court having jurisdiction; provided, however, that the Employee shall be
entitled to seek specific performance of his or her right to be paid until the
Date of Termination during pendency of any dispute arising out of this
Agreement.
13. LEGAL EXPENSES. The Company agrees to reimburse the Employee, to
the full extent permitted by law, for all costs and expenses (including without
limitation reasonable attorneys' fees) which the Employee may reasonably incur
as a result of any contest of the validity or enforceability of, or the
Company's liability under, any provision of this Agreement, plus in each case
interest at the applicable Federal rate provided for in Section 7872(f)(2) of
the Code; provided, however, that such payment shall be made only if the
Employee prevails on at least one material issue provided, further, (1) that the
amount of such expenses eligible for reimbursement in any calendar year shall
not affect the expenses eligible for reimbursement in
26
any other calendar year and (2) all such reimbursements must be made on or
before the last day of the calendar year following the calendar year in which
the expense was incurred.
14. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania without reference
to principles of conflict of laws. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement may
not be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) Any notices required or permitted to be given hereunder shall
be sufficient if in writing, and if delivered by hand, or sent by registered or
certified mail, return receipt requested, or overnight delivery using a national
courier service, or by facsimile or electronic transmission, with confirmation
as to receipt, to the Company at the address set forth below and to the Employee
at the address set forth in the personnel records of the Company, or such other
address as either party may from time to time designate in writing to the other,
and shall be deemed given as of the date of the delivery or mailing:
P.H. Glatfelter Company
96 South George Street
York, PA 17401
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
27
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Employee's failure to insist upon strict compliance with
any provision hereof shall not be deemed to be a waiver of such provision or any
other provision hereof.
(f) No material provisions of this Agreement may be waived or
discharged, unless such waiver or discharge is in writing signed by the party
who is making the waiver or discharge.
(g) This Agreement shall be binding upon and enforceable by the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributes, devisees and legatees and shall be binding upon
and enforceable by the Company's successors.
(h) This Agreement contains the entire understanding of the
Company and the Employee with respect to the subject matter hereof and
supersedes (i) all prior change in control employment agreements and (ii) all
other agreements or understandings between the Company and the Employee relating
to the subject matter hereof, but only during the two-year period commencing on
the Effective Date, if the Employee remains employed by the Company at the end
of such two-year period.
28
IN WITNESS WHEREOF, the Employee has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name and on its behalf, all as of
the day and year first above written.
[Employee]
P.H. GLATFELTER COMPANY
By
29
EXHIBIT 10(J)(A)
SCHEDULE OF CHANGE IN CONTROL EMPLOYMENT AGREEMENTS
In accordance with the Instructions to Item 601 of Regulation S-K, the
Registrant has omitted filing Change in Control Employment Agreements by and
between P. H. Glatfelter Company and the following employees as exhibits to this
Form 10-K because they are identical to the Form of Change in Control Employment
Agreement by and between P. H. Glatfelter Company and certain employees, which
is filed as Exhibit 10 (j) to our Form 10-K for the year ended December 31,
2007.
David C. Elder
Timothy R. Hess
John P. Jacunski
Jeffrey J. Norton
Dante C. Parrini
Martin Rapp
Mark A. Sullivan
William T. Yanavitch II
Exhibit 10 n (A)
FIRST AMENDMENT TO TERM LOAN AGREEMENT
THIS FIRST AMENDMENT TO TERM LOAN AGREEMENT (this "AMENDMENT"), is made and
entered into as of January 31, 2008, by and among GPW TIMBERLANDS, LLC, a
Delaware limited liability company (the "Borrower"), P.H. GLATFELTER COMPANY, a
Maryland corporation (the "PARENT"), the several banks and other financial
institutions from time to time party to the Term Loan Agreement referenced below
(the "Lenders"), and SUNTRUST BANK, in its capacity as Administrative Agent for
the Lenders (in such capacity, the "ADMINISTRATIVE AGENT").
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders and the Administrative Agent are parties
to a certain Term Loan Agreement, dated as of March 21, 2003 (as amended,
restated, supplemented or otherwise modified from time to time, the "TERM LOAN
AGREEMENT"; capitalized terms used herein and not otherwise defined shall have
the meanings assigned to such terms in the Term Loan Agreement), pursuant to
which the Lenders have made a certain Term Loan to the Borrower;
WHEREAS, the Borrower has requested that the Lenders and the Administrative
Agent amend certain provisions of the Term Loan Agreement to extend the Maturity
Date of the Term Loan from March 26, 2008 to March 26, 2013 and to modify the
interest rate applicable to the Term Loan, and subject to the terms and
conditions hereof, the Lenders and the Administrative Agent are willing to do
so;
NOW, THEREFORE, for good and valuable consideration, the sufficiency and
receipt of all of which are acknowledged, the Borrower, the Parent, the Lenders
and the Administrative Agent agree as follows:
1. AMENDMENTS.
(a) Section 1.1 of the Term Loan Agreement is hereby amended by replacing
the definition of "Maturity Date" in its entirety with the following definition:
""MATURITY DATE" shall mean the earlier of (i) March 26, 2013, or (ii)
the date on which the outstanding principal amount of the Term Loan has
been declared, or automatically has become, due and payable (whether by
acceleration or otherwise)."
(b) Section 2.5 of the Term Loan Agreement is hereby amended by replacing
subsection (a) thereof in its entirety with the following subsection (a):
Signature Page to First Amendment to Term Loan Agreement
"(a) Subject to subsections (b) and (c) of this Section 2.5, to but excluding
the date that is five (5) days after the fifth (5th) anniversary of the Closing
Date, the Borrower shall pay interest on the Term Loan at the rate of 3.82% per
annum. Thereafter, the Borrower shall pay interest on the Term Loan at a per
annum rate (fixed for the remaining term of the Term Loan) equal to LIBOR plus
0.50%. As used herein "LIBOR" shall mean, the rate per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBOR01
Page (or any successor page) as the London interbank offered rate for deposits
in Dollars at approximately 11:00 a.m. (London, England time) as of two Business
Days prior to the fifth (5th) anniversary of the Closing Date for a term of
three months.
2. CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT. Notwithstanding any other
provision of this Amendment and without affecting in any manner the rights of
the Lenders or the Administrative Agent under the Term Loan Agreement, this
Amendment shall not become effective, and the Borrower shall have no rights
under this Amendment, until each of the following conditions have been satisfied
to the satisfaction of the Administrative Agent:
(a) the Administrative Agent shall have received executed counterparts
to this Amendment from the Borrower and the Lenders;
(b) the Administrative Agent shall have received an amendment to the
Conservation Fund Letter of Credit, in form and substance satisfactory to the
Administrative Agent, which amendment shall extend the stated expiration date of
the Conservation Fund Letter of Credit from July 5, 2008 to July 5, 2013;
(c) the Administrative Agent shall have received a written
reaffirmation by Sustainable Conservation, Inc. of the Consent, Waiver and
Agreement, which written reaffirmation shall be in form and substance
satisfactory to the Administrative Agent;
(d) the Administrative Agent shall have received a written opinion of
outside counsel to the Parent and the Borrower with respect to this Amendment
and such other matters as the Administrative Agent shall request;
(e) all of the representations and warranties of the Parent and the
Borrower set forth in the Term Loan Agreement and the other Loan Documents shall
be true and correct as of the date hereof;
(f) no Default or Event of Default shall have occurred and be
continuing as of the date hereof; and
(g) the Administrative Agent shall have received payment from the
Borrower of an extension fee in the amount of $50,000.
3. REPRESENTATIONS AND WARRANTIES. To induce the Lenders and the
Administrative Agent to enter into this Amendment, the Borrower hereby
represents and warrants to the Lenders and the Administrative Agent that:
(h) The Borrower (i) is validly existing limited liability company
under the laws of the State of Delaware, and (ii) has all requisite limited
liability company power and authority to carry on its business as now conducted
and to own its properties and other assets.
(i) The execution, delivery and performance by the Borrower of this
Amendment are within the Borrower's legal organizational powers and have been
duly authorized by all necessary action. This Amendment has been duly executed
and delivered by the Borrower, and constitutes the valid and binding obligation
of the Borrower, enforceable against it in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity.
(j) The execution, delivery and performance by the Borrower of this
Amendment (a) do not require any consent or approval of, registration or filing
with, or action by, any Governmental Authority, (b) will not violate any
applicable law, rule or regulation or the certificate of formation or limited
liability company agreement of the Borrower or any judgment, order or ruling of
any Governmental Authority, (c) will not violate or result in a default under
any indenture, agreement or instrument binding on the Borrower or any of its
assets or give rise to a right thereunder to require any payment to be made by
the Borrower and (d) will not result in the creation or imposition of any Lien
on any asset of the Borrower, except Liens (if any) created under the Loan
Documents.
(k) As of the date hereof the Borrower has no outstanding Indebtedness
other than the Indebtedness created pursuant to the Term Loan Agreement and the
other Loan Documents.
(l) No litigation, investigation or proceeding of or before any
arbitrators or Governmental Authority is pending against or, to the knowledge of
the Borrower, threatened against or affecting the Borrower.
(m) The Borrower is in compliance with (a) all applicable laws, rules,
regulations, judgments and orders of any Governmental Authority, and (b) all
indentures, agreements or other instruments binding upon it or its properties.
(n) The Borrower has timely filed or caused to be filed all Federal
income tax returns and all other material tax returns that are required to be
filed by it, and has paid all taxes shown to be due and payable on such returns
or on any assessments made against it or its property and all other taxes, fees
or other charges imposed on it or any of its property by any Governmental
Authority.
(o) None of the proceeds of the Term Loan have been or will be used in
any manner that violates any rule or regulation of the Board of Governors of the
Federal Reserve System, including Regulations T, U or X.
(p) The Borrower has good title to all of its property, free and clear
of any Liens except Permitted Liens.
(q) After giving effect to this Amendment, the representations and
warranties contained in the Term Loan Agreement and the other Loan Documents are
true and correct, and no Default or Event of Default has occurred and is
continuing as of the date hereof.
4. REAFFIRMATION OF GUARANTY AND INDEMNIFICATION AGREEMENT. The Parent
hereby consents to the execution and delivery by the Borrower of this Amendment,
ratifies and confirms each of the terms of the Guaranty and Indemnification
Agreement, and agrees that each of its representations, warranties, covenants
and other obligations under the Guaranty and Indemnification Agreement shall
remain in full force and effect and shall not be diminished or impaired in any
manner or respect by the execution and delivery of this Amendment, the extension
of the Maturity Date pursuant hereto, or the modification of the interest rate
applicable to the Term Loan as provided herein. Without limitation to the
foregoing, the Parent hereby acknowledges and confirms that, notwithstanding
anything to the contrary contained in this Amendment or any other Loan Document
or otherwise, or any actions now or hereafter taken by the Lenders or the
Administrative Agent with respect to the Term Loan, the Guaranty and
Indemnification Agreement (i) is and shall continue to be a primary obligation
of the Parent, (ii) is and shall continue to be an absolute, unconditional,
continuing and irrevocable guaranty of payment, and (iii) is and shall continue
to be in full force and effect in accordance with its terms. Nothing contained
in this Amendment shall release, discharge, modify, change or affect the terms
and provisions of the Guaranty and Indemnification Agreement or the obligations
and liability of the Parent thereunder. The Parent hereby restates each of the
representations and warranties set forth in Section 3 of the Guaranty and
Indemnification Agreement as if fully set forth herein, and hereby confirms that
each of such representations and warranties set forth in Section 3 of the
Guaranty and Indemnification Agreement are true and correct as of the date
hereof.
5. EFFECT OF AMENDMENT. Except as set forth expressly herein, all terms of
the Term Loan Agreement and the other Loan Documents shall be and remain in full
force and effect and shall constitute the legal, valid, binding and enforceable
obligations of the Borrower and the Parent, respectively, to the Lenders and the
Administrative Agent. The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of the Lenders or the Administrative Agent, nor
constitute a waiver of any provision of the Term Loan Agreement or any other
Loan Document. This Amendment shall constitute a Loan Document.
6. GOVERNING LAW. (a) This Amendment shall be construed in accordance with
and shall be governed by the law (without giving effect to the conflict of law
principles thereof) of the State of Georgia.
(b) Each of the Borrower and the Parent hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of the United States District Court of the Northern District of
Georgia, and Superior Court of Fulton County, Georgia and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Amendment or any other Loan Document or the transactions contemplated hereby or
thereby, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be
heard and determined in such Georgia state court or, to the extent permitted by
applicable law, such Federal court. Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Amendment or any other Loan Document shall
affect any right that the Administrative Agent or any Lender may otherwise have
to bring any action or proceeding relating to this Amendment or any other Loan
Document against the Borrower or the Parent or any of their respective
properties in the courts of any jurisdiction.
(c) Each of the Borrower and the Parent irrevocably and unconditionally
waives any objection which it may now or hereafter have to the laying of venue
of any such suit, action or proceeding described in paragraph (b) of this
Section and brought in any court referred to in paragraph (b) of this Section.
Each of the parties hereto irrevocably waives, to the fullest extent permitted
by applicable law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
(d) Each party to this Amendment irrevocably consents to the service of
process in the manner provided for notices in Section 9.1 of the Term Loan
Agreement and Section 12 of the Guaranty and Indemnification Agreement. Nothing
in this Amendment or in any other Loan Document will affect the right of any
party hereto to serve process in any other manner permitted by law.
7. WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS
AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AMENDMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
8. NO NOVATION. This Amendment is not intended by the parties to be, and
shall not be construed to be, a novation of the Term Loan Agreement or an accord
and satisfaction in regard thereto.
9. COSTS AND EXPENSES. The Borrower agrees to pay on demand all costs and
expenses of the Administrative Agent in connection with the preparation,
execution and delivery of this Amendment, including, without limitation, the
reasonable fees and out-of-pocket expenses of outside counsel for the
Administrative Agent with respect thereto.
10. COUNTERPARTS. This Amendment may be executed by one or more of the
parties hereto in any number of separate counterparts, each of which shall be
deemed an original and all
of which, taken together, shall be deemed to constitute one and the same
instrument. Delivery of an executed counterpart of this Amendment by facsimile
transmission or by electronic mail in pdf form shall be as effective as delivery
of a manually executed counterpart hereof.
11. BINDING NATURE. This Amendment shall be binding upon and inure to the
benefit of the parties hereto, their respective successors,
successors-in-titles, and assigns.
12. ENTIRE UNDERSTANDING. This Amendment sets forth the entire
understanding of the parties with respect to the matters set forth herein, and
shall supersede any prior negotiations or agreements, whether written or oral,
with respect thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal by their respective authorized officers as of the day
and year first above written.
GPW TIMBERLANDS, LLC
By /s/ George B. Amoss, Jr. (Seal)
-------------------------
Name: George B. Amoss, Jr.
Title: President
P.H. GLATFELTER COMPANY
By /s/ Jeffrey J. Norton (Seal)
-------------------------
Name: Jeffrey J. Norton
Title: Vice President, General Counsel &
Secretary
SUNTRUST BANK
AS ADMINISTRATIVE AGENT AND AS SOLE LENDER
By /s/ Mark A. Flatin (Seal)
-------------------------
Name: Mark A. Flatin
Title: Managing Director
Exhibit 10(o)(A)
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF WISCONSIN
UNITED STATES OF AMERICA
and the STATE OF WISCONSIN
CIVIL ACTION NO. 03-C-0949
Plaintiffs,
v.
The Honorable Lynn Adelman
P. H. GLATFELTER COMPANY
and
WTM I COMPANY
(f/k/a Wisconsin Tissue Mills Inc.),
Defendants.
AGREED SUPPLEMENT TO CONSENT DECREE
The Plaintiffs and Defendants in this action have entered into this Agreed
Supplement to Consent Decree (the "Agreed Supplement") in order to memorialize
an agreement reached in accordance with Subparagraph 98.d of the existing
Consent Decree. As explained below, this Agreed Supplement sets forth the
Defendants' agreement to commit additional funds for performance of their
obligations under the Consent Decree, as envisioned by Decree Subparagraph 98.d.
The United States is filing this Agreed Supplement with the Court to make it
part of the public record concerning the Consent Decree, but the Court need not
take any action on this filing.
1. The Plaintiffs filed this action on October 1, 2003, alleging that the
Defendants are among the parties liable for environmental contamination at the
Lower Fox River and Green Bay Site (the "Site") pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Sections
9601-9675. At the same time, the United States lodged with the
Court a proposed Consent Decree between the Plaintiffs and Defendants. After a
public comment period, the Court approved and entered the Consent Decree in a
Decision and Order dated April 12, 2004.
2. The Consent Decree requires the Defendants to perform sediment
remediation work at the portion of the Site that has been designated as Operable
Unit 1 ("OU1"). The Defendants began remedial work, including removing sediment
from OU1, in 2004, and the active remediation phase of that response work has
not yet been completed. The work is being overseen by the U.S. Environmental
Protection Agency ("EPA") and the Wisconsin Department of Natural Resources
("WDNR").
3. The Defendants are paying for the response work that they are performing
in OU1 using funds deposited in a dedicated escrow account established under the
Consent Decree (the "Escrow Account"). If EPA, in consultation with WDNR,
determines at any time that the funds remaining in that Escrow Account are not
sufficient to finance the completion of the response work, EPA has certain
rights that can lead to termination of the Consent Decree. As an alternative to
that course of action, Consent Decree Subparagraph 98.d affords the Defendants
an opportunity to "deposit additional funds in the Escrow Account, in order to
avoid an Insufficiency Determination."
4. The Plaintiffs recently notified the Defendants that EPA was considering
making a formal finding that the fund balance remaining in Escrow Account was
likely to be insufficient to fund the completion of the response work. The
parties have agreed to address that potential shortfall in the Escrow Account as
set forth in the following Paragraph.
2
5. In accordance with Consent Decree Subparagraph 98.d, the parties hereby
agree that the Defendants shall deposit additional funds in the Escrow Account
established under the Consent Decree, as follows:
a. Defendant WTM I Company ("WTM I") shall deposit an additional $6
million in the Escrow Account. That total amount shall be paid in three
equal installments: (i) $2 million shall be payable on or before April 10,
2007; (ii) an additional $2 million shall be payable on or before July 10,
2007; and (iii) the final $2 million shall be payable on or before January
10, 2008. All three payments shall be deposited in a separate sub-account
within the Escrow Account (the "WTM I Sub-account"), so that those funds
can be distinguished from the other funds in the Escrow Account (the
"Existing Funds").
b. By no later than April 10, 2007, Defendant P.H. Glatfelter Company
("Glatfelter") shall obtain a $6 million irrevocable letter of credit
payable to the Escrow Account. The irrevocable letter of credit shall be
issued by a financial institution that has the authority to issue letters
of credit and whose letter of credit operations are regulated and examined
by an agency of the United States Government. The financial institution
shall have surplus and reserves in excess of $500 million. The irrevocable
letter of credit shall identify EPA as the beneficiary and the full $6
million shall immediately be payable to the Escrow Account: (i) at any time
before April 10, 2008, upon EPA's written certification that the Existing
Funds balance in the Escrow Account is below $2 million (by a letter in the
form attached hereto as Exhibit A); or (ii) on April 10, 2008, if payment
has not already been made by that date. The payment under the irrevocable
letter of credit shall be deposited in a separate sub-account within the
Escrow Account (the
3
"Glatfelter Sub-account"), so that those funds can be distinguished from
the Existing Funds. At least five business days before finalizing the
letter of credit, Glatfelter shall afford the Plaintiffs and WTM I an
opportunity to review the proposed letter of credit to assess whether it
conforms to the requirements of this Subparagraph. Notwithstanding the
requirement that the letter of credit be irrevocable, at any time prior to
payment under the irrevocable letter of credit, Glatfelter may deposit $6
million into the Glatfelter Sub-account," at which time, Glatfelter may
cancel the letter of credit.
c. The Defendants shall direct the Escrow Account manager as follows:
All Existing Funds shall be exhausted before disbursement of any amounts
from the separate sub-accounts established and funded under the preceding
Subparagraphs of this Agreed Supplement. After the Existing Funds are
exhausted, the WTM I and Glatfelter Sub-accounts shall each be drawn upon
in equal amounts, on a 50/50 basis, to pay for response work.
d. The parties hereby agree that the additional funds to be paid into
the Escrow Account under the preceding Subparagraphs of this Agreed
Supplement fall within the definition of the "OU1 Response Activities and
Costs" specified by Consent Decree Subparagraph 83.b.
6. Pursuant to Consent Decree Section XXX (Retention of Jurisdiction), the
Court has jurisdiction to enforce compliance with the terms of this Agreed
Supplement because the Court retained jurisdiction over both the subject matter
of the Consent Decree and the Settling Defendants for the duration of the
performance of the terms and provisions of the Consent Decree for the purpose of
enabling any of the parties to apply to the Court at any time for such further
order, direction, and relief as may be necessary or appropriate for the
construction or
4
modification of the Consent Decree, or to effectuate or enforce compliance with
its terms, or to resolve disputes in accordance with Consent Decree Section XX
(Dispute Resolution).
IT IS SO STIPULATED AND AGREED.
5
Signature Page for Agreed Supplement to Consent Decree in United States and the
State of Wisconsin v. P.H. Glatfelter Company and WTM I Company, Case No.
03-C-0949 (E.D. Wis.)
FOR THE UNITED STATES OF AMERICA
MATTHEW J. McKEOWN
Acting Assistant Attorney General
Environment and Natural Resources
Division
3/28/07 /s/ Randall M. Stone
Date -----------------------------------------
RANDALL M. STONE
Senior Attorney
Environmental Enforcement Section
U.S. Department of Justice
P.O. Box 7611
Washington, DC 20044-7611
MATTHEW V. RICHMOND
Assistant United States Attorney
Eastern District of Wisconsin
U.S. Courthouse and Federal Building -
Room 530
517 E. Wisconsin Avenue
Milwaukee, WI 53202
3/26/07 /s/ Richard Murawski
Date -----------------------------------------
RICHARD MURAWSKI
Associate Regional Counsel
U.S. Environmental Protection Agency
Region 5
77 West Jackson Boulevard
Chicago, IL 60604
6
Signature Page for Agreed Supplement to Consent Decree in United States and the
State of Wisconsin v. P.H. Glatfelter Company and WTM I Company, Case No.
03-C-0949 (E.D. Wis.)
FOR THE STATE OF WISCONSIN
3/26/07 /s/ Bruce Baker
Date -----------------------------------------
BRUCE BAKER
Deputy Administrator, Division of Water
Wisconsin Department of Natural Resources
101 South Webster Street
Madison, WI 53703
3/27/07 /s/ Jerry L. Hancock
Date -----------------------------------------
JERRY L. HANCOCK
Assistant Attorney General
Wisconsin Department of Justice
17 West Main Street
Madison, WI 53702
7
Signature Page for Agreed Supplement to Consent Decree in United States and the
State of Wisconsin v. P.H. Glatfelter Company and WTM I Company, Case No.
03-C-0949 (E.D. Wis.)
FOR P. H. GLATFELTER COMPANY
3/28/07 Signature: /s/ Jeffrey J. Norton
Date ------------------------------
Name (print): Jeffrey J. Norton
Title: Vice President, General Counsel
and Secretary
Address:
--------------------------------
--------------------------------
--------------------------------
--------------------------------
8
Signature Page for Agreed Supplement to Consent Decree in United States and the
State of Wisconsin v. P.H. Glatfelter Company and WTM I Company, Case No.
03-C-0949 (E.D. Wis.)
FOR WTM I COMPANY
March 27, 2007 Signature: /s/ J.P. Causey Jr.
Date ------------------------------
Name (print): J.P. Causey Jr.
Title: Vice President
Address: WTM I Company
Box 2350
Richmond, VA 23218-2350
9
EXHIBIT A TO AGREED SUPPLEMENT TO CONSENT DECREE
(PRESCRIBED FORM OF LETTER DIRECTING PAYMENT UNDER LETTER OF CREDIT BEFORE APRIL
10, 2008)
[Date]
[Name and Address of Letter of Credit Issuer]
Payment Directive Under Letter of Credit No. ________________
Sir or Madam:
I am writing in my capacity as the authorized representative of the U.S.
Environmental Protection Agency ("EPA"), the designated beneficiary under the
above-referenced letter of credit. The letter of credit was established pursuant
to an "Agreed Supplement to Consent Decree" in the case captioned United States
and the State of Wisconsin v. P.H. Glatfelter Co. and WTM I Co., Case No.
03-C-949 (E.D. Wis.), and Subparagraph 5.b of that Agreed Supplement to Consent
Decree specified certain conditions for requesting payment under the letter of
credit before April 10, 2008.
EPA hereby certifies that the conditions for payment under Subparagraph 5.b
of the Agreed Supplement to Consent Decree have been satisfied, and EPA
therefore directs your institution to pay the full amount due under the letter
of credit ($6,000,000.00), as specified herein. Payment should be made by wire
transfer in accordance with the following payment instructions:
Payment Amount: $6,000,000.00
Payee: Fox River OU1 Escrow Account
c/o Deutsche Bank Trust Company Americas
Account No. 252080
[insert wire transfer instructions]
Superfund Division Director
U.S. Environmental Protection Agency,
Region 5
CERTIFICATE OF SERVICE
Pursuant to Paragraph 124 of the Consent Decree in this action, I hereby
certify that copies of the foregoing Agreed Supplement to Consent Decree were
served on this date by first-class mail, postage prepaid, upon the following
individuals:
Nancy K. Peterson
Quarles & Brady LLP
411 East Wisconsin Avenue, Suite 2040
Milwaukee, WI 53202-4497
J.P. Causey Jr.
Vice President & Corporate Secretary
WTM I Company
c/o Chesapeake Corporation
1021 E. Gary Street
Box 2350
Richmond, VA 23218-2350
Patrick H. Zaepfel
Meyer, Unkovic & Scott, LLP
110 East King Street
Lancaster, PA 17602
David G. Mandelbaum
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
Jerry L. Hancock
Assistant Attorney General
Wisconsin Department of Justice
P.O. Box 7857
Madison, WI 53707-7857
Matthew V. Richmond
Assistant United States Attorney
Eastern District of Wisconsin
U.S. Courthouse and Federal Building - Room 530
517 E. Wisconsin Avenue
Milwaukee, WI 53202
Richard Murawski
Associate Regional Counsel (C-14J)
U.S. Environmental Protection Agency
77 W. Jackson Blvd.
Chicago, IL 60604
Douglas P. Dixon and Joshua Epstein
U.S. Environmental Protection Agency
Ariel Rios Building - Mail Code 2272A
1200 Pennsylvania Avenue, N.W.
Washington, DC 20460
Dated: March 29, 2007 s/ Randall M. Stone
---------------------------------------
EXHIBIT 10(Q)
COMPENSATORY ARRANGEMENTS WITH CERTAIN EXECUTIVE OFFICERS
Set forth below are the base salaries of the individuals who will be
identified as named executive officers(1) of the Company in the Company's 2008
proxy statement. The salary increases for Messrs. Parrini, Jacunski, Norton and
Rapp were effective February 1, 2008. Mr. Glatfelter's salary increase was
effective March 5, 2008.
NAME AND TITLE SALARY
-------------- ------
George H. Glatfelter II $660,800
Chairman and Chief Executive Officer
John P. Jacunski $333,426
Senior Vice President and Chief
Financial Officer
Dante C. Parrini $505,025
Executive Vice President and Chief
Operating Officer
Jeffrey J. Norton $248,250
Vice President, General Counsel and
Secretary
Martin Rapp $328,666
Vice President and General Manager,
Composite Fibers Business Unit
The annual base salaries are subject to adjustment pursuant to the
Company's employee compensation policies in effect from time to time. Each of
the above executive officers has a change in control employment agreement, which
is included as exhibits to this Form 10-K. Also, each executive officer
participates in the Company's 2005 Long-Term Incentive Plan and in its
Management Incentive Plan, each of which are incorporated by reference as
exhibits to this Form 10-K.
EXHIBIT 10(R)
NON-EMPLOYEE DIRECTOR COMPENSATION POLICY
P.H. Glatfelter Company (the "Company") pays fees to each non employee director
of the Company. Each non-employee director receives an annual retainer fee of
$27,000 (two-thirds in shares of Glatfelter common stock and one-third in cash)
and an additional $5,000 annual retainer if the non-employee director serves as
chairperson of a committee of the board of directors. Each non-employee director
will also receive $2,000 for attending the annual board retreat, $1,500 for each
attended board meeting and $1,000 for each attended committee meeting. In
addition, each non-employee director will receive an annual Restricted Stock
Unit award valued at $15,500 that will vest ratably over a three-year period.
Exhibit 10(t)
Between
GLATFELTER VERWALTUNGSGESELLSCHAFT MBH,
hereby represented by its sole proprietor,
1. As Managing Director of Glatfelter Verwaltungsgesellschaft mbH Mr Martin
Rapp acquires benefit entitlements according to this agreement.
2. Benefits become due without fail
2.1. on Mr Martin Rapp's 65th birthday;
2.2. should Mr Martin Rapp become permanently incapable to work before that
date, either alleged by himself or by Glatfelter
Verwaltungsgesellschaft mbH and supported by a medical referee's
doctor's certificate;
2.3. upon Mr Martin Rapp's death with regard to his surviving dependants'
entitlements to widow's and orphan's benefits;
-2-
3. Should Glatfelter Verwaltungsgesellschaft mbH terminate the employment
(ordinary or extraordinary dismissal) for reasons other than breach of
trust of contractual obligation by Mr Martin Rapp himself, he will, after
his 65th birthday, receive benefit payments, arising from this agreement
and calculated on the basis of benefit entitlements accrued up to
termination of employment. The value of these entitlements depends on
Section 2 of the Company Pension Law.
4. If Mr Martin Rapp's employment with Glatfelter Verwaltungsgesellschaft mbH
ceases for other reasons or upon completion of the vesting periods before
his 65th birthday, he retains any benefit entitlements arising from this
retirement pension provision accrued up to that date in accordance with
Company Pension Law regulations.
In this case benefit payments based on entitlements accrued up to
termination of employment become due after his 65th birthday, or should Mr
Martin Rapp become permanently incapable of working, or upon his death with
regard to widow's and orphan's benefits.
Vesting periods are deemed completed on 31/07/2007.
5. From his 60th birthday, Mr Martin Rapp is entitled to receive early
retirement benefit in the form of a reduced old-age pension. To this end
the attained retirement benefit according to II.1 (below) is reduced by
2.5% for each year by which the start of pension payments is brought
forward. Any started years count pro-rata.
II. BENEFIT PAYMENTS
1. From his 65th birthday or in case of permanent incapacity Mr Martin Rapp
receives an annual (old-age) pension payment of 1.5% per year of service of
his average pensionable income paid over the last 5 years. Pensionable are
his gross salary according to Section ......... as well as any bonus
payments/variable pay paid in the respective 12-months period in accordance
with the ,,Variable Pay Plan" as per Section ..... of the Managing
Director's Employment Contract. The retirement pension percentage also
applies to any pre-service periods from 01/08/2002. Any started years count
pro rata temporis.
2. In case of Mr Martin Rapp's death, provided the marriage had existed for at
least 5 years prior to the claim date, his widow receives 60% of the
retirement pension Mr Martin Rapp was paid or, in case of death before the
retirement date, would have received if he had been incapable to work.
-3-
3. In case of Mr Martin Rapp's death his legitimate children and any of his
children of equivalent legal status receive the following orphan's benefit
until their 18th birthday:
3.1. If the mother is alive and was entitled to receive widow's benefit at
her husband's death, each child receives 20 % of the widow's benefit.
However, the amount of benefit paid to the widow and children shall
not exceed the amount of benefit Mr Martin Rapp would have received.
3.2. If the mother is no longer alive or was not entitled to receive
widow's benefit at her husband's death, each child receives 33 1/3 %
of the widow's benefit. However, the combined amount shall not exceed
60 % of the benefit Mr Martin Rapp would have received.
3.3. If, at 18, any legitimate children are still in further education or
undertaking vocational training, orphan's benefit will continue to be
paid until their 24th birthday, provided the child's income from the
age of 18 does not exceed the amount of the intended orphan's benefit.
4. Any increase in benefits after pension payments have become due is subject
to the legal regulations and any arising company pension law specific
legislation.
Benefits paid under the state pension scheme or an exempting private life
insurance cannot be offset against these benefit payments.
5. In case of a divorce settlement in accordance with Sections 1587 f BGB
(German Civil Code) calculations will be based on the same benefits as
would have been payable had the divorce settlement not taken place. The
divorce settlement is deemed non-existent if it would entail an increase in
company pension provisions.
In case of a lawful extension of the divorce settlement in accordance with
Section 3a of the German Law for the Regulation of Hardship Cases in
Divorce Settlements (VersorgAusglHarteG) the amount of benefit paid to the
surviving widow will be reduced in accordance with Section 3a para. 4 of
the VersorgAusglHarteG by the value of compensation benefit in accordance
with Section 3a para. 1 of the VersorgAusglHarteG, which is paid to or
payable to the divorced (former) wife.
-4-
III. MATURITY OF BENEFIT PAYMENTS
1. The entitlement to receive benefit payments starts in the month after any
payments became due, at the earliest upon termination of the employment
contract and a twelfth of the amount specified in II. is payable on the
15th day of each month.
2. The entitlement is suspended as long as a claim to salary or salary
compensation payments exists and the salary continues to be paid as death
benefit.
3. Payment of benefit ends at the end of the month in which the respective
beneficiary dies or in which the other conditions for receipt of benefit
payment become void.
IV. EXTINCTION OF BENEFIT ENTITLEMENTS
Any entitlements to benefit provision arising from this contract become extinct,
1. if Mr Martin Rapp caused his incapacity to work either deliberately or
through gross negligence;
2. if Glatfelter Verwaltungsgesellschaft mbH would be entitled to terminate
the service provisions without notice for an important reason constituting
breach of duty of good faith caused by the respective beneficiary;
-5-
3. if the respective beneficiary would act against the interests of Glatfelter
Verwaltungsgesellschaft mbH or against the interests of associated
companies including the KG to such an extent, that it would in the case of
an existing service provision entitle the company concerned to terminate
the service provision without notice for an important reason constituting a
breach of duty of good faith;
4. If the widow remarries. In this case the widow is only entitled to receive
widow's benefit for three months following her remarriage.
This clause does not affect the orphans' benefit provision regulations.
V. DUTY OF DISCLOSURE
1. Any respective beneficiary has the duty to inform Glatfelter
Verwaltungsgesellschaft mbH of any change that impacts on the contractual
obligations of the Glatfelter Verwaltungsgesellschaft mbH. If necessary,
relevant valid proof of personal status must be provided.
2. Any respective beneficiary has the duty to repay possible benefit
overpayments of any kind to the Glatfelter Verwaltungsgesellschaft mbH,
including any demands arising from submission of incorrect tax returns,
social security payments or similar, even if there was no personal gain.
VI. FINAL CLAUSES
1. This contract comes into force upon signature. There are no other verbal
agreements.
2. Changes and additions to this contract have to be made in writing.
-6-
3. Part invalidity of this contract does not affect the remaining contractual
clauses.
4. A court of arbitration at the seat of the Glatfelter
Verwaltungsgesellschaft mbH will decide any disputes arising from this
contract including its validity and interpretation. The judge's decision is
final. To this end a separate arbitration agreement will be made.
York, PA USA Gernsbach
Place, Date: February 5, 2008 Place, Date: 31-01-2008
-------------------- --------------------
/s/ Dante C. Parrini /s/ Martin Rapp
--------------------------------------- --------------------------------------
Glatfelter Verwaltungsgesellschaft mbH Martin Rapp
represented by its shareholder/partner,
---------------------------------------
by: Dante C. Parrini
Exhibit 10(x)
EXECUTION VERSION
TERM LOAN AGREEMENT
dated as of January 15, 2008
between
GPW VIRGINIA TIMBERLANDS LLC
as Borrower
THE LENDERS FROM TIME TO TIME PARTY HERETO
AND
SUNTRUST BANK
as Agent
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS; CONSTRUCTION.................................... 1
SECTION 1.01 DEFINITIONS.................................................. 1
SECTION 1.02 ACCOUNTING TERMS AND DETERMINATION........................... 14
SECTION 1.03 TERMS GENERALLY.............................................. 14
ARTICLE II. AMOUNT AND TERMS OF THE COMMITMENT........................... 15
SECTION 2.01 TERM LOAN COMMITMENT......................................... 15
SECTION 2.02 INTEREST ELECTION............................................ 15
SECTION 2.03 TERMINATION OF COMMITMENTS................................... 15
SECTION 2.04 REPAYMENT OF TERM LOAN....................................... 16
SECTION 2.05 OPTIONAL PREPAYMENTS......................................... 16
SECTION 2.06 MANDATORY PREPAYMENTS........................................ 16
SECTION 2.07 INTEREST ON TERM LOAN........................................ 16
SECTION 2.08 FEES......................................................... 17
SECTION 2.09 COMPUTATION OF INTEREST...................................... 17
SECTION 2.10 INABILITY TO DETERMINE INTEREST RATES........................ 17
SECTION 2.11 ILLEGALITY................................................... 18
SECTION 2.12 INCREASED COSTS.............................................. 18
SECTION 2.13 FUNDING INDEMNITY............................................ 19
SECTION 2.14 TAXES........................................................ 19
SECTION 2.15 PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SET-OFFS.. 21
ARTICLE III. CONDITIONS PRECEDENT......................................... 23
SECTION 3.01 REPRESENTATIONS AND WARRANTIES............................... 23
SECTION 3.02 PERFORMANCE; NO DEFAULT...................................... 23
SECTION 3.03 COMPLIANCE CERTIFICATES...................................... 23
SECTION 3.04 OPINIONS OF COUNSEL.......................................... 23
SECTION 3.05 INSTALLMENT SALE TRANSACTION; INITIAL CAPITALIZATION
TRANSACTION.................................................. 24
SECTION 3.06 TRANSACTION DOCUMENTS........................................ 24
SECTION 3.07 COLLATERAL................................................... 25
SECTION 3.08 INTEREST RESERVE ACCOUNT AND COLLECTION ACCOUNT.............. 25
SECTION 3.09 INTEREST RESERVE AMOUNT...................................... 25
SECTION 3.10 TERM LOAN PERMITTED BY APPLICABLE LAW, ETC................... 25
SECTION 3.11 PAYMENT OF SPECIAL COUNSEL FEES.............................. 26
SECTION 3.12 FUNDING INSTRUCTIONS......................................... 26
SECTION 3.13 PROCEEDINGS AND DOCUMENTS.................................... 26
ARTICLE IV. REPRESENTATIONS AND WARRANTIES............................... 26
SECTION 4.01 ORGANIZATION; POWER AND AUTHORITY............................ 26
SECTION 4.02 AUTHORIZATION, ETC........................................... 26
SECTION 4.03 DISCLOSURE................................................... 27
SECTION 4.04 ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES......... 27
SECTION 4.05 CLOSING DATE BALANCE SHEET; LIABILITIES...................... 27
SECTION 4.06 COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC................. 27
SECTION 4.07 GOVERNMENTAL AUTHORIZATIONS, ETC............................. 27
SECTION 4.08 LITIGATION; OBSERVANCE OF STATUTES AND ORDERS................ 28
SECTION 4.09 TAXES........................................................ 28
SECTION 4.10 TITLE TO PROPERTY............................................ 28
SECTION 4.11 LICENSES, PERMITS, ETC....................................... 28
SECTION 4.12 COMPLIANCE WITH ERISA........................................ 28
SECTION 4.13 [Reserved]................................................... 29
SECTION 4.14 USE OF PROCEEDS; MARGIN REGULATIONS.......................... 29
i
SECTION 4.15 INDEBTEDNESS................................................. 30
SECTION 4.16 SOLVENCY..................................................... 30
SECTION 4.17 ACTIVITIES................................................... 30
SECTION 4.18 FOREIGN ASSETS CONTROL REGULATIONS, ETC...................... 30
SECTION 4.19 INVESTMENT COMPANY ACT....................................... 31
ARTICLE V. AFFIRMATIVE COVENANTS........................................ 31
SECTION 5.01 FINANCIAL AND BUSINESS INFORMATION........................... 31
SECTION 5.02 OFFICER'S CERTIFICATE........................................ 32
SECTION 5.03 VISITATION................................................... 32
SECTION 5.04 COMPLIANCE WITH LAW.......................................... 33
SECTION 5.05 INSURANCE.................................................... 33
SECTION 5.06 MAINTENANCE OF PROPERTIES.................................... 33
SECTION 5.07 PAYMENT OF TAXES............................................. 33
SECTION 5.08 CORPORATE EXISTENCE, ETC..................................... 33
SECTION 5.09 PAYMENT OF OBLIGATIONS....................................... 33
SECTION 5.10 BOOKS AND RECORDS............................................ 34
SECTION 5.11 ACTIVITIES................................................... 34
SECTION 5.12 CHARACTERIZATION OF BORROWER FOR TAX PURPOSES................ 34
ARTICLE VI. NEGATIVE COVENANTS........................................... 34
SECTION 6.01 INDEBTEDNESS................................................. 34
SECTION 6.02 LIENS........................................................ 34
SECTION 6.03 TRANSACTIONS WITH AFFILIATES................................. 34
SECTION 6.04 MERGER, CONSOLIDATION, ETC................................... 35
SECTION 6.05 LINE OF BUSINESS............................................. 35
SECTION 6.06 TERRORISM SANCTIONS REGULATIONS.............................. 35
SECTION 6.07 INVESTMENTS.................................................. 35
SECTION 6.08 DISTRIBUTIONS................................................ 35
SECTION 6.09 CAPITAL EXPENDITURES......................................... 36
SECTION 6.10 BANKRUPTCY, INSOLVENCY....................................... 36
SECTION 6.11 AMENDMENTS AND MODIFICATIONS TO ORGANIZATIONAL DOCUMENTS
AND COLLATERAL............................................... 36
ARTICLE VII. EVENTS OF DEFAULT............................................ 37
SECTION 7.01 EVENTS OF DEFAULT............................................ 37
SECTION 7.02 REMEDIES ON DEFAULT, ETC..................................... 38
ARTICLE VIII. THE AGENT.................................................... 39
SECTION 8.01 APPOINTMENT OF AGENT......................................... 39
SECTION 8.02 NATURE OF DUTIES OF AGENT.................................... 40
SECTION 8.03 LACK OF RELIANCE ON THE AGENT................................ 40
SECTION 8.04 CERTAIN RIGHTS OF THE AGENT.................................. 40
SECTION 8.05 RELIANCE BY AGENT............................................ 41
SECTION 8.06 THE AGENT IN ITS INDIVIDUAL CAPACITY......................... 41
SECTION 8.07 SUCCESSOR AGENT.............................................. 41
SECTION 8.08 AUTHORIZATION TO EXECUTE OTHER LOAN DOCUMENTS................ 42
ARTICLE IX. MISCELLANEOUS................................................ 42
SECTION 9.01 NOTICES...................................................... 42
SECTION 9.02 WAIVER; AMENDMENTS........................................... 43
SECTION 9.03 EXPENSES; INDEMNIFICATION.................................... 44
SECTION 9.04 SUCCESSORS AND ASSIGNS....................................... 45
SECTION 9.05 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS... 49
SECTION 9.06 WAIVER OF JURY TRIAL......................................... 49
SECTION 9.07 RIGHT OF SETOFF.............................................. 50
SECTION 9.08 COUNTERPARTS; INTEGRATION.................................... 50
SECTION 9.09 SURVIVAL..................................................... 50
SECTION 9.10 SEVERABILITY................................................. 51
SECTION 9.11 CONFIDENTIALITY.............................................. 51
Schedules
Schedule 4.05 - Closing Date Balance Sheet
Schedule 4.15 - Other Indebtedness
Exhibits
Exhibit A - Term Note
Exhibit B - Form of Glatfelter Note
Exhibit C - Form of Assignment and Acceptance
iii
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT (this "Agreement") is made and entered into
as of January 15, 2008, by and between GPW VIRGINIA TIMBERLANDS LLC, a Delaware
limited liability company (the "Borrower") the several banks and other financial
institutions from time to time party hereto (the "Lenders"), and SUNTRUST BANK,
in its capacity as Agent for the Lenders (in such capacity, the "Agent").
WITNESSETH:
WHEREAS, the Borrower has requested that the Lender make a term loan
in a principal amount equal to $36,694,500.00 to the Borrower;
WHEREAS, subject to the terms and conditions of this Agreement, the
Lender is willing to make the term loan to the Borrower.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Agent, the Borrower and the Lenders agree as
follows:
ARTICLE I. DEFINITIONS; CONSTRUCTION
SECTION 1.01 DEFINITIONS.
In addition to the other terms defined herein, the following terms used
herein shall have the meanings herein specified (to be equally applicable to
both the singular and plural forms of the terms defined):
"ADJUSTED LIBO RATE" shall mean, with respect to each Interest Period
for a Eurodollar Loan, the rate per annum obtained by dividing (i) LIBOR for
such Interest Period by (ii) a percentage equal to 1.00 minus the Eurodollar
Reserve Percentage.
"ADMINISTRATIVE QUESTIONNAIRE" shall mean, with respect to each
Lender, an administrative questionnaire in the form prepared by the Agent and
submitted to the Agent duly completed by such Lender.
"AFFILIATE" means, at any time, and with respect to any Person, any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person. As used in this definition, "Control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. Unless the context otherwise clearly
requires, any reference to an "Affiliate" is a reference to an Affiliate of the
Borrower.
"AGENT" shall have the meaning set forth in the introductory paragraph
hereof.
"ANTI-TERRORISM ORDER" means Executive Order No. 13,224 of September
24, 2001, Blocking Property and Prohibiting Transactions with Persons Who
Commit, Threaten to Commit or Support Terrorism, 66 U.S. Fed. Reg. 49, 079
(2001), as amended.
"APPLICABLE LENDING OFFICE" shall mean, for each Lender the "Lending
Office" of such Lender (or an Affiliate of such Lender) designated in the
Administrative Questionnaire submitted by such Lender or such other office of
such Lender (or an Affiliate of such Lender) as such Lender may from time to
time specify to the Agent and the Borrower as the office by which its Term Loan
is to be made and maintained.
"APPLICABLE MARGIN" shall mean 0.00% per annum on a Base Rate Loan and
1.20% per annum on a Eurodollar Loan.
"APPROVED FUND" means any Person (other than a natural Person) that is
(or will be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its
business and that is administered or managed by (a) the Lender, (b) an Affiliate
of the Lender or (c) an entity or an Affiliate of an entity that administers or
manages the Lender.
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04(b)) and accepted by the Agent, in the form
of Exhibit C attached hereto or any other form approved by the Agent.
"AVAILABLE FUNDS" means, as of any date of determination, the amount
by which cash on deposit in the Interest Reserve Account and the Collection
Account, and Permitted Investments standing to the credit of the Interest
Reserve Account or the Collection Account or otherwise subject to a perfected,
first priority Lien in favor of the Collateral Trustee, exceeds the sum of (a)
the amount of principal, interest and other sums in respect of the Term Loan
that is due and payable within the 45 days following such date of determination,
plus (b) the Interest Reserve Amount, plus (c) the amount of expenses projected
by the Borrower in good faith to be due and payable on or prior to the last day
of the immediately succeeding Interest Period as certified by a Responsible
Officer of the Borrower to the Collateral Trustee.
"BASE RATE" shall mean the higher of (i) the per annum rate which the
Agent publicly announces from time to time to be its prime lending rate, as in
effect from time to time, and (ii) the Federal Funds Rate, as in effect from
time to time, plus one-half of one percent (0.50%). The Agent's prime lending
rate is a reference rate and does not necessarily represent the lowest or best
rate charged to customers. The Agent may make commercial loans or other loans at
rates of interest at, above or below the Agent's prime lending rate. Each change
in the Agent's prime lending rate shall be effective from and including the date
such change is publicly
2
announced as being effective. When used in reference to the Term Loan, "Base
Rate" refers to whether the Term Loan bears interest at a rate determined by
reference to the Base Rate (e.g., a "Base Rate Loan").
"BORROWER" shall have the meaning in the introductory paragraph
hereof.
"BUSINESS DAY" shall mean (i) any day other than a Saturday, Sunday or
other day on which commercial banks in Atlanta, Georgia or Richmond, Virginia
are authorized or required by law to close and (ii) if such day relates to a
borrowing of, a payment or prepayment of principal or interest on, a conversion
of, or an Interest Period for, a Eurodollar Loan or a notice with respect to any
of the foregoing, any London Business Day.
"CAPITALIZATION TRANSACTION" means, collectively, (a) the Initial
Capitalization Transaction, (b) the purchase by the Borrower from Glatfelter on
the date of Closing of a Glatfelter Note in the principal amount of
$3,377,000.00 for a purchase price equal to 100% of the principal amount
thereof, paid by the Borrower with proceeds of the Term Loan, and (c) the
contribution by the Parent on the date of Closing of a Glatfelter Note in the
principal amount of $5,781,000.00.
"CHANGE IN LAW" shall mean (i) the adoption of any applicable law,
rule or regulation after the date of this Agreement, (ii) any change in any
applicable law, rule or regulation, or any change in the interpretation or
application thereof, by any Governmental Authority after the date of this
Agreement, or (iii) compliance by the Lender (or by the Lender's holding
company, if applicable) with any request, guideline or directive (whether or not
having the force of law) of any Governmental Authority made or issued after the
date of this Agreement.
"CLOSING DATE" or the "CLOSING" shall mean the date on which the
conditions precedent set forth in Article III have been satisfied or waived.
"CLOSING DATE BALANCE SHEET" means the balance sheet of the Borrower
as of the date of Closing, after giving effect and fully reflecting all of the
transactions contemplated to occur on or prior to Closing, including, without
limitation, the Capitalization Transaction, the Term Loan and the Closing Date
Distribution.
"CLOSING DATE DISTRIBUTION" means a cash distribution made by the
Borrower to the Parent on the date of Closing in the amount of $32,377,500.
"CODE" shall mean the Internal Revenue Code of 1986, as amended and in
effect from time to time.
"COLLATERAL" means (a) the Installment Note, (b) the Letter of Credit,
(c) the Glatfelter Securities, (d) the Interest Reserve Account and all cash and
other items from time to time standing to the credit of the Interest Reserve
Account, (e) the Collection Account and all cash and other items from time to
time standing to the credit of the Collection Account, (f) all rights of the
Borrower under the Contribution Agreement, (g) all other assets of the Borrower,
and (h) any and all proceeds of any of the foregoing.
3
"COLLATERAL TRUSTEE" means SunTrust Bank, in its capacity as
Collateral Trustee pursuant to the Collateral Trust Indenture.
"COLLATERAL TRUST INDENTURE" means that certain Collateral Trust
Indenture dated as of January 15, 2008 between the Collateral Trustee and the
Borrower.
"COMMITMENT" shall mean the Term Loan Commitment.
"CONTRIBUTION AGREEMENT" means the Contribution Agreement, dated as of
January 14, 2008, between the Parent and the Borrower.
"CONTRIBUTION AGREEMENT EVENT" means (a) any representation or
warranty made by the Parent in the Contribution Agreement proves to have been
false or incorrect in any material respect on the date as of which made or (b)
the Parent defaults in the performance of or compliance with any term in the
Contribution Agreement to be performed by or complied with by the Parent and
such defaults are not remedied within 30 days after the earlier of (i) a
responsible officer of the Parent obtaining actual knowledge of such default and
(ii) the Parent receiving written notice of such default.
"DEFAULT" shall mean any condition or event that, with the giving of
notice or the lapse of time or both, would constitute an Event of Default.
"DEFAULT INTEREST" shall have the meaning set forth in Section
2.07(b).
"DOLLAR(S)" and the sign "$" shall mean lawful money of the United
States of America.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Borrower
under section 414 of the Code.
"EURODOLLAR" when used in reference to the Term Loan, refers to
whether the Term Loan bears interest at a rate determined by reference to the
Adjusted LIBO Rate (e.g., a "Eurodollar Loan").
"EURODOLLAR RESERVE PERCENTAGE" shall mean the aggregate (without
duplication) of the maximum reserve percentages (including, without limitation,
any emergency, supplemental, special or other marginal reserves) expressed as a
decimal (rounded upwards to the next 1/100th of 1%) in effect on any day to
which the Lender is subject with respect to the Adjusted LIBO Rate pursuant to
regulations issued by the Board of Governors of the Federal Reserve System (or
any Governmental Authority succeeding to any of its principal functions) with
respect to eurocurrency funding (currently referred to as "eurocurrency
liabilities" under
4
Regulation D). Any Eurodollar Loan shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to the Lender under Regulation D. The Eurodollar Reserve Percentage shall
be adjusted automatically on and as of the effective date of any change in any
reserve percentage.
"EVENT OF DEFAULT" shall have the meaning provided in Section 7.01.
"EXCLUDED TAXES" shall mean with respect to the Agent, any Lender or
any other recipient of any payment to be made by or on account of any obligation
of the Borrower hereunder, (a) Taxes imposed on or measured by such recipient's
overall net income (however denominated), franchise Taxes imposed on such
recipient (in lieu of net income Taxes), and branch profits or similar Taxes
imposed on it by any jurisdiction (or any political subdivision thereof) as a
result of such recipient being organized or having its principal office or, in
the case of any Lender, its Applicable Lending Office located in such
jurisdiction or as a result of a present or former connection with such
jurisdiction (other than any such connection arising from such recipient having
executed, delivered or performed its obligations or received a payment under, or
enforced, or otherwise with respect to, any of the Loan Documents), and (b) any
withholding or backup withholding Tax that (i) is imposed under the law in
effect at the time such recipient becomes a party to this Agreement, except to
the extent of any additional amounts to which such Lender's assignor (if any)
was entitled at the time of assignment, or designates a new lending office
(unless such re-designation was at the request of the Borrower), other than
Taxes that have accrued prior to the designation of such lending office that are
otherwise not Excluded Taxes, or (ii) is attributable to such Foreign Lender's
failure (or unreasonable delay) to comply (other than as a result of a change in
law, rule, regulation or treaty or treaty or in the administration,
interpretation or application thereof by a Governmental Authority) with Section
2.14(e).
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the next 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with member banks
of the Federal Reserve System arranged by Federal funds brokers, as published by
the Federal Reserve Bank of New York on the next succeeding Business Day or if
such rate is not so published for any Business Day, the Federal Funds Rate for
such day shall be the average rounded upwards, if necessary, to the next 1/100th
of 1% of the quotations for such day on such transactions received by the Agent
from three Federal funds brokers of recognized standing selected by the Agent.
"FEE LETTER" shall mean that certain fee letter, dated as of January
9, 2008, executed by SunTrust Robinson Humphrey, Inc. and SunTrust Bank and
accepted by the Borrower.
"FOREIGN LENDER" shall mean any Lender that is not a United States
person under Section 7701(a)(30) of the Code.
"GAAP" shall mean generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms of Section
1.02.
5
"GLATFELTER" means P.H. Glatfelter Company, a Pennsylvania
corporation.
"GLATFELTER NOTE" means any note issued by Glatfelter in favor of the
Borrower in the form of Exhibit B.
"GLATFELTER SECURITIES" means, collectively, (a) the Glatfelter Note
in the principal amount of $5,781,000.00 contributed by the Parent to the
Borrower on the date of Closing, and (b) the Glatfelter Note in the principal
amount of $3,377,000.00 purchased by the Borrower from Glatfelter on the date of
Closing with proceeds from the Term Loan.
"GOVERNMENTAL AUTHORITY" means (a) the government of (i) the United
States of America or any State or other political subdivision thereof, or (ii)
any other jurisdiction in which the Borrower conducts all or any part of its
business, or which asserts jurisdiction over any properties of the Borrower, or
(b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government
"GUARANTEE" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or other
balance sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the
obligor under any Guarantee, the indebtedness or other obligations that are the
subject of such Guarantee shall be assumed to be direct obligations of such
obligor.
"INDEBTEDNESS" with respect to any Person means, at any time, without
duplication,
6
(a) its liabilities for borrowed money and its redemption obligations in
respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of property acquired by
such Person (excluding accounts payable arising in the ordinary course of
business but including all liabilities created or arising under any conditional
sale or other title retention agreement with respect to any such property);
(c) (i) all liabilities appearing on its balance sheet in accordance with
GAAP in respect of Capital Leases and (ii) all liabilities which would appear on
its balance sheet in accordance with GAAP in respect of Synthetic Leases
assuming such Synthetic Leases were accounted for as Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with respect to
any property owned by such Person (whether or not it has assumed or otherwise
become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or instruments
serving a similar function issued or accepted for its account by banks and other
financial institutions (whether or not representing obligations for borrowed
money);
(f) all Swap Contracts of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (f) hereof.
"INDEMNIFIED TAXES" shall mean Taxes other than Excluded Taxes.
"INITIAL CAPITALIZATION TRANSACTION" means the contribution by the
Parent to the Borrower prior to the Closing of the Installment Note and the
Letter of Credit with respect to membership interests constituting 100% of the
issued and outstanding equity capital of the Borrower, pursuant to a
Contribution Agreement and the operating agreement of the Borrower.
"INSTALLMENT NOTE" means that certain Purchase Note No. P-1 in the
principal amount of $43,170,000, dated November 15, 2007, issued by the
Installment Note Issuer, originally made payable to the order of the Parent, and
conveyed and transferred by the Parent to the Borrower pursuant to the
Contribution Agreement.
"INSTALLMENT NOTE ISSUER" means GIC Investments LLC, a Delaware
limited liability company.
"INSTALLMENT SALE TRANSACTION" means the sale by the Parent on
November 16, 2007 of its equity interests in two limited liability companies
formed to hold certain timberlands to the Installment Note Issuer, the purchase
price for which the Installment Note Issuer delivered to the Parent (a) the
Installment Note and (b) the Letter of Credit.
7
"INSTALLMENT NOTE TRIGGER EVENT" means any of (a) a default in the
payment of any amount when due (whether on a scheduled payment date, upon
acceleration or otherwise) under the Installment Note that has not been cured
with the proceeds of a drawing under the Letter of Credit within 5 days
following such default; (b) failure of the Borrower to direct the Collateral
Trustee to accelerate the maturity of the Installment Note within 5 days
following the delivery by the L/C Bank of a Timely Reimbursement Failure Notice
(as such term is defined in the Letter of Credit); and (c) an insolvency event
relating to the L/C Bank.
"INTEREST PERIOD" means (i) initially, the period commencing on the
date hereof and ending on June 15, 2008 and (ii) thereafter, each period
commencing on the last day of the immediately preceding Interest Period and
ending on the 15th day of the sixth consecutive month ending after the month in
which such immediately preceding Interest Period ended. The determination of
Interest Periods shall be subject to the following provisions:
(i) if any Interest Period would otherwise expire on a day that is not a
Business Day, such Interest Period shall expire on the immediately
succeeding Business Day; provided, however, that if any Interest Period
would otherwise expire on a day that is not a Business Day but is a day of
the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the immediately preceding Business Day; and
(ii) no Interest Period shall extend beyond the stated maturity date
hereof.
"INTEREST RESERVE AMOUNT" means $350,000.
"INTEREST RESERVE ACCOUNT" means a trust account established by the
Collateral Trustee to hold certain amounts to be used to make payments on the
Term Loan.
"INVESTMENT COMPANY ACT" shall mean the United States Investment
Company Act of 1940, as amended.
"LC BANK" means the Royal Bank of Scotland plc, together with any
issuer of a substitute Letter of Credit.
"LETTER OF CREDIT" means that certain Irrevocable Standby Letter of
Credit No. LCA11020701586NY, in the initial "Base Amount" (as defined in said
letter of credit) of $43,170,000 issued by the LC Bank, together with any
substitute letter of credit that replaces such letter of credit pursuant to the
terms of the Installment Note.
"LIBOR" means, (i) 4.110625% per annum for the first Interest Period,
and (ii) for any subsequent Interest Period:
(a) an interest rate per annum appearing on page BBAM on the Bloomberg
Terminal ("Page BBAM") (or any other page that may replace such page from time
to time for the purpose of displaying offered rates of leading banks for London
interbank deposits in United States dollars) at approximately 11:00 a.m. (London
time) on the day that is two London
8
Business Days prior to the commencement of such Interest Period for United
States dollar deposits having a tenor equal to the duration of such Interest
Period;
(b) if a rate is not available, the rate per annum determined by the
Collateral Trustee to be the arithmetic mean (rounded, if necessary, to the
nearest fifth decimal place (with 5's being rounded up)) of the respective rates
of interest communicated by each of the Reference Banks to the Collateral
Trustee as the rates at which such Reference Banks would offer a United States
dollar deposit having a tenor equal to the duration of such Interest Period and
an amount at least equal to US$100 million to prime banks in the London
interbank market at approximately 11:00 a.m. (London time) on the day that is
two London Business Days prior to the commencement of such Interest Period;
provided, however, that if less than all Reference Banks provide such rate
quotations, then the Collateral Trustee shall determine the above-mentioned
arithmetic mean based on the rates quoted by those Reference Banks that provide
such a quotation, and if only one Reference Bank provides such a rate quotation,
then the Collateral Trustee shall use such sole Reference Bank's quoted rate; or
(c) if a rate cannot be determined pursuant to the foregoing
provisions, the LIBO Rate for such Interest Period shall be the rate per annum
determined by the Collateral Trustee to be the arithmetic mean (rounded, if
necessary, to the nearest fifth decimal place (with 5's being rounded up)) of
the respective rates of interest communicated by each of the Reference Banks to
the Collateral Trustee as the rates at which such Reference Banks would offer a
United States dollar deposit having a tenor equal to the duration of such
Interest Period and an amount at least equal to US$100 million to prime banks in
the New York interbank market at approximately 11:00 a.m. (New York City time)
on the first day of such Interest Period; provided, however, that if less than
all Reference Banks provide such rate quotations, then the Collateral Trustee
shall determine the above-mentioned arithmetic mean based on the rates quoted by
those Reference Banks that provide such a quotation, and if only one Reference
Bank provides such a rate quotation, then the Collateral Trustee shall use such
sole Reference Bank's quoted rate.
In respect of any Interest Period having a tenor other than six months, the
LIBO Rate shall be determined through the use of straight-line interpolation by
reference to two rates calculated in accordance with clauses (a), (b) and (c)
above, one of which shall be determined as if the maturity of the Dollar
deposits referred to therein were the period of time for which rates are
available next shorter than the Interest Period and the other of which shall be
determined as if the maturity were the period of time for which rates are
available next longer than the Interest Period; provided that, if an Interest
Period is less than or equal to seven days, then the LIBO Rate shall be
determined by reference to a rate calculated in accordance with clauses (a), (b)
and (c) above as if the maturity of the Dollar deposits referred to therein were
a period of time equal to seven days.
"LENDERS" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"LIEN" shall mean any mortgage, pledge, security interest, lien
(statutory or otherwise), charge, encumbrance, hypothecation, assignment,
deposit arrangement, or other
9
arrangement having the practical effect of the foregoing or any preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement and any capital lease having the same economic effect as any of the
foregoing).
"LOAN" shall have the meaning set forth in Section 2.01
"LOAN DOCUMENTS" shall mean, collectively, (a) this Agreement, (b) the
Term Note, (c) the Pledge and Security Agreement, (d) the Collateral Trust
Indenture, (e) any deposit account control agreement or securities account
control agreement, if any, governing the Interest Reserve Account, Collection
Account or any investments made with the proceeds of any cash or other items
standing to the credit of the Interest Reserve Account or Collection Account and
(f) any other certificate, instrument, document or agreement executed or
delivered by the Borrower to the Collateral Trustee, the Agent or any Lender.
"LONDON BUSINESS DAY" shall mean a day on which dealings in Dollars
are carried on in the London interbank market.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Borrower, or (b) the ability of the Borrower to perform its obligations under
this Agreement, the Term Note and the other Loan Documents, or (c) the validity
or enforceability of this Agreement, the Term Note or the other Loan Documents.
"MATURITY DATE" shall mean, with respect to the Term Loan, the earlier
of (i) January 15, 2013 or (ii) the date on which the principal amount of the
Term Loan has been declared or automatically have become due and payable
(whether by acceleration or otherwise).
"MEMBER" means the Parent in its capacity as the sole member of the
Borrower.
"MOODY'S" shall mean Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"NOTE" shall mean the Term Note.
"OBLIGATIONS" shall mean all amounts owing by the Borrower to the
Agent or any Lender pursuant to or in connection with this Agreement or any
other Loan Document, including without limitation, all principal, interest
(including any interest accruing after the filing of any petition in bankruptcy
or the commencement of any insolvency, reorganization or like proceeding
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), all reimbursement
obligations, fees, expenses, indemnification and reimbursement payments, costs
and expenses (including all fees and expenses of counsel to the Agent and any
Lender incurred pursuant to this Agreement or any other Loan Document), whether
direct or indirect, absolute or contingent, liquidated or
10
unliquidated, now existing or hereafter arising hereunder or thereunder, and all
obligations to the Lender or any of its Affiliates, together with all renewals,
extensions, modifications or refinancings thereof.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of another officer of the Borrower whose responsibilities extend to
the subject matter of such certificate.
"OTHER TAXES" shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
"PARENT" means Glatfelter Pulp Wood Company, a Maryland corporation
and a wholly-owned subsidiary of Glatfelter.
"PARTICIPANT" shall have the meaning set forth in Section 9.04(d).
"PAYMENT OFFICE" shall mean the office of the Agent located at
SunTrust Plaza, 303 Peachtree Street, Atlanta, Georgia 30303 or such other
location as to which the Agent shall have given written notice to the Borrower
and the Lenders.
"PERMITTED INVESTMENTS" means (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurocurrency time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any commercial bank organized under the laws of the United
States or any state thereof having combined capital and surplus and undivided
profits of not less than $1,000,000,000; (c) commercial paper of an issuer rated
at least A-1 by S&P or P-1 by Moody's, or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and maturing
within six months from the date of acquisition; (d) repurchase obligations of
any commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than 30 days, with respect to securities
issued or fully guaranteed or insured by the United States government; (e)
securities with maturities of one year or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the securities of which
state, commonwealth, territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at least A+ by S&P or A1 by
Moody's; (f) securities with maturities of six months or less from the date of
acquisition backed by standby letters of credit issued by any commercial bank
satisfying the requirements of clause (b) of this definition; (g) money market
mutual or similar funds that invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition; (h) money market
funds that (1) comply with the criteria set forth in SEC Rule 2a-7 under the
Investment Company
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Act of 1940, as amended and (2) are rated A+ by S&P and A1 by Moody's and (iii)
have portfolio assets of at least $100,000,000.
"PERSON" shall mean any individual, partnership, firm, corporation,
association, joint venture, limited liability company, trust or other entity, or
any Governmental Authority.
"PLAN" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) subject to Title I of ERISA that is or has been established or
maintained, or to which contributions are or have been made or required to be
made, by the Borrower or any ERISA Affiliate with respect to which the Borrower
or any ERISA Affiliate may have any liability.
"PLEDGE AND SECURITY AGREEMENT" means that certain Pledge and Security
Agreement, dated as of January 15, 2008, between the Borrower and the Collateral
Trustee.
"PREFERRED STOCK" means any class of capital stock of a Person that is
preferred over any other class of capital stock (or similar equity interests) of
such Person as to the payment of dividends or the payment of any amount upon
liquidation or dissolution of such Person.
"PRO RATA SHARE" shall mean, with respect to any Lender at any time, a
percentage the numerator of which shall be the outstanding principal amount of
such Lender's portion of the Term Loan, and the denominator of which shall be
the outstanding principal amount of the Term Loan.
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.
"QUALIFIED PURCHASER" shall mean a "qualified purchaser" for purposes
of Section 3(c)(7) of the Investment Company Act and as defined in Section
2(a)(51) of the Investment Company Act.
"REGULATION D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System, as the same may be in effect from time to time, and
any successor regulations.
"REFERENCE BANKS" means The Royal Bank of Scotland plc, SunTrust Bank,
JPMorgan Chase Bank N.A. and The Bank of New York.
"RELATED PARTIES" shall mean, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.
"REQUIRED LENDERS" means, at any time, Lenders holding greater than
50% of the principal amount of the Term Loan then outstanding.
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"RESPONSIBLE OFFICER" shall mean the President, any Vice-President,
the Treasurer, the Secretary, any Senior Financial Officer and any other officer
of the Borrower with responsibility for the administration of the relevant
portion of this Agreement.
"SENIOR FINANCIAL OFFICER" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Borrower.
"S&P" shall mean Standard & Poor's.
"SUBSIDIARY" shall mean, as to any Person, any other Person in which
such first Person or one or more of its Subsidiaries or such first Person and
one or more of its Subsidiaries owns sufficient equity or voting interests to
enable it or them (as a group) ordinarily, in the absence of contingencies, to
elect a majority of the directors (or Persons performing similar functions) of
such second Person, and any partnership or joint venture if more than a 50%
interest in the profits or capital thereof is owned by such first Person or one
or more of its Subsidiaries or such first Person and one or more of its
Subsidiaries (unless such partnership or joint venture can and does ordinarily
take major business actions without the prior approval of such Person or one or
more of its Subsidiaries). Unless the context otherwise clearly requires, any
reference to a "Subsidiary" is a reference to a Subsidiary of the Borrower.
"SWAP CONTRACT" means (a) any and all interest rate swap transactions,
basis swap transactions, basis swaps, credit derivative transactions, forward
rate transactions, commodity swaps, commodity options, forward commodity
contracts, equity or equity index swaps or options, bond or bond price or bond
index swaps or options or forward foreign exchange transactions, cap
transactions, floor transactions, currency options, spot contracts or any other
similar transactions or any of the foregoing (including, but without limitation,
any options to enter into any of the foregoing), and (b) any and all
transactions of any kind, and the related confirmations, which are subject to
the terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association, Inc., any
International Foreign Exchange Master Agreement.
"SYNTHETIC LEASE" means, at any time, any lease (including leases that
may be terminated by the lessee at any time) of any property (a) that is
accounted for as an operating lease under GAAP and (b) in respect of which the
lessee retains or obtains ownership of the property so leased for United States
federal income tax purposes, other than any such lease under which such Person
is the lessor.
"TAXES" means any income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
net income taxes and franchise taxes (imposed in lieu of net income taxes)
imposed on any Lender as a result of a present or former connection between such
holder and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from such holder having executed, delivered or
received a payment under, or enforced, this Agreement or any other Loan
Document).
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"TERM LOAN" shall have the meaning set forth in Section 2.01.
"TERM LOAN COMMITMENT" shall mean, with respect to the Lender, the
obligation of the Lender to make the Term Loan hereunder on the Closing Date, in
a principal amount equal to $36,694,500.00.
"TERM NOTE" shall mean a Term Note of the Borrower payable to the
order of a Lender, in substantially the form of Exhibit A attached hereto.
"TYPE", when used in reference to the Term Loan, refers to whether the
rate of interest on such Loan is determined by reference to the Adjusted LIBO
Rate or the Base Rate.
"U.S. GOVERNMENT OBLIGATIONS" means marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States.
"USA PATRIOT ACT" means United States Public Law 107-56, Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.
SECTION 1.02 ACCOUNTING TERMS AND DETERMINATION
Unless otherwise defined or specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered hereunder shall be
prepared, in accordance with GAAP as in effect from time to time, applied on a
basis consistent (except for such changes approved by the Borrower's independent
public accountants) with the most recent audited consolidated financial
statement of the Borrower delivered pursuant to Section 5.01(a).
SECTION 1.03 TERMS GENERALLY.
The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". In the computation of periods of time
from a specified date to a later specified date, the word "from" means "from and
including" and the word "to" means "to but excluding". Unless the context
requires otherwise (i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as it was originally executed or as it
may from time to time be amended, supplemented or otherwise modified (subject to
any restrictions on such amendments, supplements or modifications set forth
herein), (ii) any reference herein to any Person shall be construed to include
such Person's successors and permitted assigns, (iii) the words "hereof",
"herein" and "hereunder" and words of similar import shall be construed to refer
to this Agreement as a whole and not to any particular provision
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hereof, (iv) all references to Articles, Sections, Exhibits and Schedules shall
be construed to refer to Articles, Sections, Exhibits and Schedules to this
Agreement and (v) all references to a specific time shall be construed to refer
to the time in the city and state of the Agent's principal office, unless
otherwise indicated.
ARTICLE II. AMOUNT AND TERMS OF THE COMMITMENT
SECTION 2.01 TERM LOAN COMMITMENT.
(a) Subject to the terms and conditions set forth herein, the Lenders
agree to make a single loan (the "TERM LOAN" or the "LOAN") to the Borrower on
the Closing Date in a principal amount not to exceed the Term Loan Commitment;
provided, that if for any reason the full amount of the Term Loan Commitment is
not fully drawn on the Closing Date, the undrawn portion thereof shall
automatically be cancelled. Subject to Section 2.10 and Section 2.11, the Term
Loan shall be a Eurodollar Loan. The execution and delivery of this Agreement by
the Borrower and the satisfaction of all conditions precedent pursuant to
Article III shall be deemed to constitute the Borrower's request to borrow the
Term Loan on the Closing Date. The Term Loan (net of the Agent's fees and
expenses) shall be deposited in the Collection Account.
(b) The Borrower's obligation to pay the principal of, and interest
on, the Term Loan shall be evidenced by the records of the Agent and the Lenders
and by the Term Notes. The entries made in such records and on the schedule
annexed to the Term Notes shall be prima facie evidence of the existence and
amounts of the obligations of the Borrower therein recorded; provided, that the
failure or delay of the Agent or any Lender in maintaining or making entries
into any such record or on such schedule or any error therein shall not in any
manner affect the obligation of the Borrower to repay the Term Loan (both
principal and unpaid accrued interest) in accordance with the terms of this
Agreement.
SECTION 2.02 INTEREST ELECTION.
If, following the conversion of the Term Loan into a Base Rate Loan
pursuant to Section 2.10 or 2.11, the Agent determines (which determination
shall be conclusive and binding upon the Borrower) that it is possible to
ascertain LIBOR or that it is no longer unlawful to maintain or continue the
Term Loan as a Eurodollar Loan, as the case may be, then the Agent shall
promptly notify the Borrower and the Lenders of such determination. Following
such determination and notice, the Borrower shall have the right to convert the
Term Loan from a Base Rate Loan to a Eurodollar Loan in accordance with the
provisions of this Section 2.02. To make an election pursuant to this Section
2.02, the Borrower shall give the Agent prior written notice (or telephonic
notice promptly confirmed in writing) that the Term Loan is to be converted into
a Eurodollar Loan prior to 2:00 p.m. (Atlanta, Georgia time) three (3) Business
Days prior to such conversion. Such notice of conversion shall be irrevocable
and shall specify the effective date of the election.
SECTION 2.03 TERMINATION OF COMMITMENTS.
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Unless previously terminated, the Term Loan Commitment shall terminate
on the Closing Date upon the making of the Term Loan pursuant to Section 2.01.
SECTION 2.04 REPAYMENT OF TERM LOAN.
The Borrower unconditionally promises to pay to the Agent for the
account of the Lenders the principal amount of the Term Loan on the Maturity
Date.
SECTION 2.05 OPTIONAL PREPAYMENTS.
(a) The Borrower shall have the right at any time and from time to
time to prepay the Term Loan, in whole or in part, without premium or penalty,
by giving irrevocable written notice (or telephonic notice promptly confirmed in
writing) to the Agent no later than 11:00 a.m. not less than three (3) Business
Days prior to any such prepayment. Each such notice shall be irrevocable and
shall specify the proposed date of such prepayment and the principal amount of
the Term Loan or portion thereof to be prepaid. Upon receipt of any such notice,
the Agent shall promptly notify each Lender of the contents thereof and of such
Lender's Pro Rata Share of any such prepayment. Such amount shall be due and
payable on the date designated in such notice, together with accrued interest to
such date on the amount so prepaid in accordance with Section 2.07; provided,
that if the Term Loan is prepaid on a date other than the last day of an
Interest Period applicable thereto, the Borrower shall also pay all amounts
required pursuant to Section 2.13.
(b) Unless a Default or an Event of Default has occurred and is
continuing, any prepayments made by the Borrower pursuant to Section 2.05(a)
above shall be applied as follows: first, to the Agent's fees and reimbursable
expenses then due and payable pursuant to any of the Loan Documents; second, to
all fees and reimbursable expenses of the Lenders then due and payable pursuant
to any of the Loan Documents, pro rata to the Lenders based on their respective
Pro Rata Shares of such expenses; third, to interest then due and payable on the
Term Loan, pro rata to the Lenders based on their respective Pro Rata Shares of
the Term Loan; and fourth, to the principal balance of the Term Loan, until the
same shall have been paid in full, pro rata to the Lenders based on their
respective Pro Rata Shares of the Term Loan.
SECTION 2.06 MANDATORY PREPAYMENTS.
In the event the Installment Note shall become immediately due and payable
for any reason, the Borrower shall prepay, within two Business Days following
such event, the entire principal amount of the Term Loan then outstanding, plus
all amounts required pursuant to Section 2.13. The Borrower will give the Agent
and each Lender written notice of a mandatory prepayment under this Section
2.06. Each such notice shall specify such date (which shall be a Business Day),
the aggregate principal amount of the Term Loan to be prepaid on such date, and
the interest to be paid on the prepayment date with respect to such principal
amount being prepaid, and shall be accompanied by a certificate of a Responsible
Officer as to all amounts required pursuant to Section 2.13 in connection with
such prepayment, setting forth the details of such computation.
SECTION 2.07 INTEREST ON TERM LOAN.
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(a) The Borrower shall pay to the Agent interest on any Base Rate Loan
at the Base Rate in effect from time to time and on any Eurodollar Loan at the
Adjusted LIBO Rate for the applicable Interest Period in effect, plus, in each
case, the Applicable Margin in effect from time to time.
(b) While an Event of Default exists, the Borrower shall pay interest
("DEFAULT INTEREST") at the rate otherwise applicable plus an additional 2% per
annum.
(c) Interest on the principal amount of the Term Loan shall accrue
from and including the date made to but excluding the date of any repayment
thereof.
(d) Interest on any outstanding Base Rate Loan shall be payable
semi-annually in arrears on the fifteenth day of each June and December, and on
the Maturity Date. Interest on any outstanding Eurodollar Loan shall be payable
on the last day of each Interest Period applicable thereto, and on the Maturity
Date. If the Term Loan is converted into a Loan of another Type or repaid or
prepaid, interest shall be payable on the date of such conversion or on the date
of any such repayment or prepayment (on the amount repaid or prepaid) thereof.
All Default Interest shall be payable on demand.
(e) The Agent shall determine each interest rate applicable to the
Term Loan hereunder and shall promptly notify the Borrower of such rate in
writing (or by telephone, promptly confirmed in writing). Any such determination
shall be conclusive and binding for all purposes, absent manifest error.
SECTION 2.08 FEES.
The Borrower shall pay to the Agent the fees set forth in the Fee
Letter.
SECTION 2.09 COMPUTATION OF INTEREST.
All computations of interest hereunder (other than interest based on
the Base Rate) shall be made on the basis of a year of 360 days for the actual
number of days (including the first day but excluding the last day) occurring in
the period for which such interest or fees are payable (to the extent computed
on the basis of days elapsed). Interest based on the Base Rate shall be
calculated on the basis of a 365-day year (or 366-day year, as the case may be)
for the actual days elapsed. Each determination by the Agent of an interest
amount hereunder shall be made in good faith and, except for manifest error,
shall be final, conclusive and binding for all purposes.
SECTION 2.10 INABILITY TO DETERMINE INTEREST RATES.
If prior to the commencement 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 interbank
market, adequate means do not exist for ascertaining LIBOR for such Interest
Period, the Agent shall give written notice (or telephonic
17
notice, promptly confirmed in writing) to the Borrower and to the Lenders as
soon as practicable thereafter. Until the Agent shall notify the Borrower and
the Lenders that the circumstances giving rise to such notice no longer exist,
(i) the obligations of the Lenders to maintain the Term Loan as a Eurodollar
Loan shall be suspended and (ii) the Term Loan shall be converted into a Base
Rate Loan on the last day of the then current Interest Period applicable thereto
unless the Borrower prepays the Term Loan in accordance with this Agreement.
SECTION 2.11 ILLEGALITY.
If any Change in Law shall make it unlawful or impossible for any Lender to
make, maintain or fund any Eurodollar Loan and such Lender shall so notify the
Agent, the Agent shall promptly give notice thereof to the Borrower and the
other Lenders, whereupon until such Lender notifies the Agent and the Borrower
that the circumstances giving rise to such suspension no longer exist, the
obligation of the Lenders to continue the Term Loan as a Eurodollar Loan, shall
be suspended. The Term Loan shall be converted to a Base Rate Loan either (i) on
the last day of the then current Interest Period applicable to such Eurodollar
Loan if such Lender may lawfully continue to maintain the Term Loan to such date
or (ii) immediately if such Lender shall determine that it may not lawfully
continue to maintain such Eurodollar Loan to such date. Notwithstanding the
foregoing, the affected Lender shall, prior to giving such notice to the Agent,
designate a different Applicable Lending Office if such designation would avoid
the need for giving such notice and if such designation would not otherwise be
disadvantageous to such Lender in the good faith exercise of its discretion.
SECTION 2.12 INCREASED COSTS.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement that is not otherwise included in the
determination of the Adjusted LIBO Rate hereunder against assets of, deposits
with or for the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted LIBO Rate); or
(ii) impose on any Lender or the eurodollar interbank market any
other condition affecting this Agreement or any Eurodollar Loan made by such
Lender or any participation therein;
and the result of either of the foregoing is to increase the cost to such Lender
of making or maintaining a Eurodollar Loan or to reduce the amount received or
receivable by such Lender hereunder (whether of principal, interest or any other
amount), then the Borrower shall promptly pay, as set forth in paragraph (c)
below, to the Agent for the account of such Lender, additional amount or amounts
sufficient to compensate such Lender for such additional costs incurred or
reduction suffered.
(b) If any Lender shall have determined that on or after the date of
this Agreement any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender's capital (or on
the capital of such Lender's parent corporation) as
18
a consequence of its obligations hereunder to a level below that which such
Lender or such Lender's parent corporation could have achieved but for such
Change in Law (taking into consideration such Lender's policies or the policies
of such Lender's parent corporation with respect to capital adequacy) then, from
time to time, as set forth in paragraph (c) below, the Borrower shall pay to
such Lender such additional amounts as will compensate such Lender or such
Lender's parent corporation for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or such Lender's parent corporation, as the
case may be, specified in paragraph (a) or (b) of this Section 2.12 shall be
delivered to the Borrower (with a copy to the Agent) and shall be conclusive,
absent manifest error. The Borrower shall pay any such Lender such amount or
amounts within 10 days after receipt thereof; provided that the Borrower shall
not be required to make any such payment prior to the last day of the then
current Interest Period if Borrower does not have funds available to make such
payment.
(d) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section 2.12 shall not constitute a waiver of such Lender's
right to demand such compensation.
(e) If any Lender shall seek any additional amount or amounts under
this Section 2.12, at the written request of the Borrower, such Lender shall
designate a different Applicable Lending Office if such designation would avoid
the need for or would reduce such amount or amounts and if such designation
would not otherwise be disadvantageous to such Lender in the good faith exercise
of its discretion.
SECTION 2.13 FUNDING INDEMNITY.
In the event of (a) the payment of any principal of a Eurodollar Loan other
than on the last day of the Interest Period applicable thereto (including as a
result of an Event of Default), or (b) the conversion of a Eurodollar Loan other
than on the last day of the Interest Period applicable thereto, or (c) the
failure by the Borrower to prepay any Eurodollar Loan on the date specified in
any applicable notice (regardless of whether such notice is withdrawn or
revoked), then, in any such event, the Borrower shall compensate each Lender,
within five (5) Business Days after written demand from such Lender, for any
loss, cost or expense attributable to such event. In the case of a Eurodollar
Loan, such loss, cost or expense shall be deemed to include an amount determined
by such Lender to be the excess, if any, of (A) the amount of interest that
would have accrued on the principal amount of such Eurodollar Loan if such event
had not occurred at the Adjusted LIBO Rate applicable to such Eurodollar Loan
for the period from the date of such event to the last day of the then current
Interest Period therefor over (B) the amount of interest that would accrue on
the principal amount of such Eurodollar Loan for the same period if the Adjusted
LIBO Rate were set on the date such Eurodollar Loan was prepaid or converted. A
certificate as to any additional amount payable under this Section 2.13
submitted to the Borrower by any Lender (with a copy to the Agent) shall be
conclusive, absent manifest error.
SECTION 2.14 TAXES.
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(a) Any and all payments by or on account of any obligation of the
Borrower hereunder shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided, that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.14) the Agent or any Lender (as the case may be) shall
receive an amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions and (iii) the Borrower
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Agent and each Lender, within ten
(10) Business Days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Agent or such Lender, as the case
may be, on or with respect to any payment by or on account of any obligation of
the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section 2.14) and any
penalties, interest and any reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or by the Agent on its own behalf or on behalf of a Lender,
shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the Code or any treaty to which the United
States is a party, with respect to payments under this Agreement shall deliver
to the Borrower (with a copy to the Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed by
applicable law or reasonably requested by the Borrower as will permit such
payments to be made without withholding or at a reduced rate. Without limiting
the generality of the foregoing, each Foreign Lender agrees that it will deliver
to the Agent and the Borrower (or in the case of a Participant, to the Lender
from which the related participation shall have been purchased), as appropriate,
two (2) duly completed copies of (i) Internal Revenue Service Form W-8 ECI, or
any successor form thereto, certifying that the payments received from the
Borrower hereunder are effectively connected with such Foreign Lender's conduct
of a trade or business in the United States; or (ii) Internal Revenue Service
Form W-8 BEN, or any successor form thereto, certifying that such Foreign Lender
is entitled to benefits under an income tax treaty to which the United States is
a party which reduces the rate of withholding tax on payments of interest; or
(iii) Internal Revenue Service Form W-8 BEN, or any successor form
20
prescribed by the Internal Revenue Service, together with a certificate (A)
establishing that the payment to the Foreign Lender qualifies as "portfolio
interest" exempt from U.S. withholding tax under Code Section 871(h) or 881(c),
and (B) stating that (1) the Foreign Lender is not a bank for purposes of Code
Section 881(c)(3)(A), or the obligation of the Borrower hereunder is not, with
respect to such Foreign Lender, a loan agreement entered into in the ordinary
course of its trade or business, within the meaning of that section; (2) the
Foreign Lender is not a 10% shareholder of the Borrower within the meaning of
Code Section 871(h)(3) or 881(c)(3)(B); and (3) the Foreign Lender is not a
controlled foreign corporation that is related to the Borrower within the
meaning of Code Section 881(c)(3)(C); or (iv) such other Internal Revenue
Service forms as may be applicable to the Foreign Lender, including Forms W-8
IMY or W-8 EXP. Each such Foreign Lender shall deliver to the Borrower and the
Agent such forms on or before the date that it becomes a party to this Agreement
(or in the case of a Participant, on or before the date such Participant
purchases the related participation) and periodically thereafter at the time or
times prescribed by applicable laws, including without limitation, promptly upon
the obsolescence or invalidity of any form previously delivered by such Foreign
Lender. Each such Foreign Lender shall promptly notify the Borrower and the
Agent at any time that it determines that it is no longer in a position to
provide any previously delivered certificate to the Borrower (or any other form
of certification adopted by the Internal Revenue Service for such purpose).
(f) If a Lender or the Agent determines in its sole discretion that it
is entitled to claim a refund from a taxing authority in respect of amounts paid
by a Borrower pursuant to this Section 2.14, such Lender or Agent shall promptly
notify Borrower and Agent (as applicable) of the availability of such claim and,
if the Lender or the Agent (as applicable) determines in its sole discretion
that making such refund claim could not reasonably be expected to have an
adverse effect on its Taxes or business operations, shall make such claim. If
the Agent or a Lender determines, in its sole discretion, that it has received a
refund against any Taxes (including without limitation by way of offset) as to
which it has been indemnified by the Borrower or with respect to which Borrower
has paid additional amounts pursuant to this Section 2.14, it shall pay over
such refund or credit to Borrower (but only to the extent of amounts paid by
Borrower under this Section 2.14), net of all out-of-pocket expenses of such
Lender or the Agent and without interest (other than any interest paid by the
relevant taxing authority with respect to such refund); provided, however, that
the Borrower, upon the request of the Agent or such Lender, agrees to repay the
amount paid over to the Borrower to such Lender or the Agent in the event such
Lender or the Agent is required to repay such refund to such taxing authority.
This Section shall not be construed to require the Agent or any Lender to make
available its Tax returns (or any other information relating to its Taxes that
it deems confidential) to the Borrower or any other Person.
(g) If any Lender shall seek any additional amount or amounts under
this Section 2.14, at the written request of the Borrower, such Lender shall
designate a different Applicable Lending Office if such designation would avoid
the need for or would reduce such amount or amounts and if such designation
would not otherwise be disadvantageous to such Lender in the good faith exercise
of its discretion.
SECTION 2.15 PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF
SET-OFFS.
21
(a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or otherwise) to the Agent prior
to noon (Atlanta, Georgia time) on the date when due, in immediately available
funds, free and clear of any rights of set-off or counterclaim. Any amounts
received after such time on any date may, in the discretion of the Agent, be
deemed to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the Agent at
the Payment Office. The Agent shall distribute any such payments received by it
for the account of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment hereunder shall be due on a day that
is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be made payable for the period of such extension. All
payments hereunder shall be made in Dollars.
(b) If at any time insufficient funds are received by and available to
the Agent to pay fully all amounts of principal, interest and other amounts then
due hereunder, such funds shall be applied (i) first, towards payment of
interest and other amounts then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of interest and other amounts
then due to such parties, and (ii) second, towards payment of principal then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on the Term Loan that would result in such Lender receiving payment of
a greater proportion of the aggregate amount of its Pro Rata Share of the Term
Loan and accrued interest thereon than the proportion received by any other
Lender, then the Lender receiving such greater proportion shall purchase (for
cash at face value) participations in the Pro Rata Shares of the Term Loan of
other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Pro Rata Shares of the
Term Loan; provided, that (i) if any such participations are purchased and all
or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by the Borrower pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in the Term Loan to any assignee or participant, other than to the
Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of
this paragraph shall apply). The Borrower consents to the foregoing and agrees,
to the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.
(d) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Agent for the account of
the Lenders hereunder that the Borrower will not make such payment, the Agent
may assume that the Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption,
22
distribute to the Lenders the amount or amounts due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders severally
agrees to repay to the Agent forthwith on demand the amount so distributed to
such Lender with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the Agent,
at the greater of the Federal Funds Rate and a rate determined by the Agent in
accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made
by it, then the Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Agent for the
account of such Lender to satisfy such Lender's obligations under such Sections
until all such unsatisfied obligations are fully paid.
ARTICLE III. CONDITIONS PRECEDENT
The obligations of the Lenders to make the Term Loan are subject to the
fulfillment to such Lenders' satisfaction, prior to or at the Closing, of the
following conditions:
SECTION 3.01 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Borrower in this Agreement and
the other Loan Documents shall be correct when made and at the time of the
Closing.
SECTION 3.02 PERFORMANCE; NO DEFAULT.
The Borrower shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied with
by it prior to or at the Closing, and after giving effect to the making of the
Term Loan (and the application of the proceeds thereof as contemplated by
Section 4.14) no Default or Event of Default shall have occurred and be
continuing.
SECTION 3.03 COMPLIANCE CERTIFICATES.
(a) Officer's Certificate. The Borrower shall have delivered to such
Lender an Officer's Certificate, dated the date of the Closing, certifying that
the conditions specified in Sections 3.01, 3.02, 3.05 and 3.09 have been
fulfilled.
(b) Secretary's Certificate. The Borrower shall have delivered to such
Lender a certificate of its Secretary or other Responsible Officer, dated the
date of Closing, certifying as to the resolutions attached thereto and other
company proceedings relating to the authorization, execution and delivery of
this Agreement and the other Loan Documents.
SECTION 3.04 OPINIONS OF COUNSEL.
(a) Such Lender shall have received opinions in form and substance
reasonably satisfactory to such Lender, dated the date of the Closing:
23
(i) from Saul & Ewing LLP, counsel to the Borrower, the Parent and
Glatfelter, covering such Delaware, Maryland and Pennsylvania law matters
incident to the entry into this Agreement, the Capitalization Transaction, the
issuance of the Glatfelter Securities and the other transactions contemplated
hereby as such Lender or its counsel may reasonably request (and the Borrower
hereby instructs its counsel to deliver such opinion to the Lenders);
(ii) from Debevoise & Plimpton LLP, counsel for the Borrower, the
Parent and Glatfelter, covering such New York and Federal law matters incident
to the entry into this Agreement, the Capitalization Transaction, the issuance
of the Glatfelter Securities and the other transactions contemplated hereby as
such Lender or its counsel may reasonably request (and the Borrower hereby
instructs its counsel to deliver such opinion to the Lenders);
(iii) from Debevoise & Plimpton LLP, counsel for the Borrower,
regarding the nonconsolidation of the Borrower in a bankruptcy of Glatfelter or
any of its Subsidiaries and the true sale or true contribution of the assets of
the Parent sold or contributed pursuant to the Capitalization Transaction.
(b) Such Lender shall have received copies of the following opinions
dated the date of issuance of the Installment Note and Letter of Credit:
(i) from Dundas & Wilson CS LLP, counsel to the LC Issuer, covering
certain Scottish law matters relating to the LC Issuer and the Letter of Credit;
(ii) from Latham & Watkins LLP, counsel to the LC Issuer, covering
certain New York and Federal law matters relating to the LC Issuer and the
Letter of Credit;
(iii) from Sutherland, Asbill & Brennan LLP, counsel to the
Installment Note Issuer, covering certain matters relating to the Installment
Note Issuer and the Installment Note; and
(iv) from Sutherland, Asbill & Brennan LLP, counsel to the Installment
Note Issuer, regarding the nonconsolidation of the Installment Note Issuer in a
bankruptcy of its parent company or of its Subsidiaries.
SECTION 3.05 INSTALLMENT SALE TRANSACTION; INITIAL CAPITALIZATION
TRANSACTION.
The Installment Sale Transaction and the Initial Capitalization Transaction
shall have been consummated.
SECTION 3.06 TRANSACTION DOCUMENTS.
The Collateral Trustee shall have received (i) this Agreement, executed by
the Borrower and each Lender, (ii) the Pledge and Security Agreement, executed
by the Borrower and the Collateral Trustee, (iii) the Collateral Trust
Indenture, executed by the Borrower and the Collateral Trustee and (iv) the
other Loan Documents.
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SECTION 3.07 COLLATERAL.
(a) Installment Note. The Collateral Trustee shall have received the
Installment Note, together with a transfer instrument executed by the Borrower
naming the Collateral Trustee as transferee. The Installment Note and instrument
of transfer shall have been submitted to the "Paying Agent" referenced in the
Installment Note for registration of transfer, and such Paying Agent shall have
registered such transfer, recorded the transfer on the Installment Note and
delivered the Installment Note to the Collateral Trustee.
(b) Letter of Credit. The Collateral Trustee shall have received the
Letter of Credit, together with a "Request for Full Transfer" referenced therein
executed by the Borrower naming the Collateral Trustee as transferee. The Letter
of Credit and such Request for Full Transfer shall have been submitted to the LC
Bank, and the LC Bank shall have delivered to the Collateral Trustee the Letter
of Credit duly endorsed for transfer and accompanied by the LC Bank's customary
letter of transfer to the Collateral Trustee.
(c) Glatfelter Securities. The Collateral Trustee shall have received
the Glatfelter Securities, together with undated transfer instruments executed
by the Borrower.
(d) Contribution Agreement. The Collateral Trustee shall have received
a fully executed copy of the Contribution Agreement, certified by a Responsible
Officer of the Borrower as a true and complete copy thereof.
(e) Evidence of Perfection; Uniform Commercial Code Financing
Statement. The Collateral Trustee shall have received such evidence (including,
without limitation, evidence of the filing of appropriate UCC-1 financing
statements) as the Collateral Trustee may require as to the perfection of the
security interest created by the Pledge and Security Agreement in the
Collateral.
(f) Lien Searches. The Collateral Trustee shall have received written
reports of Uniform Commercial Code, judgment and tax lien searches of the Parent
and the Borrower in all appropriate jurisdictions, showing the absence of any
liens attaching to any of the Collateral.
SECTION 3.08 INTEREST RESERVE ACCOUNT AND COLLECTION ACCOUNT.
The Collateral Trustee shall have received evidence of (a) the
establishment of the Interest Reserve Account, and (b) the establishment of the
Collection Account.
SECTION 3.09 INTEREST RESERVE AMOUNT.
The Collateral Trustee shall have received evidence, in the form of a
certification by the Borrower pursuant to Section 3.03(a), that the Interest
Reserve Amount will be deposited into the Interest Reserve Account immediately
following the Closing.
SECTION 3.10 TERM LOAN PERMITTED BY APPLICABLE LAW, ETC.
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On the date of the Closing such Lender's making of the Term Loan shall (a)
be permitted by the laws and regulations of each jurisdiction to which such
Lender is subject, (b) not violate any applicable law or regulation (including,
without limitation, Regulation T, U or X of the Board of Governors of the
Federal Reserve System) and (c) not subject such Lender to any tax, penalty or
liability under or pursuant to any applicable law or regulation, which law or
regulation was not in effect on the date hereof. If requested by such Lender,
such Lender shall have received an Officer's Certificate certifying as to such
matters of fact as such Lender may reasonably specify to enable such Lender to
determine whether such purchase is so permitted.
SECTION 3.11 PAYMENT OF SPECIAL COUNSEL FEES.
The Borrower shall have paid on or before the Closing or made provision for
the payment on or before the Closing of the fees, charges and disbursements of
the Lender's special counsel to the extent reflected in a statement of such
counsel rendered to the Borrower at least two Business Days prior to the
Closing.
SECTION 3.12 FUNDING INSTRUCTIONS.
At least three Business Days prior to the date of the Closing, the Agent
shall have received written instructions signed by a Responsible Officer
providing wire instructions for the disbursement of the proceeds of the Term
Loan.
SECTION 3.13 PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be satisfactory to such Lender, and such Lender shall
have received all such counterpart originals or certified or other copies of
such documents as such Lender may reasonably request.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and each Lender as
follows:
SECTION 4.01 ORGANIZATION; POWER AND AUTHORITY.
The Borrower is a limited liability company duly formed, validly existing
and in good standing under the laws of its jurisdiction of formation, and is
duly qualified as a foreign limited liability company and is in good standing in
each jurisdiction in which such qualification is required by law. The Borrower
has the limited liability company power and authority to own or hold under lease
the properties it purports to own or hold under lease, to transact the business
it transacts and proposes to transact, to execute and deliver this Agreement,
the Note and the other Loan Documents and to perform the provisions hereof and
thereof.
SECTION 4.02 AUTHORIZATION, ETC.
26
This Agreement, the Note and the other Loan Documents have been duly
authorized by all necessary limited liability company action on the part of the
Borrower, and this Agreement and the other Loan Documents (other than the Note)
constitute, and upon execution and delivery thereof the Note will constitute,
legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
SECTION 4.03 DISCLOSURE.
This Agreement, the other Loan Documents and the Closing Date Balance Sheet
(this Agreement, the other Loan Documents, and such Closing Date Balance Sheet
being referred to, collectively, as the "Disclosure Documents"), taken as a
whole, do not contain any material misstatement of fact or omit to state any
material fact necessary to make the statements therein not misleading in light
of the circumstances under which they were made.
SECTION 4.04 ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES.
The Borrower has no Subsidiaries.
SECTION 4.05 CLOSING DATE BALANCE SHEET; LIABILITIES.
The Borrower has delivered to each Lender a copy of the Closing Date
Balance Sheet. The Closing Date Balance Sheet fairly presents in all material
respects the financial position of the Borrower as of the Closing Date and has
been prepared in accordance with GAAP. The Borrower does not have any
liabilities that are not disclosed on Closing Date Balance Sheet or otherwise
disclosed in the Disclosure Documents.
SECTION 4.06 COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Borrower of this Agreement
and the other Loan Documents will not (i) contravene, result in any breach of,
or constitute a default under, or result in the creation of any Lien in respect
of any property of the Borrower under, any indenture, mortgage, deed of trust,
loan, purchase or credit agreement, lease, the Borrower's certificate of
formation or operating agreement, or any other agreement or instrument to which
the Borrower is bound or by which the Borrower or any of its properties may be
bound or affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to the Borrower or (iii) violate
any provision of any statute or other rule or regulation of any Governmental
Authority applicable to the Borrower.
SECTION 4.07 GOVERNMENTAL AUTHORIZATIONS, ETC.
27
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Borrower of this Agreement or the
other Loan Documents.
SECTION 4.08 LITIGATION; OBSERVANCE OF STATUTES AND ORDERS.
(a) There are no actions, suits, investigations or proceedings pending
or, to the knowledge of the Borrower, threatened against or affecting the
Borrower or any property of the Borrower in any court or before any arbitrator
of any kind or before or by any Governmental Authority.
(b) The Borrower is not in default under any order, judgment, decree
or ruling of any court, arbitrator or Governmental Authority or is in violation
of any applicable law, ordinance, rule or regulation (including without
limitation the USA Patriot Act) of any Governmental Authority.
SECTION 4.09 TAXES.
The Borrower has filed all income tax returns that are required to have
been filed in any jurisdiction, and has paid all taxes shown to be due and
payable on such returns and all other taxes and assessments payable by it, to
the extent such taxes and assessments have become due and payable and before
they have become delinquent. The Borrower has been and will be characterized and
treated as an entity disregarded as separate for income tax purposes.
SECTION 4.10 TITLE TO PROPERTY.
The Borrower has good and sufficient title to its properties, including all
such properties reflected in the Closing Date Balance Sheet, in each case free
and clear of Liens.
SECTION 4.11 LICENSES, PERMITS, ETC.
The Borrower owns or possesses all licenses, permits, franchises,
authorizations, patents, copyrights, proprietary software, service marks,
trademarks and trade names, or rights thereto, required for the conduct of its
business, without known conflict with the rights of others.
SECTION 4.12 COMPLIANCE WITH ERISA.
(a) The Borrower and each ERISA Affiliate have operated and
administered each Plan in compliance in all material respects with all
applicable laws. Neither the Borrower nor any ERISA Affiliate has any material
liability pursuant to Title I or IV of ERISA with respect to a Plan or any
material liability under the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in section 3 of ERISA), and no
event, transaction or condition has occurred or exists that would reasonably be
expected to result in the incurrence of any such material liability by the
Borrower or any ERISA Affiliate, or in the imposition of any Lien on any of the
rights, properties or assets of the Borrower or any ERISA Affiliate, in either
28
case pursuant to Title I or IV of ERISA or to such penalty or excise tax
provisions or to section 401(a)(29) or 412 of the Code or section 4068 of ERISA.
(b) The present value of the aggregate benefit liabilities under each
of the Plans subject to Title IV of ERISA (other than Multiemployer Plans),
determined as of the end of such Plan's most recently ended plan year on the
basis of the actuarial assumptions specified for funding purposes in such Plan's
most recent actuarial valuation report, did not exceed the aggregate current
value of the assets of such Plan allocable to such benefit liabilities, in each
case as set forth in such most recent actuarial valuation report. In addition,
if each of the Plans were to terminate as of such Plan's most recently ended
plan year in a "standard termination" (within the meaning of Section 4041 of
ERISA), the additional contributions required to be made by the contributing
sponsor of such Plan in connection with such termination would not reasonably be
expected to be material.
(c) The Borrower and its ERISA Affiliates have not incurred withdrawal
liabilities under section 4201 or 4204 of ERISA in respect of any Multiemployer
Plan which have not been satisfied in full, and no event, transaction or
condition has occurred or exists that would reasonably be expected to result in
the assessment of any additional material withdrawal liabilities under section
4201 or section 4204 of ERISA in respect of any Multiemployer Plan, and neither
the Borrower nor its ERISA Affiliates has any material contingent withdrawal
liabilities under section 4204 of ERISA in respect of any Multiemployer Plan.
(d) The Borrower does not have any expected postretirement benefit
obligation determined as of the last day of the Borrower's most recently ended
fiscal year in accordance with Financial Accounting Standards Board Statement
No. 106, without regard to liabilities attributable to continuation coverage
mandated by section 4980B of the Code.
(e) Assuming that no Lender funds any portion of the Term Loan with
"plan assets" (within the meaning of Section 3(42) of ERISA), the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby will not involve any transaction that is subject to the prohibitions of
section 406 of ERISA or in connection with which a tax could be imposed pursuant
to section 4975(c)(1)(A) (D) of the Code.
SECTION 4.13 [Reserved]
SECTION 4.14 USE OF PROCEEDS; MARGIN REGULATIONS.
No part of the proceeds from the Term Loan hereunder will be used, directly
or indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
(12 CFR 221), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Borrower in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). None of the assets of the
Borrower constitute margin stock, and the Borrower does not have any present
intention that margin stock will constitute more any portion of such assets. As
used in this Section, the terms
29
"margin stock" and "purpose of buying or carrying" shall have the meanings
assigned to them in said Regulation U.
SECTION 4.15 INDEBTEDNESS.
(a) The Borrower has no outstanding Indebtedness other than the Term
Loan.
(b) The Borrower is not a party to, or otherwise subject to any
provision contained in, any instrument or agreement (other than its certificate
of formation, its operating agreement and this Agreement) which limits the
amount of, or otherwise imposes restrictions on the incurring of, Indebtedness
of the Borrower, except as disclosed on Schedule 4.15.
SECTION 4.16 SOLVENCY.
After giving effect to the Term Loan pursuant to this Agreement, the
Borrower will be "solvent" and for purposes hereof, the term "solvent" shall
mean that (a) the fair value of the property of the Borrower is greater than the
total amount of its liabilities (including contingent liabilities), (b) the
present fair saleable value of its property is not less than the amount that
will be required to pay the probable liability on its debts as they become
absolute and matured, (c) the Borrower does not intend to, and does not believe
that it will, incur debts or liabilities beyond its ability to pay as such debts
and liabilities mature, and (d) the Borrower is not engaged in a business for
which its property would constitute an unreasonably small capital.
SECTION 4.17 ACTIVITIES.
Since the date of formation of the Borrower, the Borrower has taken all
steps reasonably required by its certificate of formation and limited liability
company agreement to continue its identity as a separate legal entity and to
make it apparent to other Persons that the Borrower is an entity with assets and
liabilities distinct from those of any other Person. Without limiting the
foregoing, since the date of formation of the Borrower, the Borrower has (i)
been a limited purpose company whose activities have been restricted in its
certificate of formation and operating agreement, (ii) maintained books,
records, accounts, assets and financial statements separate from any other
Person and otherwise held itself out as an entity separate from any other
Person, (iii) not identified itself as a division of any other person or
commingled its funds with any other person, (iv) conducted its own business and
held its own assets in its own name, (v) observed all formalities required by
its certificate of formation and operating agreement, (vi) paid its own
employees and liabilities out of its own funds, (vii) allocated fairly and
reasonably overhead for any shared office space, (viii) maintained adequate
capital, to the extent necessary in light of its business operations, and (ix)
been treated as an entity disregarded as separate for income tax purposes.
SECTION 4.18 FOREIGN ASSETS CONTROL REGULATIONS, ETC.
(a) Neither the entry into this Agreement, the making of the Term Loan
nor its use of the proceeds thereof will violate the Trading with the Enemy Act,
as amended, or any of
30
the foreign assets control regulations of the United States Treasury Department
(31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto.
(b) The Borrower (i) is not a Person described or designated in the
Specially Designated Nationals and Blocked Persons List of the Office of Foreign
Assets Control or in Section 1 of the Anti Terrorism Order and (ii) does not
engage in any dealings or transactions with any such Person. The Borrower is in
compliance, in all material respects, with the USA Patriot Act.
(c) No part of the proceeds from the Term Loan will be used, directly
or indirectly, for any payments to any governmental official or employee,
political party, official of a political party, candidate for political office,
or anyone else acting in an official capacity, in order to obtain, retain or
direct business or obtain any improper advantage, in violation of the United
States Foreign Corrupt Practices Act of 1977, as amended, assuming in all cases
that such Act applies to the Borrower.
SECTION 4.19 INVESTMENT COMPANY ACT.
The Borrower is not subject to regulation under the Investment Company Act
of 1940, as amended.
ARTICLE V. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that so long as the principal of and
interest on any Loan or any fee remains unpaid:
SECTION 5.01 FINANCIAL AND BUSINESS INFORMATION.
The Borrower shall deliver to the Agent:
(a) Semi-Annual Statements -- not later 30 days following the close of
each six-month period ending June 30 and December 31 of each year, duplicate
copies of,
(i) a balance sheet of the Borrower, as at the end of such period,
and
(ii) statements of cash flows of the Borrower, for such period,
in reasonable detail, prepared in accordance with GAAP, and accompanied by
a certificate of a Responsible Officer, which certificate shall state that such
financial statements present fairly, in all material respects, the financial
position of the Borrower and its cash flows and have been prepared in conformity
with GAAP;
(b) Notice of Default or Event of Default -- promptly, and in any
event within five days after a Responsible Officer becoming aware of the
existence of any Default or
31
Event of Default, a written notice specifying the nature and period of existence
thereof and what action the Borrower is taking or proposes to take with respect
thereto;
(c) [Reserved]
(d) Communications Regarding Collateral -- with reasonable promptness
following the Borrower's receipt thereof, any and all notices and other
communications received by the Borrower under or in connection with the
Installment Note or the Letter of Credit (including, without limitation, any
"Event of Default" under the Installment Note);
(e) Litigation -- promptly, and in any event within five days after
the filing or commencement thereof, a written notice of action, suit or
proceeding by or before any arbitrator or Governmental Authority against or
affecting the Borrower; and
(f) Requested Information -- with reasonable promptness, such other
data and information relating to the business, operations, affairs, financial
condition, assets or properties of the Borrower or relating to the ability of
the Borrower to perform its obligations under this Agreement and the other Loan
Documents as from time to time may be reasonably requested by the Agent.
SECTION 5.02 OFFICER'S CERTIFICATE.
Each set of financial statements delivered to the Agent pursuant to Section
5.01(a) shall be accompanied by a certificate of a Responsible Officer setting
forth a statement that a Responsible Officer reviewed the relevant terms hereof
and has made, or caused to be made, under his or her supervision, a review of
the transactions and conditions of the Borrower from the beginning of the
semi-annual period covered by the statements then being furnished to the date of
the certificate and that such review shall not have disclosed the existence
during such period of any condition or event that constitutes a Default or an
Event of Default or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action the
Borrower shall have taken or proposes to take with respect thereto.
SECTION 5.03 VISITATION.
The Borrower shall permit the Agent:
(a) No Default -- if no Default or Event of Default then exists, at
the expense of the Lenders and upon reasonable prior notice to the Borrower, to
discuss the affairs, finances and accounts of the Borrower with the Borrower's
officers at such reasonable times and as often as may be reasonably requested in
writing; and
(b) Default -- if a Default or Event of Default then exists, at the
expense of the Borrower to examine the Borrower's books of account, records,
reports and other papers, to make copies and extracts therefrom, and to discuss
the affairs, finances and accounts of the Borrower with its officers and
independent public accountants (and by this provision the
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Borrower authorizes said accountants to discuss the affairs, finances and
accounts of the Borrower), all at such times and as often as may be requested.
SECTION 5.04 COMPLIANCE WITH LAW.
The Borrower will comply with all laws, ordinances or governmental rules or
regulations to which it is subject, including, without limitation, ERISA and the
USA Patriot Act, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of its properties or to the conduct of its
businesses, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.05 INSURANCE.
The Borrower will maintain, with financially sound and reputable insurers,
insurance with respect to its properties and businesses against such casualties
and contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of entities engaged
in the same or a similar business and similarly situated, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.06 MAINTENANCE OF PROPERTIES.
The Borrower will maintain and keep, or cause to be maintained and kept,
its properties in good repair, working order and condition (other than ordinary
wear and tear), so that the business carried on in connection therewith may be
properly conducted at all times.
SECTION 5.07 PAYMENT OF TAXES.
The Borrower will file all income tax or similar tax returns required to be
filed in any jurisdiction and pay and discharge all taxes shown to be due and
payable on such returns and all other taxes, assessments, governmental charges,
or levies payable by it, to the extent the same have become due and payable and
before they have become delinquent, provided that the Borrower need not pay any
such tax, assessment, charge or levy if the amount, applicability or validity
thereof is contested by the Borrower on a timely basis in good faith and in
appropriate proceedings, and the Borrower has established adequate reserves
therefor in accordance with GAAP on the books of the Borrower.
SECTION 5.08 CORPORATE EXISTENCE, ETC.
The Borrower will at all times preserve and keep in full force and effect
its existence. The Borrower will at all times preserve and keep in full force
and effect all rights and franchises of the Borrower material to the conduct of
its business.
SECTION 5.09 PAYMENT OF OBLIGATIONS.
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The Borrower will pay and discharge all of its obligations and liabilities
before the same shall become delinquent or in default; provided that the
Borrower need not pay any obligations or liabilities if the amount or validity
thereof is contested by the Borrower on a timely basis in good faith and in
appropriate proceedings, and the Borrower has established adequate reserves
therefor in accordance with GAAP on the books of the Borrower.
SECTION 5.10 BOOKS AND RECORDS.
The Borrower will maintain proper books of record and account in conformity
with GAAP and all applicable requirements of any Governmental Authority having
legal or regulatory jurisdiction over the Borrower, except where the failure to
do so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 5.11 ACTIVITIES.
The Borrower shall comply in all respects with Section 6.1 of its Amended
and Restated Limited Liability Company Agreement dated as of the Closing Date.
SECTION 5.12 CHARACTERIZATION OF BORROWER FOR TAX PURPOSES.
The Borrower will execute and caused to be filed such returns and make and
cause to be made such elections as may from time to time be required or
appropriate so as to maintain the Borrower's characterization, and will at all
times be characterized and treated, as an entity disregarded as separate for
income tax purposes.
ARTICLE VI. NEGATIVE COVENANTS
The Borrower covenants and agrees that so long as the principal of or
interest on any Loan remains unpaid or any fee remains unpaid:
SECTION 6.01 INDEBTEDNESS.
The Borrower will not incur, assume or suffer to exist any Indebtedness
other than the Term Loan.
SECTION 6.02 LIENS.
The Borrower will not create, incur, assume or suffer to exist any Lien
other than those Liens expressly permitted by the Loan Documents.
SECTION 6.03 TRANSACTIONS WITH AFFILIATES.
The Borrower will not enter into, directly or indirectly, any transaction
(including without limitation the purchase, lease, sale or exchange of
properties of any kind or the rendering of any
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service) with any Affiliate, except (i) the Capitalization Transaction and (ii)
the making of distributions to the Parent to the extent permitted under Section
6.08.
SECTION 6.04 MERGER, CONSOLIDATION, ETC.
The Borrower will not consolidate with or merge with any other Person or
convey, transfer or lease any of its assets to any Person, except that the
Borrower may convey cash, the Installment Note and the Letter of Credit to the
Parent as a distribution to its sole member to the extent permitted under
Section 6.08.
SECTION 6.05 LINE OF BUSINESS.
The Borrower will not engage in any business other than (i) acquiring,
owning, managing, protecting, conserving and selling or otherwise dispose of the
Installment Note, the Letter of Credit, the Glatfelter Securities and Permitted
Investments, (ii) enter into and perform its obligations under the Loan
Documents to which the Borrower is a party, and (iii) engage in activities
related or incidental to the foregoing and necessary or appropriate therefor.
SECTION 6.06 TERRORISM SANCTIONS REGULATIONS.
The Borrower will not (a) become a Person described or designated in the
Specially Designated Nationals and Blocked Persons List of the Office of Foreign
Assets Control or in Section 1 of the Anti Terrorism Order or (b) engage in any
dealings or transactions with any such Person.
SECTION 6.07 INVESTMENTS.
The Borrower will not acquire any business or property, any equity interest
of any other Person, or any Indebtedness of any other Person, or otherwise make
or permit to remain outstanding any investment, other than the Borrower's
investment in the Installment Note, the Letter of Credit, the Glatfelter
Securities, any cash on deposit in the Interest Reserve Account or the
Collection Account, and Permitted Investments if such Permitted Investments
stand to the credit of the Interest Reserve Account or the Collection Account or
otherwise are subject to a perfected, first priority Lien in favor of the
Collateral Trustee.
SECTION 6.08 DISTRIBUTIONS.
The Borrower will not declare or make, or agree to pay or make, directly or
indirectly, any dividend payment or other distribution in respect of its
membership interests, except that (a) the Borrower may make the Closing Date
Distribution, (b) provided that, both before and after giving effect to such
distribution, no Default or Event of Default shall have occurred and be
continuing, the Borrower may make distributions to the Parent on each Interest
Payment Date to the extent provided in Section 6 of the Collateral Trust
Indenture in an amount equal to the amount of cash on hand of the Borrower in
excess of the sum of (x) the Interest Reserve Amount and (y) the amount of
expenses projected by the Borrower in good faith to be due and payable on or
prior to the immediately succeeding Interest Payment Date as certified by a
Responsible
35
Officer of the Borrower to the Collateral Trustee, and (c) upon any release by
the Collateral Trustee of its Lien on the Installment Note and Letter of Credit
in accordance with Section 8(f) of the Collateral Trust Indenture, the Borrower
may distribute the Installment Note and the Letter of Credit to the Parent. The
Borrower will not redeem or repurchase any of its membership interests.
SECTION 6.09 CAPITAL EXPENDITURES.
The Borrower will not make any capital expenditures.
SECTION 6.10 BANKRUPTCY, INSOLVENCY.
The Borrower will not (i) voluntarily commence any proceeding or file any
petition seeking liquidation, reorganization or other similar relief under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition seeking
liquidation, reorganization or similar relief in respect of the Borrower or its
debts or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian or similar official for the Borrower or a substantial part of its
assets under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding, (v)
make a general assignment for the benefit of creditors or (vi) take any action
for the purpose of effecting any of the foregoing.
SECTION 6.11 AMENDMENTS AND MODIFICATIONS TO ORGANIZATIONAL DOCUMENTS
AND COLLATERAL.
(a) The Borrower will not without the prior written consent of the
Required Lenders (i) make any changes to its business objectives, purpose or
operations, (ii) make any change to its capital structure, including without
limitation the issuance of any membership interests or economic rights or units
or securities convertible into or exercisable for membership interests or
economic rights of the Borrower to any Person other than the Parent, (iii)
reorganize itself under the laws of any jurisdiction other than the jurisdiction
in which it is organized as of the date of the Closing, or (iv) amend or modify,
and will not authorize, consent to or permit the amendment or modification of,
its Amended and Restated Limited Liability Company Agreement dated as of the
Closing Date.
(b) The Borrower will not amend or modify, and will not authorize,
consent to or permit the amendment or modification of, the Installment Note, the
Letter of Credit, the Glatfelter Securities or the Contribution Agreement
without the prior written consent of the Required Lenders, provided that this
provision shall not limit the ability of the Borrower to request a substitution
of the Letter of Credit and take all steps and actions to implement such
substitution (including the replacement of the Letter of Credit by a substitute
Letter of Credit) in circumstances where the holder of the Installment Note is
permitted to request such a substitution pursuant to the terms of the
Installment Note.
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ARTICLE VII. EVENTS OF DEFAULT
SECTION 7.01 EVENTS OF DEFAULT.
The following events are each an "Event of Default":
(a) the Borrower defaults in the payment of any principal or amount
required pursuant to Section 2.13 in connection with a prepayment of principal,
if any, on the Term Loan when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or
(b) the Borrower defaults in the payment of any interest on the Term
Loan or any other amount payable under this Agreement or any other Loan Document
for more than three Business Days after the same becomes due and payable; or
(c) the Borrower defaults in the performance of or compliance with any
term contained in Section 5.01(b), Section 5.08, Section 5.12 or Article VI; or
(d) the Borrower defaults in the performance of or compliance with any
term contained herein or any other Loan Document (other than those referred to
in Sections 7.01(a), (b) and (c)) and such default is not remedied within 30
days after the earlier of (i) a Responsible Officer obtaining actual knowledge
of such default and (ii) the Borrower receiving written notice of such default
from the Agent (any such written notice to be identified as a "notice of
default" and to refer specifically to this Section 7.01(d)); or
(e) any representation or warranty made in writing by or on behalf of
the Borrower or by a Responsible Officer or any other representative of the
Borrower in this Agreement or any other Loan Document or in any writing
furnished in connection with the transactions contemplated hereby proves to have
been false or incorrect in any material respect on the date as of which made; or
(f) the Borrower (i) is generally not paying, or admits in writing its
inability to pay, its debts as they become due, (ii) files, or consents by
answer or otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an assignment
for the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes any organizational
action for the purpose of any of the foregoing; or
(g) a court or Governmental Authority of competent jurisdiction enters
an order appointing, without consent by the Borrower, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or
37
constituting an order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for liquidation or to take
advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding-up or liquidation of the Borrower, or any such petition
shall be filed against the Borrower and such petition shall not be dismissed
within 60 days; or
(h) the Borrower is dissolved or liquidated or takes any
organizational action for the purpose of dissolving or liquidating; or
(i) a final judgment or judgments for the payment of money are
rendered against the Borrower and which judgments are not, within 30 days after
entry thereof, bonded, discharged or stayed pending appeal, or are not
discharged within 30 days after the expiration of such stay; or
(j) the L/C Bank is replaced with a substitute L/C Bank that is not a
commercial bank organized under the laws of the United States or any state
thereof or a branch located in the United States of any commercial bank
organized under the laws of any other country that is a member of the
Organization for Economic Cooperation and Development, in each case having a
long-term debt rating assigned by S&P of at least A+ and Moody's of at least A1;
or
(k) the LC Bank ceases to be rated at least "A+" by S&P and "A1" by
Moody's, and the LC Bank is not replaced within 60 days thereof with a
substitute LC Bank that (i) is a commercial bank organized under the laws of the
United States or any state thereof or a branch located in the United States of
any commercial bank organized under the laws of any other country that is a
member of the Organization for Economic Cooperation and Development, and (ii)
has a long-term debt rating assigned by S&P of at least "A+" and by Moody's of
at least "A1"; or
(l) an Installment Note Trigger Event shall have occurred; or
(m) an "Event of Default" (as such term is defined in the Glatfelter
Securities) shall have occurred and be continuing; or
(n) Glatfelter shall cease to own, directly or indirectly, one hundred
percent (100%) of the issued and outstanding membership interests of the
Borrower; or
(o) a Contribution Agreement Event shall have occurred;
SECTION 7.02 REMEDIES ON DEFAULT, ETC.
(a) Acceleration.
(i) If an Event of Default with respect to the Borrower described in
Section 7.01(f), (g) or (h) (other than an Event of Default described in clause
(i) of Section 7.01(f) or described in clause (vi) of Section 7.01(f) by virtue
of the fact that such clause encompasses clause (i) of Section 7.01(f)) has
occurred, the principal of the Term Loan then outstanding,
38
together with accrued interest thereon, and all other Obligations shall
automatically become due and payable.
(ii) If any other Event of Default has occurred and is continuing, the
Agent may, and upon the written request of the Required Lenders shall, by notice
to the Borrower, take any or all of the following actions, at the same or
different times: (i) declare the principal of and any accrued interest on the
Term Loan and all other Obligations owing hereunder to be, whereupon the same
shall become, due and payable immediately; (ii) exercise all remedies contained
in any other Loan Document; and (iii) exercise any other remedies available at
law or in equity.
Upon the Term Loan becoming due and payable under this Section 7.02, whether
automatically or by declaration, all Obligations will forthwith mature and the
entire unpaid principal amount of the Term Loan, plus (x) all accrued and unpaid
interest thereon (including, but not limited to, interest accrued thereon at the
Default Rate) and (y) all amounts required pursuant to Section 2.13 determined
in respect of such principal amount (to the full extent permitted by applicable
law), shall all be immediately due and payable, in each and every case without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower.
(b) Enforcement of Collateral. Upon the Term Loan becoming due and
payable, whether automatically or by declaration, the Required Lenders may
direct the Collateral Trustee to take any and all action with respect to the
Collateral permitted under the Loan Documents, at law, in equity or otherwise,
including, without limitation, to foreclose upon any or all of the Collateral
and to draw under the Letter of Credit to the extent permitted to do so under
the terms thereof.
(c) Rescission. At any time after the Term Loan has been declared due
and payable pursuant to Section 7.02(a)(ii), the Required Lenders, by written
notice to the Borrower, may rescind and annul any such declaration and its
consequences.
ARTICLE VIII. THE AGENT
SECTION 8.01 APPOINTMENT OF AGENT.
Each Lender irrevocably appoints SunTrust Bank as the Agent and authorizes it to
take such actions on its behalf and to exercise such powers as are delegated to
the Agent under this Agreement and the other Loan Documents, together with all
such actions and powers that are reasonably incidental thereto. The Agent may
perform any of its duties hereunder or under the other Loan Documents by or
through any one or more sub-agents or attorneys-in-fact appointed by the Agent.
The Agent and any such sub-agent or attorney-in-fact may perform any and all of
its duties and exercise its rights and powers through their respective Related
Parties. The exculpatory provisions set forth in this Article shall apply to any
such sub-agent or attorney-in-fact and the Related Parties of the Agent, any
such sub-agent and any such attorney-in-fact and
39
shall apply to their respective activities in connection with the syndication of
the credit facilities provided for herein as well as activities as Agent.
SECTION 8.02 NATURE OF DUTIES OF AGENT.
The Agent shall not have any duties or obligations except those expressly set
forth in this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, (a) the Agent shall not be subject to any fiduciary
or other implied duties, regardless of whether a Default or an Event of Default
has occurred and is continuing, (b) the Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except those
discretionary rights and powers expressly contemplated by the Loan Documents
that the Agent is required to exercise in writing by the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided herein), and (c) except as expressly set forth in the
Loan Documents, the Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrower
that is communicated to or obtained by the Agent or any of its Affiliates in any
capacity. The Agent shall not be liable for any action taken or not taken by it,
its sub-agents or attorneys-in-fact with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided herein) in the absence of its own
gross negligence or willful misconduct. The Agent shall not be responsible for
the negligence or misconduct of any sub-agents or attorneys-in-fact selected by
it with reasonable care. The Agent shall not be deemed to have knowledge of any
Default or Event of Default unless and until written notice thereof is given to
the Agent by the Borrower or any Lender, and the Agent shall not be responsible
for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with any Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements, or other terms and conditions
set forth in any Loan Document, (iv) the validity, enforceability, effectiveness
or genuineness of any Loan Document or any other agreement, instrument or
document, or (v) the satisfaction of any condition set forth in Article III or
elsewhere in any Loan Document, other than to confirm receipt of items expressly
required to be delivered to the Agent. The Agent may consult with legal counsel
(including counsel for the Borrower) concerning all matters pertaining to such
duties.
SECTION 8.03 LACK OF RELIANCE ON THE AGENT.
Each of the Lenders acknowledges 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 credit analysis and decision to enter
into this Agreement. Each of the Lenders also acknowledges that it will,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it has deemed appropriate, continue to make
its own decisions in taking or not taking of any action under or based on this
Agreement, any related agreement or any document furnished hereunder or
thereunder.
SECTION 8.04 CERTAIN RIGHTS OF THE AGENT.
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If the Agent shall request instructions from the Required Lenders with respect
to any action or actions (including the failure to act) in connection with this
Agreement, the Agent shall be entitled to refrain from such act or taking such
act, unless and until it shall have received instructions from such Lenders; and
the Agent shall not incur liability to any Person by reason of so refraining.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining from
acting hereunder in accordance with the instructions of the Required Lenders
where required by the terms of this Agreement.
SECTION 8.05 RELIANCE BY AGENT.
The Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument,
document or other writing believed by it to be genuine and to have been signed,
sent or made by the proper Person. The Agent may also rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person and shall not incur any liability for relying thereon. The Agent may
consult with legal counsel (including counsel for the Borrower), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or not taken by it in accordance with the advice of such
counsel, accountants or experts.
SECTION 8.06 THE AGENT IN ITS INDIVIDUAL CAPACITY.
The bank serving as the Agent shall have the same rights and powers under this
Agreement and any other Loan Document in its capacity as a Lender as any other
Lender and may exercise or refrain from exercising the same as though it were
not the Agent; and the terms "Lenders", "Required Lenders", "holders of Notes",
or any similar terms shall, unless the context clearly otherwise indicates,
include the Agent in its individual capacity. The bank acting as the Agent and
its Affiliates may accept deposits from, lend money to, and generally engage in
any kind of business with the Borrower or Affiliate of the Borrower as if it
were not the Agent hereunder.
SECTION 8.07 SUCCESSOR AGENT.
(a) The Agent may resign at any time by giving at least 30 days' prior
notice thereof to the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent, subject to
the approval by the Borrower (such approval not to be unreasonably withheld or
delayed) provided that no Default or Event of Default shall exist at such time.
If no successor Agent shall have been so appointed, and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of resignation,
then the retiring Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a commercial bank, insurance company or other financial
institution organized under the laws of the United States of America or any
state thereof or a bank, insurance company or other financial institution which
maintains an office in the United States, having a combined capital and surplus
of at least $500,000,000.
(b) Upon the acceptance of its appointment as the Agent hereunder by a
successor, such successor Agent shall thereupon succeed to and become vested
with all the
41
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents. If within 45 days after written notice is given of
the retiring Agent's resignation under this Section 8.07 no successor Agent
shall have been appointed and shall have accepted such appointment, then on such
45th day (i) the retiring Agent's resignation shall become effective, (ii) the
retiring Agent shall thereupon be discharged from its duties and obligations
under the Loan Documents and (iii) the Required Lenders shall thereafter perform
all duties of the retiring Agent under the Loan Documents until such time as the
Required Lenders appoint a successor Agent as provided above. After any retiring
Agent's resignation hereunder, the provisions of this Article VIII shall
continue in effect for the benefit of such retiring Agent and its
representatives and agents in respect of any actions taken or not taken by any
of them while it was serving as the Agent.
SECTION 8.08 AUTHORIZATION TO EXECUTE OTHER LOAN DOCUMENTS.
Each Lender hereby authorizes the Agent to execute on behalf of all Lenders all
Loan Documents other than this Agreement.
ARTICLE IX. MISCELLANEOUS
SECTION 9.01 NOTICES.
(a) Except in the case of notices and other communications expressly
permitted to be given by telephone, all notices and other communications to any
party herein to be effective shall be in writing and shall be delivered by hand
or overnight courier service, mailed by certified or registered mail or sent by
telecopy, as follows:
To the Borrower: GPW Virginia Timberlands LLC
c/o P.H. Glatfelter Company
96 South George Street Suite 400
York, PA 17401
Attention: Donald Gross
Facsimile: 717-812-8964
Attention: Thomas Bosley, VP & General Manager
Facsimile: 717-225-4711
To the Agent: SunTrust Bank
303 Peachtree Street, N. E.
Atlanta, Georgia 30308
Attention: Mark Flatin
Telecopy Number: 804.782.5413
To any other Lender: the address set forth in the Administrative
Questionnaire
42
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All such notices
and other communications shall, when transmitted by overnight delivery, or
faxed, be effective when delivered for overnight (next-day) delivery, or
transmitted in legible form by facsimile machine, respectively, or if mailed,
upon the third Business Day after the date deposited into the mail or if
delivered, upon delivery.
(b) Any agreement of the Agent and the Lenders herein to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of the Borrower. The Agent and the Lenders shall be entitled to rely
on the authority of any Person purporting to be a Person authorized by the
Borrower to give such notice and the Agent and Lenders shall not have any
liability to the Borrower or other Person on account of any action taken or not
taken by the Agent or the Lenders in reliance upon such telephonic or facsimile
notice. The obligation of the Borrower to repay the Term Loan and all other
Obligations hereunder shall not be affected in any way or to any extent by any
failure of the Agent or the Lenders to receive written confirmation of any
telephonic or facsimile notice or the receipt by the Agent and the Lenders of a
confirmation which is at variance with the terms understood by the Agent and the
Lenders to be contained in any such telephonic or facsimile notice.
SECTION 9.02 WAIVER; AMENDMENTS.
(a) No failure or delay by the Agent or any Lender in exercising any
right or power hereunder or any other Loan Document, and no course of dealing
between the Borrower and the Agent or any Lender, shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power or
any abandonment or discontinuance of steps to enforce such right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power hereunder or thereunder. The rights and remedies of the Agent and
the Lenders hereunder and under the other Loan Documents are cumulative and are
not exclusive of any rights or remedies provided by law. No waiver of any
provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section 9.02, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. Without limiting the generality of the foregoing, the
making of a Loan shall not be construed as a waiver of any Default or Event of
Default, regardless of whether the Agent or any Lender may have had notice or
knowledge of such Default or Event of Default at the time.
(b) No amendment or waiver of any provision of this Agreement or the
other Loan Documents, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Borrower and the Required Lenders or the Borrower and the Agent with the
consent of the Required Lenders and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, that no amendment or waiver shall: (i) increase the Commitment
of any Lender without the written consent of such Lender, (ii) reduce the
principal amount of any Loan or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written
43
consent of each Lender affected thereby, (iii) postpone the date fixed for any
payment of any principal of, or interest on, any Loan or interest thereon or any
fees hereunder or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date for the termination or reduction of any Commitment,
without the written consent of each Lender affected thereby, (iv) change Section
2.15(b) or (c) in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, (v) change any of
the provisions of this Section 9.02 or the definition of "Required Lenders" or
any other provision hereof specifying the number or percentage of Lenders which
are required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the consent of each
Lender; (vi) release any guarantor or limit the liability of any such guarantor
under any guaranty agreement, without the written consent of each Lender; (vii)
release all or substantially all collateral (if any) securing any of the
Obligations or agree to subordinate any Lien in such collateral to any other
creditor, without the written consent of each Lender; provided further, that no
such agreement shall amend, modify or otherwise affect the rights, duties or
obligations of the Agent or the Collateral Trustee without the prior written
consent of the such Person. Notwithstanding anything contained herein to the
contrary, this Agreement may be amended and restated without the consent of any
Lender (but with the consent of the Borrower and the Agent) if, upon giving
effect to such amendment and restatement, such Lender shall no longer be a party
to this Agreement (as so amended and restated), the Commitments of such Lender
shall have terminated (but such Lender shall continue to be entitled to the
benefits of Sections 2.12, 2.13, 2.14 and 9.03), such Lender shall have no other
commitment or other obligation hereunder and shall have been paid in full all
principal, interest and other amounts owing to it or accrued for its account
under this Agreement.
SECTION 9.03 EXPENSES; INDEMNIFICATION.
(a) The Borrower shall pay (i) all reasonable, out-of-pocket costs and
expenses of the Agent and its Affiliates, including, without limitation, the
reasonable fees, charges and disbursements of outside counsel and allocated cost
of inside counsel for the Agent and its Affiliates, in connection with the
preparation and administration of the Loan Documents and any amendments,
modifications or waivers of the Loan Documents (whether or not the transactions
contemplated in this Agreement or any other Loan Document shall be consummated),
and (ii) all out-of-pocket costs and expenses (including, without limitation,
the reasonable fees, charges and disbursements of outside counsel and the
allocated cost of inside counsel) incurred by the Agent or any Lender in
connection with the enforcement or protection of its rights in connection with
this Agreement, including its rights under this Section 9.03, or in connection
with the Term Loan, including all such out-of-pocket expenses incurred during
any workout, restructuring or negotiations in respect of the Term Loan.
(b) The Borrower shall indemnify the Agent (and any sub-agent thereof)
and each Lender and each Related Party of any of the foregoing Persons (each
such Person being called an "Indemnitee") against, and hold each Indemnitee
harmless from, any and all costs, losses, liabilities, claims, damages and
related expenses (including the fees, charges and disbursements of any counsel
for any Indemnitee), incurred by any Indemnitee or asserted against any
Indemnitee by any third party or by the Borrower or any Affiliate thereof
arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement, any other Loan
44
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder or the consummation of any of the transactions contemplated hereby or
thereby, (ii) any Loan or the use or proposed use of the proceeds therefrom or
(iii) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory, whether brought by a third party or by the Borrower or any Affiliate
thereof, and regardless of whether any Indemnitee is a party thereto, provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee or any Related Party of such Indemnitee.
(c) The Borrower shall pay, and hold the Agent and each of the Lenders
harmless from and against, any and all present and future stamp, documentary,
and other similar taxes with respect to this Agreement and any other Loan
Documents, any collateral described therein, or any payments due thereunder, and
save the Agent and each Lender harmless from and against any and all liabilities
with respect to or resulting from any delay or omission to pay such taxes.
(d) To the extent that the Borrower fails to pay any amount required
to be paid to the Agent, each Lender severally agrees to pay to the Agent such
Lender's Pro Rata Share (determined as of the time that the unreimbursed expense
or indemnity payment is sought) of such unpaid amount; provided, that the
unreimbursed expense or indemnified payment, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the Agent in
its capacity as such.
(e) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to actual or direct damages) arising out of, in connection with or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
transactions contemplated therein, any Loan or the use of proceeds thereof.
(f) All amounts due under this Section 9.03 shall be payable promptly
after written demand therefor.
SECTION 9.04 SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
the Agent and each Lender, and no Lender may assign or otherwise transfer any of
its rights or obligations hereunder except (i) to an assignee in accordance with
the provisions of paragraph (b) of this Section, (ii) by way of participation in
accordance with the provisions of paragraph (d) of this Section or (iii) by way
of pledge or assignment of a security interest subject to the restrictions of
paragraph (f) of this Section (and any other attempted assignment or transfer by
any party hereto shall be null and void). Nothing in this Agreement, expressed
or implied, shall be construed to confer upon any Person (other
45
than the parties hereto, their respective successors and assigns permitted
hereby, Participants to the extent provided in paragraph (d) of this Section
and, to the extent expressly contemplated hereby, the Related Parties of each of
the Agent and the Lenders) any legal or equitable right, remedy or claim under
or by reason of this Agreement.
(b) Any Lender may at any time assign to one or more assignees all or
a portion of its rights and obligations under this Agreement (including all or a
portion of the Term Loan at the time owing to it); provided that any such
assignment shall be subject to the following conditions:
(i) Minimum Amounts.
(A) in the case of an assignment of the entire remaining amount
of the assigning Lender's portion of the Term Loan at the time owing to it or in
the case of an assignment to a Lender, an Affiliate of a Lender or an Approved
Fund, no minimum amount need be assigned; and
(B) in any case not described in paragraph (b)(i)(A) of this
Section, the outstanding principal balance of the Term Loan of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the Agent or, if
"Trade Date" is specified in the Assignment and Acceptance, as of the Trade
Date) shall not be less than $1,000,000, unless each of the Agent and, so long
as no Event of Default has occurred and is continuing, the Borrower otherwise
consents (each such consent not to be unreasonably withheld or delayed).
(ii) Proportionate Amounts. Each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement with respect to the Term Loan assigned.
(iii) Required Consents. No consent shall be required for any
assignment except to the extent required by paragraph (b)(i)(B) of this Section
and, in addition:
(A) the consent of the Borrower (such consent not to be
unreasonably withheld or delayed) shall be required unless (x) an Event of
Default has occurred and is continuing at the time of such assignment or (y)
such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund;
and
(B) the consent of the Agent (such consent not to be unreasonably
withheld or delayed) shall be required for assignments to a Person that is not a
Lender.
(iv) Assignment and Acceptance. The parties to each assignment shall
deliver to the Agent (A) a duly executed Assignment and Acceptance, which shall
include a representation for the benefit of the Borrower that the assignee is a
Qualified Purchaser, (B) a processing and recordation fee of $3,500, (C) an
Administrative Questionnaire unless the assignee is already a Lender, and (D)
the documents required under Section 2.15 if such assignee is a Foreign Lender.
46
(v) No Assignment to Borrower. No such assignment shall be made to the
Borrower or any of the Borrower's Affiliates or Subsidiaries.
(vi) No Assignment to Natural Persons; Qualified Purchaser. No such
assignment shall be made to a natural person or to a Person that is not a
Qualified Purchaser.
Subject to acceptance and recording thereof by the Agent pursuant to
paragraph (c) of this Section 9.04, from and after the effective date specified
in each Assignment and Acceptance, the assignee thereunder shall be a party to
this Agreement and, to the extent of the interest assigned by such Assignment
and Acceptance, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 2.12, 2.13, 2.14 and 9.03 with
respect to facts and circumstances occurring prior to the effective date of such
assignment. Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this paragraph shall be treated
for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with paragraph (d) of this Section
9.04. If the consent of the Borrower to an assignment is required hereunder
(including a consent to an assignment which does not meet the minimum assignment
thresholds specified above), the Borrower shall be deemed to have given its
consent five Business Days after the date notice thereof has actually been
delivered by the assigning Lender (through the Agent) to the Borrower, unless
such consent is expressly refused by the Borrower prior to such fifth Business
Day.
(c) The Agent, acting solely for this purpose as an agent of the
Borrower, shall maintain at one of its offices in Atlanta, Georgia a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, the principal amount of
the Term Loan owing to, each Lender pursuant to the terms hereof from time to
time (the "Register"). Information contained in the Register with respect to any
Lender shall be available for inspection by such Lender at any reasonable time
and from time to time upon reasonable prior notice; information contained in the
Register shall also be available for inspection by the Borrower at any
reasonable time and from time to time upon reasonable prior notice. In
establishing and maintaining the Register, the Agent shall serve as the
Borrower's agent solely for tax purposes and solely with respect to the actions
described in this Section, and the Borrower hereby agrees that, to the extent
SunTrust Bank serves in such capacity, SunTrust Bank and its officers,
directors, employees, agents, sub-agents and affiliates shall constitute
"Indemnitees."
(d) Any Lender may at any time, without the consent of, or notice to,
the Borrower or the Agent sell participations to any Person (other than a
natural person, the Borrower or any of the Borrower's Affiliates or
Subsidiaries) (each, a "PARTICIPANT") in all or a portion of such Lender's
rights and/or obligations under this Agreement (including all or a portion of
the Term Loan owing to it); provided that (i) such Lender's obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other
47
parties hereto for the performance of such obligations and (iii) the Borrower,
the Agent and the Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement.
(e) Any agreement or instrument pursuant to which a Lender sells such
a participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver with respect to the following to the
extent affecting such Participant: (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal amount of
any Loan or reduce the rate of interest thereon, or reduce any fees payable
hereunder, without the written consent of each Lender affected thereby, (iii)
postpone the date fixed for any payment of any principal of, or interest on, any
Loan or any fees hereunder or reduce the amount of, waive or excuse any such
payment, or postpone the scheduled date for the termination or reduction of any
Commitment, without the written consent of each Lender affected thereby, (iv)
change Section 2.15(b) or (c) in a manner that would alter the pro rata sharing
of payments required thereby, without the written consent of each Lender, (v)
change any of the provisions of this Section 9.04 or the definition of "Required
Lenders" or any other provision hereof specifying the number or percentage of
Lenders which are required to waive, amend or modify any rights hereunder or
make any determination or grant any consent hereunder, without the consent of
each Lender; (vi) release any guarantor or limit the liability of any such
guarantor under any guaranty agreement without the written consent of each
Lender except to the extent such release is expressly provided under the terms
of such guaranty agreement; or (vii) release all or substantially all collateral
(if any) securing any of the Obligations. Subject to paragraph (f) of this
Section 9.04, the Borrower agrees that each Participant shall be entitled to the
benefits of (and shall have the related obligations under) Sections 2.12, 2.13,
and 2.14 to the same extent as if it were a Lender and had acquired its interest
by assignment pursuant to paragraph (b) of this Section 9.04. To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 9.07 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.15 as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater payment
under Section 2.12 and Section 2.14 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.14 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.14(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
48
SECTION 9.05 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS.
(a) This Agreement and the other Loan Documents shall be construed in
accordance with and be governed by the law (without giving effect to the
conflict of law principles thereof) of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the non-exclusive jurisdiction of any New York state
court or federal court sitting in the County of New York and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or any other Loan Document or the transactions contemplated hereby or
thereby, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York state court or, to the extent permitted by applicable law, such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement or any other Loan Document shall affect any right that
the Agent and the Lenders may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against the Borrower or
its properties in the courts of any jurisdiction.
(c) The Borrower irrevocably and unconditionally waives any objection
which it may now or hereafter have to the laying of venue of any such suit,
action or proceeding described in paragraph (b) of this Section and brought in
any court referred to in paragraph (b) of this Section. Each of the parties
hereto irrevocably waives, to the fullest extent permitted by applicable law,
the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to the service
of process in the manner provided for notices in Section 9.01. Nothing in this
Agreement or in any other Loan Document will affect the right of any party
hereto to serve process in any other manner permitted by law.
SECTION 9.06 WAIVER OF JURY TRIAL.
EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
49
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
SECTION 9.07 RIGHT OF SETOFF.
In addition to any rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, the Agent and each Lender shall
have the right, at any time or from time to time upon the occurrence and during
the continuance of an Event of Default, without prior notice to the Borrower,
any such notice being expressly waived by the Borrower to the extent permitted
by applicable law, to set off and apply against all deposits (general or
special, time or demand, provisional or final) of the Borrower at any time held
or other obligations at any time owing by the Agent or any Lender to or for the
credit or the account of the Borrower against any and all Obligations held by
the Agent or any Lender, irrespective of whether the Agent or such Lender shall
have made demand hereunder and although such Obligations may be unmatured. The
Agent and Lenders agree promptly to notify the Borrower after any such set-off
and any application made by the Agent or any Lender; provided, that the failure
to give such notice shall not affect the validity of such set-off and
application.
SECTION 9.08 COUNTERPARTS; INTEGRATION.
This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts (including by telecopy), and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument. This Agreement, the Fee Letter and the other Loan Documents
constitute the entire agreement among the parties hereto and thereto regarding
the subject matters hereof and thereof and supersede all prior agreements and
understandings, oral or written, regarding such subject matters.
SECTION 9.09 SURVIVAL.
All covenants, agreements, representations and warranties made by the
Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement and the making of the Term Loan, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that the Agent or the Lenders may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid. The provisions of Sections 2.11,
2.12, and 9.03 shall survive and remain in full force and effect regardless of
the consummation of the transactions contemplated hereby, the repayment of the
Term Loan, the expiration or termination of the Commitments or the termination
of this Agreement or any provision hereof. All representations and warranties
made herein, in the certificates, reports, notices, and other documents
delivered pursuant to this Agreement shall survive the execution and delivery of
this Agreement and the other Loan Documents, and the making of the Term Loan.
50
SECTION 9.10 SEVERABILITY.
Any provision of this Agreement or any other Loan Document held to be
illegal, invalid or unenforceable in any jurisdiction, shall, as to such
jurisdiction, be ineffective to the extent of such illegality, invalidity or
unenforceability without affecting the legality, validity or enforceability of
the remaining provisions hereof or thereof; and the illegality, invalidity or
unenforceability of a particular provision in a particular jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 9.11 CONFIDENTIALITY.
The Agent and the Lenders agree to take normal and reasonable precautions
to maintain the confidentiality of (i) any information designated in writing as
confidential and (ii) any and all information relating to the Installment Sale
Transaction and provided to it by the Borrower or any Subsidiary, except that
such information may be disclosed (i) to any Related Party of the Agent or the
Lenders, including without limitation accountants, legal counsel and other
advisors; provided that the Agent or the Lender disclosing such information
first advises the party receiving such information that it is confidential as
per the provisions of this Section and that the Agent or Lender shall be
responsible for compliance by the party receiving the information with the
provisions of this Section, (ii) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (iii) to the extent
requested by any regulatory agency or authority, (iv) to the extent that such
information becomes publicly available other than as a result of a breach of
this Section, or which becomes available to the Agent or a Lender or any Related
Party of the Agent or a Lender on a nonconfidential basis from a source other
than the Borrower, (v) in connection with the exercise of any remedy hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder, and (ix) subject to provisions substantially similar to
this Section 9.11, to any actual or prospective assignee or Participant, or (vi)
with the consent of the Borrower. Any Person required to maintain the
confidentiality of any information as provided for in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
information as such Person would accord its own confidential information.
SECTION 9.12 INTEREST RATE LIMITATION.
Notwithstanding anything herein to the contrary, if at any time the
interest rate applicable to the Term Loan, together with all fees, charges and
other amounts which may be treated as interest on such Loan under applicable law
(collectively, the "CHARGES"), shall exceed the maximum lawful rate of interest
(the "MAXIMUM RATE") which may be contracted for, charged, taken, received or
reserved by the Agent and the Lenders in accordance with applicable law, the
rate of interest payable in respect of the Term Loan hereunder, together with
all Charges payable in respect thereof, shall be limited to the Maximum Rate
and, to the extent lawful, the interest and Charges that would have been payable
in respect of such Loan but were not payable as a result of the operation of
this Section shall be cumulated and the interest and Charges payable to the
Agent on behalf of the Lenders in respect of other periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the
51
Federal Funds Rate to the date of repayment, shall have been received by the
Agent on behalf of the Lenders.
SECTION 9.13 QUALIFIED PURCHASER.
Each Lender severally represents that it is a Qualified Purchaser.
(remainder of page left intentionally blank)
52
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
GPW VIRGINIA TIMBERLANDS LLC
By /s/ George B. Amoss, Jr.
-------------------------------------
Name: George B. Amoss, Jr.
Title: President
SUNTRUST BANK
By /s/ Mark A. Flatin
-------------------------------------
Name: Mark A. Flatin
Title: Managing Director
[SIGNATURE PAGE TO TERM LOAN AGREEMENT]
.
.
.
EXHIBIT 21
LIST OF SUBSIDIARIES
State or Country of
Incorporation
--------------------
PHG Tea Leaves, Inc. Delaware
GLT International Finance LLC Delaware
The Glatfelter Pulp Wood Company Maryland
Glatfelter Holdings, LLC Delaware
GPW Virginia Timberlands LLC Delaware
GPW Timberlands, LLC Delaware
GW Partners, LLC (50% partnership interest) Wisconsin
Mollanvick, Inc. Delaware
Glatfelter Composite Fibers NA, Inc. Delaware
Glatfelter Holdings II, LLC Delaware
Glatfelter Gernsbach GmbH & Co.KG Germany
Papcel-Papier und Cellulose, Technologie und Handels-GmbH Germany
Glatfelter Auslandsbeteiligungen GmbH Germany
PHG Verwaltungsgesellschaft mbH Germany
Glatfelter Verwaltungsgesellschaft mbH Germany
TL Verwaltungsgesellschaft mbH Germany
Unicon-Papier-und Kunststoffhandels GmbH Germany
Glatfelter Scaer SAS France
Glatfelter-Lydney, LTD England & Wales
Glatfelter Caerphilly Ltd. England & Wales
Balo-I Industrial, Inc. Philippines
Newtech Pulp Inc. Philippines
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statements Nos.
33-49660, 33-62331, 333-12089, 333-26587 and 333-124485 on Forms S-8 of our
reports dated March 12, 2008, relating to the consolidated financial statements
and financial statement schedule of P. H. Glatfelter Company and subsidiaries
(which report expresses an unqualified opinion and includes an explanatory
paragraph relating to the adoption of Financial Accounting Standards Board
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes -- an
Interpretation of FASB No. 109") and on the effectiveness of P.H. Glatfelter
Company and subsidiaries' internal control over financial reporting appearing in
this Annual Report on Form 10-K of P. H. Glatfelter Company and subsidiaries for
the year ended December 31, 2007.
/s/ Deloitte & Touche LLP
Philadelphia, Pennsylvania
March 12, 2008
I have reviewed this Annual Report on
Form 10-K
for the year ended December 31, 2007 of P. H.
Glatfelter Company (“Glatfelter”);
2.
Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in
all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this report.
4.
Glatfelter’s other certifying officer and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act
Rules 13a-15(e)
and
15d-15(e))
and internal control over financial reporting (as defined in
Exchange Act Rules
13a-15(f)
and
15d-15(f))
for Glatfelter and have:
(a)
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to
Glatfelter, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or
caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of Glatfelter’s disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(d)
Disclosed in this report any change in Glatfelter’s
internal control over financial reporting that occurred during
Glatfelter’s most recent fiscal quarter (the fourth fiscal
quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect,
Glatfelter’s internal control over financial
reporting; and
5.
Glatfelter’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to Glatfelter’s auditors and the audit
committee of the Glatfelter’s board of directors:
(a)
All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect
Glatfelter’s ability to record, process, summarize and
report financial information; and
(b)
Any fraud, whether or not material, that involves management or
other employees who have a significant role in Glatfelter’s
internal control over financial reporting.
Date: March 13, 2008
By:
/s/ George
H. Glatfelter II
George H. Glatfelter II
Chairman and Chief Executive Officer
-60-
GLATFELTER
CERTIFICATION
PURSUANT TO SECTION 302 (a) OF THE SARBANES-OXLEY ACT
OF 2002
I, John P. Jacunski, certify that:
1.
I have reviewed this Annual Report on
Form 10-K
for the year ended December 31, 2007 of P. H.
Glatfelter Company (“Glatfelter”);
2.
Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in
all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4.
Glatfelter’s other certifying officer and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act
Rules 13a-15(e)
and
15d-15(e))
and internal control over financial reporting (as defined in
Exchange Act Rules
13a-15(f)
and
15d-15(f))
for Glatfelter and have:
(a)
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to
Glatfelter, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or
caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of Glatfelter’s disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(d)
Disclosed in this report any change in Glatfelter’s
internal control over financial reporting that occurred during
Glatfelter’s most recent fiscal quarter (the fourth fiscal
quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect,
Glatfelter’s internal control over financial
reporting; and
5.
Glatfelter’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to Glatfelter’s auditors and the audit
committee of the Glatfelter’s board of directors:
(a)
All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect
Glatfelter’s ability to record, process, summarize and
report financial information; and
(b)
Any fraud, whether or not material, that involves management or
other employees who have a significant role in Glatfelter’s
internal control over financial reporting.
Date: March 13, 2008
By:
/s/ John
P. Jacunski
John P. Jacunski
Senior Vice President and
Chief Financial Officer
-61-
GLATFELTER
EXHIBIT 32.1
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 18
U.S.C. SECTION 1350
In connection with the Annual Report on Form 10-K for the year ended
December 31, 2007 of P. H. Glatfelter Company (the "Company") as filed
with the Securities and Exchange Commission on the date hereof (the
"Report"), I, George H. Glatfelter II, Chairman and Chief Executive
Officer of the Company, certify to the best of my knowledge, pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
1350, that:
1) The Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended; and
2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
A signed original of this written statement required by Section 906 has been
provided to Glatfelter and will be retained by Glatfelter and furnished to the
Securities and Exchange Commission or its staff upon request.
Date: March 13, 2008 By: /s/ George H. Glatfelter II
---------------------------------
George H. Glatfelter II
Chairman and Chief Executive
Officer
EXHIBIT 32.2
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 18
U.S.C. SECTION 1350
In connection with the Annual Report on Form 10-K for the year ended
December 31, 2007 of P. H. Glatfelter Company (the "Company") as filed
with the Securities and Exchange Commission on the date hereof (the
"Report"), I, John P. Jacunski, Senior Vice President and Chief
Financial Officer of the Company, certify to the best of my knowledge,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350, that:
1) The Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended; and
2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
A signed original of this written statement required by Section 906 has been
provided to Glatfelter and will be retained by Glatfelter and furnished to the
Securities and Exchange Commission or its staff upon request.
Date: March 13, 2008 By: /s/ John P. Jacunski
--------------------------------
John P. Jacunski
Senior Vice President and
Chief Financial Officer
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