-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L9mmBOOSmPEFnExily//vCEuAfDt5k+EYGyA3di2tpCALPsYHj+4Cn+CMlhyo4op qrXkGxaaFhmjA/3mqgY6JQ== 0000950123-98-007946.txt : 19980827 0000950123-98-007946.hdr.sgml : 19980827 ACCESSION NUMBER: 0000950123-98-007946 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980811 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980826 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAXAR CORP CENTRAL INDEX KEY: 0000075681 STANDARD INDUSTRIAL CLASSIFICATION: COMMERCIAL PRINTING [2750] IRS NUMBER: 135670050 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-09493 FILM NUMBER: 98698287 BUSINESS ADDRESS: STREET 1: 105 CORPORATE PARK DRIVE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 9146976800 FORMER COMPANY: FORMER CONFORMED NAME: PACKAGING SYSTEMS CORP DATE OF NAME CHANGE: 19870401 8-K 1 FORM 8-K RE: PAXAR CORPORATION 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): August 11, 1998 Paxar Corporation (Exact name of registrant as specified in its charter) New York 0-5610 13-5670050 (State or Other Jurisdiction (Commission File Number) (IRS Employer Ident. No.) of Incorporation) 105 Corporate Park Drive, White Plains, New York 10604 (Address of Principal Executive Offices) (Zip Code) (914) 697-6800 Registrant's telephone number, including area code 2 ITEM 5. OTHER EVENTS. On August 11, 1998, the Registrant entered into an Amended and Restated Credit Agreement (the "Amended Credit Agreement") with Fleet Bank, N.A. ("Fleet"), as Initial Issuing Bank, Swing Line Bank, and Administrative Agent, and with certain other banks and financial institutions (the "Other Lenders"), providing for an unsecured five-year $200 million revolving credit facility. The Amended Credit Agreement amended and restated the Registrant's unsecured, six-year $280 million Credit Agreement, dated as of March 3, 1997 (the "Credit Agreement"), with Fleet and the Other Lenders, which had provided for a $140 million revolving credit facility and a $140 million term loan. Under the Amended Credit Agreement, the Registrant repaid the term loan with the proceeds of the Senior Notes described below, and the Banks increased the Registrant's revolving credit facility to $200 million. Loans under the Amended Credit Agreement bear interest at rates referenced to the London Interbank Offered Rate (with applicable margins varying in accordance with the Company's attainment of specified financial thresholds) or the Prime Rate (as defined), and are guaranteed by certain domestic subsidiaries of the Registrant. On August 11, 1998, the Registrant sold an aggregate of $150 million of unsecured 6.74% Senior Notes (the "Senior Notes") to 18 institutional lenders, primarily insurance companies, pursuant to the terms of a Note Purchase Agreement, dated as of August 4, 1998, with each such lender. The Senior Notes bear interest at 6.74% per year payable semi-annually and are due on August 11, 2008. The Registrant used the proceeds of the Senior Notes to repay the $140 million term loan outstanding under the Credit Agreement and a portion of the revolving loan outstanding thereunder. The Senior Notes were issued in a transaction not involving any public offering exempt from registration under Section 4(2) of the Securities Act of 1933, as amended. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits. 10.1 Amended and Restated Credit Agreement, dated as of August 11, 1998, among Paxar Corporation, Fleet Bank, N.A., as Initial Issuing Bank, Swing Line Bank, and Administrative Agent, and the banks, financial institutions and other institutional lenders listed on the signature pages thereof. 10.2 Form of Note Purchase Agreement, dated as of August 4, 1998, between Paxar Corporation and each of the institutional lenders listed on Schedule A thereto. -2- 3 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PAXAR CORPORATION (Registrant) Date: August 26, 1998 By:/s/ John P. Jordan -------------------------- John P. Jordan Vice President and Treasurer -3- 4 EXHIBIT INDEX Exhibit No. Description. 10.1 Amended and Restated Credit Agreement, dated as of August 11, 1998, among Paxar Corporation, Fleet Bank, N.A., as Initial Issuing Bank, Swing Line Bank, and Administrative Agent, and the banks, financial institutions and other institutional lenders listed on the signature pages thereof. 10.2 Form of Note Purchase Agreement, dated as of August 4, 1998, between Paxar Corporation and each of the institutional lenders listed on Schedule A thereto. EX-10.1 2 AMENDED AND RESTATED CREDIT AGREEMENT 1 EXECUTION COPY U.S. $200,000,000 AMENDED AND RESTATED CREDIT AGREEMENT Dated as of August 11, 1998 Among PAXAR CORPORATION as Borrower and THE INITIAL LENDERS, INITIAL ISSUING BANK AND SWING LINE BANK NAMED HEREIN as Initial Lenders, Initial Issuing Bank and Swing Line Bank and FLEET BANK, N.A. as Administrative Agent 2
TABLE OF CONTENTS ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. Certain Defined Terms.....................................................................1 SECTION 1.02. Computation of Time Periods..............................................................19 SECTION 1.03. Accounting Terms.........................................................................19 ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT SECTION 2.01. The Advances.............................................................................19 SECTION 2.02. Making the Advances......................................................................21 SECTION 2.03. The Competitive Bid Advances.............................................................23 SECTION 2.04. Issuance of and Drawings and Reimbursement Under Letters of Credit.......................27 SECTION 2.05. Fees.....................................................................................28 SECTION 2.06. Termination or Reduction of the Commitments..............................................28 SECTION 2.07. Repayment of Advances....................................................................29 SECTION 2.08. Interest.................................................................................30 SECTION 2.09. Interest Rate Determination..............................................................31 SECTION 2.10. Conversion of Advances...................................................................32 SECTION 2.11. Prepayments..............................................................................32 SECTION 2.12. Increased Costs..........................................................................33 SECTION 2.13. Illegality...............................................................................34 SECTION 2.14. Payments and Computations................................................................34 SECTION 2.15. Taxes....................................................................................35 SECTION 2.16. Sharing of Payments, Etc.................................................................37 SECTION 2.17. Use of Proceeds..........................................................................37 SECTION 2.18. Additional Borrowers.....................................................................37 ARTICLE III CONDITIONS TO EFFECTIVENESS AND LENDING SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01, 2.03 and 2.04....................37 SECTION 3.02. Conditions Precedent to the Initial Borrowing of Each Additional Borrower..............................................................39 SECTION 3.03. Conditions Precedent to Each Borrowing (other than a Competitive Bid Borrowing and Issuance...........................................................40 SECTION 3.04. Conditions Precedent to Each Competitive Bid Borrowing...................................41 SECTION 3.05. Determinations Under Section 3.01........................................................41
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Page ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Borrowers..........................................42 ARTICLE V COVENANTS OF PAXAR SECTION 5.01. Affirmative Covenants....................................................................44 SECTION 5.02. Negative Covenants.......................................................................47 SECTION 5.03. Financial Covenants......................................................................52 ARTICLE VI EVENTS OF DEFAULT SECTION 6.01. Events of Default........................................................................53 ARTICLE VII THE ADMINISTRATIVE AGENT SECTION 7.01. Authorization and Action.................................................................55 SECTION 7.02. Administrative Agent's Reliance, Etc.....................................................56 SECTION 7.03. Fleet and Affiliates.....................................................................56 SECTION 7.04. Lender Credit Decision...................................................................56 SECTION 7.05. Indemnification..........................................................................56 SECTION 7.06. Successor Administrative Agent...........................................................57 ARTICLE VIII GUARANTY SECTION 8.01. Guaranty.................................................................................57 SECTION 8.02. Guaranty Absolute........................................................................58 SECTION 8.03. Waivers and Acknowledgments..............................................................59 SECTION 8.04. Subrogation..............................................................................59 SECTION 8.05. Continuing Guarantee; Assignments........................................................60
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Page ARTICLE IX MISCELLANEOUS SECTION 9.01. Amendments, Etc..........................................................................60 SECTION 9.02. Notices, Etc.............................................................................61 SECTION 9.03. No Waiver; Remedies......................................................................61 SECTION 9.04. Costs and Expenses.......................................................................61 SECTION 9.05. Right of Set-off.........................................................................62 SECTION 9.06. Binding Effect...........................................................................63 SECTION 9.07. Assignments, Designations and Participations.............................................63 SECTION 9.08. Confidentiality..........................................................................66 SECTION 9.09. No Liability of the Issuing Bank.........................................................66 SECTION 9.10. Governing Law............................................................................67 SECTION 9.11. Execution in Counterparts................................................................67 SECTION 9.12. Judgment.................................................................................67 SECTION 9.13. Jurisdiction, Etc........................................................................68 SECTION 9.14. Waiver of Jury Trial.....................................................................69
5 iv Schedules Schedule I - List of Applicable Lending Offices Schedule 4.01(c) - Required Authorizations and Approvals Schedule 4.01(f) - Environmental Actions Schedule 4.01(i) - Environmental Laws Schedule 5.02(a) - Existing Liens Schedule 5.02(d) - Existing Debt Schedule 5.02(g) - Scheduled Investments Exhibits Exhibit A-1 - Form of Revolving Credit Note Exhibit A-2 - Form of Competitive Bid Note Exhibit B-1 - Form of Notice of Borrowing Exhibit B-2 - Form of Notice of Competitive Bid Borrowing Exhibit C - Form of Assignment and Acceptance Exhibit D - Form of Designation Agreement Exhibit E - Form of Credit Agreement Supplement Exhibit F-1 - Form of Opinion of Counsel for Paxar Exhibit F-2 - Form of Opinion of Counsel for Additional Borrowers Exhibit G - Form of Acceptance of Process Agent Exhibit H - Subsidiary Guaranty 6 AMENDED AND RESTATED CREDIT AGREEMENT Dated as of August 11, 1998 Paxar Corporation, a New York corporation ("Paxar"), any other Subsidiary (as hereinafter defined) that becomes a Borrower (as hereinafter defined) pursuant to the terms hereof, the banks, financial institutions and other institutional lenders (the "Initial Lenders") listed on the signature pages hereof as the Initial Lenders, Fleet Bank, N.A. ("Fleet") as initial issuing bank (in such capacity, the "Initial Issuing Bank"), Fleet as the swing line bank (in such capacity, the "Swing Line Bank"), and Fleet as administrative agent (in such capacity, the "Administrative Agent") for the Lender Parties (as hereinafter defined), agree to amend and restate the Existing Credit Agreement (as defined below) in its entirety as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Administrative Agent's Account" means (a) in the case of Advances denominated in US Dollars, the account of the Administrative Agent maintained by the Administrative Agent at Fleet Bank, N.A. with its office at 1133 Avenue of the Americas, 40th Floor, New York, New York 10036, Account No. 1983580, Attention: Joann Zegarelli and (b) in the case of Advances denominated in any Primary Currency, the account of the Administrative Agent designated in writing from time to time by the Administrative Agent to Paxar, the other Borrowers and the Lender Parties for such purpose. "Advance" means a Revolving Credit Advance, a Swing Line Advance, a Letter of Credit Advance or a Competitive Bid Advance. "Affiliate" means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term "control" (including the terms "controlling", "controlled by" and "under common control with") of a Person means the possession, direct or indirect, of the power to vote 5% or more of the Voting Stock of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise. "Applicable Lending Office" means, with respect to each Lender Party, such Lender Party's Domestic Lending Office in the case of a Prime Rate Advance and such Lender Party's Eurocurrency Lending Office in the case of a Eurocurrency Rate Advance and, in the case of a Competitive Bid Advance, the office of such Lender Party notified by such Lender Party to the Administrative Agent as its Applicable Lending Office with respect to such Competitive Bid Advance. 7 2 "Applicable Margin" means, at any time, a percentage per annum determined by reference to the Debt to EBITDA Ratio as set forth below: Applicable Margin for Debt To Revolving Credit EBITDA Ratio Advances Level 1 Greater than or equal to 3.00 to 1 or above 0.5000% Level 2 Greater than or equal to 2.50 to 1 but less than 3.00 to 1 0.4125% Level 3 Greater than or equal to 2.00 to 1 but less than 2.50 to 1 0.3500% Level 4 Greater than or equal to 1.50 to 1 but less than 2.00 to 1 0.3000% Level 5 Greater than or equal to 1.00 to 1 but less than 1.50 to 1 0.2500% Level 6 Less than 1.00 to 1 0.2200% The Applicable Margin for each Advance (other than a Competitive Bid Advance) shall be determined by reference to the Debt to EBITDA Ratio in effect on the first day of each Interest Period for such Advance; provided, however, that no change in the Applicable Margin shall be effective until three Business Days after the date on which the Administrative Agent receives financial statements pursuant to Section 5.01(m)(i) or (ii) and a certificate of the chief financial officer or the treasurer of Paxar demonstrating such ratio. 8 3 "Applicable Percentage" means, at any time, a percentage per annum determined by reference to the Debt to EBITDA Ratio as set forth below: Debt To Applicable EBITDA Ratio Percentage Level 1 0.2500% Greater than or equal to 3.00 to 1 or above Level 2 0.1875% Greater than or equal to 2.50 to 1 but less than 3.00 to 1 Level 3 0.1500% Greater than or equal to 2.00 to 1 but less than 2.50 to 1 Level 4 0.1250% Greater than or equal to 1.50 to 1 but less than 2.00 to 1 Level 5 0.1000% Greater than or equal to 1.00 to 1 but less than 1.50 to 1 Level 6 0.0800% Less than 1.00 to 1 The Applicable Percentage for the Revolving Credit Facility shall be determined by reference to the Debt to EBITDA Ratio in effect from time to time; provided, however, that no change in the Applicable Percentage shall be effective until three Business Days after the date on which the Administrative Agent receives financial statements pursuant to Section 5.01(m)(i) or (ii) and a certificate of the chief financial officer or the treasurer of Paxar demonstrating such ratio. "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender Party and an Eligible Assignee, and accepted by the Administrative Agent, in substantially the form of Exhibit C hereto. 9 4 "Available Amount" of any Letter of Credit means, at any time, the maximum amount available to be drawn under such Letter of Credit at such time (assuming compliance at such time with all conditions to drawing). "Borrower" means Paxar and each wholly owned Subsidiary of Paxar that has delivered a Credit Agreement Supplement which has become effective; provided, however, that in no event shall the number of Borrowers hereunder exceed four at any one time. "Borrowing" means a Revolving Credit Borrowing, a Swing Line Borrowing or a Competitive Bid Borrowing. "Business Day" means a day of the year on which banks are not required or authorized by law to close in New York City and, if the applicable Business Day relates to any Eurocurrency Rate Advances, on which dealings are carried on in the London interbank market and banks are open for business in the country of issue of the currency of such Eurocurrency Rate Advance. "Capital Expenditures" means, for any Person for any period, the sum of (a) all expenditures made, directly or indirectly, by such Person or any of its Subsidiaries during such period for equipment, fixed assets, real property or improvements, or for replacements or substitutions therefor or additions thereto, that have been or should be, in accordance with GAAP, reflected as additions to property, plant or equipment on a Consolidated balance sheet of such Person or have a useful life of more than one year plus (b) without duplication, the aggregate principal amount of all Debt (including Obligations under Capitalized Leases) assumed or incurred in connection with any such expenditures. "Capitalized Leases" means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases. "Cash Equivalents" means any of the following, to the extent owned by Paxar or any of its Subsidiaries free and clear of all Liens and having a maturity of not greater than 180 days from the date of issuance thereof: (a) readily marketable direct obligations of the Government of the United States or any agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the Government of the United States, (b) insured certificates of deposit of or time deposits with any commercial bank that is a Lender Party or a member of the Federal Reserve System, issues (or the parent of which issues) commercial paper rated as described in clause (c), is organized under the laws of the United States or any state thereof and has combined capital and surplus of at least $1 billion, (c) commercial paper issued by any corporation organized under the laws of any state of the United States and rated at least "Prime-1" (or the then equivalent grade) by Moody's or "A-1" (or the then equivalent grade) by S&P or (d) Investments in money market funds that invest primarily in Cash Equivalents of the types described in clauses (a), (b) and (c) above and are established by a Lender Party or any Affiliate of a Lender Party. "Commitment" means a Revolving Credit Commitment or a Letter of Credit Commitment. 10 5 "Competitive Bid Advance" means an advance by a Lender Party to Paxar as part of a Competitive Bid Borrowing resulting from the competitive bidding procedure described in Section 2.03 and refers to a Fixed Rate Advance or a LIBO Rate Advance (each of which may only be in US Dollars). "Competitive Bid Borrowing" means a borrowing consisting of simultaneous Competitive Bid Advances from each of the Lender Parties to Paxar whose offer to make one or more Competitive Bid Advances as part of such borrowing has been accepted under the competitive bidding procedure described in Section 2.03. "Competitive Bid Note" means a promissory note of Paxar payable to the order of any Lender Party, in substantially the form of Exhibit A-3 hereto, evidencing the indebtedness of Paxar to such Lender Party resulting from a Competitive Bid Advance made by such Lender Party. "Confidential Information" means information that any Borrower furnishes to the Administrative Agent or any Lender Party in a writing designated as confidential, but does not include any such information that is or becomes generally available to the public or that is or becomes available to the Administrative Agent or such Lender Party from a source other than the Borrowers. "Consolidated" refers to the consolidation of accounts in accordance with GAAP. "Convert", "Conversion" and "Converted" each refers to a conversion of Advances (other than Competitive Bid Advances) of one Type into Advances of the other Type (other than Competitive Bid Advances) pursuant to Section 2.09 or 2.10. "Credit Agreement Supplement" has the meaning specified in Section 2.18. "Debt" of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all Obligations of such Person for the deferred purchase price of property or services (other than trade payables not overdue by more than 90 days incurred in the ordinary course of such Person's business), (c) all Obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all Obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Obligations of such Person as lessee under Capitalized Leases, (f) all Obligations, contingent or otherwise, of such Person in respect of acceptances, letters of credit or similar extensions of credit, (g) all Obligations of such Person in respect of Hedge Agreements, (h) all Obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any capital stock of or other ownership or profit interest in such Person or any other Person or any warrants, rights or options to acquire such capital stock, (i) Debt of others referred to in clauses (a) through (h) above or clause (j) below guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (1) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (2) to purchase, sell 11 6 or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (3) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (4) otherwise to assure a creditor against loss, and (j) all Debt referred to in clauses (a) through (i) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt. "Debt to EBITDA Ratio" means, for any fiscal quarter of Paxar, a ratio of Debt of Paxar and its Subsidiaries as at the end of such fiscal quarter to Consolidated EBITDA of Paxar and its Subsidiaries for the most recently completed four fiscal quarters. "Default" means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both. "Designated Bidder" means (a) an Eligible Assignee or (b) a special purpose corporation that is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and that issues (or the parent of which issues) commercial paper rated at least "Prime-1" (or the then equivalent grade) by Moody's or "A-1" (or the then equivalent grade) by S&P that, in the case of either clause (a) or (b), (i) is organized under the laws of the United States or any State thereof, (ii) shall have become a party hereto pursuant to Section 9.07(d), (e) and (f) and (iii) is not otherwise a Lender Party. "Designation Agreement" means a designation agreement entered into by a Lender Party (other than a Designated Bidder) and a Designated Bidder, and accepted by the Administrative Agent, in substantially the form of Exhibit D hereto. "Domestic Lending Office" means, with respect to any Lender Party, the office of such Lender Party specified as its "Domestic Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender Party, or such other office of such Lender Party as such Lender Party may from time to time specify to Paxar and the Administrative Agent. "EBIT" means, for any period, net income (or net loss) before deduction for income taxes and net interest expense, in each case determined in accordance with GAAP for such period. "EBITDA" means, for any period, net income (or net loss) plus the sum of (a) interest expense, (b) income tax expense, (c) depreciation expense and (d) amortization expense, in each case determined in accordance with GAAP for such period and, in the case of clauses (a) through (d), to the extent such expenses are actually deducted in calculating net income (or net loss); provided, however, that the $2,300,000 non-recurring charge taken by Paxar in respect of the quarter ended June 30, 1998 shall be excluded from the calculations of EBITDA for all purposes of this Agreement. 12 7 "Effective Date" has the meaning specified in Section 3.01. "Eligible Assignee" means (i) a Lender Party; (ii) an Affiliate of a Lender Party; (iii) a commercial bank organized under the laws of the United States, or any State thereof, and having total assets in excess of $500,000,000; (iv) a savings and loan association or savings bank organized under the laws of the United States, or any State thereof, and having total assets in excess of $500,000,000; (v) a commercial bank organized under the laws of any other country that is a member of the Organization for Economic Cooperation and Development or has concluded special lending arrangements with the International Monetary Fund associated with its General Arrangements to Borrow, or a political subdivision of any such country, and having total assets in excess of $500,000,000, so long as such bank is acting through a branch or agency located in the United States; (vi) the central bank of any country that is a member of the Organization for Economic Cooperation and Development; (vii) a finance company, insurance company or other financial institution or fund (whether a corporation, partnership, trust or other entity) that is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and having total assets in excess of $500,000,000 and (viii) any other Person approved by the Administrative Agent and, unless an Event of Default has occurred and is continuing at the time any assignment is effected in accordance with Section 9.07, Paxar, such approval not to be unreasonably withheld or delayed; provided, however, that neither Paxar nor an Affiliate of Paxar shall qualify as an Eligible Assignee. "Environmental Action" means any action, suit, demand, demand letter, claim, notice of non-compliance or violation, notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, Environmental Permit or Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any governmental or regulatory authority or any third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief. "Environmental Law" means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials. "Environmental Permit" means any permit, approval, identification number, license or other authorization required under any Environmental Law. "Equivalent" means (a) in US Dollars of any Primary Currency on any date of determination, the equivalent in US Dollars of such Primary Currency determined by using the quoted spot rate at which Fleet's principal office in New York City, New York, offers to exchange US Dollars for such Primary Currency in New York City, New York, at the opening of business on such date and (b) in any Primary Currency of US Dollars on any date of determination, the equivalent in such Primary Currency of US Dollars determined by using the quoted spot rate at 13 8 which Fleet's principal office in New York City, New York offers to exchange such Primary Currency for US Dollars in New York City, New York at the opening of business on such date. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "ERISA Affiliate" means any Person that for purposes of Title IV of ERISA is a member of Paxar's controlled group, or under common control with Paxar, within the meaning of Section 414 of the Internal Revenue Code. "ERISA Event" means (a) (i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day notice requirement with respect to such event has been waived by the PBGC, or (ii) the requirements of subsection (1) of Section 4043(b) of ERISA (without regard to subsection (2) of such Section) are met with a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such Plan within the following 30 days; (b) the application for a minimum funding waiver with respect to a Plan; (c) the provision by the administrator of any Plan of a notice of intent to terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of Paxar or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by Paxar or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for the imposition of a lien under Section 302(f) of ERISA shall have been met with respect to any Plan; (g) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, a Plan. "Eurocurrency Lending Office" means, with respect to any Lender Party, the office of such Lender Party specified as its "Eurocurrency Lending Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender Party (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender Party as such Lender Party may from time to time specify to Paxar and the Administrative Agent. "Eurocurrency Liabilities" has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Eurocurrency Rate" means, for any Interest Period for each Eurocurrency Rate Advance comprising part of the same Borrowing (other than a Competitive Bid Borrowing), the rate per annum (rounded upwards to the nearest 1/16 of 1%) at which deposits in US Dollars or in the applicable Primary Currency, as the case may be, appear on Page 3740 or 3750 of the Dow Jones Telerate Screen at or about 11:00 A.M. (London time) two Business Days before the first day of such Interest Period and for a period equal to such Interest Period. If for any reason such rate is 14 9 not available, the term "Eurocurrency Rate" shall mean, for any Interest Period for each Eurocurrency Rate Advance comprising part of the same Borrowing, the rate per annum (rounded upwards to the nearest 1/16 of 1%) appearing on the appropriate Reuters Screen as the London interbank offered rate for deposits in US Dollars or in the applicable Primary Currency, as the case may be, at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, however, if more than one rate is specified on such Reuters Screen, the applicable rate shall be the arithmetic mean of all such rates. "Eurocurrency Rate Advance" means an Advance (other than a Competitive Bid Advance) denominated in US Dollars or in a Primary Currency that bears interest as provided in Section 2.08(a)(ii). "Eurocurrency Rate Reserve Percentage" means, with respect to any Lender for any Interest Period for any Eurocurrency Rate Advance made by such Lender from time to time, the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor thereto) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for such Lender with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurocurrency Rate Advances is determined) having a term equal to such Interest Period. "Events of Default" has the meaning specified in Section 6.01. "Existing Credit Agreement" means the Credit Agreement dated as of March 3, 1997, as amended by Letter Amendment dated as of October 1, 1997 and Letter Amendment No. 2 dated as of June ____, 1998, among the Borrower, the banks, financial institutions and other institutional lenders party thereto and Fleet as administrative agent. "Existing Debt" has the meaning specified in Section 5.02(d)(iii)(B) hereof. "Extraordinary Receipt" means any cash received by or paid to or for the account of any Person not in the ordinary course of business, including, without limitation, pension plan reversions, proceeds of insurance (other than proceeds of business interruption insurance to the extent such proceeds constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof) and indemnity payments; provided, however, that an Extraordinary Receipt shall not include cash receipts received from proceeds of insurance, condemnation awards (or payments in lieu thereof) or indemnity payments to the extent that such proceeds, awards or payments in respect of loss or damage to equipment, fixed assets or real property are applied (or in respect of which expenditures were previously incurred) to replace or repair the equipment, fixed assets or real property in respect of which such proceeds were received in accordance with the terms of the Loan Documents, so long as such application is made within 6 months after the occurrence of such damage or loss. 15 10 "Facility" means the Revolving Credit Facility, the Swing Line Facility or the Letter of Credit Facility. "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. "Fiscal Year" means a fiscal year of Paxar and its Consolidated Subsidiaries ending on December 31 in any calendar year. "Fixed Rate Advances" has the meaning specified in Section 2.03(a)(i), which Advances shall be denominated in US Dollars. "Fleet" has the meaning specified in the recital of parties to this Agreement. "Foreign Loan Amount" means, at any date, the sum of the Equivalent on such date of the aggregate principal amount on such date of the outstanding Revolving Credit Advances denominated in any Primary Currency plus the aggregate principal amount on such date of the outstanding advances made by Paxar and its domestic Subsidiaries to any wholly-owned foreign Subsidiaries of Paxar. "Funded Debt" of any Person means Debt in respect of the Advances, in the case of any Borrower, and all other Debt of such Person that by its terms matures more than one year after the date of determination or matures within one year from such date but is renewable or extendible, at the option of such Person, to a date more than one year after such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year after such date, including, without limitation, all amounts of Funded Debt of such Person required to be paid or prepaid within one year after the date of determination. "GAAP" has the meaning specified in Section 1.03. "Guaranteed Obligations" has the meaning specified in Section 8.01. "Guaranty" has the meaning specified in Section 8.01. "Hazardous Materials" means (a) petroleum and petroleum products, byproducts or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (b) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law. 16 11 "Hedge Agreements" means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other similar agreements. "Indemnified Party" has the meaning specified in Section 9.04(b). "Information Memorandum" means the information memorandum dated July __, 1998 used by the Administrative Agent in connection with the syndication of the Commitments. "Initial Extension of Credit" means the earlier to occur of the initial Borrowing and the initial issuance of a Letter of Credit hereunder. "Initial Issuing Bank" has the meaning specified in the recital of parties to this Agreement. "Initial Lenders" has the meaning specified in the recital of parties to this Agreement. "Insufficiency" means, with respect to any Plan, the amount, if any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA. "Interest Period" means, for each Eurocurrency Rate Advance comprising part of the same Borrowing (other than a Competitive Bid Borrowing) and each LIBO Rate Advance comprising part of the same Competitive Bid Borrowing, the period commencing on the date of such Eurocurrency Rate Advance or LIBO Rate Advance or the date of the Conversion of any Prime Rate Advance into such Eurocurrency Rate Advance and ending on the last day of the period selected by the relevant Borrower pursuant to the provisions below and, thereafter, with respect to Eurocurrency Rate Advances, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by such Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one, two, three or six months, as the relevant Borrower may, upon notice received by the Administrative Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that: (i) a Borrower may not select any Interest Period with respect to any Eurocurrency Rate Advance or LIBO Rate Advance that ends after any principal repayment installment date unless, after giving effect to such selection, the aggregate principal amount of Prime Rate Advances and of Eurocurrency Rate Advances and LIBO Rate Advances having Interest Periods that end on or prior to such principal repayment installment date shall be at least equal to the aggregate principal amount of Advances due and payable on or prior to such date; (ii) Interest Periods commencing on the same date for Eurocurrency Rate Advances comprising part of the same Borrowing (other than a Competitive Bid Borrowing) or for LIBO Rate Advances comprising part of the same Competitive Bid Borrowing shall be of the same duration; 17 12 (iii) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, however, that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and (iv) whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "Investment" in any Person means any loan or advance to such Person, any purchase or other acquisition of any capital stock or other ownership or profit interest, warrants, rights, options, obligations or other securities of such Person, any capital contribution to such Person or any other investment in such Person, including, without limitation, any arrangement pursuant to which the investor incurs Debt of the types referred to in clause (i) or (j) of the definition of "Debt" in respect of such Person. "Issuing Bank" means the Initial Issuing Bank and each Eligible Assignee to which the Letter of Credit Commitment hereunder has been assigned pursuant to Section 9.07. "L/C Related Documents" has the meaning specified in Section 2.07(c)(ii). "Lender Party" means any Lender, the Issuing Bank or the Swing Line Bank. "Lenders" means the Initial Lenders and each Person that shall become a party hereto pursuant to Section 9.07(a), (b) and (c) and, except when used in reference to a Borrowing (other than a Competitive Bid Borrowing), a Note (other than a Competitive Bid Note), a Commitment or a related term, each Designated Bidder. "Letter of Credit" has the meaning specified in Section 2.01(c). "Letter of Credit Advance" means an advance made by the Issuing Bank or any Lender pursuant to Section 2.04(c), which advance shall be denominated in US Dollars. "Letter of Credit Agreement" has the meaning specified in Section 2.04(a). "Letter of Credit Commitment" means, with respect to the Issuing Bank at any time, $5,000,000 or, if the Issuing Bank has entered into one or more Assignments and Acceptances, set forth for the Issuing Bank in the Register maintained by the Administrative Agent pursuant to 18 13 Section 9.07(g) as the Issuing Bank's "Letter of Credit Commitment" and, in each case, as such amount may be reduced at or prior to such time pursuant to Section 2.06. "Letter of Credit Facility" means, at any time, an amount equal to the amount of the Issuing Bank's Letter of Credit Commitment at such time, as such amount may be reduced at or prior to such time pursuant to Section 2.06. "LIBO Rate" means, for any Interest Period for all LIBO Rate Advances comprising part of the same Competitive Bid Borrowing, the rate per annum (rounded upwards to the nearest 1/16 of 1%) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in US Dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period. If for any reason such rate is not available, the term "LIBO Rate" shall mean, for any Interest Period for each LIBO Rate Advance comprising part of the same Competitive Bid Borrowing, the rate per annum (rounded upwards to the nearest 1/16 of 1%) appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in US Dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, however, if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates. "LIBO Rate Advances" has the meaning specified in Section 2.03(a)(i). "Lien" means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property. "Loan Documents" means this Agreement, the Notes, the Subsidiary Guaranty, any Credit Agreement Supplement entered into by a Borrower and any pledge agreement or security agreement entered into by Paxar or any Subsidiary Guarantor pursuant to the provisions of Section 5.02(d)(ii). "Loan Parties" means each Borrower and each Subsidiary Guarantor. "Material Adverse Change" means any material adverse change in the business, condition (financial or otherwise), operations, performance, properties or prospects of Paxar or Paxar and its Subsidiaries taken as a whole. "Material Adverse Effect" means a material adverse effect on (a) the business, condition (financial or otherwise), operations, performance, properties or prospects of Paxar or Paxar and its Subsidiaries taken as a whole, (b) the rights and remedies of the Administrative Agent or any Lender Party under the Loan Documents or (c) the ability of any Loan Party to perform its obligations under the Loan Documents. "Moody's" means Moody's Investors Service, Inc. 19 14 "Multiemployer Plan" means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which Paxar or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions. "Multiple Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of Paxar or any ERISA Affiliate and at least one Person other than Paxar and the ERISA Affiliates or (b) was so maintained and in respect of which Paxar or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated. "Net Cash Proceeds" means, with respect to the sale or issuance of any Debt or capital stock or other ownership or profit interest, any securities convertible into or exchangeable for capital stock or other ownership or profit interest or any warrants, rights, options or other securities to acquire capital stock or other ownership or profit interest by any Person, the aggregate amount of cash received from time to time (whether as initial consideration or through payment or disposition of deferred consideration) by or on behalf of such Person in connection with such transaction after deducting therefrom only (without duplication) (a) reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finder's fees and other similar fees and commissions and (b) the amount of taxes payable in connection with or as a result of such transaction and (c) the amount of any Debt secured by a Lien on such asset that, by the terms of such transaction, is required to be repaid upon such disposition, in each case to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such costs, actually paid to a Person that is not an affiliate of such Person or any Loan Party or any Affiliate of any Loan Party and are properly attributable to such transaction or to the asset that is the subject thereof. "Net Interest Expense" means, for any period, the sum of the aggregate net interest expense of any Person and its Subsidiaries for such period, as determined in accordance with GAAP, and in any event including, without duplication, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptances and net costs under interest rate protection agreements and the portion of any obligation under Capitalized Leases allocable to consolidated net interest expense. "Note" means a Revolving Credit Note or a Competitive Bid Note. "Notice of Borrowing" has the meaning specified in Section 2.02(a). "Notice of Competitive Bid Borrowing" has the meaning specified in Section 2.03(a)(i). "Notice of Issuance" has the meaning specified in Section 2.04(a). "Notice of Renewal" has the meaning specified in Section 2.01(c). "Notice of Swing Line Borrowing" has the meaning specified in Section 2.02(b). 20 15 "Notice of Termination" has the meaning specified in Section 2.01(c). "Obligation" means, with respect to any Person, any payment, performance or other obligation of such Person of any kind, including, without limitation, any liability of such Person on any claim, whether or not the right of any creditor to payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding referred to in Section 6.01(f). Without limiting the generality of the foregoing, the obligations of the Loan Parties under the Loan Documents include (a) the obligation to pay principal, interest, Letter of Credit commissions, charges, expenses, fees, attorneys' fees and disbursements, indemnities and other amounts payable by any Loan Party under any Loan Document and (b) the obligation of any Loan Party to reimburse any amount in respect of any of the foregoing that any Lender Party, in its sole discretion, may elect to pay or advance on behalf of such Loan Party. "Other Taxes" has the meaning specified in Section 2.15(b). "PBGC" means the Pension Benefit Guaranty Corporation (or any successor). "Permitted Asset Sale Amount" means, with respect to any Fiscal Year, an amount equal to the Net Cash Proceeds from asset sales permitted by Section 5.02(f)(iii). "Permitted Liens" means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (a) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(b) hereof; (b) Liens imposed by law, such as materialmen's, mechanics', carriers', workmen's and repairmen's Liens and other similar Liens arising in the ordinary course of business securing obligations that are not overdue for a period of more than 30 days; (c) pledges or deposits to secure obligations under workers' compensation laws or similar legislation or to secure public or statutory obligations; and (d) easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable or materially adversely affect the use of such property for its present purposes. "Person" means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof. "Plan" means a Single Employer Plan or a Multiple Employer Plan. "Primary Currencies" means, collectively, the lawful currency of the United Kingdom of Great Britain and Northern Ireland, the lawful currency of the Federal Republic of Germany, the lawful currency of the Republic of France, the lawful currency of The Kingdom of the Netherlands, the lawful currency of The Swiss Confederation, the lawful currency of Spain, the lawful currency of Italy, the lawful currency of Belgium, the lawful currency of Australia and the lawful currency of Canada; provided, however, that any of the above-enumerated currencies shall 21 16 cease to be a "Primary Currency" upon notification by the Required Lenders to the Administrative Agent that such currency is not freely transferable and convertible into US Dollars or dealings in deposits in such currency are not carried out in the London interbank market. "Prime Rate" means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the higher of: (a) the rate of interest announced publicly by Fleet in New York, New York, from time to time, as Fleet's prime rate; and (b) 1/2 of one percent per annum above the Federal Funds Rate. "Prime Rate Advance" means an Advance (other than a Competitive Bid Advance) that bears interest as provided in Section 2.08(a)(i). "Pro Rata Share" of any amount means, with respect to any Lender at any time, the product of such amount times a fraction the numerator of which is the amount of such Lender's Revolving Credit Commitment at such time and the denominator of which is the Revolving Credit Facility at such time. "Register" has the meaning specified in Section 9.07(g). "Registration Rights Agreement" means the Registration Rights Agreement dated as of March 3, 1997 between Paxar and Odyssey Partners, L.P., as the same may be amended, modified or otherwise supplemented from time to time in accordance with the terms of this Agreement. "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Related Documents" means the Stock Purchase Agreement, the Warrant Agreement and the Registration Rights Agreement. "Required Lenders" means at any time Lenders owed or holding at least a majority in interest of the sum of (a) the aggregate principal amount of the Advances (other than Competitive Bid Advances) outstanding at such time and (b) the aggregate Available Amount of all Letters of Credit outstanding at such time, or, if no such principal amount and no Letters of Credit are outstanding at such time, Lenders holding at least a majority in interest of the aggregate of the Revolving Credit Commitments. For purposes of this definition, the aggregate principal amount of Swing Line Advances owing to the Swing Line Bank and of Letter of Credit Advances owing to the Issuing Bank and the Available Amount of each Letter of Credit shall be considered to be owed to the Lenders ratably in accordance with their respective Revolving Credit Commitments. "Revolving Credit Advance" has the meaning specified in Section 2.01(a). 22 17 "Revolving Credit Borrowing" means a borrowing consisting of simultaneous Revolving Credit Advances of the same Type made by each of the Lender Parties pursuant to Section 2.01(a). "Revolving Credit Commitment" means, with respect to any Lender at any time, the amount set forth opposite such Lender's name on Schedule I hereto under the caption "Revolving Credit Commitment" or, if such Lender has entered into one or more Assignments and Acceptances, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 9.07(g) as such Lender's "Revolving Credit Commitment", as such amount may be reduced at or prior to such time pursuant to Section 2.06. "Revolving Credit Facility" means, at any time, the aggregate amount of the Lenders' Revolving Credit Commitments at such time. "Revolving Credit Note" means a promissory note of each Borrower payable to the order of any Lender, in substantially the form of Exhibit A-1 hereto, evidencing the aggregate indebtedness of such Borrower to such Lender resulting from the Revolving Credit Advances made by such Lender to such Borrower. "S&P" means Standard & Poor's, a division of The McGraw-Hill Companies, Inc. "Senior Notes" means the 6.74% Senior Notes due 2008 issued by Paxar in an aggregate principal amount not to exceed $150,000,000. "Single Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of Paxar or any ERISA Affiliate and no Person other than Paxar and the ERISA Affiliates or (b) was so maintained and in respect of which Paxar or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated. "Solvent" and "Solvency" mean, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. "Standby Letter of Credit" means any Letter of Credit issued under the Letter of Credit Facility, other than a Trade Letter of Credit. 23 18 "Stock Purchase Agreement" means the Purchase and Sale Agreement dated as of December 20, 1996 between Paxar and Odyssey Partners, L.P., as the same may be amended, modified or otherwise supplemented from time to time in accordance with the terms of this Agreement. "Subsidiary" of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such limited liability company, partnership or joint venture or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person's other Subsidiaries. "Subsidiary Guarantors" means each of the Subsidiaries of Paxar that is organized under the laws of the United States of America or any state thereof. "Subsidiary Guaranty" means the Guaranty dated as of March 3, 1997 (which is attached hereto as Exhibit H) made by the Subsidiary Guarantors in favor of the Administrative Agent and the Lender Parties, as the same may be amended, modified or otherwise supplemented from time to time. "Swing Line Advance" means an advance which shall be denominated in US Dollars made by (a) the Swing Line Bank pursuant to Section 2.01(b) or (b) any Lender pursuant to Section 2.02(b). "Swing Line Bank" has the meaning specified in the recital of parties to this Agreement. "Swing Line Borrowing" means a borrowing consisting of a Swing Line Advance made by the Swing Line Bank. "Swing Line Facility" has the meaning specified in Section 2.01(b). "Termination Date" means the earlier of August 11, 2003 and the date of termination in whole of the Commitments pursuant to Section 2.06 or 6.01. "Trade Letter of Credit" means any Letter of Credit that is issued under the Letter of Credit Facility for the benefit of a supplier of inventory to Paxar or any of its Subsidiaries to effect payment for such inventory. "Type" refers to the distinction between Advances (other than Competitive Bid Advances) bearing interest at the Prime Rate and Advances bearing interest at the Eurocurrency Rate. 24 19 "Unused Revolving Credit Commitment" means, with respect to any Lender at any time (a) such Lender's Revolving Credit Commitment at such time minus (b) the sum of (i) the aggregate principal amount of all Revolving Credit Advances, Swing Line Advances and Letter of Credit Advances made by such Lender (in its capacity as a Lender) and outstanding at such time, plus (ii) such Lender's Pro Rata Share of (A) the aggregate Available Amount of all Letters of Credit outstanding at such time, (B) the aggregate principal amount of all Letter of Credit Advances made by the Issuing Bank pursuant to Section 2.04(c) and outstanding at such time, (C) the aggregate principal amount of all Swing Line Advances made by the Swing Line Bank pursuant to Section 2.01(b) and outstanding at such time, and (D) the aggregate principal amount of all Competitive Bid Advances outstanding at such time. "US Dollars" and the "$" sign each mean the lawful money of the United States of America. "Voting Stock" means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency. "Warrant Agreement" means the Warrant Agreement dated as of March 3, 1997 between Paxar and Odyssey Partners, L.P., as the same may be amended, modified or otherwise supplemented from time to time in accordance with the terms of this Agreement. "Year 2000 Risk" means the risk that computer applications used by Paxar and its Subsidiaries and/or its suppliers, vendors and customers may be unable to recognize and perform without error date-sensitive functions involving certain dates prior to and any date after December 31, 1999. SECTION 1.02. Computation of Time Periods. In this Agreement 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 words "to" and "until" each mean "to but excluding". SECTION 1.03. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(e) ("GAAP"). ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT SECTION 2.01. The Advances. (a) The Revolving Credit Advances. Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make advances (each a "Revolving Credit Advance") to each Borrower from time to time on any Business Day during the period from the 25 20 Effective Date until the Termination Date in an amount for each such Revolving Credit Advance (determined in the case of any Revolving Credit Advance denominated in a Primary Currency by reference to the Equivalent thereof in US Dollars on such Business Day) not to exceed such Lender's Unused Revolving Credit Commitment at such time; provided, however, that, after giving effect to such Revolving Credit Borrowing, the sum of (x) the aggregate principal amount of all Revolving Credit Advances, Swing Line Advances, Letter of Credit Advances and Competitive Bid Advances made hereunder and outstanding on such Business Day plus (y) the aggregate Available Amount of all Letters of Credit outstanding on such Business Day shall not exceed the Revolving Credit Facility on such Business Day. Each Revolving Credit Borrowing shall be in an aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof (or the Equivalent thereof in the Primary Currency in which such Revolving Credit Borrowing is denominated) (other than a Borrowing the proceeds of which shall be used solely to repay or prepay in full outstanding Swing Line Advances or outstanding Letter of Credit Advances) and shall consist of Revolving Credit Advances of the same Type and in the same currency made simultaneously by the Lenders ratably according to their Revolving Credit Commitments; provided, however, that after giving effect to any Revolving Credit Borrowing denominated in a Primary Currency, the Foreign Loan Amount on such date shall not exceed $100,000,000. Any "Revolving Credit Advances" outstanding on the Effective Date under the Existing Credit Agreement shall be Revolving Credit Advances for all purposes hereunder and under the other Loan Documents. Within the limits of each Lender's Commitment, the Borrowers may borrow under this Section 2.01, prepay pursuant to Section 2.11 and reborrow under this Section 2.01. (b) The Swing Line Advances. Paxar may request the Swing Line Bank to make, and the Swing Line Bank shall make, on the terms and conditions hereinafter set forth, Swing Line Advances to Paxar from time to time on any Business Day during the period from the date hereof until the Termination Date (i) in an aggregate amount not to exceed at any time outstanding $5,000,000 (the "Swing Line Facility") and (ii) in an amount for each such Swing Line Borrowing not to exceed the aggregate of the Unused Revolving Credit Commitments of the Lenders at such time. No Swing Line Advance shall be used for the purpose of funding the payment of principal of any other Swing Line Advance. Each Swing Line Borrowing shall be in an amount of $100,000 or an integral multiple of $100,000 in excess thereof and shall be made as a Prime Rate Advance or shall bear interest at such other interest rate, if any, as may be agreed upon by Paxar and the Swing Line Bank. Any "Swing Line Advances" outstanding on the Effective Date under the Existing Credit Agreement shall be Swing Line Advances for all purposes hereunder and under the other Loan Documents. Within the limits of the Swing Line Facility and within the limits referred to in clause (ii) above, Paxar may borrow under this Section 2.01(b), repay pursuant to Section 2.07(c) or prepay pursuant to Section 2.11 and reborrow under this Section 2.01(b). (c) Letters of Credit. The Issuing Bank agrees, on the terms and conditions hereinafter set forth, to issue letters of credit (the "Letters of Credit") for the account of a Borrower from time to time on any Business Day during the period from the date hereof until 60 days before the Termination Date (i) in an aggregate Available Amount for all Letters of Credit not to exceed at any time the Issuing Bank's Letter of Credit Commitment at such time and (ii) in an Available Amount for each such Letter of Credit not to exceed the lesser of (x) the Letter of Credit Facility at such time and (y) the Unused Revolving Credit Commitments of the Lenders at such time. No Letter of Credit shall have an expiration date (including all rights of the relevant Borrower or the beneficiary to require renewal) later than the earlier of 60 days before the Termination Date and (A) in the case of a Standby Letter of Credit, one year after the date of issuance thereof, but may by its terms be automatically renewable annually upon notice 26 21 (a "Notice of Renewal") given to the Issuing Bank and the Administrative Agent on or prior to any date for notice of renewal set forth in such Letter of Credit but in any event at least three Business Days prior to the date of the proposed renewal of such Standby Letter of Credit and upon fulfillment of the applicable conditions set forth in Article III unless such Issuing Bank has notified the relevant Borrower (with a copy to the Administrative Agent) on or prior to the date for notice of termination set forth in such Letter of Credit but in any event at least 30 Business Days prior to the date of automatic renewal of its election not to renew such Standby Letter of Credit (a "Notice of Termination")) and (B) in the case of a Trade Letter of Credit, 60 days after the date of issuance thereof; provided that the terms of each Standby Letter of Credit that is automatically renewable annually shall (x) require the Issuing Bank that issued such Standby Letter of Credit to give the beneficiary named in such Standby Letter of Credit notice of any Notice of Termination, (y) permit such beneficiary, upon receipt of such notice, to draw under such Standby Letter of Credit prior to the date such Standby Letter of Credit otherwise would have been automatically renewed and (z) not permit the expiration date (after giving effect to any renewal) of such Standby Letter of Credit in any event to be extended to a date later than 60 days before the Termination Date. If either a Notice of Renewal is not given by the relevant Borrower or a Notice of Termination is given by the Issuing Bank pursuant to the immediately preceding sentence, such Standby Letter of Credit shall expire on the date on which it otherwise would have been automatically renewed; provided, however, that even in the absence of receipt of a Notice of Renewal the Issuing Bank may in its discretion, unless instructed to the contrary by the Administrative Agent or the relevant Borrower, deem that a Notice of Renewal had been timely delivered and in such case, a Notice of Renewal shall be deemed to have been so delivered for all purposes under this Agreement. Any "Letters of Credit" outstanding on the Effective Date under the Existing Credit Agreement shall be Letters of Credit for all purposes hereunder and under the other Loan Documents. Within the limits of the Letter of Credit Facility, and subject to the limits referred to above, the Borrower may request the issuance of Letters of Credit under this Section 2.01(c), repay any Letter of Credit Advances resulting from drawings thereunder pursuant to Section 2.04(c) and request the issuance of additional Letters of Credit under this Section 2.01(c). SECTION 2.02. Making the Advances. (a) Except as otherwise provided in Section 2.02(b) or 2.03, each Borrowing (other than a Competitive Bid Borrowing) shall be made on notice, given not later than 12:00 Noon (New York City time) on the third Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Eurocurrency Rate Advances, or the first Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Prime Rate Advances, by the relevant Borrower to the Administrative Agent, which shall give to each Lender prompt notice thereof by telecopier or telex. Each such notice of a Borrowing (a "Notice of Borrowing") shall be by telephone, confirmed immediately in writing, or telecopier or telex in substantially the form of Exhibit B-1 hereto, specifying therein the requested (i) date of such Borrowing, (ii) Facility under which such Borrowing is to be made, (iii) Type of Advances comprising such Borrowing, (iv) aggregate amount of such Borrowing, and (v) in the case of a Borrowing consisting of Eurocurrency Rate Advances, initial Interest Period and the currency for each such Advance. Each Lender shall, before 12:00 Noon (New York City time) on the date of such Borrowing, make available for the account of its Applicable Lending Office to the Administrative Agent at the Administrative Agent's Account, in same day funds, such Lender's ratable portion of such Borrowing. After the Administrative Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower at the Administrative Agent's address referred to in Section 9.02. 27 22 (b) Each Swing Line Borrowing shall be made on notice, given not later than 12:00 Noon (New York City time) on the date of the proposed Swing Line Borrowing, by Paxar to the Swing Line Bank and the Administrative Agent. Each such notice of a Swing Line Borrowing (a "Notice of Swing Line Borrowing") shall be by telephone, confirmed immediately in writing, or telex or telecopier, specifying therein the requested (i) date of such Borrowing, (ii) amount of such Borrowing and (iii) interest rate to be applicable to the Advances comprising such Borrowing (which interest rate shall either be the Prime Rate or such other interest rate as may be agreed upon by Paxar and the Swing Line Bank). The Swing Line Bank will make the amount thereof available to the Administrative Agent at the Administrative Agent's Account, in same day funds. After the Administrative Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to Paxar at the Administrative Agent's address referred to in Section 9.02. Upon written demand by the Swing Line Bank, with a copy of such demand to the Administrative Agent, each other Lender shall purchase from the Swing Line Bank, and the Swing Line Bank shall sell and assign to each such other Lender, such other Lender's Pro Rata Share of such outstanding Swing Line Advance as of the date of such demand, by making available for the account of its Applicable Lending Office to the Administrative Agent for the account of the Swing Line Bank, by deposit to the Administrative Agent's Account, in same day funds, an amount equal to the portion of the outstanding principal amount of such Swing Line Advance to be purchased by such Lender. Paxar hereby agrees to each such sale and assignment. Effective upon each such sale and assignment, each Swing Line Advance purchased by a Lender shall be, for all purposes under this Agreement, a Revolving Credit Advance (which shall be a Prime Rate Advance). Upon any such assignment by the Swing Line Bank to any other Lender of a portion of a Swing Line Advance, the Swing Line Bank represents and warrants to such other Lender that the Swing Line Bank is the legal and beneficial owner of such interest being assigned by it, free and clear of any liens, but makes no other representation or warranty and assumes no responsibility with respect to such Swing Line Advance, the Loan Documents or any Loan Party. If and to the extent that any Lender shall not have so made the amount of such Swing Line Advance available to the Administrative Agent, such Lender agrees to pay to the Administrative Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by the Swing Line Bank until the date such amount is paid to the Administrative Agent, at the Federal Funds Rate. If such Lender shall pay to the Administrative Agent such amount for the account of the Swing Line Bank on any Business Day, such amount so paid in respect of principal shall constitute a Swing Line Advance made by such Lender on such Business Day for purposes of this Agreement, and the outstanding principal amount of the Swing Line Advance made by the Swing Line Bank shall be reduced by such amount on such Business Day. (c) Anything in subsection (a) above to the contrary notwithstanding, (i) a Borrower may not select Eurocurrency Rate Advances for any Borrowing if the aggregate amount of such Borrowing is less than $5,000,000 or if the obligation of the Lenders to make Eurocurrency Rate Advances shall then be suspended pursuant to Section 2.09 or 2.13 and (ii) the Eurocurrency Rate Advances may not be outstanding as part of more than 10 separate Borrowings. (d) Each Notice of Borrowing and Notice of Swing Line Borrowing shall be irrevocable and binding on the relevant Borrower. In the case of any Borrowing that the related Notice of Borrowing specifies is to be comprised of Eurocurrency Rate Advances, the relevant Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable 28 23 conditions set forth in Article III, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance, as a result of such failure, is not made on such date. (e) Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender's ratable portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with subsection (a) or (b) of this Section 2.02 and the Administrative Agent may, in reliance upon such assumption, make available to the appropriate Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Administrative Agent, such Lender and the appropriate Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the appropriate Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of such Borrower, the interest rate applicable at the time to Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender's Advance as part of such Borrowing for purposes of this Agreement. (f) The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing. SECTION 2.03. The Competitive Bid Advances. (a) Each Lender severally agrees that Paxar may make Competitive Bid Borrowings under this Section 2.03 from time to time on any Business Day during the period from the date hereof until the date occurring 30 days prior to the Termination Date in the manner set forth below; provided that, following the making of each Competitive Bid Borrowing, (x) the aggregate amount of the Competitive Bid Advances then outstanding shall not exceed $60,000,000 and (y) the sum of the aggregate principal amount of the Revolving Credit Advances, the Swing Line Advances, the Letter of Credit Advances and the Competitive Bid Advances then outstanding plus the aggregate Available Amount of all Letters of Credit outstanding at such time shall not exceed the aggregate amount of the Revolving Credit Commitments of the Lenders. (i) Paxar may request a Competitive Bid Borrowing under this Section 2.03 by delivering to the Administrative Agent, by telecopier or telex, a notice of a Competitive Bid Borrowing (a "Notice of Competitive Bid Borrowing"), in substantially the form of Exhibit B-2 hereto, specifying therein the requested (v) date of such proposed Competitive Bid Borrowing, (w) aggregate amount of such proposed Competitive Bid Borrowing, (x) in the case of a Competitive Bid Borrowing consisting of LIBO Rate Advances, the Interest Period for and the maturity date of such LIBO Rate Advance, or in the case of a Competitive Bid Borrowing consisting of Fixed Rate Advances, maturity date for repayment of each Fixed Rate Advance to be made as part of such Competitive Bid Borrowing (which maturity date may not be earlier than the date occurring 7 days after the date of such Competitive Bid Borrowing or later than the earlier 29 24 of (I) 180 days after the date of such Competitive Bid Borrowing and (II) the Termination Date), (y) interest payment date or dates relating thereto, and (z) other terms (if any) to be applicable to such Competitive Bid Borrowing, not later than 10:00 A.M. (New York City time) (A) at least one Business Day prior to the date of the proposed Competitive Bid Borrowing, if Paxar shall specify in the Notice of Competitive Bid Borrowing that the rates of interest to be offered by the Lenders shall be fixed rates per annum (the Advances comprising any such Competitive Bid Borrowing being referred to herein as "Fixed Rate Advances") and (B) at least five Business Days prior to the date of the proposed Competitive Bid Borrowing, if Paxar shall instead specify in the Notice of Competitive Bid Borrowing that the rates of interest be offered by the Lenders are to be based on the LIBO Rate (the Advances comprising such Competitive Bid Borrowing being referred to herein as "LIBO Rate Advances"). Each Notice of Competitive Bid Borrowing shall be irrevocable and binding on Paxar. The Administrative Agent shall in turn promptly notify each Lender of each request for a Competitive Bid Borrowing received by it from Paxar by sending such Lender a copy of the related Notice of Competitive Bid Borrowing. (ii) Each Lender may, if, in its sole discretion, it elects to do so, irrevocably offer to make one or more Competitive Bid Advances to Paxar as part of such proposed Competitive Bid Borrowing at a rate or rates of interest specified by such Lender in its sole discretion, by notifying the Administrative Agent (which shall give prompt notice thereof to Paxar), before 9:30 A.M. (New York City time) on the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of Fixed Rate Advances and before 10:00 A.M. (New York City time) three Business Days before the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of LIBO Rate Advances, of the minimum amount and maximum amount of each Competitive Bid Advance which such Lender would be willing to make as part of such proposed Competitive Bid Borrowing (which amounts may, subject to the proviso to the first sentence of this Section 2.03(a), exceed such Lender's Commitment, if any), the rate or rates of interest therefor and such Lender's Applicable Lending Office with respect to such Competitive Bid Advance; provided that if the Administrative Agent in its capacity as a Lender shall, in its sole discretion, elect to make any such offer, it shall notify Paxar of such offer at least 30 minutes before the time and on the date on which notice of such election is to be given to the Administrative Agent by the other Lenders. If any Lender shall elect not to make such an offer, such Lender shall so notify the Administrative Agent, before 10:00 A.M. (New York City time) on the date on which notice of such election is to be given to the Administrative Agent by the other Lenders, and such Lender shall not be obligated to, and shall not, make any Competitive Bid Advance as part of such Competitive Bid Borrowing; provided that the failure by any Lender to give such notice shall not cause such Lender to be obligated to make any Competitive Bid Advance as part of such proposed Competitive Bid Borrowing. (iii) Paxar shall, in turn, before 10:30 A.M. (New York City time) on the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of Fixed Rate Advances and before 11:00 A.M. (New York City time) three Business Days before the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of LIBO Rate Advances, either: 30 25 (x) cancel such Competitive Bid Borrowing by giving the Administrative Agent notice to that effect, or (y) accept one or more of the offers made by any Lender or Lenders pursuant to paragraph (ii) above, in its sole discretion, by giving notice to the Administrative Agent of the amount of each Competitive Bid Advance (which amount shall be equal to or greater than the minimum amount, and equal to or less than the maximum amount, notified to Paxar by the Administrative Agent on behalf of such Lender for such Competitive Bid Advance pursuant to paragraph (ii) above) to be made by each Lender as part of such Competitive Bid Borrowing, and reject any remaining offers made by Lenders pursuant to paragraph (ii) above by giving the Administrative Agent notice to that effect. Paxar shall accept the offers made by any Lender or Lenders to make Competitive Bid Advances in order of the lowest to the highest rates of interest offered by such Lenders. If two or more Lenders have offered the same interest rate, the amount to be borrowed at such interest rate will be allocated among such Lenders in proportion to the amount that each such Lender offered at such interest rate. (iv) If Paxar notifies the Administrative Agent that such Competitive Bid Borrowing is canceled pursuant to paragraph (iii)(x) above, the Administrative Agent shall give prompt notice thereof to the Lenders and such Competitive Bid Borrowing shall not be made. (v) If Paxar accepts one or more of the offers made by any Lender or Lenders pursuant to paragraph (iii)(y) above, the Administrative Agent shall in turn promptly notify (A) each Lender that has made an offer as described in paragraph (ii) above, of the date and aggregate amount of such Competitive Bid Borrowing and whether or not any offer or offers made by such Lender pursuant to paragraph (ii) above have been accepted by Paxar, (B) each Lender that is to make a Competitive Bid Advance as part of such Competitive Bid Borrowing, of the amount of each Competitive Bid Advance to be made by such Lender as part of such Competitive Bid Borrowing, and (C) each Lender that is to make a Competitive Bid Advance as part of such Competitive Bid Borrowing, upon receipt, that the Administrative Agent has received forms of documents appearing to fulfill the applicable conditions set forth in Article III. Each Lender that is to make a Competitive Bid Advance as part of such Competitive Bid Borrowing shall, before 1:00 P.M. (New York City time) on the date of such Competitive Bid Borrowing specified in the notice received from the Administrative Agent pursuant to clause (A) of the preceding sentence or any later time when such Lender shall have received notice from the Administrative Agent pursuant to clause (C) of the preceding sentence, make available for the account of its Applicable Lending Office to the Administrative Agent at the Administrative Agent's Account, in same day funds, such Lender's portion of such Competitive Bid Borrowing. Upon fulfillment of the applicable conditions set forth in Article III and after receipt by the Administrative Agent of such funds, the Administrative Agent will make such funds available to Paxar at the Administrative Agent's address referred to in Section 9.02. Promptly after each Competitive Bid Borrowing the Administrative Agent will notify each Lender of the amount of the Competitive Bid Borrowing and the Unused Revolving Credit Commitments of the Lenders after giving effect to such Competitive Bid Borrowing. 31 26 (vi) If Paxar notifies the Administrative Agent that it accepts one or more of the offers made by any Lender or Lenders pursuant to paragraph (iii)(y) above, such notice of acceptance shall be irrevocable and binding on Paxar. Paxar shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in the related Notice of Competitive Bid Borrowing for such Competitive Bid Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Competitive Bid Advance to be made by such Lender as part of such Competitive Bid Borrowing when such Competitive Bid Advance, as a result of such failure, is not made on such date. (b) Each Competitive Bid Borrowing shall be in an aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and, following the making of each Competitive Bid Borrowing, the Borrowers shall be in compliance with the limitations set forth in the proviso to the first sentence of subsection (a) above. (c) Within the limits and on the conditions set forth in this Section 2.03, Paxar may from time to time borrow under this Section 2.03, repay or prepay pursuant to subsection (d) below, and reborrow under this Section 2.03, provided that a Competitive Bid Borrowing shall not be made within three Business Days of the date of any other Competitive Bid Borrowing. (d) Paxar shall repay to the Administrative Agent for the account of each Lender that has made a Competitive Bid Advance, on the maturity date of each Competitive Bid Advance (such maturity date being that specified by Paxar for repayment of such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above and provided in the Competitive Bid Note evidencing such Competitive Bid Advance), the then unpaid principal amount of such Competitive Bid Advance. Paxar shall have no right to prepay any principal amount of any Competitive Bid Advance unless, and then only on the terms, specified by Paxar for such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above and set forth in the Competitive Bid Note evidencing such Competitive Bid Advance. (e) Paxar shall pay interest on the unpaid principal amount of each Competitive Bid Advance from the date of such Competitive Bid Advance to the date the principal amount of such Competitive Bid Advance is repaid in full, at the rate of interest for such Competitive Bid Advance specified by the Lender making such Competitive Bid Advance in its notice with respect thereto delivered pursuant to subsection (a)(ii) above, payable on the interest payment date or dates specified by Paxar for such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above, as provided in the Competitive Bid Note evidencing such Competitive Bid Advance. Upon the occurrence and during the continuance of an Event of Default, Paxar shall pay interest on the amount of unpaid principal of and interest on each Competitive Bid Advance owing to a Lender, payable in arrears on the date or dates interest is payable thereon, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Competitive Bid Advance under the terms of the Competitive Bid Note evidencing such Competitive Bid Advance unless otherwise agreed in such Competitive Bid Note. 32 27 (f) The indebtedness of Paxar resulting from each Competitive Bid Advance shall be evidenced by a separate Competitive Bid Note of Paxar payable to the order of the Lender making such Competitive Bid Advance. (g) Upon delivery of each Notice of Competitive Bid Borrowing, Paxar shall pay a non-refundable fee of $3,500 to the Administrative Agent for its own account. SECTION 2.04. Issuance of and Drawings and Reimbursement Under Letters of Credit. (a) Request for Issuance. Each Letter of Credit shall be issued upon notice, given not later than 11:00 A.M. (New York City time) on the fifth Business Day prior to the date of the proposed issuance of such Letter of Credit, by the relevant Borrower to the Issuing Bank, which shall give to the Administrative Agent and each Lender prompt notice thereof by telex or telecopier. Each such notice of issuance of a Letter of Credit (a "Notice of Issuance") shall be by telephone, confirmed immediately in writing, or telex or telecopier, specifying therein the requested (A) date of such issuance (which shall be a Business Day), (B) Available Amount of such Letter of Credit, (C) expiration date of such Letter of Credit, (D) name and address of the beneficiary of such Letter of Credit and (E) form of such Letter of Credit, and shall be accompanied by such application and agreement for letter of credit as the Issuing Bank may specify to such Borrower for use in connection with such requested Letter of Credit (a "Letter of Credit Agreement"). If (x) the requested form of such Letter of Credit is acceptable to the Issuing Bank in its sole discretion and (y) it has not received written notice of objection to such issuance from the Required Lenders, the Issuing Bank will, upon fulfillment of the applicable conditions set forth in Article III, make such Letter of Credit available to the relevant Borrower at its office referred to in Section 9.02 or as otherwise agreed with such Borrower in connection with such issuance. In the event and to the extent that the provisions of any Letter of Credit Agreement shall conflict with this Agreement, the provisions of this Agreement shall govern. (b) Letter of Credit Reports. The Issuing Bank shall furnish (A) to the Administrative Agent and each Lender on the first Business Day of each month a written report summarizing issuance and expiration dates of Letters of Credit issued during the preceding month and drawings during such month under all Letters of Credit and (B) to the Administrative Agent and each Lender on the first Business Day of each calendar quarter a written report setting forth the average daily aggregate Available Amount during the preceding calendar quarter of all Letters of Credit. (c) Drawing and Reimbursement. The payment by the Issuing Bank of a draft drawn under any Letter of Credit shall constitute for all purposes of this Agreement the making by the Issuing Bank of a Letter of Credit Advance, which shall be a Prime Rate Advance, in the amount of such draft. Upon written demand by the Issuing Bank, with a copy of such demand to the Administrative Agent, each Lender shall purchase from the Issuing Bank, and the Issuing Bank shall sell and assign to each such Lender, such Lender's Pro Rata Share of such outstanding Letter of Credit Advance as of the date of such purchase, by making available for the account of its Applicable Lending Office to the Administrative Agent for the account of the Issuing Bank, by deposit to the Administrative Agent's Account, in same day funds, an amount equal to the portion of the outstanding principal amount of such Letter of Credit Advance to be purchased by such Lender. Promptly after receipt thereof, the Administrative Agent shall transfer such funds to the Issuing Bank. Each Borrower hereby agrees to each such sale and assignment. Each Lender agrees to purchase its Pro Rata Share of an outstanding Letter of Credit Advance on (i) the Business Day 33 28 on which demand therefor is made by the Issuing Bank, provided notice of such demand is given not later than 11:00 A.M. (New York City time) on such Business Day or (ii) the first Business Day next succeeding such demand if notice of such demand is given after such time. Upon any such assignment by the Issuing Bank to any other Lender of a portion of a Letter of Credit Advance, the Issuing Bank represents and warrants to such other Lender that the Issuing Bank is the legal and beneficial owner of such interest being assigned by it, free and clear of any liens, but makes no other representation or warranty and assumes no responsibility with respect to such Letter of Credit Advance, the Loan Documents or any Loan Party. If and to the extent that any Lender shall not have so made the amount of such Letter of Credit Advance available to the Administrative Agent, such Lender agrees to pay to the Administrative Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by the Issuing Bank until the date such amount is paid to the Administrative Agent, at the Federal Funds Rate for its account or the account of the Issuing Bank, as applicable. If such Lender shall pay to the Administrative Agent such amount for the account of the Issuing Bank on any Business Day, such amount so paid in respect of principal shall constitute a Letter of Credit Advance made by such Lender on such Business Day for purposes of this Agreement, and the outstanding principal amount of the Letter of Credit Advance made by the Issuing Bank shall be reduced by such amount on such Business Day. (d) Failure to Make Letter of Credit Advances. The failure of any Lender to make the Letter of Credit Advance to be made by it on the date specified in Section 2.04(c) shall not relieve any other Lender of its obligation hereunder to make its Letter of Credit Advance on such date, but no Lender shall be responsible for the failure of any other Lender to make the Letter of Credit Advance to be made by such other Lender on such date. SECTION 2.05. Fees. (a) Revolving Credit Facility Fee. Paxar agrees to pay to the Administrative Agent for the account of each Lender (other than the Designated Bidders) a facility fee on the aggregate amount of such Lender's Revolving Credit Commitment from the Effective Date in the case of each Initial Lender and from the later of the Effective Date and the effective date specified in the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender until the Termination Date at a rate per annum equal to the Applicable Percentage in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December, commencing September 30, 1998, and on the Termination Date. (b) Letter of Credit Fees, Etc. (i) Paxar shall pay to the Administrative Agent for the account of each Lender a commission, payable in arrears quarterly on the last Business Day of each March, June, September and December, commencing September 30,1998, and on the earliest to occur of the full drawing, expiration, termination or cancellation of any such Letter of Credit and on the Termination Date, on such Lender's Pro Rata Share of the average daily aggregate Available Amount during such quarter of all Letters of Credit outstanding from time to time at the Applicable Margin then in effect for the Revolving Credit Facility. (ii) Paxar shall pay to the Issuing Bank, for its own account, such commissions, issuance fees, fronting fees, transfer fees and other fees and charges in connection with the issuance or administration of each Letter of Credit as Paxar and the Issuing Bank shall agree. 34 29 (c) Administrative Agent's Fees. Paxar shall pay to the Administrative Agent for its own account such fees as may from time to time be agreed between Paxar and the Administrative Agent. SECTION 2.06. Termination or Reduction of the Commitments. The Borrower shall have the right, upon at least five Business Days' notice to the Administrative Agent, to terminate in whole or reduce ratably in part the Unused Revolving Credit Commitments of the Lenders, provided that each partial reduction shall be in the aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof and provided further that the aggregate amount of the Revolving Credit Commitments of the Lenders shall not be reduced to an amount that is less than an amount equal to the sum of (x) the aggregate principal amount of the Competitive Bid Advances then outstanding and (y) the aggregate Available Amount of all Letters of Credit then outstanding. SECTION 2.07. Repayment of Advances. (a) Revolving Credit Advances. Each Borrower shall repay to the Administrative Agent for the ratable account of the Lenders on the Termination Date the aggregate principal amount of the Revolving Credit Advances then outstanding. (b) Swing Line Advances. Paxar shall repay to the Administrative Agent for the account of the Swing Line Bank and each other Lender that has made a Swing Line Advance the outstanding principal amount of each Swing Line Advance made by each of them on the earliest of (i) the date repayment is demanded by the Swing Line Bank, (ii) 60 days after such Swing Line Advance is made and (iii) the Termination Date. (c) Letter of Credit Advances. (i) The relevant Borrower shall repay to the Administrative Agent for the account of the Issuing Bank and each other Lender that has made a Letter of Credit Advance on the earlier of demand and the Termination Date the outstanding principal amount of each Letter of Credit Advance made by each of them. (ii) The Obligations of each Borrower under this Agreement, any Letter of Credit Agreement and any other agreement or instrument relating to any Letter of Credit shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement, such Letter of Credit Agreement and such other agreement or instrument under all circumstances, including, without limitation, the following circumstances (it being understood that any such payment by a Borrower is without prejudice to, and does not constitute a waiver of, any rights such Borrower might have or might acquire as a result of the payment by the Issuing Bank of any draft or the reimbursement by such Borrower thereof): (A) any lack of validity or enforceability of any Loan Document, any Letter of Credit Agreement, any Letter of Credit or any other agreement or instrument relating thereto (all of the foregoing being, collectively, the "L/C Related Documents"); (B) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations of any Borrower in respect of any L/C Related Document or any other amendment or waiver of or any consent to departure from all or any of the L/C Related Documents; 35 30 (C) the existence of any claim, set-off, defense or other right that a Borrower may have at any time against any beneficiary or any transferee of a Letter of Credit (or any Persons for whom any such beneficiary or any such transferee may be acting), the Issuing Bank or any other Person, whether in connection with the transactions contemplated by the L/C Related Documents or any unrelated transaction; (D) any statement or any other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (E) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; (F) any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from the Guaranty, the Subsidiary Guaranty or any other guarantee, for all or any of the Obligations of a Borrower in respect of the L/C Related Documents; or (G) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, a Borrower or a guarantor. SECTION 2.08. Interest. (a) Scheduled Interest. Each Borrower shall pay interest on the unpaid principal amount of each Advance (other than Competitive Bid Advances or Swing Line Advances that are not Prime Rate Advances) owing to each Lender by such Borrower from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum: (i) Prime Rate Advances. During such periods as such Advance is a Prime Rate Advance, a rate per annum equal at all times to the Prime Rate in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December during such periods and on the date such Prime Rate Advance shall be Converted or paid in full. (ii) Eurocurrency Rate Advances. During such periods as such Advance is a Eurocurrency Rate Advance, a rate per annum equal at all times during each Interest Period for such Advance to the sum of (x) the Eurocurrency Rate for such Interest Period for such Advance plus (y) the Applicable Margin in effect on the first day of such Interest Period, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurocurrency Rate Advance shall be Converted or paid in full. (b) Default Interest. Upon the occurrence and during the continuance of an Event of Default, each Borrower shall pay interest on (i) the unpaid principal amount of each Advance (other than a Competitive Bid Advance) owing to each Lender by such Borrower, payable in arrears on the dates referred to in clause (a)(i) or (a)(ii) above, at a rate per annum equal at all times to 2% per annum above 36 31 the rate per annum required to be paid on such Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the fullest extent permitted by law, the amount of any interest, fee or other amount payable hereunder that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on Prime Rate Advances pursuant to clause (a)(i) above. (c) Additional Interest on Eurocurrency Rate Advances. Each Borrower shall pay to each Lender, so long as and to the extent such Lender shall be required under regulations of the Board of Governors of the Federal Reserve System to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency Liabilities, additional interest on the unpaid principal amount of each Eurocurrency Rate Advance of such Lender, from the date of such Eurocurrency Rate Advance until such principal amount is paid in full, at an interest rate per annum equal at all times to the remainder obtained by subtracting (a) the Eurocurrency Rate for the applicable Interest Period for such Eurocurrency Rate Advance from (b) the rate obtained by dividing such Eurocurrency Rate by a percentage equal to 100% minus the Eurocurrency Rate Reserve Percentage of such Lender for such Interest Period, payable on each date on which interest is otherwise payable on such Eurocurrency Rate Advance. Such Lender shall as soon as practicable provide notice to the Administrative Agent and the Borrowers of any such additional interest arising in connection with any such Eurocurrency Rate Advance, which notice shall be conclusive and binding, absent manifest error. SECTION 2.09. Interest Rate Determination. (a) The Administrative Agent shall give prompt notice to the Borrowers and the Lenders of the applicable interest rate determined by the Administrative Agent for purposes of Section 2.08(a)(i) or (ii). (b) If, with respect to any Eurocurrency Rate Advances, the Required Lenders notify the Administrative Agent that the Eurocurrency Rate for any Interest Period for such Advances will not adequately reflect the cost to such Required Lenders of making, funding or maintaining their respective Eurocurrency Rate Advances for such Interest Period, the Administrative Agent shall forthwith so notify the Borrowers and the Lenders, whereupon (i) each Eurocurrency Rate Advance will automatically, on the last day of the then existing Interest Period therefor, (A) if such Eurocurrency Rate Advances are denominated in US Dollars, Convert into Prime Rate Advances and (B) if such Eurocurrency Rate Advances are denominated in a Primary Currency, be exchanged for an Equivalent amount of US Dollars and converted into Prime Rate Advances, and (ii) the obligation of the Lenders to make, or to Convert Revolving Credit Advances into, Eurocurrency Rate Advances shall be suspended until the Administrative Agent shall notify the Borrowers and the Lenders that the circumstances causing such suspension no longer exist. (c) If a Borrower shall fail to select the duration of any Interest Period for any Eurocurrency Rate Advances in accordance with the provisions contained in the definition of "Interest Period" in Section 1.01, the Administrative Agent will forthwith so notify such Borrower and the Lenders and such Advances will automatically, on the last day of the then existing Interest Period therefor, (i) if such Eurocurrency Rate Advances are denominated in US Dollars, Convert into Prime Rate Advances and (ii) if such Eurocurrency Rate Advances are denominated in a Primary Currency, be exchanged for an Equivalent amount of US Dollars and Converted into Prime Rate Advances. 37 32 (d) On the date on which the aggregate unpaid principal amount of Eurocurrency Rate Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $5,000,000, such Advances shall automatically (i) if such Eurocurrency Rate Advances are denominated in US Dollars, Convert into Prime Rate Advances and (ii) if such Eurocurrency Rate Advances are denominated in a Primary Currency, be exchanged for an Equivalent amount of US Dollars and Converted into Prime Rate Advances. (e) Upon the occurrence and during the continuance of any Event of Default, (i) each Eurocurrency Rate Advance will automatically, on the last day of the then existing Interest Period therefor, (A) if such Eurocurrency Rate Advances are denominated in US Dollars, Convert into Prime Rate Advances and (B) if such Eurocurrency Rate Advances are denominated in a Primary Currency, be exchanged for an Equivalent amount of US Dollars and Converted into Prime Rate Advances and (ii) the obligation of the Lenders to make, or to Convert Advances into, Eurocurrency Rate Advances shall be suspended. SECTION 2.10. Conversion of Advances. Each Borrower may on any Business Day, upon notice given to the Administrative Agent not later than 12:00 Noon (New York City time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.09 and 2.13, Convert all Advances owing by such Borrower (other than Competitive Bid Advances) of one Type comprising the same Borrowing into Advances (other than Competitive Bid Advances) of the other Type, so long as, after giving effect to any such Conversion, each such Borrowing is comprised of Advances denominated in the same currency and, in the case of any Borrowing comprised of Eurocurrency Rate Advances, having the same Interest Period; provided, however, that (w) no Eurocurrency Rate Advances of one currency shall be Converted into Eurocurrency Rate Advances of another currency, (x) any Conversion of Eurocurrency Rate Advances into Prime Rate Advances shall be made only on the last day of an Interest Period for such Eurocurrency Rate Advances, (y) any Conversion of Prime Rate Advances into Eurocurrency Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(c) and (z) no Conversion of any such Advances shall result in more separate Borrowings than permitted under Section 2.02(c). Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Advances to be Converted, and (iii) if such Conversion is into Eurocurrency Rate Advances, the currency of and the duration of the initial Interest Period for each such Advance. Each notice of Conversion shall be irrevocable and binding on the relevant Borrower. SECTION 2.11. Prepayments. (a) Optional. Each Borrower may, upon at least one Business Day's notice in the case of Prime Rate Advances and three Business Days' notice in the case of Eurocurrency Rate Advances, in each case to the Administrative Agent stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given such Borrower shall, prepay the outstanding principal amount of the Advances owing by such Borrower and comprising part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided, however, that (x) each partial prepayment shall be in an aggregate principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof (or the Equivalent thereof in the Primary Currency in which such Revolving Credit Borrowing is denominated, determined on the date the related notice of prepayment is given) and (y) in the event of any such prepayment of a 38 33 Eurocurrency Rate Advance, such Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 9.04(c). (b) Mandatory. (i) Paxar shall, on each Business Day, prepay an aggregate principal amount of the Revolving Credit Advances comprising part of the same Borrowings, the Letter of Credit Advances and the Swing Line Advances equal to the amount by which (A) the sum of the aggregate principal amount of (u) the Revolving Credit Advances denominated in US Dollars, plus (v) the Equivalent on such day of the Revolving Credit Advances denominated in Primary Currencies, plus (w) the Letter of Credit Advances, plus (x) the aggregate Available Amount of all Letters of Credit then outstanding, plus (y) the Swing Line Advances plus (z) the Competitive Bid Advances then outstanding exceeds (B) the Revolving Credit Facility. (ii) Prepayments of the Revolving Credit Facility made pursuant to clause (i) above shall be first applied to prepay Letter of Credit Advances then outstanding until such Advances are paid in full, second applied to prepay Swing Line Advances then outstanding until such Advances are paid in full and third applied to prepay Revolving Credit Advances then outstanding comprising part of the same Borrowings until such Advances are paid in full. (iii) All prepayments under this subsection (b) shall be made together with accrued interest to the date of such prepayment on the principal amount prepaid. SECTION 2.12. Increased Costs. (a) If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to any Lender Party of agreeing to make or making, funding or maintaining Eurocurrency Rate Advances or LIBO Rate Advances (excluding for purposes of this Section 2.12 any such increased costs resulting from (i) Taxes or Other Taxes (as to which Section 2.15 shall govern) and (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or by the foreign jurisdiction or state under the laws of which such Lender Party is organized or has its Applicable Lending Office or any political subdivision thereof), then Paxar shall from time to time, upon demand by such Lender Party (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender Party additional amounts sufficient to compensate such Lender Party for such increased cost. A certificate as to the amount of such increased cost, submitted to Paxar and the Administrative Agent by such Lender Party, shall be conclusive and binding for all purposes, absent manifest error. (b) If any Lender Party determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender Party or any corporation controlling such Lender Party and that the amount of such capital is increased by or based upon the existence of such Lender Party's commitment to lend or to issue or participate in Letters of Credit hereunder and other commitments of this type or the issuance or maintenance of, or participation in, the Letters of Credit (or similar contingent obligations), then, upon demand by such Lender Party (with a copy of such demand to the Administrative Agent), Paxar shall pay to the Administrative Agent for the account of such Lender Party, from time to time as specified by such 39 34 Lender Party, additional amounts sufficient to compensate such Lender Party or such corporation in the light of such circumstances, to the extent that such Lender Party reasonably determines such increase in capital to be allocable to the existence of such Lender Party's commitment to lend or to issue or participate in Letters of Credit hereunder or to the issuance or maintenance of, or participation in, any Letters of Credit. A certificate as to such amounts submitted to Paxar and the Administrative Agent by such Lender Party shall be conclusive and binding for all purposes, absent manifest error. SECTION 2.13. Illegality. Notwithstanding any other provision of this Agreement, if any Lender shall notify the Administrative Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for any Lender or its Eurocurrency Lending Office to perform its obligations hereunder to make Eurocurrency Rate Advances or LIBO Rate Advances or to fund or maintain Eurocurrency Rate Advances or LIBO Rate Advances hereunder, (i) each Eurocurrency Rate Advance or LIBO Rate Advance, as the case may be, will automatically, upon such demand, be exchanged for an Equivalent amount of US Dollars and Converted into a Prime Rate Advance or an Advance that bears interest at the rate set forth in Section 2.08(a)(i), as the case may be, and (ii) the obligation of the Lenders to make Eurocurrency Rate Advances or LIBO Rate Advances or to Convert Prime Rate Advances into Eurocurrency Rate Advances shall be suspended until the Administrative Agent shall notify Paxar and the Lenders that the circumstances causing such suspension no longer exist. SECTION 2.14. Payments and Computations. (a) Each Borrower shall make each payment required to be made by it hereunder and under the Notes not later than 12:00 Noon (New York City time) on the day when due in like funds as advanced to the Administrative Agent at the Administrative Agent's Account in same day funds. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or facility or Letter of Credit fees ratably (other than amounts payable pursuant to Section 2.03, 2.12, 2.15 or 9.04(c)) to the Lender Parties for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender Party to such Lender Party for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 9.07(g), from and after the effective date specified in such Assignment and Acceptance, the Administrative Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender Party assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. (b) Each Borrower hereby authorizes each Lender Party, if and to the extent payment owed to such Lender Party is not made when due hereunder or under any Note held by such Lender Party, to charge from time to time against any or all of such Borrower's accounts with such Lender Party any amount so due. (c) All computations of interest based on the Prime Rate shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurocurrency Rate or the Federal Funds Rate and of Facility and Letter of Credit fees shall be made by the Administrative Agent on the basis of a year of 360 days, in each case for the 40 35 actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or facility fees are payable. Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (d) Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or facility or Letter of Credit fee, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of Eurocurrency Rate Advances or LIBO Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. (e) Unless the Administrative Agent shall have received notice from a Borrower prior to the date on which any payment is due to any Lender Party hereunder that such Borrower will not make such payment in full, the Administrative Agent may assume that such Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender Party on such due date an amount equal to the amount then due such Lender Party. If and to the extent a Borrower shall not have so made such payment in full to the Administrative Agent, each Lender Party shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender Party together with interest thereon, for each day from the date such amount is distributed to such Lender Party until the date such Lender Party repays such amount to the Administrative Agent, at the Federal Funds Rate. SECTION 2.15. Taxes. (a) Any and all payments by a Borrower hereunder or under the Notes shall be made, in accordance with Section 2.14, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender Party and the Administrative Agent, taxes imposed on its overall net income, and franchise taxes imposed on it in lieu of overall net income taxes, by the jurisdiction under the laws of which such Lender Party or the Administrative Agent (as the case may be) is organized or any political subdivision thereof and, in the case of each Lender Party, taxes imposed on its overall net income, and franchise taxes imposed on it in lieu of overall net income taxes, by the jurisdiction of such Lender Party's Applicable Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Notes being hereinafter referred to as "Taxes"). If a Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note to any Lender Party or the Administrative Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.15) such Lender Party or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions and (iii) such Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (b) In addition, each Borrower shall pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or under the Notes or from the execution, delivery or registration of, performing under, or otherwise with respect to, this Agreement or the Notes (hereinafter referred to as "Other Taxes"). 41 36 (c) Each Borrower shall indemnify each Lender Party and the Administrative Agent for and hold it harmless against the full amount of Taxes and Other Taxes (including, without limitation, taxes of any kind imposed by any jurisdiction on amounts payable under this Section 2.15) imposed on or paid by such Lender Party or the Administrative Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 30 days from the date such Lender Party or the Administrative Agent (as the case may be) makes written demand therefor. (d) Within 30 days after the date of any payment of Taxes, the relevant Borrower shall furnish to the Administrative Agent, at its address referred to in Section 9.02, the original or a certified copy of a receipt evidencing such payment. In the case of any payment hereunder or under the Notes by or on behalf of a Borrower through an account or branch outside the United States or by or on behalf of a Borrower by a payor that is not a United States person, if such Borrower determines that no Taxes are payable in respect thereof, such Borrower shall furnish, or shall cause such payor to furnish, to the Administrative Agent, at such address, an opinion of counsel acceptable to the Administrative Agent stating that such payment is exempt from Taxes. For purposes of this subsection (d) and subsection (e), the terms "United States" and "United States person" shall have the meanings specified in Section 7701 of the Internal Revenue Code. (e) Each Lender Party organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Initial Lender or the Initial Issuing Bank, as the case may be, and on the date of the Assignment and Acceptance pursuant to which it becomes a Lender Party in the case of each other Lender Party, and from time to time thereafter as requested in writing by a Borrower (but only so long as such Lender Party remains lawfully able to do so), shall provide each of the Administrative Agent and the Borrower with two original Internal Revenue Service Forms 1001 or 4224, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that such Lender Party is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to this Agreement or the Notes. If the form provided by a Lender Party at the time such Lender Party first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until such Lender Party provides the appropriate forms certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods governed by such form; provided, however, that, if at the date of the Assignment and Acceptance pursuant to which a Lender Party assignee becomes a party to this Agreement, the Lender Party assignor was entitled to payments under subsection (a) in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable with respect to the Lender Party assignee on such date. If any form or document referred to in this subsection (e) requires the disclosure of information, other than information necessary to compute the tax payable and information required on the date hereof by Internal Revenue Service Form 1001 or 4224, that the applicable Lender Party reasonably considers to be confidential, such Lender Party, if legally required to do so, shall give notice thereof to the Borrower and shall not be obligated to include in such form or document such confidential information. 42 37 (f) For any period with respect to which a Lender Party required to do so has failed to provide a Borrower with the appropriate form described in Section 2.15(e) (other than if such failure is due to a change in law occurring subsequent to the date on which a form originally was required to be provided, or if such form otherwise is not required under subsection (e) above), such Lender Party shall not be entitled to indemnification under Section 2.15(a) or (c) with respect to Taxes imposed by the United States by reason of such failure; provided, however, that should a Lender Party become subject to Taxes because of its failure to deliver a form required hereunder, the Borrower shall take such steps as such Lender Party shall reasonably request to assist the Lender Party to recover such Taxes. SECTION 2.16. Sharing of Payments, Etc. If any Lender Party shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) (a) on account of obligations owing to such Lender Party hereunder and under the Notes in excess of its ratable share of payments on account of the Obligations owing to all Lender Parties hereunder and under the Notes at such time obtained by all the Lender Parties at such time, such Lender Party shall forthwith purchase from the other Lender Parties such participations in the Obligations owing to them as shall be necessary to cause such purchasing Lender Party to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender Party, such purchase from each Lender Party shall be rescinded and such Lender Party shall repay to the purchasing Lender Party the purchase price to the extent of such recovery together with an amount equal to such Lender Party's ratable share (according to the proportion of (i) the amount of such Lender Party's required repayment to (ii) the total amount so recovered from the purchasing Lender Party) of any interest or other amount paid or payable by the purchasing Lender Party in respect of the total amount so recovered. Each Borrower agrees that any Lender Party so purchasing a participation from another Lender Party pursuant to this Section 2.16 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender Party were the direct creditor of such Borrower in the amount of such participation. SECTION 2.17. Use of Proceeds. The proceeds of the Advances shall be available (and Paxar agrees that it and any other Borrower shall use such proceeds) solely for general corporate purposes of Paxar and its Subsidiaries. SECTION 2.18. Additional Borrowers. Upon the execution and delivery by any Subsidiary of Paxar acceptable to the Required Lenders in their reasonable judgment of a supplement to this Agreement, in substantially the form of Exhibit E hereto (a "Credit Agreement Supplement"), (i) such Person shall be referred to as a "Borrower" and shall be and become a Borrower, and each reference in this Agreement to a "Borrower" shall also mean and be a reference to such Borrower and each reference in any other Loan Document to a "Borrower" or a "Loan Party" shall also mean and be a reference to such Borrower, and (ii) such Person shall assume all of the Obligations of a Borrower hereunder. The Administrative Agent shall promptly notify each Lender of each such additional Borrower. 43 38 ARTICLE III CONDITIONS TO EFFECTIVENESS AND LENDING SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01, 2.03 and 2.04. Sections 2.01, 2.03 and 2.04 of this Agreement shall become effective on and as of the first date (the "Effective Date") on which the following conditions precedent have been satisfied: (a) There shall have occurred no Material Adverse Change since December 31, 1997. (b) There shall exist no action, suit, investigation, litigation or proceeding affecting Paxar or any of its Subsidiaries pending or threatened before any court, governmental agency or arbitrator that (i) could be reasonably likely to have a Material Adverse Effect or (ii) purports to adversely affect the Facilities or the consummation of the transactions contemplated hereby. (c) All governmental and third party consents and approvals necessary in connection with the Facilities and the other transactions contemplated hereby shall have been obtained (without the imposition of any conditions that are not acceptable to the Lender Parties) and shall remain in effect, and no law or regulation shall be applicable in the reasonable judgment of the Lender Parties that restrains, prevents or imposes materially adverse conditions upon the transactions contemplated hereby. (d) Paxar shall have notified each Lender Party and the Administrative Agent in writing as to the proposed Effective Date. (e) Paxar shall have paid all accrued fees and expenses of the Administrative Agent and the Lender Parties (including the accrued fees and expenses of counsel to the Administrative Agent). (f) Paxar shall have received Net Cash Proceeds from the issuance of the Senior Notes of at least $149,000,000 and shall have applied such Net Cash Proceeds first, to prepay in full the "Term Advances" under the Existing Credit Agreement and second, to prepay the "Revolving Credit Advances" under the Existing Credit Agreement. (g) On the Effective Date, the following statements shall be true and the Administrative Agent shall have received for the account of each Lender Party a certificate signed by a duly authorized officer of Paxar, dated the Effective Date, stating that: (i) The representations and warranties contained in Section 4.01 are correct on and as of the Effective Date, and (ii) No event has occurred and is continuing that constitutes a Default. 44 39 (h) The Administrative Agent shall have received on or before the Effective Date the following, each dated such day, in form and substance satisfactory to the Administrative Agent and in sufficient copies for each Lender Party: (i) A certificate of the Secretary or an Assistant Secretary of Paxar and each other Loan Party certifying the names and true signatures of the officers of Paxar and such other Loan Party authorized to sign this Agreement and the Notes and the other documents to be delivered hereunder. (ii) A copy of the charter of Paxar and each other Loan Party and each amendment thereto, certified (as of a date reasonably near the Effective Date) by the Secretary of State of the jurisdiction of its incorporation as being a true and correct copy thereof. (iii) A consent executed by each of the Loan Parties (other than Paxar) to the amendment and restatement of the Existing Credit Agreement, in form and substance reasonably satisfactory to the Administrative Agent. (iv) Certificates, in form and substance satisfactory to the Lender Parties, attesting to the Solvency of each Loan Party after giving effect to the Transaction and the other transactions contemplated hereby, from its chief financial officer. (v) A favorable opinion of Snow Becker Krauss P.C., counsel for Paxar, substantially in the form of Exhibit F-1 hereto and as to such other matters as any Lender Party through the Administrative Agent may reasonably request. (i) The Existing Credit Agreement shall have been terminated and all amounts due and owing under the Existing Credit Agreement shall have been paid in full in cash. SECTION 3.02. Conditions Precedent to the Initial Borrowing of Each Additional Borrower. The obligation of each Lender to make an initial Advance to each Borrower (other than Paxar) following its designation as a Borrower hereunder pursuant to Section 2.18 on the occasion of the initial Borrowing thereby is subject to the Administrative Agent's receipt on or before the date of such initial Borrowing of each of the following, in form and substance satisfactory to the Administrative Agent and dated such date: (a) The Credit Agreement Supplement relating to such Borrower, in substantially the form of Exhibit E hereto. (b) A Revolving Credit Note of such Borrower to the order of each of the Lenders, respectively. (c) A certificate of the Secretary or an Assistant Secretary (or person performing similar functions) of such Borrower certifying (A) appropriate resolutions of the board of directors (or persons performing similar functions) of such Borrower approving this Agreement and its 45 40 Revolving Credit Notes, and all documents evidencing other necessary corporate (or equivalent) action and governmental approvals, if any, with respect to this Agreement and its Revolving Credit Notes (copies of which shall be attached thereto), (B) copies of the by-laws (or the equivalent thereof) of such Borrower (copies of which shall be attached thereto) and (C) the names and true signatures of the officers of such Borrower authorized to sign the Credit Agreement Supplement relating to such Borrower and its Revolving Credit Notes and the other documents to be delivered by such Borrower hereunder. (d) A copy of the charter or articles (or other similar organizational document) of such Borrower, certified (as of a date reasonably near the date of such Borrowing) as being a true and complete copy thereof by the Secretary of State (or other appropriate governmental authority) of the jurisdiction of organization of such Borrower or, if such certificate is not provided in the jurisdiction of organization of such Borrower, certified (as of a date reasonably near the date of such Borrowing) as being a true and complete copy thereof by a duly authorized officer of such Borrower. (e) A copy of a certificate of the Secretary of State (or other appropriate governmental authority) of the jurisdiction of organization of such Borrower, dated reasonably near the date of such Borrowing, certifying that such Borrower is duly organized and in good standing (or the equivalent thereof) under the laws of the jurisdiction of its organization. (f) A certificate signed by a duly authorized officer of such Borrower, dated as of the date of such Borrowing, certifying that such Borrower has obtained all authorizations, consents, approvals (including, without limitation, exchange control approvals) and licenses of any governmental authority or other third party necessary for such Borrower to execute and deliver its Credit Agreement Supplement and its Revolving Credit Notes and to perform its obligations under this Agreement or any of its Revolving Credit Notes. (g) Evidence of acceptance by Paxar of its appointment as the process agent of such Borrower in accordance with Section 9.13(a), in substantially the form of Exhibit G hereto. (h) A favorable opinion of counsel for such Borrower reasonably acceptable to the Administrative Agent, dated the date of such Borrowing, in substantially the form of Exhibit F-2 hereto, and addressing such other matters as any Lender Party through the Administrative Agent may reasonably request. (i) Such other documents, opinions and other information as any Lender Party, through the Administrative Agent, may reasonably request. SECTION 3.03. Conditions Precedent to Each Borrowing (other than a Competitive Bid Borrowing) and Issuance. The obligation of each Lender to make an Advance (other than a Competitive Bid Advance, a Letter of Credit Advance made by the Issuing Bank or a Lender pursuant to Section 2.04(c) and a Swing Line Advance made by a Lender pursuant to Section 2.02(b)) on the occasion of each Borrowing (other than a Competitive Bid Borrowing but including the Initial Extension of Credit), and the obligation of the Issuing Bank to issue a Letter of Credit (including the initial issuance) or renew a Letter 46 41 of Credit and the right of a Borrower to request a Swing Line Borrowing or the issuance or renewal of a Letter of Credit, shall be subject to the conditions precedent that the Effective Date shall have occurred and on the date of such Borrowing or issuance or renewal (a) the following statements shall be true (and each of the giving of the applicable Notice of Borrowing, Notice of Swing Line Borrowing, Notice of Issuance or Notice of Renewal and the acceptance by the relevant Borrower of the proceeds of such Borrowing or of such Letter of Credit or the renewal of such Letter of Credit shall constitute a representation and warranty by Paxar and such Borrower that on the date of such Borrowing or issuance or renewal such statements are true): (i) the representations and warranties contained in each Loan Document are correct on and as of such date, before and after giving effect to such Borrowing or issuance or renewal and to the application of the proceeds therefrom, as though made on and as of such date other than any such representations or warranties that, by their terms, refer to a specific date other than the date of such Borrowing or issuance or renewal, in which case as of such specific date, and (ii) no event has occurred and is continuing, or would result from such Borrowing or issuance or renewal or from the application of the proceeds therefrom, that constitutes a Default; and (b) the Administrative Agent shall have received such other approvals, opinions or documents as any Lender Party through the Administrative Agent may reasonably request. SECTION 3.04. Conditions Precedent to Each Competitive Bid Borrowing. The obligation of each Lender that is to make a Competitive Bid Advance on the occasion of a Competitive Bid Borrowing to make such Competitive Bid Advance as part of such Competitive Bid Borrowing is subject to the conditions precedent that (i) the Administrative Agent shall have received the written confirmatory Notice of Competitive Bid Borrowing with respect thereto, (ii) on or before the date of such Competitive Bid Borrowing, but prior to such Competitive Bid Borrowing, the Administrative Agent shall have received a Competitive Bid Note payable to the order of such Lender for each of the one or more Competitive Bid Advances to be made by such Lender as part of such Competitive Bid Borrowing, in a principal amount equal to the principal amount of the Competitive Bid Advance to be evidenced thereby and otherwise on such terms as were agreed to for such Competitive Bid Advance in accordance with Section 2.03, and (iii) on the date of such Competitive Bid Borrowing the following statements shall be true (and each of the giving of the applicable Notice of Competitive Bid Borrowing and the acceptance by Paxar of the proceeds of such Competitive Bid Borrowing shall constitute a representation and warranty by such Borrower that on the date of such Competitive Bid Borrowing such statements are true): (a) the representations and warranties contained in each Loan Document are correct on and as of the date of such Competitive Bid Borrowing, before and after giving effect to such Competitive Bid Borrowing and to the application of the proceeds therefrom, as though made on and as of such date other than any such representations or warranties that, by their terms, refer to a specific date other than the date of such Competitive Bid Borrowing, in which case as of such specific date, (b) no event has occurred and is continuing, or would result from such Competitive Bid Borrowing or from the application of the proceeds therefrom, that constitutes a Default, and 47 42 (c) no event has occurred and no circumstance exists as a result of which the information concerning Paxar that has been provided to the Administrative Agent and each Lender by Paxar in connection herewith would include an untrue statement of a material fact or omit to state any material fact or any fact necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading. SECTION 3.05. Determinations Under Section 3.01. For purposes of determining compliance with the conditions specified in Section 3.01, each Lender Party shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lender Parties unless an officer of the Administrative Agent responsible for the transactions contemplated by this Agreement shall have received notice from such Lender Party prior to the date that the Borrower, by notice to the Lender Parties, designates as the proposed Effective Date, specifying its objection thereto. The Administrative Agent shall promptly notify the Lender Parties of the occurrence of the Effective Date. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Borrowers. Each Borrower represents and warrants as follows: (a) Each Loan Party is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. (b) The execution, delivery and performance by each Loan Party of this Agreement, the Notes and each other Loan Document to which it is or is to be a party, and the consummation of the transactions contemplated hereby, are within such Loan Party's corporate powers, have been duly authorized by all necessary corporate action, and do not (i) contravene such Loan Party's charter or by-laws, (ii) violate any law (including, without limitation, the Securities Exchange Act of 1934 and the Racketeer Influenced and Corrupt Organizations Chapter of the Organized Crime Control Act of 1970), rule, regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree, determination or award, (iii) conflict with or result in the breach of, or constitute a default under, any contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument binding on or affecting any Loan Party, any of its Subsidiaries or any of their properties or (iv) except for the Liens created under the Loan Documents, result in or require the creation or imposition of any Lien upon or with respect to any of the properties of any Loan Party or any of its Subsidiaries. (c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for (i) the due execution, delivery and performance by any Loan Party of this Agreement, the Notes or any other Loan Document to which it is or is to be a party or for the consummation of the transactions contemplated hereby or (ii) the exercise by the Administrative Agent or any Lender Party of its 48 43 rights under the Loan Documents, except for those authorizations, approvals, actions, notices and filings listed on Schedule 4.01(c) hereto, all of which have been duly obtained, taken, given or made and are in full force and effect. (d) This Agreement, each of the Notes and each other Loan Document has been duly executed and delivered by each Loan Party thereto. This Agreement, each of the Notes and each other Loan Document is the legal, valid and binding obligation of each Loan Party party thereto, enforceable against such Loan Party in accordance with its respective terms. (e) The Consolidated balance sheet of Paxar and its Subsidiaries as at December 31, 1997, and the related Consolidated statements of income and cash flows of Paxar and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of Arthur Andersen LLP, independent public accountants, and the Consolidated balance sheet of Paxar and its Subsidiaries as at March 31, 1998, and the related Consolidated statements of income and cash flows of Paxar and its Subsidiaries for the three months then ended, duly certified by the chief financial officer or treasurer of Paxar, copies of which have been furnished to each Lender Party, fairly present, subject, in the case of said balance sheet as at March 31, 1998, and said statements of income and cash flows for the three months then ended, to year-end audit adjustments, the Consolidated financial condition of Paxar and its Subsidiaries as at such dates and the Consolidated results of the operations of Paxar and its Subsidiaries for the periods ended on such dates, all in accordance with generally accepted accounting principles consistently applied. Since December 31, 1997, there has been no Material Adverse Change. (f) Except with respect to the matters disclosed on Schedule 4.01(f), there is no pending or threatened action, suit, investigation, litigation or proceeding, including, without limitation, any Environmental Action, affecting the Borrower or any of its Subsidiaries before any court, governmental agency or arbitrator that (i) could be reasonably likely to have a Material Adverse Effect or (ii) purports to affect the legality, validity or enforceability of this Agreement or any Note or the consummation of the transactions contemplated hereby. (g) No Borrower is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock. (h) Neither the Information Memorandum nor any other information, exhibit or report furnished by any Loan Party to the Administrative Agent or any Lender Party in connection with the negotiation of the Loan Documents or pursuant to the terms of the Loan Documents contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements made therein not misleading. (i) Except with respect to the matters disclosed on Schedule 4.01(i), the operations and properties of Paxar and each of its Subsidiaries comply in all material respects with all applicable Environmental Laws and Environmental Permits, all past non-compliance with such 49 44 Environmental Laws and Environmental Permits has been resolved without ongoing obligations or costs, and no circumstances exist that would be reasonably likely to (i) form the basis of an Environmental Action against any Loan Party or any of its Subsidiaries or any of their properties that could have a Material Adverse Effect or (ii) cause any such property to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law. (j) Neither any Loan Party nor any of its Subsidiaries is an "investment company", or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company", as such terms are defined in the Investment Company Act of 1940, as amended. Neither the making of any Advances, nor the issuance of any Letters of Credit, nor the application of the proceeds or repayment thereof by the Borrower, nor the consummation of the other transactions contemplated hereby, will violate any provision of such Act or any rule, regulation or order of the Securities and Exchange Commission thereunder. (k) Each Loan Party is, individually and together with its Subsidiaries, Solvent. (l) Paxar has reviewed the Year 2000 Risk and is taking such action as may be necessary to ensure that the Year 2000 Risk will not adversely affect its business operations and/or financial condition. ARTICLE V COVENANTS OF PAXAR SECTION 5.01. Affirmative Covenants. So long as any Advance shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, Paxar will: (a) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA and Environmental Laws as provided in Section 5.01(l). (b) Payment of Taxes, Etc. Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided, however, that neither Paxar nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, charge or claim that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained, unless and until any Lien resulting therefrom attaches to its property and becomes enforceable against its other creditors. 50 45 (c) Maintenance of Insurance. Maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which Paxar or such Subsidiary operates. (d) Preservation of Corporate Existence, Etc. Preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, its corporate existence, rights (charter and statutory) and franchises; provided, however, that Paxar and its Subsidiaries may consummate any merger or consolidation permitted under Section 5.02(b), and provided further that neither Paxar nor any of its Subsidiaries shall be required to preserve any right or franchise if the Board of Directors of Paxar or such Subsidiary shall determine that the preservation thereof is no longer desirable in the conduct of the business of Paxar or such Subsidiary, as the case may be, and that the loss thereof is not disadvantageous in any material respect to Paxar, such Subsidiary or the Lender Parties. (e) Visitation Rights. At any reasonable time and from time to time, permit (i) the Administrative Agent or any agents or representatives thereof to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, Paxar and any of its Subsidiaries, and (ii) the Administrative Agent or any of the Lender Parties or any agents or representatives thereof to discuss, in connection with the Loan Documents, the affairs, finances and accounts of Paxar and any of its Subsidiaries with any of their officers and with their independent certified public accountants. (f) Keeping of Books. Keep, and cause each of its Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of Paxar and each such Subsidiary in accordance with generally accepted accounting principles in effect from time to time. (g) Maintenance of Properties, Etc. Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted. (h) Compliance with Terms of Leaseholds. Make all payments and otherwise perform all obligations in respect of all leases of real property to which Paxar or any of its Subsidiaries is a party, keep such leases in full force and effect and not allow such leases to lapse or be terminated or any rights to renew such leases to be forfeited or canceled, notify the Administrative Agent of any default by any party with respect to such leases and cooperate with the Administrative Agent in all respects to cure any such default, and cause each of its Subsidiaries to do so except, in any case, where the failure to do so, either individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect. (i) Performance of Related Documents. Perform and observe all of the terms and provisions of each Related Document to be performed or observed by it, maintain each such Related Document in full force and effect, enforce such Related Document in accordance with its terms, take all such action to such end as may be from time to time requested by the 51 46 Administrative Agent and, upon request of the Administrative Agent, make to each other party to each such Related Document such demands and requests for information and reports or for action as Paxar is entitled to make under such Related Document. (j) Transactions with Affiliates. Conduct, and cause each of its Subsidiaries to conduct, all transactions otherwise permitted under this Agreement with any of their Affiliates on terms that are fair and reasonable and no less favorable to Paxar or such Subsidiary than it would obtain in a comparable arm's-length transaction with a Person not an Affiliate. (k) Compliance with Environmental Laws. Comply, and cause each of its Subsidiaries and all lessees and other Persons operating or occupying its properties to comply, in all material respects, with all applicable Environmental Laws and Environmental Permits; obtain and renew and cause each of its Subsidiaries to obtain and renew all Environmental Permits necessary for its operations and properties; and conduct, and cause each of its Subsidiaries to conduct, any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Hazardous Materials from any of its properties, in accordance with the requirements of all Environmental Laws; provided, however, that neither Paxar nor any of its Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances. (l) Preparation of Environmental Reports. If an Event of Default shall have occurred and be continuing, at the request of the Required Lenders, provide to the Lender Parties within 60 days after such request, at the expense of Paxar, an environmental site assessment report for the properties described in such request, prepared by an environmental consulting firm acceptable to the Required Lenders, indicating the presence or absence of Hazardous Materials and the estimated cost of any compliance, removal or remedial action in connection with any Hazardous Materials on such properties; without limiting the generality of the foregoing, if the Required Lenders determine at any time that a material risk exists that any such report will not be provided within the time referred to above, the Required Lenders may retain an environmental consulting firm to prepare such report at the expense of Paxar, and Paxar hereby grants and agrees to cause any Subsidiary that owns any property described in such request to grant at the time of such request, to the Administrative Agent, the Lender Parties, such firm and any agents or representatives thereof an irrevocable non-exclusive license, subject to the rights of tenants, to enter onto their respective properties to undertake such an assessment. (m) Reporting Requirements. Furnish to the Lender Parties: (i) as soon as available and in any event within 50 days after the end of each of the first three quarters of each fiscal year of Paxar, Consolidated and consolidating balance sheets of Paxar and its Subsidiaries as of the end of such quarter and Consolidated and consolidating statements of income and cash flows of Paxar and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, duly certified (subject to year-end audit adjustments) by the chief financial 52 47 officer or treasurer of Paxar as having been prepared in accordance with generally accepted accounting principles and certificates of the chief financial officer of Paxar as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03, provided that in the event of any change in GAAP used in the preparation of such financial statements, Paxar shall also provide, if necessary for the determination of compliance with Section 5.03, a statement of reconciliation conforming such financial statements to GAAP; (ii) as soon as available and in any event within 105 days after the end of each fiscal year of Paxar, a copy of the annual audit report for such year for Paxar and its Subsidiaries, containing Consolidated and consolidating balance sheets of Paxar and its Subsidiaries as of the end of such fiscal year and Consolidated and consolidating statements of income and cash flows of Paxar and its Subsidiaries for such fiscal year, together with a certificate of the chief financial officer of Paxar as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03 and in each case accompanied by an opinion acceptable to the Required Lenders by Arthur Andersen LLP or other independent public accountants acceptable to the Required Lenders, provided that in the event of any change in GAAP used in the preparation of such financial statements, Paxar shall also provide, if necessary for the determination of compliance with Section 5.03, a statement of reconciliation conforming such financial statements to GAAP; (iii) as soon as available and in any event no later than 105 days after the end of each fiscal year of Paxar, forecasts prepared by management of Paxar, in form satisfactory to the Administrative Agent, of balance sheets, income statements and cash flow statements on an annual basis for each of the three immediately succeeding fiscal years; (iv) as soon as possible and in any event within five days after the occurrence of each Default continuing on the date of such statement, a statement of the chief financial officer or treasurer of Paxar setting forth details of such Default and the action that Paxar has taken and proposes to take with respect thereto; (v) promptly after the sending or filing thereof, copies of all reports that Paxar sends to any of its security holders, and copies of all reports and registration statements that Paxar or any Subsidiary files with the Securities and Exchange Commission or any national securities exchange; (vi) promptly after the commencement thereof, notice of all actions and proceedings before any court, governmental agency or arbitrator affecting Paxar or any of its Subsidiaries of the type described in Section 4.01(f); (vii) promptly after the assertion or occurrence thereof, notice of any Environmental Action against or of any noncompliance by Paxar or any of its Subsidiaries 53 48 with any Environmental Law or Environmental Permit that could reasonably be expected to have a Material Adverse Effect; and (viii) such other information respecting Paxar or any of its Subsidiaries as any Lender Party through the Administrative Agent may from time to time reasonably request. SECTION 5.02. Negative Covenants. So long as any Advance shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, Paxar will not: (a) Liens, Etc. Create or suffer to exist, or permit any of its Subsidiaries to create or suffer to exist, any Lien on or with respect to any of its properties, whether now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any right to receive income, other than: (i) Permitted Liens, (ii) purchase money Liens upon or in any real property or equipment acquired or held by Paxar or any of its Subsidiaries in the ordinary course of business to secure the purchase price of such property or equipment or to secure Debt incurred solely for the purpose of financing the acquisition of such property or equipment, or Liens existing on such property or equipment at the time of its acquisition (other than any such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such property) or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount, provided, however, that no such Lien shall extend to or cover any properties of any character other than the real property or equipment being acquired, and no such extension, renewal or replacement shall extend to or cover any properties not theretofore subject to the Lien being extended, renewed or replaced, provided further that the sum of the aggregate principal amount of the indebtedness secured by the Liens referred to in this clause (ii) plus the aggregate principal amount of the indebtedness secured by the Liens referred to in clause (iv) below shall not exceed the amount specified therefor in Section 5.02(d)(iii)(C) at any time outstanding, (iii) the Liens existing on the Effective Date and described on Schedule 5.02(a) hereto, (iv) Liens arising in connection with Capitalized Leases permitted under Section 5.02(d)(iii)(C); provided that no such Lien shall extend to or cover any assets other than the assets subject to such Capitalized Leases, (v) the replacement, extension or renewal of any Lien permitted by clause (iii) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the amount or change in any direct or contingent obligor) of the Debt secured thereby, and 54 49 (vi) other Liens securing Debt in an aggregate principal amount not to exceed the amount specified therefor in Section 5.02(d)(iii)(H) at any time outstanding. (b) Mergers, Etc. Merge or consolidate with or into any Person, or permit any of its Subsidiaries to do so, except that (i) any domestic Subsidiary of Paxar may merge or consolidate with or into any other domestic Subsidiary of Paxar, (ii) any foreign Subsidiary of Paxar may merge or consolidate with or into any other foreign Subsidiary of Paxar, (iii) any Subsidiary of Paxar may merge into Paxar and (iv) the Borrower may merge into or consolidate with any other Person or permit any other Person to merge into or consolidate with it; provided, however, in each case, that no Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom and, in the case of any merger or consolidation to which the Borrower is a party, the Borrower shall be the surviving corporation. (c) Accounting Changes. Make or permit, or permit any of its Subsidiaries to make or permit, any change in accounting policies or reporting practices, except as required or permitted by generally accepted accounting principles. (d) Debt. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Debt other than: (i) in the case of Paxar, Debt in respect of Hedge Agreements designed to hedge against fluctuations in interest rates incurred in the ordinary course of business and consistent with prudent business practice; (ii) (A) in the case of any of its domestic Subsidiaries, Debt owed to Paxar or to a wholly-owned Subsidiary of Paxar and (B) in the case of any of its foreign Subsidiaries, Debt owed to Paxar or to a wholly-owned domestic Subsidiary of Paxar, provided that (1) after giving effect to the incurrence of any such Debt referred to in this clause (B), the Foreign Loan Amount shall not exceed $100,000,000 and (2) any such Debt referred to in this clause (B) shall be evidenced by a promissory note and such promissory note shall be pledged in favor of the Administrative Agent and the Lender Parties pursuant to the terms of a pledge agreement or a security agreement in form and substance reasonably satisfactory to the Administrative Agent; and (iii) in the case of Paxar and any of its Subsidiaries, (A) Debt under the Loan Documents, (B) Debt existing on the Effective Date or Debt created or incurred under a loan or credit facility existing on the Effective Date and, in each case, described on Schedule 5.02(d) hereto (the "Existing Debt"), and any Debt extending the maturity of, or refunding or refinancing, in whole or in part, the Existing Debt, provided that (1) the principal amount of such Existing Debt shall not be increased above the principal amount thereof outstanding immediately prior to such extension, refunding or refinancing, and the direct and contingent obligors 55 50 therefor shall not be changed, as a result of or in connection with such extension, refunding or refinancing and (2) any Existing Debt constituting Debt owed by a foreign Subsidiary to Paxar or to a wholly owned domestic Subsidiary of Paxar shall be evidenced by a promissory note and such promissory note shall be pledged in favor of the Administrative Agent and the Lender Parties pursuant to the terms of the Pledge Agreement or a pledge agreement or a security agreement in form and substance reasonably satisfactory to the Administrative Agent, (C) Capitalized Leases and Debt secured by Liens permitted by Section 5.02(a)(ii), provided that (i) on any date the sum of Capitalized Leases then outstanding plus the aggregate amount of Debt then outstanding and secured by Liens permitted by Section 5.02(a)(ii) plus the aggregate amount of Debt then outstanding and secured by Liens permitted by Section 5.02(a)(vi) shall not exceed $50,000,000 and (ii) after giving effect to the creation, incurrence or assumption of such Capitalized Lease or such Debt, the Debt to EBITDA Ratio of Paxar and its Subsidiaries (calculated on a pro forma basis) as of the end of the most recently ended fiscal quarter of Paxar would be less than 3.25:1, (D) in the case of Existing Debt of Paxar and its Subsidiaries, Debt of Paxar and its domestic Subsidiaries of the type described in clause (i) of the definition of "Debt" guaranteeing the Obligations of Paxar or such Subsidiary, as the case may be, under such Existing Debt, (E) Debt of Paxar or any of its wholly owned domestic Subsidiaries that is subordinate to the Obligations of the Loan Parties under the Loan Documents in an aggregate principal amount acceptable to the Required Lenders and on terms and conditions satisfactory to the Required Lenders, (F) endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; (G) Debt of Paxar or any of its wholly owned Subsidiaries so long as (i) both before and after giving effect to the creation, incurrence or assumption of such Debt, no Default shall occur and be continuing and (ii) after giving effect to the creation, incurrence or assumption of such Debt, the Debt to EBITDA Ratio of Paxar and its Subsidiaries (calculated on a pro forma basis) as of the end of the most recently ended fiscal quarter of Paxar would be less than 3.25:1, (H) secured Debt of Paxar or any of its wholly owned Subsidiaries, provided that (i) on any date the sum of Capitalized Leases then outstanding plus the aggregate amount of Debt then outstanding and secured by Liens permitted by Section 5.02(a)(ii) plus the aggregate amount of Debt then outstanding and secured by Liens permitted by Section 5.02(a)(vi) shall not exceed $50,000,000 and (ii) after giving effect to the creation, incurrence or assumption of such Debt, the Debt to EBITDA Ratio of Paxar and its Subsidiaries (calculated on an pro 56 51 forma basis) as of the end of the most recently ended fiscal quarter of Paxar would be less than 3.25:1, and (I) in the case of Paxar, the Senior Notes in an aggregate principal amount not to exceed $150,000,000 at any time outstanding. (e) Sales, Etc. of Assets. Sell, lease, transfer or otherwise dispose of, or permit any of its Subsidiaries to sell, lease, transfer or otherwise dispose of, any assets, or grant any option or other right to purchase, lease or otherwise acquire any assets, except (i) sales of inventory in the ordinary course of its business, (ii) in a transaction authorized by subsection (b) of this Section and (iii) sales of assets for cash and for fair value in an aggregate amount not to exceed an amount equal to 10% of the Consolidated total assets of Paxar and its Subsidiaries. (f) Investments in Other Persons. Make or hold, or permit any of its Subsidiaries to make or hold, any Investment in any Person other than: (i) (A) Investments by Paxar and its domestic Subsidiaries in their Subsidiaries outstanding on the date hereof and additional Investments in wholly owned domestic Subsidiaries of Paxar that, prior to the making of such Investments, were wholly owned Subsidiaries of Paxar, (B) Investments by Paxar and its Subsidiaries in wholly owned Subsidiaries of Paxar that, prior to the making of such Investments were not wholly owned Subsidiaries of Paxar, provided that (i) both before and after giving effect to such Investment, no Default shall have occurred and be continuing and (ii) with respect to Investments in any newly acquired or created wholly owned Subsidiary of Paxar, (1) the aggregate amount (including the fair market value of any non-cash portion of any such Investment) invested in each such Subsidiary shall not exceed $75,000,000, (2) if the aggregate amount (including the fair market value of any non-cash portion of any such Investment) invested in any such Subsidiary is greater than $25,000,000, Paxar must deliver, prior to such Investment, a certificate of the chief financial officer of Paxar, describing such Investment and demonstrating compliance with the covenants (on a pro forma basis giving effect to such Investment) set forth in Section 5.03 and (3) such Subsidiary (if it is a domestic Subsidiary of Paxar) shall become a Subsidiary Guarantor pursuant to the terms of the Subsidiary Guaranty, (C) Investments by the foreign Subsidiaries of Paxar in their Subsidiaries outstanding on the date hereof and (D) the Investment described on Schedule 5.02(g) hereto; (ii) loans and advances to employees in the ordinary course of the business of Paxar and its Subsidiaries as presently conducted in an aggregate principal amount not to exceed $5,000,000 at any time outstanding; (iii) Investments in Cash Equivalents; (iv) Investments in overnight Eurodollar deposits with any commercial bank that is a Lender Party or a member of the Federal Reserve System, issues (or the parent of which issues) commercial paper rated as described in clause (c) of the definition of 57 52 "Cash Equivalents", is organized under the laws of the United States or any State thereof and has combined capital and surplus of at least $1 billion; (v) Investments consisting of intercompany Debt permitted under Section 5.02(d)(ii); and (vi) other Investments in an aggregate amount invested not to exceed $25,000,000 in Persons other than wholly owned Subsidiaries; provided that with respect to any such Investment in any newly acquired or created domestic Subsidiary of Paxar, such Subsidiary shall become a Subsidiary Guarantor pursuant to the terms of the Subsidiary Guaranty. (g) Change in Nature of Business. Engage, or permit any of its Subsidiaries to engage, to any substantial extent in any business other than the businesses in which Paxar and its Subsidiaries are engaged on the Effective Date and businesses reasonably related thereto or in furtherance thereof. (h) Charter Amendments. Amend, or permit any of its Subsidiaries to amend, its certificate of incorporation or bylaws, other than any amendment which would not adversely affect the rights or interests of the Lender Parties hereunder and under the other Loan Documents. (i) Prepayments, Etc. of Debt. (x) Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner, or make any payment in violation of any subordination terms of, any Debt unless both before and after giving effect to any such prepayment, redemption, purchase, defeasance or satisfaction, no Default shall have occurred and be continuing, or (y) amend, modify or change in any manner any term or condition of any Existing Debt or the Senior Notes, or permit any of its Subsidiaries to do any of the foregoing other than to prepay any Debt payable to Paxar. (j) Amendment, Etc. of Related Documents. Cancel or terminate any Related Document or consent to or accept any cancellation or termination thereof, amend, modify or change in any manner any term or condition of any Related Document (other than any amendment, modification or change which would not adversely affect the rights or interests of the Lender Parties hereunder and under the other Loan Documents) or give any consent, waiver or approval thereunder (other than any consent, waiver or approval which would not adversely affect the rights or interests of the Lender Parties hereunder and under the other Loan Documents), waive any default under or any breach of any term or condition of any Related Document, agree in any manner to any other amendment, modification or change of any term or condition of any Related Document or take any other action in connection with any Related Document that would impair the value of the interest or rights of Paxar thereunder or that would impair the rights or interests of the Administrative Agent or any Lender Party, or permit any of its Subsidiaries to do any of the foregoing. 58 53 (k) Partnerships, Etc. Become a general partner in any general or limited partnership or joint venture, or permit any of its Subsidiaries to do so, other than any Subsidiary of Paxar the sole assets of which consist of its interest in such partnership or joint venture. SECTION 5.03. Financial Covenants. So long as any Advance shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, Paxar will: (a) Net Worth. Maintain at all times an excess of Consolidated total assets over Consolidated total liabilities, in each case of Paxar and its Subsidiaries, of not less than $190,000,000 plus 50% of Consolidated net income (without taking into account any net loss that occurs for any period after the date hereof) of Paxar and its Subsidiaries for the period after October 1, 1997 to and including each date of determination computed on a cumulative basis for said entire period plus 100% of the Net Cash Proceeds received by Paxar from the sale or issuance by Paxar of its capital stock on and after October 1, 1997. (b) Debt to EBITDA Ratio. Maintain at the end of each fiscal quarter of Paxar, a Debt to EBITDA Ratio of Paxar and its Subsidiaries of less than 3.25:1. (c) Fixed Charge Coverage Ratio. Maintain at the end of each fiscal quarter of Paxar a ratio of Consolidated EBITDA of Paxar and its Subsidiaries for the most recently completed four fiscal quarters of Paxar and its Subsidiaries less the aggregate amount of Capital Expenditures made by Paxar and its Subsidiaries during such four fiscal quarter period to the sum of (i) interest and fees payable on all Debt during such four fiscal quarter period plus (ii) principal amounts of all Debt scheduled to be payable during such four fiscal quarter period plus (iii) the aggregate amount of all taxes payable in cash during such four fiscal quarter period, in each case by Paxar and its Subsidiaries, of not less 1.50:1. ARTICLE VI EVENTS OF DEFAULT SECTION 6.01. Events of Default. If any of the following events ("Events of Default") shall occur and be continuing: (a) The Borrower shall fail to pay any principal of any Advance when the same becomes due and payable; or the Borrower shall fail to pay any interest on any Advance or make any other payment of fees or other amounts payable under this Agreement or any Note within two days after the same becomes due and payable; or (b) Any representation or warranty made or deemed made by any Loan Party (or any of its officers) in connection with any Loan Document shall prove to have been incorrect in any material respect when made or deemed made; or 59 54 (c) (i) Paxar shall fail to perform or observe any term, covenant or agreement contained in Section 5.01(d), (e), (j) or (k), 5.02 or 5.03, or (ii) any Loan Party shall fail to perform or observe any other term, covenant or agreement contained in any Loan Document on its part to be performed or observed if such failure shall remain unremedied for 10 days after the earlier of the date on which (A) an officer of Paxar becomes aware of such failure or (B) written notice thereof shall have been given to Paxar by the Administrative Agent or any Lender Party; or (d) Paxar or any of its Subsidiaries shall fail to pay any principal of or premium or interest on any Debt that is outstanding in a principal or notional amount of at least $500,000 in the aggregate (but excluding Debt outstanding hereunder) of Paxar or such Subsidiary (as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or (e) Paxar or any of its Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against Paxar or any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 30 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or Paxar or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or (f) Any judgment or order for the payment of money in excess of $500,000 shall be rendered against Paxar or any of its Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or 60 55 (g) Any non-monetary judgment or order shall be rendered against Paxar or any of its Subsidiaries that could be reasonably expected to have a Material Adverse Effect, and there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (h) (i) Any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of Paxar (or other securities convertible into such Voting Stock) representing 30% or more of the combined voting power of all Voting Stock of Paxar; or (ii) during any period of up to 24 consecutive months, commencing after the date of this Agreement, individuals who at the beginning of such 24-month period were directors of Paxar shall cease for any reason to constitute a majority of the board of directors of Paxar; or (iii) any Person or two or more Persons acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over the management or policies of Paxar; or (i) Paxar or any of its ERISA Affiliates shall incur or, in the reasonable opinion of the Required Lenders, shall be reasonably likely to incur liability in excess of $500,000 in the aggregate as a result of one or more of the following: (i) the occurrence of any ERISA Event; (ii) the partial or complete withdrawal of Paxar or any of its ERISA Affiliates from a Multiemployer Plan; or (iii) the reorganization or termination of a Multiemployer Plan; then, and in any such event, the Administrative Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to each of the Borrowers, declare the obligation of each Lender to make Advances to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to each of the Borrowers, declare the Notes, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Notes, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by each of the Borrowers; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to any Borrower under the Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances shall automatically be terminated and (B) the Notes, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by each of the Borrowers. 61 56 ARTICLE VII THE ADMINISTRATIVE AGENT SECTION 7.01. Authorization and Action. Each Lender Party hereby appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Notes), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all Lender Parties and all holders of Notes; provided, however, that the Administrative Agent shall not be required to take any action that exposes the Administrative Agent to personal liability or that is contrary to this Agreement or applicable law. The Administrative Agent agrees to give to each Lender Party prompt notice of each notice given to it by Paxar pursuant to the terms of this Agreement and, upon request by any Lender Party, a copy of any such notice. SECTION 7.02. Administrative Agent's Reliance, Etc. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Administrative Agent: (i) may treat the payee of any Note as the holder thereof until the Administrative Agent receives and accepts an Assignment and Acceptance entered into by the Lender Party that is the payee of such Note, as assignor, and an Eligible Assignee, as assignee, as provided in Section 9.07; (ii) may consult with legal counsel (including counsel for Paxar), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender Party and shall not be responsible to any Lender Party for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of Paxar or to inspect the property (including the books and records) of Paxar; (v) shall not be responsible to any Lender Party for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; and (vi) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 7.03. Fleet and Affiliates. With respect to its Commitment, the Advances made by it and the Note issued to it, Fleet shall have the same rights and powers under this Agreement as any other Lender Party and may exercise the same as though it were not the Administrative Agent; and the term "Lender", "Lenders", "Lender Party" or "Lender Parties" shall, unless otherwise expressly indicated, include Fleet in its individual capacity. Fleet and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, Paxar, any of its Subsidiaries and any Person who may do business 62 57 with or own securities of Paxar or any such Subsidiary, all as if Fleet were not the Administrative Agent and without any duty to account therefor to the Lender Parties. SECTION 7.04. Lender Credit Decision. Each Lender Party acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender Party and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender Party also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. SECTION 7.05. Indemnification. The Lender Parties (other than the Designated Bidders) agree to indemnify the Administrative Agent (to the extent not reimbursed by Paxar), ratably according to the respective principal amounts of the Notes then held by each of them (or if no Notes are at the time outstanding or if any Notes are held by Persons that are not Lender Parties, ratably according to the respective amounts of their Commitments), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Administrative Agent under this Agreement (collectively, the "Indemnified Costs"), provided that no Lender Party shall be liable for any portion of the Indemnified Costs resulting from the Administrative Agent's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender Party (other than the Designated Bidders) agrees to reimburse the Administrative Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Administrative Agent is not reimbursed for such expenses by the Borrower, provided that no Lender Party shall be required to reimburse any portion of such out-of-pocket expenses resulting from the Administrative Agent's gross negligence or willful misconduct. In the case of any investigation, litigation or proceeding giving rise to any Indemnified Costs, this Section 7.05 applies whether any such investigation, litigation or proceeding is brought by the Administrative Agent, any Lender Party or a third party. SECTION 7.06. Successor Administrative Agent. The Administrative Agent may resign at any time by giving written notice thereof to the Lender Parties and Paxar and may be removed at any time with or without cause by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent's giving of notice of resignation or the Required Lenders' removal of the retiring Administrative Agent, then the retiring Administrative Agent may, on behalf of the Lender Parties, appoint a successor Administrative Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges and duties of 63 58 the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Administrative Agent's resignation or removal hereunder as Administrative Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. ARTICLE VIII GUARANTY SECTION 8.01. Guaranty. Paxar absolutely, unconditionally and irrevocably guarantees (the undertaking by Paxar under this Article VIII being the "Guaranty") the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all Obligations of each other Loan Party now or hereafter existing under the Loan Documents, whether for principal, interest, fees, commissions, expenses or otherwise (such Obligations being the "Guaranteed Obligations"), and agrees to pay any and all expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by the Administrative Agent or any Lender Party in enforcing any rights under this Guaranty. Without limiting the generality of the foregoing, Paxar's liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by any other Loan Party to the Administrative Agent or any Lender Party under the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving such other Loan Party. SECTION 8.02. Guaranty Absolute. Paxar guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Administrative Agent or any other Lender Party with respect thereto. The Obligations of Paxar under this Guaranty are independent of the Guaranteed Obligations or any other Obligations of any Loan Party under the Loan Documents, and a separate action or actions may be brought and prosecuted against Paxar to enforce this Guaranty, irrespective of whether any action is brought against any other Loan Party or whether any other Loan Party is joined in any such action or actions. The liability of Paxar under this Guaranty shall be absolute, unconditional and irrevocable irrespective of, and Paxar hereby irrevocably waives any defenses it may now or hereafter have in any way relating to, any and all of the following: (a) any lack of validity or enforceability of any Loan Document or any other agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other Obligations of any Loan Party under the Loan Documents, or any other amendment or waiver of or any consent to departure from any Loan Document (including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Loan Party or any of its Subsidiaries or otherwise); (c) any taking, exchange, release or non-perfection of any Collateral or any taking, release or amendment or waiver of or consent to departure from any other guarantee for all or any of the Guaranteed Obligations; 64 59 (d) any change, restructuring or termination of the corporate structure or existence of any other Loan Party or any of its Subsidiaries; (e) any failure of the Administrative Agent or any Lender Party to disclose to any Loan Party any information relating to the financial condition, operations, properties or prospects of any other Loan Party now or hereafter known to the Administrative Agent or such Lender Party, as the case may be; or (f) any other circumstance (including, without limitation, any statute of limitations or any existence of or reliance on any representation by the Administrative Agent or any Lender Party) that might otherwise constitute a defense available to, or a discharge of, Paxar, any other Loan Party or any other guarantor or surety. This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by the Administrative Agent or any Lender Party or by any other Person upon the insolvency, bankruptcy or reorganization of any other Loan Party or otherwise, all as though such payment had not been made. SECTION 8.03. Waivers and Acknowledgments. (a) Paxar hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this Guaranty, and any requirement that the Administrative Agent or any Lender Party exhaust any right or take any action against any other Loan Party or any other Person or any Collateral. (b) Paxar hereby unconditionally and irrevocably waives any duty on the part of the Administrative Agent or any Lender Party to disclose to Paxar any matter, fact or thing relating to the business, operation or condition of any other Loan Party or any of its Subsidiaries or its property and assets now or hereafter known by the Administrative Agent or such Lender Party. (c) Paxar hereby unconditionally waives any right to revoke this Guaranty, and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future. (d) Paxar acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Loan Documents and that the waivers set forth in this Section 8.03 are knowingly made in contemplation of such benefits. SECTION 8.04. Subrogation. Paxar hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or may hereafter acquire against any other Loan Party or any other insider guarantor that arise from the existence, payment, performance or enforcement of its Obligations under this Guaranty or under any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Administrative Agent or any Lender against such other Loan Party or any other insider guarantor, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from such other 65 60 Loan Party or any other insider guarantor, directly or indirectly, in cash or other property or by setoff or in any other manner, payment or security on account of such claim, remedy or right, until such time as all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash, all of the Letters of Credit shall have expired, terminated or been canceled and the Commitments shall have expired or terminated. If any amount shall be paid to Paxar in violation of the immediately preceding sentence at any time prior to the latest of (a) the payment in full in cash of all of the Guaranteed Obligations and all other amounts payable under this Guaranty, (b) the full drawing, termination, expiration or cancellation of all Letters of Credit and (c) the Termination Date, such amount shall be held in trust for the benefit of the Administrative Agent and the Lender Parties and shall forthwith be paid to the Administrative Agent to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Loan Documents, or to be held as Collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (i) Paxar shall pay to the Administrative Agent all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash, (iii) all of the Letters of Credit shall have expired, terminated or been canceled, and (iv) the Termination Date shall have occurred, the Administrative Agent and the Lender Parties will, at Paxar's request and expense, execute and deliver to Paxar appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer of subrogation to Paxar of an interest in the Guaranteed Obligations resulting from the payment made by Paxar. SECTION 8.05. Continuing Guarantee; Assignments. This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until (subject to reinstatement pursuant to Section 8.02) the latest of (i) the payment in full in cash of all of the Guaranteed Obligations and all other amounts payable under this Guaranty, (ii) the full drawing, termination, expiration or cancellation of all Letters of Credit, and (iii) the Termination Date, (b) be binding upon Paxar and its respective successors and assigns and (c) inure to the benefit of, and be enforceable by, the Administrative Agent and the Lender Parties and their respective successors, transferees and assigns. Without limiting the generality of clause (c) of the immediately preceding sentence, any Lender Party may assign or otherwise transfer all or any portion of its rights and obligations under this Agreement (including, without limitation, all or any portion of its Commitment or Commitments, the Advances owing to it and the Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender Party under this Article VIII or otherwise, in each case as provided in Section 9.07. ARTICLE IX MISCELLANEOUS SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement or the Notes, nor consent to any departure by Paxar therefrom, shall in any event be effective unless the same shall be in writing and signed by 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, however, that no amendment, waiver or consent shall, unless in writing and signed by all the Lenders (other than the Designated Bidders), do any of the following: (a) waive any of the conditions specified 66 61 in Section 3.01, (b) increase the Commitments of the Lenders or subject the Lenders to any additional obligations, (c) reduce the principal of, or interest on, the Notes (other than Competitive Bid Notes) or any fees or other amounts payable hereunder, (d) postpone any date fixed for any payment of principal of, or interest on, the Notes (other than Competitive Bid Notes) or any fees or other amounts payable hereunder, (e) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Notes (other than Competitive Bid Notes), or the number of Lenders, that shall be required for the Lenders or any of them to take any action hereunder, (f) reduce or limit the obligations of Paxar under Section 8.01 or otherwise limit the Obligations of any Loan Party owing to any Lender Party or the Administrative Agent under the Loan Documents, (g) reduce or limit the obligations of Paxar under Article VIII or reduce or limit the obligations of any Subsidiary Guarantor under the Subsidiary Guaranty or release Paxar or any Subsidiary Guarantor from its respective obligations under Article VIII or the Subsidiary Guaranty, as the case may be, or limit Paxar's or any Subsidiary Guarantor's liability with respect to the Obligations owing to the Administrative Agent and the other Lender Parties or (h) amend this Section 9.01; and provided further that no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement or any Note; provided further that no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Bank or the Issuing Bank, as the case may be, in addition to the Lenders required above to take such action, affect the rights or obligations of the Swing Line Bank or of the Issuing Bank, as the case may be, under this Agreement. SECTION 9.02. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telecopier, telegraphic or telex communication) and mailed, telecopied, telegraphed, telexed or delivered, if to Paxar, at its address at 105 Corporate Park Drive, White Plains, New York 10604-3814, Attention: Jack Plaxe, Chief Financial Officer; if to any other Borrower, at its address specified in the applicable Credit Agreement Supplement; if to any Initial Lender, at its Domestic Lending Office specified opposite its name on Schedule I hereto; if to any other Lender Party, at its Domestic Lending Office specified in the Assignment and Acceptance pursuant to which it became a Lender Party; and if to the Administrative Agent, at its address at 244 Westchester Avenue, White Plains, New York 10604, Attention: Michael Dwyer; or, as to Paxar or the Administrative Agent, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to Paxar and the Administrative Agent. All such notices and communications shall, when mailed, telecopied, telegraphed or telexed, be effective when deposited in the mails, telecopied, delivered to the telegraph company or confirmed by telex answerback, respectively, except that notices and communications to the Administrative Agent pursuant to Article II, III or VII shall not be effective until received by the Administrative Agent. Delivery by telecopier of an executed counterpart of any amendment or waiver of any provision of this Agreement or the Notes or of any Exhibit hereto to be executed and delivered hereunder shall be effective as delivery of a manually executed counterpart thereof. SECTION 9.03. No Waiver; Remedies. No failure on the part of any Lender Party or the Administrative Agent to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. 67 62 SECTION 9.04. Costs and Expenses. (a) Paxar agrees to pay on demand all costs and expenses of the Administrative Agent in connection with the preparation, execution, delivery, administration, modification and amendment of this Agreement, the Notes, the other Loan Documents and the other documents to be delivered hereunder, including, without limitation, (A) all due diligence, syndication (including printing, distribution and bank meetings), transportation, computer, duplication, appraisal, consultant, and audit expenses and (B) the reasonable fees and expenses of counsel for the Administrative Agent with respect thereto and with respect to advising the Administrative Agent as to its rights and responsibilities under this Agreement. The Borrower further agrees to pay on demand all costs and expenses of the Administrative Agent and the Lender Parties, if any (including, without limitation, reasonable counsel fees and expenses), in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, the Notes and the other documents to be delivered hereunder, including, without limitation, reasonable fees and expenses of counsel for the Administrative Agent and each Lender Party in connection with the enforcement of rights under this Section 9.04(a). (b) Paxar agrees to indemnify and hold harmless the Administrative Agent and each Lender Party and each of their Affiliates and their officers, directors, employees, agents and advisors (each, an "Indemnified Party") from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (i) the Notes, this Agreement, the other Loan Documents, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances or (ii) the actual or alleged presence of Hazardous Materials on any property of Paxar or any of its Subsidiaries or any Environmental Action relating in any way to Paxar or any of its Subsidiaries, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 9.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by Paxar, its directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. Paxar also agrees not to assert any claim against the Administrative Agent, any Lender Party, any of their Affiliates, or any of their respective directors, officers, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Notes, this Agreement, any of the other Loan Documents, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances. (c) If any payment of principal of, or Conversion of, any Eurocurrency Rate Advance or LIBO Rate Advance is made by a Borrower to or for the account of a Lender Party other than on the last day of the Interest Period for such Advance, or if any payment of principal of any Swing Line Advance (other than a Swing Line Advance that is a Prime Rate Advance) is made by Paxar to or for the account of the Swing Line Bank other than on the day on which Paxar and the Swing Line Bank had agreed such Swing Line Advance would be payable, as a result of a payment or Conversion pursuant to Section 2.09(d) or (e), 2.11 or 2.13, acceleration of the maturity of the Notes pursuant to Section 6.01 or for any other reason, such Borrower shall, upon demand by such Lender (with a copy of such demand to 68 63 the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance. (d) Without prejudice to the survival of any other agreement of the Borrowers hereunder, the agreements and obligations of the Borrowers contained in Sections 2.12, 2.15 and 9.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the Notes. SECTION 9.05. Right of Set-off. Upon (i) the occurrence and during the continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Administrative Agent to declare the Notes due and payable pursuant to the provisions of Section 6.01, each Lender Party and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender Party or such Affiliate to or for the credit or the account of a Borrower against any and all of the obligations of the Borrowers now or hereafter existing under this Agreement and the Notes held by such Lender Party, whether or not such Lender Party shall have made any demand under this Agreement or such Note and although such obligations may be unmatured. Each Lender Party agrees promptly to notify the relevant Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender Party and its Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender Party and its Affiliates may have. SECTION 9.06. Binding Effect. This Agreement shall become effective (other than Sections 2.01, 2.03 and 2.04, which shall only become effective upon satisfaction of the conditions precedent set forth in Section 3.01) when it shall have been executed by Paxar and the Administrative Agent and when the Administrative Agent shall have been notified by each Initial Lender and the Initial Issuing Bank that such Initial Lender and the Initial Issuing Bank has executed it and thereafter shall be binding upon and inure to the benefit of the Borrowers, the Administrative Agent and each Lender Party and their respective successors and assigns, except that no Borrower shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lender Parties. SECTION 9.07. Assignments, Designations and Participations. (a) Each Lender (other than the Designated Bidders) may assign to one or more Persons all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitments, the Advances (other than Competitive Bid Advances) owing to it and the Note or Notes (other than any Competitive Bid Note) held by it); provided, however, that (i) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement (other than any right to make Competitive Bid Advances, Competitive Bid Advances owing to it and Competitive Bid Notes), (ii) except in the case of an assignment to a Person that, immediately prior to such assignment, was a Lender or an assignment of all of a Lender's rights and obligations under this Agreement, the amount of the Commitment of the assigning Lender being assigned pursuant to each such assignment (determined as 69 64 of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $5,000,000, (iii) each such assignment shall be to an Eligible Assignee, and (iv) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with any Note subject to such assignment and a processing and recordation fee of $3,500. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). (b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any other instrument or document furnished pursuant hereto or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrowers or any other Loan Party or the performance or observance by the Borrowers or any other Loan Party of any of their respective obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 or Section 5.01(o) and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Administrative Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Lender. (c) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, together with any Note or Notes subject to such assignment, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to Paxar. Within five Business Days after its receipt of such notice, the Borrowers, at Paxar's own expense, shall execute and deliver to the Administrative Agent in exchange for the surrendered Note a new Note to the order of such 70 65 Eligible Assignee in an amount equal to the Commitment assumed by it pursuant to such Assignment and Acceptance and, if the assigning Lender has retained a Commitment hereunder, a new Note to the order of the assigning Lender in an amount equal to the Commitment retained by it hereunder. Such new Note or Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of Exhibit A-1 or A-2 hereto, as the case may be. (d) Each Lender (other than the Designated Bidders) may designate one or more banks or other entities to have a right to make Competitive Bid Advances as a Lender pursuant to Section 2.03; provided, however, that (i) no such Lender shall be entitled to make more than one such designation, (ii) each such Lender making one or more of such designations shall retain the right to make Competitive Bid Advances as a Lender pursuant to Section 2.03, (iii) each such designation shall be to a Designated Bidder and (iv) the parties to each such designation shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, a Designation Agreement. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Designation Agreement, the designee thereunder shall be a party hereto with a right to make Competitive Bid Advances as a Lender pursuant to Section 2.03 and the obligations related thereto. (e) By executing and delivering a Designation Agreement, the Lender making the designation thereunder and its designee thereunder confirm and agree with each other and the other parties hereto as follows: (i) such Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any other instrument or document furnished pursuant hereto or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrowers or any other Loan Party or the performance or observance by the Borrowers or any other Loan Party of any of their respective obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such designee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Designation Agreement; (iv) such designee will, independently and without reliance upon the Administrative Agent, such designating Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such designee confirms that it is a Designated Bidder; (vi) such designee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto; and (vii) such designee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (f) Upon its receipt of a Designation Agreement executed by a designating Lender and a designee representing that it is a Designated Bidder, the Administrative Agent shall, if such Designation Agreement has been completed and is substantially in the form of Exhibit D hereto, (i) accept such 71 66 Designation Agreement, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to Paxar. (g) The Administrative Agent shall maintain at its address referred to in Section 9.02 a copy of each Assignment and Acceptance and each Designation Agreement delivered to and accepted by it and a register for the recordation of the names and addresses of the Lender Parties and, with respect to Lender Parties other than Designated Bidders, the Commitment of, and principal amount of the Advances owing to, each Lender Party from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and each Borrower, the Administrative Agent and the Lender Parties may treat each Person whose name is recorded in the Register as a Lender Party hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers or any Lender Party at any reasonable time and from time to time upon reasonable prior notice. (h) The Issuing Bank may assign to an Eligible Assignee all of its rights and obligations under the undrawn portion of its Letter of Credit Commitment at any time; provided, however, that (i) except in the case of an assignment to a Person that immediately prior to such assignment was an Issuing Bank or an assignment of all of an Issuing Bank's rights and obligations under this Agreement, the amount of the Letter of Credit Commitment of the assigning Issuing Bank being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than the undrawn portion of the Letter of Credit Commitment at such time, (ii) each such assignment shall be to an Eligible Assignee and (iii) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with a processing and recordation fee of $3,500. (i) Each Lender Party may sell participations to one or more banks or other entities (other than Paxar or any of its Affiliates) in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitments, the Advances owing to it and the Note or Notes held by it); provided, however, that (i) such Lender Party's obligations under this Agreement (including, without limitation, its Commitments to the Borrower hereunder) shall remain unchanged, (ii) such Lender Party shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender Party shall remain the holder of any such Note for all purposes of this Agreement, (iv) the Borrowers, the Administrative Agent and the other Lender Parties shall continue to deal solely and directly with such Lender Party in connection with such Lender Party's rights and obligations under this Agreement and (v) no participant under any such participation shall have any right to approve any amendment or waiver of any provision of this Agreement or any Note or any other Loan Document, or any consent to any departure by the Borrowers therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation. (j) Any Lender Party may, in connection with any assignment, designation or participation or proposed assignment, designation or participation pursuant to this Section 9.07, disclose to the assignee, designee or participant or proposed assignee, designee or participant, any information relating to the Borrowers or any other Loan Party furnished to such Lender Party by or on behalf of the Borrowers; provided that, prior to any such disclosure, the assignee, designee or participant or proposed 72 67 assignee, designee or participant shall agree to preserve the confidentiality of any Confidential Information relating to the Borrowers received by it from such Lender. (k) Notwithstanding any other provision set forth in this Agreement, any Lender Party may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System. SECTION 9.08. Confidentiality. Neither the Administrative Agent nor any Lender Party shall disclose any Confidential Information to any other Person without the consent of Paxar, other than (a) to the Administrative Agent's or such Lender Party's Affiliates and their officers, directors, employees, agents and advisors and, as contemplated by Section 9.07(j), to actual or prospective assignees and participants, and then only on a confidential basis, (b) as required by any law, rule or regulation or judicial process, (c) to any rating agency when required by it, provided that, prior to any such disclosure, such rating agency shall undertake to preserve the confidentiality of any Confidential Information relating to any Borrower received by it from such Lender and (d) as requested or required by any state, federal or foreign authority or examiner regulating banks or banking. SECTION 9.09. No Liability of the Issuing Bank. Each Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit. Neither the Issuing Bank nor any of its officers or directors shall be liable or responsible for: (a) the use that may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing Bank against presentation of documents that do not comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit, except that the relevant Borrower shall have a claim against the Issuing Bank, and the Issuing Bank shall be liable to such Borrower, to the extent of any direct, but not consequential, damages suffered by such Borrower that such Borrower proves were caused by (i) the Issuing Bank's willful misconduct or gross negligence in determining whether documents presented under any Letter of Credit issued on account of such Borrower comply with the terms of the Letter of Credit or (ii) the Issuing Bank's willful failure to make lawful payment under a Letter of Credit issued on account of such Borrower after the presentation to it of a draft and certificates strictly complying with the terms and conditions of the Letter of Credit. In furtherance and not in limitation of the foregoing, the Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary. SECTION 9.10. Governing Law. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York. SECTION 9.11. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement. 73 68 SECTION 9.12. Judgment. (a) Rate of Exchange. If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum due hereunder (including, without limitation, under Section 8.01) or under any Note or Notes in another currency into US Dollars or into a Primary Currency, as the case may be, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which, in accordance with normal banking procedures, a Lender Party could purchase such other currency with US Dollars or with a Primary Currency, as the case may be, in New York City, New York at the close of business on the Business Day immediately preceding the day on which final judgment is given, together with any premiums and costs of exchange payable in connection with such purchase. (b) Indemnity. The obligation of each Borrower in respect of any sum due from it to the Administrative Agent or any Lender Party hereunder or under any Note or Notes shall, notwithstanding any judgment in a currency other than US Dollars or a Primary Currency, as the case may be, be discharged only to the extent that on the Business Day next succeeding receipt by the Administrative Agent or such Lender Party of any sum adjudged to be so due in such other currency, the Administrative Agent or such Lender Party may, in accordance with normal banking procedures, purchase US Dollars or such Primary Currency, as the case may be, with such other currency. If the US Dollars or such Primary Currency so purchased are less than the sum originally due to the Administrative Agent or such Lender Party in US Dollars or in such Primary Currency, each Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Lender Party against such loss, and if the US Dollars or such Primary Currency so purchased exceed the sum originally due to the Administrative Agent or any Lender Party in US Dollars or in such Primary Currency, as the case may be, the Administrative Agent or such Lender Party agrees to remit to such Borrower such excess. SECTION 9.13. Jurisdiction, Etc. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the Notes or the other Loan Documents, 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 any such New York State court or, to the extent permitted by law, in such federal court. Each Borrower further irrevocably consents to the service of process in any action or proceeding in such courts by the mailing thereof by any parties thereto by registered or certified mail, postage prepaid, to such Borrower at its address specified pursuant to Section 9.02 or in the Credit Agreement Supplement. Each Borrower (other than Paxar) hereby further agrees that service of process in any such action or proceeding brought in any such New York state court or in any such federal court may be made upon Paxar at its address specified in Section 9.02, and each Borrower (other than Paxar) hereby irrevocably appoints Paxar as its authorized agent to accept such service of process, and hereby irrevocably agrees that the failure of Paxar to give any notice of such service to such Borrower shall not impair or affect the validity of such service or of any judgment rendered in any action or proceeding based thereon. 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 shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or the Notes in the courts of any jurisdiction. (b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the Notes or the 74 69 other Loan Documents in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (c) To the extent that any Borrower has or hereafter may acquire any immunity from the jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, such Borrower hereby irrevocably waives such immunity in respect of its obligations under this Agreement and the Notes and the other Loan Documents. SECTION 9.14. Waiver of Jury Trial. Each of the Borrowers, the Administrative Agent and the Lender Parties hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or the Notes or the other Loan Documents or the actions of the Administrative Agent or any Lender Party in the negotiation, administration, performance or enforcement thereof. 75 70 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. PAXAR CORPORATION By -------------------------------- Title: 76 71 FLEET BANK, N.A., as Administrative Agent By ------------------------------- Title: FLEET BANK, N.A., as Initial Issuing Bank By ------------------------------- Title: Initial Lenders FLEET BANK, N.A. By ------------------------------- Title: BANK OF BOSTON CONNECTICUT By ------------------------------- Title: THE BANK OF NEW YORK By ------------------------------- Title: 77 72 CREDITO ITALIANO S.p.A. By ------------------------------- Title: By ------------------------------- Title: FIRST UNION NATIONAL BANK By ------------------------------- Title: KEYBANK, NATIONAL ASSOCIATION By ------------------------------- Title: MARINE MIDLAND BANK By ------------------------------- Title: MELLON BANK, N.A. By ------------------------------- Title: NATIONAL CITY BANK By ------------------------------- Title: 78 73 NATIONSBANK, N.A. By ------------------------------- Title: STATE STREET BANK AND TRUST COMPANY By ------------------------------- Title: SUNTRUST BANK, ATLANTA By ------------------------------- Title: By ------------------------------- Title: WACHOVIA BANK OF GEORGIA, N.A. By ------------------------------- Title: 79 EXHIBIT A-1 - FORM OF REVOLVING CREDIT PROMISSORY NOTE U.S. _______________ Dated: August __, 1998 FOR VALUE RECEIVED, the undersigned, [NAME OF BORROWER], a _________________________ corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of _________________________ (the "Lender") for the account of its Applicable Lending Office (as defined in the Credit Agreement referred to below) the aggregate principal amount of the Revolving Credit Advances (as defined below) owing to the Lender by the Borrower pursuant to the Amended and Restated Credit Agreement dated as of August 11, 1998 among the Borrower, [Paxar Corporation,] the other Borrowers party thereto, the Lender and certain other lenders party thereto, and Fleet Bank, N.A., as Administrative Agent for the Lender and such other lenders (as amended or modified from time to time, the "Credit Agreement"; the terms defined therein being used herein as therein defined) on the Termination Date. The Borrower promises to pay the Lender interest on the unpaid principal amount of each Revolving Credit Advance from the date of such Revolving Credit Advance until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement. Both principal and interest are payable in lawful money of the United States of America to Fleet Bank, N.A., as Administrative Agent, at _________________________, ____________________, __________, in same day funds. Each Revolving Credit Advance owing to the Lender by the Borrower pursuant to the Credit Agreement, and all payments made on account of principal thereof, shall be recorded by the Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Promissory Note. This Promissory Note is one of the Revolving Credit Notes referred to in, and is entitled to the benefits of, the Credit Agreement. The Credit Agreement, among other things, (i) provides for the making of advances (the "Revolving Credit Advances") by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the U.S. dollar amount first above mentioned, the indebtedness of the Borrower resulting from each such Revolving Credit Advance being evidenced by this Promissory Note, and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. The obligations of the Borrower under this Promissory Note and the Credit Agreement, and the obligations of the other Loan Parties under the Loan Documents, are secured by the Collateral as provided in the Loan Documents. The Borrower hereby waives presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights. This Promissory Note shall be governed by, and construed in accordance with, the laws of the State of New York. 80 2 [NAME OF BORROWER] By ------------------------------- Title: 81 ADVANCES AND PAYMENTS OF PRINCIPAL
Amount of Amount of Principal Paid Unpaid Principal Notation Date Advance or Prepaid Balance Made By - -------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------
82 EXHIBIT A-2 - FORM OF COMPETITIVE BID PROMISSORY NOTE U.S. _______________ Dated: _______________, 199_ FOR VALUE RECEIVED, the undersigned, PAXAR CORPORATION, a New York corporation ("Paxar"), HEREBY PROMISES TO PAY to the order of _________________________ (the "Lender") for the account of its Applicable Lending Office (as defined in the Amended and Restated Credit Agreement dated as of August 11, 1998 among Paxar, the other Borrowers party thereto, the Lender and certain other lenders party thereto, and Fleet Bank, N.A., as Administrative Agent for the Lender and such other lenders (as amended or modified from time to time, the "Credit Agreement"; the terms defined therein being used herein as therein defined)), on _______________, 199_, the principal amount of U.S. - ---------------. Paxar promises to pay interest on the unpaid principal amount hereof from the date hereof until such principal amount is paid in full, at the interest rate and payable on the interest payment date or dates provided below: Interest Rate: _____% per annum (calculated on the basis of a year of _____ days for the actual number of days elapsed). Interest Payment Date: _____ and _____. Both principal and interest are payable in lawful money of the United States of America to Fleet Bank, N.A. for the account of the Lender at the office of Fleet Bank, N.A., at _________________________ in same day funds. This Promissory Note is one of the Competitive Bid Notes referred to in, and is entitled to the benefits of, the Credit Agreement. The Credit Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events. The obligations of Paxar under this Promissory Note and the Credit Agreement are secured by collateral as provided therein. Paxar hereby waives presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights. 83 2 This Promissory Note shall be governed by, and construed in accordance with, the laws of the State of New York. PAXAR CORPORATION By ----------------------------------- Title: 84 EXHIBIT B-1 - FORM OF NOTICE OF BORROWING Fleet Bank, N.A., as Administrative Agent for the Lenders parties to the Credit Agreement referred to below - ------------------------- - ------------------------- [Date] Attention: _______________ Ladies and Gentlemen: The undersigned, [Name of Borrower], refers to the Amended and Restated Credit Agreement, dated as of August 11, 1998 (as amended or modified from time to time, the "Credit Agreement", the terms defined therein being used herein as therein defined), among [Paxar Corporation], the undersigned, the other Borrowers party thereto, certain Lenders party thereto and Fleet Bank, N.A., as Administrative Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the undersigned hereby requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the "Proposed Borrowing") as required by Section 2.02(a) of the Credit Agreement: (i) The Business Day of the Proposed Borrowing is _______________, 199_. (ii) The Facility under which the Proposed Borrowing is requested is the ________ Facility. (iii) The Type of Advances comprising the Proposed Borrowing is [Prime Rate Advances] [Eurocurrency Rate Advances]. (iv) The aggregate amount of the Proposed Borrowing is _______________. [(v) The initial Interest Period [and the currency] for each Eurocurrency Rate Advance made as part of the Proposed Borrowing is _____ month[s] and [Primary Currency].] The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Revolving Credit Borrowing: (A) the representations and warranties contained in each Loan Document are correct, before and after giving effect to the Proposed Borrowing and to the application of the proceeds therefrom, as though made on and as of such date (other than any such representations or warranties that, by their terms, refer to a specific date other than the date of such Proposed Borrowing, in which case as of such specific date); and 85 2 (B) no event has occurred and is continuing, or would result from such Proposed Borrowing or from the application of the proceeds therefrom, that constitutes a Default. Very truly yours, [NAME OF BORROWER] By ---------------------------- Title: 86 EXHIBIT B-2 - FORM OF NOTICE OF COMPETITIVE BID BORROWING Fleet Bank, N.A., as Administrative Agent for the Lenders parties to the Credit Agreement referred to below - -------------------- - -------------------- [Date] Attention: _______________ Ladies and Gentlemen: The undersigned, Paxar Corporation, refers to the Amended and Restated Credit Agreement, dated as of August 11, 1998 (as amended or modified from time to time, the "Credit Agreement", the terms defined therein being used herein as therein defined), among the undersigned, the other Borrowers party thereto, certain Lenders party thereto and Fleet Bank, N.A., as Administrative Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.03 of the Credit Agreement that the undersigned hereby requests a Competitive Bid Borrowing under the Credit Agreement, and in that connection sets forth the terms on which such Competitive Bid Borrowing (the "Proposed Competitive Bid Borrowing") is requested to be made: (A) Date of Competitive Bid Borrowing ____________________ (B) Amount of Competitive Bid Borrowing ____________________ (C) [Maturity Date] [Interest Period] ____________________ (D) Interest Rate Basis ____________________ (E) Interest Payment Date(s) ____________________ (F) ___________________ ____________________ (G) ___________________ ____________________ (H) ___________________ ____________________ The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Competitive Bid Borrowing: (a) the representations and warranties contained in each Loan Document are correct, before and after giving effect to the Proposed Competitive Bid Borrowing and to the application of the proceeds therefrom, as though made on and as of such date (other than any such representations or warranties that, by their terms, refer to a specific date other than the date of such Proposed Competitive Bid Borrowing, in which case as of such specific date); (b) no event has occurred and is continuing, or would result from the Proposed Competitive Bid Borrowing or from the application of the proceeds therefrom, that constitutes a Default; (c) no event has occurred and no circumstance exists as a result of which the information concerning the undersigned that has been provided to the Administrative Agent and 87 2 each Lender by the undersigned in connection with the Credit Agreement would include an untrue statement of a material fact or omit to state any material fact or any fact necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading; and (d) the aggregate amount of the Proposed Competitive Bid Borrowing and all Revolving Credit Borrowings and Swing Line Borrowings to be made on the same day under the Credit Agreement is within the aggregate amount of the Unused Revolving Credit Commitments of the Lenders. The undersigned hereby confirms that the Proposed Competitive Bid Borrowing is to be made available to it in accordance with Section 2.03(a)(v) of the Credit Agreement. Very truly yours, PAXAR CORPORATION By ------------------------------- Title: 88 EXHIBIT C - FORM OF ASSIGNMENT AND ACCEPTANCE Reference is made to the Amended and Restated Credit Agreement dated as of August 11, 1998 (as amended or modified from time to time, the "Credit Agreement") among Paxar Corporation, a New York corporation ("Paxar"), the other Borrowers (as defined in the Credit Agreement) party thereto, the Lenders (as defined in the Credit Agreement) and Fleet Bank, N.A., as administrative agent for the Lenders (the "Administrative Agent"). Terms defined in the Credit Agreement are used herein with the same meaning. The "Assignor" and the "Assignee" referred to on Schedule I hereto agree as follows: 1. The Assignor hereby sells and assigns to the Assignee without recourse, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit Agreement as of the date hereof (other than in respect of Competitive Bid Advances and Competitive Bid Notes) equal to the percentage interest specified on Schedule 1 hereto of all outstanding rights and obligations under the Credit Agreement (other than in respect of Competitive Bid Advances and Competitive Bid Notes). After giving effect to such sale and assignment, the Assignee's Commitments and the amount of the Advances owing to the Assignee will be as set forth on Schedule 1 hereto. 2. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Documents or any other instrument or document provided pursuant thereto or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, the Loan Documents or any other instrument or document furnished pursuant thereto; (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or the performance or observance by any Loan Party of any of its obligations under the Loan Documents or any other instrument or document furnished pursuant thereto; and (iv) attaches the Note or Notes held by the Assignor and requests that the Administrative Agent exchange such Note or Notes for a new Note or Notes payable to the order of the Assignee in an amount equal to the Commitments assumed by the Assignee pursuant hereto or new Notes payable to the order of the Assignee in an amount equal to the Commitment assumed by the Assignee pursuant hereto and the Assignor in an amount equal to the Commitment retained by the Assignor under the Credit Agreement, respectively, as specified on Schedule 1 hereto. 3. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.01 or delivered pursuant to Section 5.01(o) thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Administrative Agent, the Assignor or any other Lender Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and authorizes the Administrative Agent to take such action as administrative agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; (v) agrees that it will perform in accordance with their 89 2 terms all of the obligations that by the terms of the Credit Agreement are required to be performed by it as a Lender Party; and (vi) attaches any U.S. Internal Revenue Service forms required under Section 2.15 of the Credit Agreement. 4. Following the execution of this Assignment and Acceptance, it will be delivered to the Administrative Agent for acceptance and recording by the Administrative Agent. The effective date for this Assignment and Acceptance (the "Effective Date") shall be the date of acceptance hereof by the Administrative Agent, unless otherwise specified on Schedule 1 hereto. 5. Upon such acceptance and recording by the Administrative Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender Party thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights, except under Section 2.11, 2.15 and 9.04 of the Credit Agreement, and be released from its obligations under the Credit Agreement. 6. Upon such acceptance and recording by the Administrative Agent, from and after the Effective Date, the Administrative Agent shall make all payments under the Credit Agreement and the Notes in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and facility fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the Notes for periods prior to the Effective Date directly between themselves. 7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York. 8. This Assignment and Acceptance may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to this Assignment and Acceptance to be executed by their officers thereunto duly authorized as of the date specified thereon. 90 Schedule 1 to Assignment and Acceptance Percentage interest assigned: _____% Assignee's Commitment: ---------- Aggregate outstanding principal amount of Revolving Credit Advances assigned: ---------- Aggregate outstanding principal amount of Term Advances assigned: Principal amount of Revolving Credit Note payable to Assignee: ---------- Principal amount of Term Note payable to Assignee: Principal amount of Revolving Credit Note payable to Assignor: ---------- Principal amount of Term Note payable to Assignor: Effective Date*: _______________, 199_ [NAME OF ASSIGNOR], as Assignor By ----------------------------------- Title: Dated: _______________, 199_ [NAME OF ASSIGNEE], as Assignee By ----------------------------------- Title: Dated: _______________, 199_ Domestic Lending Office: [Address] - -------- * This date should be no earlier than five Business Days after the delivery of this Assignment and Acceptance to the Administrative Agent. 91 2 Eurocurrency Lending Office: [Address] Accepted [and Approved]* this __________ day of _______________, 199_ FLEET BANK, N.A., as Administrative Agent By Title: [Approved this __________ day of _______________, 199_ PAXAR CORPORATION By _____________________________ ]** Title: - -------- * Required if the Assignee is an Eligible Assignee solely by reason of clause (viii) of the definition of "Eligible Assignee". ** Required if the Assignee is an Eligible Assignee solely by reason of clause (viii) of the definition of "Eligible Assignee". 92 EXHIBIT D - FORM OF DESIGNATION AGREEMENT Dated _______________, 199_ Reference is made to the Amended and Restated Credit Agreement dated as of August 11, 1998 (as amended or modified from time to time, the "Credit Agreement") among Paxar Corporation, a New York corporation ("Paxar"), the other Borrowers (as defined in the Credit Agreement) party thereto, the Lenders (as defined in the Credit Agreement) and Fleet Bank, N.A., as agent for the Lenders (the "Administrative Agent"). Terms defined in the Credit Agreement are used herein with the same meaning. _________________________ (the "Designor") and __________________ (the "Designee") agree as follows: 1. The Designor hereby designates the Designee, and the Designee hereby accepts such designation, to have a right to make Competitive Bid Advances pursuant to Section 2.03 of the Credit Agreement. 2. The Designor makes no representation or warranty and assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Loan Documents or any other instrument or document provided pursuant thereto or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, the Loan Documents or any other instrument or document furnished pursuant thereto and (ii) the financial condition of any Loan Party or the performance or observance by any Loan Party of any of its obligations under the Loan Documents or any other instrument or document furnished pursuant thereto. 3. The Designee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.01 or delivered pursuant to Section 5.01(o) thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Designation Agreement; (ii) agrees that it will, independently and without reliance upon the Administrative Agent, the Designor or any other Lender Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) confirms that it is a Designated Bidder; (iv) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; and (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Designated Bidder. 4. Following the execution of this Designation Agreement by the Designor and its Designee, it will be delivered to the Administrative Agent for acceptance and recording by the Administrative Agent. The effective date for this Designation Agreement (the "Effective Date") shall be the date of acceptance hereof by the Administrative Agent, unless otherwise specified on the signature page hereto. 5. Upon such acceptance and recording by the Administrative Agent, as of the Effective Date, the Designee shall be a party to the Credit Agreement with a right to make Competitive 93 2 Bid Advances as a Designated Bidder pursuant to Section 2.03 of the Credit Agreement and the rights and obligations of a Lender related thereto. 6. This Designation Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. 7. This Designation Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Designation Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Designation Agreement. IN WITNESS WHEREOF, the Designor and the Designee have caused this Designation Agreement to be executed by their officers thereunto duly authorized as of the date first above written. Effective Date*: _______________, 199__ [NAME OF DESIGNOR], as Designor By ------------------------------- Title: [NAME OF DESIGNEE], as Designee By ------------------------------- Title: Applicable Lending Office (and address for notices): [Address] Accepted this ____ day of _______________, 199_ FLEET BANK, as Administrative Agent By ------------------------------ Title: - -------- * This date should be no earlier than five Business Days after the delivery of this Designation Agreement to the Administrative Agent. 94 EXHIBIT E - FORM OF CREDIT AGREEMENT SUPPLEMENT [DATE] To each of the Banks under the Credit Agreement referred to below Ladies and Gentlemen: Reference is made to the Amended and Restated Credit Agreement dated as of August 11, 1998 (as amended or modified from time to time, the "Credit Agreement") among Paxar Corporation, a New York corporation ("Paxar"), the other Borrowers (as defined in the Credit Agreement) party thereto, the Lenders (as defined in the Credit Agreement) and Fleet Bank, N.A., as agent for the Lenders (the "Administrative Agent"). Terms defined in the Credit Agreement are used herein with the same meaning. [NAME AND JURISDICTION OF INCORPORATION OF ADDITIONAL BORROWER] (the "Additional Borrower"), in consideration of the agreement of each Bank to extend credit to it from time to time under, and on the terms and conditions set forth in, the Credit Agreement does hereby assume each of the obligations imposed upon an Additional Borrower under the Credit Agreement and agrees to be bound by all of the terms and conditions of the Credit Agreement. The Additional Borrower hereby agrees as follows: 1. The Additional Borrower hereby agrees, as of the date first above written, to be bound as a Borrower by all of the terms and conditions of the Credit Agreement to the same extent as each of the other Borrowers as if it had been a party thereto as a Borrower. The Additional Borrower further agrees, as of the date first above written, that each reference in the Credit Agreement to a "Borrower" shall, as and where the context requires also mean and be a reference to the Additional Borrower, and each reference in any other Loan Document to a "Borrower" or a "Loan Party" shall also mean, as and where the context requires and be a reference to the Additional Borrower. 2. The Additional Borrower hereby represents and warrants to the Administrative Agent and each of the Banks that the representations and warranties contained in each Loan Document are correct on and as of the date hereof as though made on and as of such date other than any such representations and warranties that, by their terms, refer to a date other than the date hereof, in which case as of such specific date (provided that the representations and warranties referred to therein may be qualified, to the reasonable satisfaction of the Administrative Agent, to take into account requirements of the local laws of the foreign jurisdiction in which the Additional Borrower is located) 3. Pursuant to the terms of the Credit Agreement, the Administrative Agent hereby indicates its approval of the Additional Borrower. 95 2 4. This Credit Agreement Supplement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York. 5. (a) THIS CREDIT AGREEMENT SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding with respect to this Credit Agreement Supplement or any other Loan Document may be brought in the courts of the State of New York or of the United States for the Southern District of New York, and, by execution and delivery of this Credit Agreement Supplement, the Additional Borrower hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The Additional Borrower hereby further irrevocably waives any claim that any such courts lack jurisdiction over such Additional Borrower, and agrees not to plead or claim, in any legal action or proceeding with respect to this Credit Agreement Supplement or any other Loan Document brought in any of the aforesaid courts, that any such court lacks jurisdiction over the Additional Borrower. The Additional Borrower 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. The Additional Borrower hereby irrevocably appoints CT Corporation System with an office on the date hereof at 1633 Broadway, New York, New York 10019 (the "Process Agent"), as its agent to receive on behalf of the Additional Borrower and its property service of copies of the summons and complaint and any other process which may be served in any such action or proceeding. The Additional Borrower irrevocably consents to the service of process in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the Additional Borrower at its address set forth on the signature pages hereof, such service to become effective 30 days after such mailing. The Additional Borrower hereby irrevocably waives any objection to such service of process and further irrevocably waives and agrees not to plead or claim in any action or proceeding commenced hereunder or under any other Loan Document that service of process was in any way invalid or ineffective. Nothing herein shall affect the right of the Administrative Agent,, any Lender Party or the holder of any Note to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Additional Borrower in any other jurisdiction. (b) The Additional Borrower hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Credit Agreement Supplement or any other Loan Document brought in the courts referred to in clause (a) above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. (c) To the extent that the Additional Borrower has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, the Additional Borrower to the extent permitted by law hereby irrevocably waives such immunity in respect of its obligations under this Credit Agreement Supplement or any other Loan Document and, without limiting the generality of the foregoing, agrees that the waivers set forth in this subsection (c) shall have the fullest scope permitted under the United States Foreign Sovereign Immunities Act of 1976, as amended, or any other similarly 96 3 applicable foreign law and are intended to be irrevocable for purposes of such Act or any other similarly applicable foreign law. 6. The Additional Borrower hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Credit Agreement Supplement or any of the other Loan Documents to which it is a party, or the actions of the Administrative Agent or any Lender Party in the negotiation, administration, performance or enforcement thereof. Very truly yours, [NAME OF ADDITIONAL BORROWER] By _______________________________ Name: Title: Address: Accepted and Agreed: FLEET BANK, N.A., as Administrative Agent By________________________________ Title: 97 EXHIBIT G - FORM OF ACCEPTANCE OF PROCESS AGENT [LETTERHEAD OF PAXAR] [Date] To each of the Lenders party to the Credit Agreement referred to below, and to Fleet Bank, N.A., as Administrative Agent for such Lenders [Name of Additional Borrower] Ladies and Gentlemen: Reference is made to (a) the Amended and Restated Credit Agreement dated as of August 11, 1998 (as amended or modified from time to time, the "Credit Agreement") among Paxar Corporation, a New York corporation ("Paxar"), the other Borrowers (as defined in the Credit Agreement) party thereto, the Lenders (as defined in the Credit Agreement) and Fleet Bank, N.A., as agent for the Lenders (the "Administrative Agent"), and (b) the Credit Agreement Supplement dated _________, pursuant to which __________, a ___________ (the "Additional Borrower"), has become a "Borrower" under and for all purposes of the Credit Agreement. Terms defined in the Credit Agreement are used herein with the same meaning Pursuant to Section 9.13 of the Credit Agreement and to the Credit Agreement Supplement, the Additional Borrower has appointed Paxar (with its address at _________________________, Attention: _______________) as its process agent (the "Process Agent") to receive on behalf of the Additional Borrower and its property service of copies of any summons and complaint and any other process that may be served in any action or proceeding in any New York state court or any federal court sitting in New York City, New York, and any appellate court from any thereof, arising out of or relating to its Credit Agreement Supplement, the Credit Agreement or any of the Notes issued by it. The undersigned hereby accepts such appointment as the Process Agent and agrees with each of you that (a) Paxar will maintain an office in White Plains, through the Termination Date and will give the Administrative Agent prompt notice of any change of its address, (b) Paxar will perform its duties as the Process Agent to receive on behalf of the Additional Borrower and its property service of copies of any summons and complaint and any other process that may be served in any action or proceeding in any New York state court or any federal court sitting in New York City, New York, and any appellate court from any thereof, arising out of or relating to the Credit Agreement Supplement of the Additional Borrower, the Credit Agreement or any of the Notes issued by the Additional Borrower and (c) the undersigned will forward forthwith to the Additional Borrower at its address at ________________ or, 98 2 if different, its then current address, copies of any summons, complaint and other process that the undersigned receives in connection with its appointment as the Process Agent therefor. This acceptance and agreement shall be binding upon Paxar and all of its successors and assigns. Very truly yours, PAXAR CORPORATION By -------------------------------- Name: Title: 99 SCHEDULE 4.01(c) None. 100 SCHEDULE 4.01(f) None. 101 SCHEDULE 4.01(i) None. 102 SCHEDULE 5.02(g) None. EX-10.2 3 FORM OF NOTE PURCHASE AGREEMENT 1 [EXECUTION COPY] PAXAR CORPORATION 6.74% Senior Notes due 2008 NOTE PURCHASE AGREEMENT Dated as of August 4, 1998 2 Table of Contents
Page 1. AUTHORIZATION OF NOTES .................................................................. 1 1.1. The Notes .................................................................... 1 1.2. The Subsidiary Guarantees .................................................... 1 2. SALE AND PURCHASE OF NOTES .............................................................. 2 3. CLOSING ................................................................................. 2 4. CONDITIONS TO CLOSING ................................................................... 2 4.1. Representations and Warranties ............................................... 3 4.2. Performance; No Default ...................................................... 3 4.3. Compliance Certificates ...................................................... 3 4.4. Opinions of Counsel .......................................................... 3 4.5. Subsidiary Guarantees ........................................................ 3 4.6. Purchase Permitted by Applicable Law, etc .................................... 4 4.7. Rating ....................................................................... 4 4.8. Payment of Special Counsel Fees .............................................. 4 4.9. Private Placement Number ..................................................... 4 4.10. Changes in Corporate Structure .............................................. 4 4.11. Proceedings and Documents ................................................... 5 4.12. Sale of Notes to Other Purchasers ........................................... 5 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY ........................................... 5 5.1. Organization; Power and Authority ............................................ 5 5.2. Authorization, etc ........................................................... 5 5.3. Disclosure ................................................................... 6 5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates ............. 6 5.5. Financial Statements ......................................................... 7 5.6. Compliance with Laws, Other Instruments, etc ................................. 7 5.7. Governmental Authorizations, etc ............................................. 7 5.8. Litigation; Observance of Agreements, Statutes and Orders .................... 8 5.9. Taxes ........................................................................ 8 5.10. Title to Property; Leases ................................................... 8 5.11. Licenses, Permits, etc ...................................................... 9 5.12. Compliance with ERISA ....................................................... 9 5.13. Private Offering by the Company ............................................. 10 5.14. Use of Proceeds; Margin Regulations ......................................... 11 5.15. Existing Indebtedness ....................................................... 11 5.16. Foreign Assets Control Regulations, etc ..................................... 11 5.17. Status Under Certain Statutes ............................................... 12 5.18. Environmental Matters ....................................................... 12 6. REPRESENTATIONS OF THE PURCHASER ........................................................ 12 6.1. Purchase of Notes ............................................................ 12 6.2. Source of Funds .............................................................. 13 7. INFORMATION AS TO COMPANY ............................................................... 14
3 7.1. Financial and Business Information ........................................... 14 7.2. Officer's Certificate ........................................................ 17 7.3. Inspection ................................................................... 18 8. PREPAYMENT OF THE NOTES ................................................................. 18 8.1. Optional Prepayments with Make-Whole Amount .................................. 18 8.2. Allocation of Partial Prepayments ............................................ 19 8.3. Maturity; Surrender, etc ..................................................... 19 8.4. Purchase of Notes ............................................................ 19 8.5. Make-Whole Amount ............................................................ 20 9. AFFIRMATIVE COVENANTS ................................................................... 21 9.1. Compliance with Law .......................................................... 21 9.2. Insurance .................................................................... 21 9.3. Maintenance of Properties .................................................... 22 9.4. Payment of Taxes and Claims .................................................. 22 9.5. Corporate Existence, etc ..................................................... 22 9.6. Additional Subsidiary Guarantees; Release of Subsidiary Guarantees ........... 23 10. NEGATIVE COVENANTS ..................................................................... 23 10.1. Total Indebtedness; Restricted Subsidiary Indebtedness ...................... 23 10.2. Liens ....................................................................... 25 10.3. Limitation on Sale and Leaseback Transactions ............................... 26 10.4. Maintenance of Consolidated Net Worth ....................................... 27 10.5. Merger, Consolidation, etc .................................................. 27 10.6. Lines of Business ........................................................... 28 10.7. Transactions with Affiliates ................................................ 28 10.8. Designation of Restricted and Unrestricted Subsidiaries ..................... 29 11. EVENTS OF DEFAULT ...................................................................... 30 12. REMEDIES ON DEFAULT, ETC ............................................................... 32 12.1. Acceleration ................................................................ 32 12.2. Other Remedies .............................................................. 33 12.3. Rescission .................................................................. 33 12.4. No Waivers or Election of Remedies, Expenses, etc ........................... 34 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES .......................................... 34 13.1. Registration of Notes ....................................................... 34 13.2. Transfer and Exchange of Notes .............................................. 34 13.3. Replacement of Notes ........................................................ 35 14. PAYMENTS ON NOTES ...................................................................... 35 14.1. Place of Payment ............................................................ 35 14.2. Home Office Payment ......................................................... 36 15. EXPENSES, ETC .......................................................................... 36 15.1. Transaction Expenses ........................................................ 36 15.2. Survival .................................................................... 37
(ii) 4 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT ........................... 37 17. AMENDMENT AND WAIVER ................................................................... 37 17.1. Requirements ................................................................ 37 17.2. Solicitation of Holders of Notes ............................................ 38 17.3. Binding Effect, etc ......................................................... 38 17.4. Notes held by Company, etc .................................................. 39 18. NOTICES ................................................................................ 39 19. REPRODUCTION OF DOCUMENTS .............................................................. 39 20. CONFIDENTIAL INFORMATION ............................................................... 40 21. SUBSTITUTION OF PURCHASER .............................................................. 41 22. MISCELLANEOUS .......................................................................... 41 22.1. Successors and Assigns ...................................................... 41 22.2. Construction ................................................................ 42 22.3. Payments Due on Non-Business Days ........................................... 42 22.4. Severability ................................................................ 42 22.5. Accounting Terms; Pro Forma Calculations .................................... 42 22.6. Counterparts ................................................................ 43 22.7. Governing Law ............................................................... 43
Exhibit 1.1 -- Form of 6.74% Senior Note due 2008 Exhibit 1.2 -- Form of Subsidiary Guarantee Exhibit 4.4(a) -- Form of Opinion of Special Counsel for the Company Exhibit 4.4(b) -- Form of Opinion of Special Counsel for the Purchasers Schedule A -- Names and Addresses of Purchasers Schedule B -- Defined Terms Schedule 5.3 -- Disclosure Documents Schedule 5.4 -- Subsidiaries Schedule 5.5 -- Financial Statements Schedule 5.8 -- Litigation Schedule 5.11 -- Licenses, etc. Schedule 5.15 -- Existing Indebtedness (iii) 5 PAXAR CORPORATION 105 Corporate Park Drive White Plains, NY 10604 Telephone: 914-697-6800 6.74% Senior Notes due 2008 As of August 4, 1998 TO EACH OF THE PURCHASERS LISTED IN THE ATTACHED SCHEDULE A: Ladies and Gentlemen: PAXAR CORPORATION, a New York corporation (the "COMPANY"), agrees with you as follows: 1. AUTHORIZATION OF NOTES. 1.1. THE NOTES. The Company has duly authorized the issue and sale of $150,000,000 aggregate principal amount of its 6.74% Senior Notes due 2008 (the "NOTES"), such notes to be substantially in the form set out in Exhibit 1.1. As used herein, the term "NOTES" shall mean all notes originally delivered pursuant to this Agreement and the Other Agreements referred to below and all notes delivered in substitution or exchange for any such note and, where applicable, shall include the singular number as well as the plural. The terms "NOTE" means one of the Notes. Certain capitalized and other terms used in this Agreement are defined in Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement. 1.2. THE SUBSIDIARY GUARANTEES. The Notes will be unconditionally guaranteed by each of the Company's existing United States Restricted Subsidiaries, pursuant to subsidiary guarantees substantially in the form of Exhibit 1.2 (individually a "SUBSIDIARY GUARANTEE" and collectively the "SUBSIDIARY GUARANTEES", which terms shall include after the date of the Closing all additional Subsidiary Guarantees from time to time executed and delivered pursuant to Section 9.6). 6 2 2. SALE AND PURCHASE OF NOTES. Subject to the terms and conditions of this Agreement, the Company will issue and sell to you and you will purchase from the Company, at the Closing provided for in Section 3, Notes in the principal amount specified opposite your name in Schedule A at the purchase price of 100% of the principal amount thereof. Contemporaneously with entering into this Agreement, the Company is entering into separate Note Purchase Agreements (the "OTHER AGREEMENTS") identical with this Agreement (except for the principal amounts of Notes to be purchased) with each of the other purchasers named in Schedule A (the "OTHER PURCHASERS"), providing for the sale at such Closing to each of the Other Purchasers of Notes in the principal amount specified opposite its name in Schedule A. Your obligation hereunder and the obligations of the Other Purchasers under the Other Agreements are several and not joint obligations and you shall have no obligation under any Other Agreement and no liability to any Person for the performance or non-performance by any Other Purchaser thereunder. 3. CLOSING. The sale and purchase of the Notes to be purchased by you and the Other Purchasers shall occur at the offices of Willkie Farr & Gallagher, 787 Seventh Avenue, New York, NY 10019 at 10:00 a.m., New York time, at a closing (the "CLOSING") on August 11, 1998 or on such other Business Day thereafter on or prior to August 14, 1998 as may be agreed upon by the Company and you and the Other Purchasers. At the Closing the Company will deliver to you the Notes to be purchased by you in the form of a single Note (or such greater number of Notes in denominations of at least $100,000 as you may request) dated the date of the Closing and registered in your name (or in the name of your nominee), against delivery by you to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds to Paxar Corporation Concentration Account (account number 940-878-0187) at Fleet Bank, White Plains, New York, ABA number 011500010. If at the Closing the Company shall fail to tender such Notes to you as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to your satisfaction, you shall, at your election, be relieved of all further obligations under this Agreement, without thereby waiving any rights you may have by reason of such failure or such nonfulfillment. 4. CONDITIONS TO CLOSING. Your obligation to purchase and pay for the Notes to be sold to you at the Closing is subject to the fulfillment to your satisfaction, prior to or at the Closing, of the following conditions: 7 3 4.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Company in this Agreement shall be correct when made and at the time of the Closing. 4.2. PERFORMANCE; NO DEFAULT. The Company 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 issue and sale of the Notes (and the application of the proceeds thereof as contemplated by Section 5.14) no Default or Event of Default shall have occurred and be continuing. 4.3. COMPLIANCE CERTIFICATES. (a) Officer's Certificate. The Company shall have delivered to you an Officer's Certificate, dated the date of the Closing, certifying that the conditions specified in Sections 4.1, 4.2 and 4.10 have been fulfilled. (b) Secretary's Certificate. The Company shall have delivered to you a certificate of the Secretary or an Assistant Secretary of the Company certifying as to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Notes and this Agreement and the Other Agreements. 4.4. OPINIONS OF COUNSEL. You shall have received opinions in form and substance satisfactory to you, dated the date of the Closing (a) from Snow Becker Krauss P.C., special counsel for the Company, substantially in the form set forth in Exhibit 4.4(a) (as to certain matters given in reliance upon or accompanied by separate opinion of Daniel S. Bishop, Esq., General Counsel of the Company) and covering such other matters incident to the transactions contemplated hereby as you or your counsel may reasonably request (and the Company hereby instructs its counsel to deliver such opinion to you) and (b) from Willkie Farr & Gallagher, your special counsel in connection with such transactions, substantially in the form set forth in Exhibit 4.4(b) and covering such other matters incident to such transactions as you may reasonably request. 4.5. SUBSIDIARY GUARANTEES. A Subsidiary Guarantee, dated as of a date on or before the date of the Closing, shall have been executed and delivered by each United States Restricted Subsidiary (in such capacity sometimes individually called a "SUBSIDIARY GUARANTOR" and 8 4 collectively the "SUBSIDIARY GUARANTORS") in the form hereinabove recited and shall be in full force and effect. 4.6. PURCHASE PERMITTED BY APPLICABLE LAW, ETC. On the date of the Closing your purchase of Notes shall (a) be permitted by the laws and regulations of each jurisdiction to which you are subject, without recourse to provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (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 you 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 you, you shall have received an Officer's Certificate certifying as to such matters of fact as you may reasonably specify to enable you to determine whether such purchase is so permitted. 4.7. RATING. The Notes shall have been rated "BBB+" by Duff & Phelps Credit Rating Co. and such rating shall be in full force and effect and not under review on the date of the Closing. 4.8. PAYMENT OF SPECIAL COUNSEL FEES. Without limiting the provisions of Section 15.1, the Company shall have paid on or before the Closing the fees, charges and disbursements of your special counsel referred to in Section 4.4 to the extent reflected in a statement of such counsel rendered to the Company at least one Business Day prior to the Closing. 4.9. PRIVATE PLACEMENT NUMBER. A Private Placement Number issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National Association of Insurance Commissioners) shall have been obtained for the Notes. 4.10. CHANGES IN CORPORATE STRUCTURE. The Company shall not have changed its jurisdiction of incorporation or been a party to any merger or consolidation or succeeded to all or any substantial part of the liabilities of any other entity at any time following the date of the most recent financial statements referred to in Schedule 5.5. 9 5 4.11. 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 you and your special counsel, and you and your special counsel shall have received all such counterpart originals or certified or other copies of such documents as you or they may reasonably request. 4.12. SALE OF NOTES TO OTHER PURCHASERS. The Company shall sell to the Other Purchasers and the Other Purchasers shall purchase the Notes to be purchased by them at the Closing as specified in Schedule A. 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to you that: 5.1. ORGANIZATION; POWER AND AUTHORITY. The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has the corporate 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 and the Other Agreements and the Notes and to perform the provisions hereof and thereof. 5.2. AUTHORIZATION, ETC. This Agreement and the Other Agreements and the Notes have been duly authorized by all necessary corporate action on the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 10 6 5.3. DISCLOSURE. The Company, through its agents, Credit Suisse First Boston Corporation and NationsBanc Montgomery Securities LLC, has delivered to you a copy of a Confidential Offering Memorandum, dated May 1998 (the "MEMORANDUM"), relating to the transactions contemplated hereby. The Memorandum fairly describes, in all material respects, the general nature of the business and principal properties of the Company and its Subsidiaries. This Agreement, the Memorandum, the documents, certificates or other writings delivered to you by or on behalf of the Company in connection with the transactions contemplated hereby and described in Schedule 5.3 (together with the Memorandum, the "DISCLOSURE DOCUMENTS"), and the financial statements listed in Schedule 5.5, taken as a whole, do not contain any untrue statement of a material 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, provided that to the extent any information contained in the Disclosure Documents constitutes a forecast or projection, the Company represents only that it acted in good faith and utilized reasonable assumptions, due and careful consideration and the best information known to it at the time in the preparation of such information, but the same may not be predictive of actual results. Since December 31, 1997, there has been no change in the financial condition, operations, business, properties or prospects of the Company or any Subsidiary except as disclosed in the Disclosure Documents or in the financial statements listed in Schedule 5.5 and other changes that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. 5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES. (a) Schedule 5.4 contains a complete and correct list of the Company's Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Company and each other Subsidiary. Schedule 5.4 also identifies each Restricted Subsidiary and each Domestic Restricted Subsidiary as of the date of this Agreement. No Subsidiary listed in Schedule 5.4 is a guarantor under the Bank Credit Agreement other than the United States Subsidiaries so identified in Schedule 5.4. (b) All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company and its Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Company or another Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule 5.4). (c) Each Subsidiary identified in Schedule 5.4 is a corporation duly organized, validly existing and in good standing 11 7 under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each such Subsidiary has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact and, in the case of Subsidiary Guarantors, to execute and deliver and perform its obligations under its respective Subsidiary Guarantee. 5.5. FINANCIAL STATEMENTS. The Company has delivered to you copies of the financial statements of the Company and its Subsidiaries listed in Schedule 5.5. All of said financial statements (including in each case the related schedules and notes) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates specified in such Schedule and the consolidated results of their operations and cash flows for the respective periods so specified and have been prepared in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year-end adjustments). 5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. The execution, delivery and performance by the Company of this Agreement and the Notes and by the Subsidiary Guarantors of their respective Subsidiary Guarantees 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 Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other material agreement or instrument to which the Company or any Subsidiary is bound or by which the Company or any Subsidiary or any of their respective 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 Company or any Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary. 5.7. GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required for the validity of the execution, delivery or performance by the Company of this Agreement or the Notes or 12 8 by the Subsidiary Guarantors of their respective Subsidiary Guarantees. 5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS. (a) Except as disclosed in Schedule 5.8, there are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any property of the Company or any Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. (b) Neither the Company nor any Subsidiary is 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 Environmental Laws) of any Governmental Authority, which default or violation, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. 5.9. TAXES. The Company and its Subsidiaries have filed all tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments levied upon them or their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (a) currently payable without penalty or interest, (b) the amount of which is not individually or in the aggregate Material or (c) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or a Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. The Federal income tax liabilities of the Company and its Subsidiaries have been determined by the Internal Revenue Service and paid for all fiscal years up to and including the fiscal year ended December 31, 1993. 5.10. TITLE TO PROPERTY; LEASES. The Company and its Subsidiaries have good and marketable title to their respective real properties and good and sufficient title to their respective other properties, including all such properties reflected in the most recent audited balance sheet listed on Schedule 5.5 or purported to have been acquired by the Company or any Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear of Liens prohibited by this Agreement. All leases that individually or in the aggregate are Material are 13 9 valid and subsisting and are in full force and effect in all material respects. 5.11. LICENSES, PERMITS, ETC. Except as disclosed in Schedule 5.11, (a) the Company and its Subsidiaries own or possess all licenses, permits, franchises, authorizations, patents, copyrights, proprietary software, service marks, trademarks and trade names, or rights thereto, that are Material, without known conflict with the rights of others, except for those conflicts that, individually or in the aggregate, would not have a Material Adverse Effect; (b) to the best knowledge of the Company, no product of the Company infringes in any material respect any license, permit, franchise, authorization, patent, copyright, proprietary software, service mark, trademark, trade name or other right owned by any other Person; and (c) to the best knowledge of the Company, there is no Material violation by any Person of any right of the Company or any of its Subsidiaries with respect to any patent, copyright, proprietary software, service mark, trademark, trade name or other right owned or used by the Company or any of its Subsidiaries. 5.12. COMPLIANCE WITH ERISA. (a) The Company and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances of noncompliance as have not resulted in and could not reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or 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 liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate, in either 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, other than such liabilities or Liens as would not be individually or in the aggregate Material. (b) The present value of the aggregate benefit liabilities under each of the Plans (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 14 10 value of the assets of such Plan allocable to such benefit liabilities. The term "benefit liabilities" has the meaning specified in section 4001 of ERISA and the terms "CURRENT VALUE" and "PRESENT VALUE" have the meaning specified in section 3 of ERISA. (c) The Company and its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material. (d) The expected post retirement benefit obligation (determined as of the last day of the Company'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) of the Company and its Subsidiaries is not Material. (e) With respect to each employee benefit plan, if any, disclosed by you in writing to the Company in accordance with Section 6.2(c), neither the Company nor any "affiliate" of the Company (as defined in Section V(c) of the QPAM Exemption) has at this time, nor has exercised at any time during the immediately preceding year, the authority to appoint or terminate the "QPAM" (as defined in Part V of the QPAM Exemption) disclosed by you to the Company pursuant to Section 6.2(c) as manager of any of the assets of any such plan or to negotiate the terms of any management agreement with such QPAM on behalf of any such plan, and the Company is not an "affiliate" (as so defined) of such QPAM. The Company is not a party in interest with respect to any employee benefit plan disclosed by you in accordance with Section 6.2(b) or 6.2(e). The execution and delivery of this Agreement and the issuance and sale of the Notes at the Closing hereunder will not involve any prohibited transaction (as such term is defined in section 406(a) of ERISA and section 4975(c)(1)(A)-(D) of the Code), that could subject the Company or any holder of a Note to any tax or penalty on prohibited transactions imposed under said section 4975 of the Code or by section 502(i) of ERISA. The representation by the Company in the preceding sentence of this Section 5.12(e) is made in reliance upon and subject to the accuracy of your representation in Section 6.2 as to the source of the funds used to pay the purchase price of the Notes to be purchased by you. 5.13. PRIVATE OFFERING BY THE COMPANY. Neither the Company nor anyone acting on its behalf has offered the Notes, the Subsidiary Guarantees or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any person other than you, the Other Purchasers and not more than 60 other Institutional Investors, each of which has been offered the Notes at a private sale for investment. Neither 15 11 the Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes or the issuance of the Subsidiary Guarantees to the registration requirements of Section 5 of the Securities Act. 5.14. USE OF PROCEEDS; MARGIN REGULATIONS. The Company will apply the net proceeds of the sale of the Notes to repay Indebtedness outstanding under the Bank Credit Agreement. No part of the proceeds from the sale of the Notes hereunder will be used, and no part of the proceeds of such Indebtedness being repaid was 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 Company 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). Margin stock does not constitute more than 5% of the value of the consolidated assets of the Company and its Subsidiaries and the Company does not have any present intention that margin stock will constitute more than 25% of the value of such assets. As used in this Section, the terms "MARGIN STOCK" and "PURPOSE OF BUYING OR CARRYING" shall have the meanings assigned to them in said Regulation U. 5.15. EXISTING INDEBTEDNESS. Schedule 5.15 sets forth a complete and correct list of all outstanding Indebtedness of the Company and its Subsidiaries in an unpaid principal amount exceeding $1,000,000 as of June 30, 1998, since which date there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of the Indebtedness of the Company or its Subsidiaries. Neither the Company nor any Subsidiary is in default, and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness of the Company or such Subsidiary, and no event or condition exists with respect to any such Indebtedness of the Company or any Subsidiary that would permit (or that with the giving of notice or the lapse of time, or both, would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment. 5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC. Neither the sale of the Notes by the Company hereunder nor its use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of 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. 16 12 5.17. STATUS UNDER CERTAIN STATUTES. Neither the Company nor any Subsidiary is subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as amended, the Interstate Commerce Act, as amended, or the Federal Power Act, as amended. 5.18. ENVIRONMENTAL MATTERS. Neither the Company nor any Subsidiary has knowledge of any claim or has received any notice of any claim, and no proceeding has been instituted raising any claim against the Company or any of its Subsidiaries or any of their respective real properties now or formerly owned, leased or operated by any of them or other assets, alleging any damage to the environment or violation of any Environmental Laws, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect. Except as otherwise disclosed to you in writing, (a) neither the Company nor any Subsidiary has knowledge of any facts which would give rise to any claim, public or private, of violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or formerly owned, leased or operated by any of them or to other assets or their use, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect; (b) neither the Company nor any of its Subsidiaries has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them and has not disposed of any Hazardous Materials in a manner contrary to any Environmental Laws in each case in any manner that could reasonably be expected to result in a Material Adverse Effect; and (c) all buildings on all real properties now owned, leased or operated by the Company or any of its Subsidiaries are in compliance with applicable Environmental Laws, except where failure to comply could not reasonably be expected to result in a Material Adverse Effect. 6. REPRESENTATIONS OF THE PURCHASER. 6.1. PURCHASE OF NOTES. You represent that you are purchasing the Notes for your own account or for one or more separate accounts maintained by you or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of your or their property shall at all times be within your or their control. You understand that the Notes have 17 13 not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that the Company is not required to register the Notes. 6.2. SOURCE OF FUNDS. You represent that at least one of the following statements is an accurate representation as to each source of funds (a "SOURCE") to be used by you to pay the purchase price of the Notes to be purchased by you hereunder: (a) the Source is an "insurance company general account", as such term is defined in Prohibited Transaction Exemption ("PTE") 95-60 (issued July 12, 1995), and there is no plan with respect to which the aggregate amount of such general account's reserves and liabilities for the contracts held by or on behalf of such plan and all other plans maintained by the same employer (and affiliates thereof as defined in section V(a)(1) of PTE 95-60) or by the same employee organization (in each case determined in accordance with PTE 95-60) exceeds or will exceed 10% of the total of all reserves and liabilities of such general account (determined in accordance with PTE 95-60, exclusive of separate account liabilities, plus any applicable surplus) as of the date of the Closing; or (b) the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1 (issued January 29, 1990), or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 (issued July 12, 1991) and, except as you have disclosed to the Company in writing pursuant to this paragraph (b), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or (c) the Source constitutes assets of an "investment fund" (within the meaning of Part V of the QPAM Exemption) managed by a "qualified professional asset manager" or "QPAM" (within the meaning of Part V of the QPAM Exemption), no employee benefit plan's assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM (applying the definition of "control" 18 14 in section V(e) of the QPAM Exemption) owns a 5% or more interest in the Company and (i) the identity of such QPAM and (ii) the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Company in writing pursuant to this paragraph (c); or (d) the Source is a governmental plan; or (e) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this paragraph (e); or (f) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA. As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL PLAN" and "SEPARATE ACCOUNT" shall have the respective meanings assigned to such terms in section 3 of ERISA. 7. INFORMATION AS TO COMPANY. 7.1. FINANCIAL AND BUSINESS INFORMATION. The Company shall deliver to each holder of Notes that is an Institutional Investor: (a) Quarterly Statements -- within 60 days after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), duplicate copies of, (i) a consolidated balance sheet of the Company and its Restricted Subsidiaries as at the end of such quarter, and (ii) consolidated statements of income, changes in shareholders' equity and cash flows of the Company and its Restricted Subsidiaries, for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter, setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from year-end adjustments, provided that delivery within the time 19 15 period specified above of copies of the Company's Quarterly Report on Form 10-Q prepared in compliance with the requirements therefor and filed with the Securities and Exchange Commission shall be deemed to satisfy the requirements of this Section 7.1(a), unless the financial statements included in said Form 10-Q include the accounts of any Unrestricted Subsidiary; (b) Annual Statements -- within 105 days after the end of each fiscal year of the Company, duplicate copies of, (i) a consolidated balance sheet of the Company and its Restricted Subsidiaries as at the end of such year, and (ii) consolidated statements of income, changes in shareholders' equity and cash flows of the Company and its Restricted Subsidiaries for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied by (A) an opinion thereon of independent public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances, and (B) a certificate of such accountants stating that they have reviewed this Agreement and stating further whether, in making their audit, they have become aware of any condition or event that then constitutes a Default or an Event of Default, and, if they are aware that any such condition or event then exists, specifying the nature and period of the existence thereof (it being understood that such accountants shall not be liable, directly or indirectly, for any failure to obtain knowledge of any Default or Event of Default unless such accountants should have obtained knowledge thereof in making an audit in accordance with generally accepted auditing standards or did not make such an audit), provided that the delivery within the time period specified above of the Company's Annual Report on Form 10-K for such fiscal year (together with the Company's annual report to 20 16 shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance with the requirements therefor and filed with the Securities and Exchange Commission, together with the accountants' certificate described in clause (B) above, shall be deemed to satisfy the requirements of this Section 7.1(b), unless the financial statements included in said Form 10-K include the accounts of any Unrestricted Subsidiary; (c) SEC and Other Reports -- promptly upon their becoming available, one copy of (i) each financial statement, report, notice or proxy statement sent by the Company or any Restricted Subsidiary generally to its shareholders or to its creditors (other than the Company or another Subsidiary), and (ii) each regular or periodic report, each registration statement (without exhibits except as expressly requested by such holder), and each prospectus and all amendments thereto filed by the Company or any Subsidiary with the Securities and Exchange Commission; (d) 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 Event of Default, a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto; (e) ERISA Matters -- promptly, and in any event within five days after a Responsible Officer becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes to take with respect thereto: (i) with respect to any Plan, any reportable event, as defined in section 4043(b) of ERISA and the regulations thereunder, for which notice thereof has not been waived pursuant to such regulations as in effect on the date hereof; or (ii) the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; or (iii) any event, transaction or condition that could result in the incurrence of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties 21 17 or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, could reasonably be expected to have a Material Adverse Effect; (f) Notices from Governmental Authority -- promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Company or any Subsidiary from any Federal or state Governmental Authority relating to any order, ruling, statute or other law or regulation that could reasonably be expected to have a Material Adverse Effect; and (g) Requested Information -- with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Company or any of its Subsidiaries or relating to the ability of the Company to perform its obligations hereunder and under the Notes or relating to the ability of a Subsidiary Guarantor to perform its obligations under its respective Subsidiary Guarantee, in each case as from time to time may be reasonably requested by any such holder of Notes. 7.2. OFFICER'S CERTIFICATE. Each set of financial statements delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a certificate of a Senior Financial Officer setting forth: (a) Covenant Compliance -- the information (including detailed calculations) required in order to establish whether the Company was in compliance with the requirements of Sections 10.1 through 10.8, inclusive, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence); and (b) Default -- a statement that such Senior Financial Officer has 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 Company and its Subsidiaries from the beginning of the quarterly or 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 22 18 or, if any such condition or event existed or exists (including, without limitation, any such event or condition resulting from the failure of the Company or any Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto. 7.3. INSPECTION. The Company shall permit the representatives of each holder of Notes that is an Institutional Investor: (a) No Default -- if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Company, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Company's officers, and (with the consent of the Company, which consent will not be unreasonably withheld) its independent public accountants, and (with the consent of the Company, which consent will not be unreasonably withheld) to visit the other offices and properties of the Company and each Subsidiary, all 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 Company, to visit and inspect any of the offices or properties of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers, employees and independent public accountants (and by this provision the Company authorizes said accountants to discuss the affairs, finances and accounts of the Company and its Subsidiaries), all at such times and as often as may be requested. 8. PREPAYMENT OF THE NOTES. In addition to the payment of the entire unpaid principal amount of the Notes at the final maturity thereof, the Company may make optional prepayments in respect of the Notes as hereinafter provided. 8.1. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT. The Company may, at its option and upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes (in a minimum amount of $5,000,000 and otherwise in multiples of $100,000) at the principal amount so prepaid, together with interest accrued thereon to the date of such prepayment, plus the Make-Whole Amount determined for the 23 19 prepayment date with respect to such principal amount. The Company will give each holder of Notes written notice of each optional prepayment under this Section 8.1 not less than 30 days and not more than 60 days prior to the date fixed for such prepayment. Each such notice shall specify the date fixed for such prepayment (which shall be a Business Day), the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of Notes held by such holder to be prepaid (determined in accordance with Section 8.2) and the interest to be paid on the prepayment date with respect to such principal amount being prepaid. Each such notice of prepayment shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment of Notes, the Company shall deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date. 8.2. ALLOCATION OF PARTIAL PREPAYMENTS. In the case of a partial prepayment of the Notes pursuant to Section 8.1, the principal amount of the Notes to be prepaid shall be allocated among all of the Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof. 8.3. MATURITY; SURRENDER, ETC. In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and canceled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note. 8.4. PURCHASE OF NOTES. The Company will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes. 24 20 8.5. MAKE-WHOLE AMOUNT. The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings: "CALLED PRINCIPAL" means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.1 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires. "DISCOUNTED VALUE" means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal. "REINVESTMENT YIELD" means, with respect to the Called Principal of any Note, .50% (50 basis points) over the yield to maturity implied by (i) the yields reported, as of 10:00 A.M. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on (x) the Bloomberg Financial Markets News screen PX1 or the equivalent screen provided by Bloomberg Financial Markets News, or (y) if such on-line market data is not at the time provided by Bloomberg Financial Markets News, on the display designated as "Page 500" on the Dow Jones Markets service (or such other display as may replace Page 500 on the Dow Jones Markets service), in any case for actively traded U.S. Treasury securities having a maturity equal to the remaining life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the remaining life of such Called Principal as of such Settlement Date. Such implied yield will be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted 25 21 financial practice and (b) interpolating linearly between (1) the actively traded U.S. Treasury security with a maturity closest to and greater than the remaining life and (2) the actively traded U.S. Treasury security with a maturity closest to and less than the remaining life. "REMAINING SCHEDULED PAYMENTS" means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.1 or 12.1. "SETTLEMENT DATE" means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.1 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires. 9. AFFIRMATIVE COVENANTS. The Company covenants that so long as any of the Notes are outstanding: 9.1. COMPLIANCE WITH LAW. The Company will and will cause each of its Subsidiaries to comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, including without limitation Environmental Laws, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 9.2. INSURANCE. The Company will and will cause each of its Subsidiaries to maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, 26 22 co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated. 9.3. MAINTENANCE OF PROPERTIES. The Company will and will cause each of its Subsidiaries to maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may properly conducted at all times, provided that this Section shall not prevent the Company or any Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 9.4. PAYMENT OF TAXES AND CLAIMS. The Company will and will cause each of its Subsidiaries to file all income tax or similar tax returns required to be filed in any jurisdiction and to 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 any of them, to the extent such taxes and assessments have become due and payable and before they have become delinquent, provided that neither the Company nor any Subsidiary need pay any such tax or assessment if (i) the amount, applicability or validity thereof is contested by the Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Company or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in the aggregate would not reasonably be expected to have a materially adverse effect on the business, operations, affairs, financial condition, properties or assets of the Company and its Subsidiaries taken as a whole. 9.5. CORPORATE EXISTENCE, ETC. The Company will at all times preserve and keep in full force and effect its corporate existence. Subject to Section 10.5, the Company will at all times preserve and keep in full force and effect the corporate existence of each of its Subsidiaries (unless merged into the Company or a Subsidiary) and all rights and franchises of the Company and its Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure to preserve and keep in full force and effect such corporate existence, right or franchise would not, individually or in the aggregate, have a Material Adverse Effect. 27 23 9.6. ADDITIONAL SUBSIDIARY GUARANTEES; RELEASE OF SUBSIDIARY GUARANTEES. (a) So long as the Bank Credit Agreement remains in effect the Company will cause each Subsidiary that becomes a borrower or a guarantor thereunder or in respect thereof after the date of the Closing (if such Subsidiary is not at the time a Subsidiary Guarantor) to become a Subsidiary Guarantor by executing and delivering a Subsidiary Guarantee, prior to or concurrently with so becoming a borrower or a guarantor; and promptly and in any event within ten Business Days thereafter the Company will furnish each holder of the Notes with a counterpart of such executed Subsidiary Guarantee, together with an opinion of Snow Becker Krauss P.C. or other counsel reasonably satisfactory to the Required Holders (which opinion shall be reasonably satisfactory to the Required Holders and may be subject to customary exceptions, qualifications and limitations under the circumstances) to the effect that such Subsidiary Guarantee has been duly authorized, executed and delivered by such Subsidiary and is valid, binding and enforceable in accordance with its terms. (b) The Company will cause each Subsidiary Guarantee to remain in full force and effect at all times after the execution and delivery thereof, provided that any Subsidiary the Voting Stock of which is being disposed of as an entirety shall, at the Company's request, be discharged from all of its obligations and liabilities under its Subsidiary Guarantee by the Required Holders entering into a release in form and substance reasonably satisfactory to the Required Holders, and you and each other holder of a Note, by acceptance of such Note, agree to enter into such a satisfactory release promptly upon request, except that this proviso shall not apply (i) if a Default or Event of Default has occurred and is continuing, (ii) to a Subsidiary if any amount is then due and payable under its Subsidiary Guarantee or (iii) to a Subsidiary which at the time is a guarantor of any other Indebtedness of the Company or another Subsidiary party to a Subsidiary Guarantee that is not also concurrently being released. 10. NEGATIVE COVENANTS. The Company covenants that so long as any of the Notes are outstanding: 10.1. TOTAL INDEBTEDNESS; RESTRICTED SUBSIDIARY INDEBTEDNESS. (a) The Company will not and will not permit any Restricted Subsidiary to create, assume, incur, guarantee or otherwise become liable in respect of any Indebtedness except: (i) Additional Borrowing Facility Indebtedness, provided that at the time such Additional Borrowing Facility Indebtedness is incurred the aggregate unpaid principal 28 24 amount of Borrowing Facility Indebtedness does not exceed the Maximum Amount as then in effect, (ii) Indebtedness owing by a Restricted Subsidiary to the Company or to a Wholly-Owned Restricted Subsidiary, and (iii) other Indebtedness, provided that immediately after giving effect thereto and to the application of the proceeds of such Indebtedness the pro forma Total Indebtedness to EBITDA Ratio does not exceed 3.50 to 1. (b) The Company will not permit any Restricted Subsidiary to create, assume, incur, guarantee or otherwise become liable in respect of any Indebtedness except (i) Indebtedness secured by Liens permitted by Section 10.2(b) or (c), (ii) in the case of any Person that after the date of the Closing becomes a Restricted Subsidiary or is consolidated with or merged with or into a Restricted Subsidiary or sells, leases or otherwise disposes of all of its property to a Restricted Subsidiary, Indebtedness outstanding at the time such Person becomes a Restricted Subsidiary or is so consolidated or merged or effects such sale, lease or other disposition of property (and not created in anticipation thereof), (iii) Indebtedness evidenced by the Subsidiary Guarantees and other guarantees by the Subsidiary Guarantors in respect of unsecured Indebtedness of the Company (subject to the requirements of Section 9.6), (iv) Indebtedness owing to the Company or a Wholly-Owned Restricted Subsidiary, and (v) other Indebtedness, provided that immediately after giving effect to such other Indebtedness Priority Debt does not exceed 15% of Consolidated Capitalization and Adjusted Priority Debt does not exceed 5% of Consolidated Capitalization. As used in this Agreement the term "PRIORITY DEBT" means, at any date, the sum (without duplication) of (A) the aggregate unpaid principal amount of Indebtedness (including Capitalized Lease Obligations) of the Company secured by Liens permitted by Section 10.2(e) plus (B) the aggregate unpaid principal amount of Indebtedness of all Restricted Subsidiaries (other than Indebtedness permitted by subclause (i), (ii), (iii) or (iv) of clause (b) above) plus (C) the aggregate Attributable Debt in connection with all sale and leaseback transactions of the Company and its Subsidiaries entered into after the date of the Closing in accordance with the provisions of Section 10.3; and 29 25 the term "ADJUSTED PRIORITY DEBT" means, at any date, the aggregate amount of Priority Debt attributable to the Company and its Domestic Restricted Subsidiaries. For purposes of this Section 10.1: a Restricted Subsidiary shall be deemed to have incurred Indebtedness in respect of any obligation previously owed to the Company or to a Wholly-Owned Restricted Subsidiary on the date the obligee ceases for any reason to be the Company or a Wholly-Owned Restricted Subsidiary; a Person that hereafter becomes a Restricted Subsidiary shall be deemed at that time to have incurred all of its outstanding Indebtedness; any Unrestricted Subsidiary or other Person that hereafter becomes a Restricted Subsidiary shall be deemed at that time to have incurred all of its outstanding Indebtedness; and the Company shall be deemed to have incurred Indebtedness in respect of a Guaranty of the type described in clause (b)(ii) of the definition of "Guaranty" in Schedule B, with respect to Indebtedness of any other Person, at such time as the obligations of the Company in respect of such Guaranty are required to be shown as a liability on the balance sheet of the Company prepared in accordance with GAAP. 10.2. LIENS. The Company will not and will not permit any Restricted Subsidiary to create, assume, incur or suffer to exist any Lien upon or with respect to any property or assets, whether now owned or hereafter acquired, securing any Indebtedness without making effective provision (pursuant to documentation in form and substance reasonably satisfactory to the Required Holders) whereby the Notes shall be secured by such Lien equally and ratably with or prior to any and all Indebtedness and other obligations to be secured thereby, provided that nothing in this Section 10.2 shall prohibit (a) Liens in respect of property of the Company or a Restricted Subsidiary existing on the date of the Closing and described in Schedule 5.15, and any extension, renewal or replacement of any such Lien (including successive extensions, renewals and replacements), provided that the principal amount of Indebtedness (or the maximum commitment therefor) secured by any such Lien is not increased and such Lien does not extend to or cover any property other than the property covered by such Lien on the date of the Closing; (b) Liens in respect of property acquired or constructed by the Company or a Restricted Subsidiary after the date of the Closing, which are created at the time of or within 180 days after acquisition or completion of construction of such property to secure Indebtedness assumed or incurred to finance all or any part of the purchase price or cost of construction of such property, provided that in any such case 30 26 (i) no such Lien shall extend to or cover any other property of the Company or such Restricted Subsidiary, as the case may be, and (ii) the aggregate principal amount of Indebtedness secured by all such Liens in respect of any such property shall not exceed the cost of such property and any improvements then being financed; (c) Liens in respect of property acquired by the Company or a Restricted Subsidiary after the date of the Closing, existing on such property at the time of acquisition thereof (and not created in anticipation thereof), or in the case of any Person that after the date of the Closing becomes a Restricted Subsidiary or is consolidated with or merged with or into the Company or a Restricted Subsidiary or sells, leases or otherwise disposes of all or substantially all of its property to the Company or a Restricted Subsidiary, Liens existing at the time such Person becomes a Restricted Subsidiary or is so consolidated or merged or effects such sale, lease or other disposition of property (and not created in anticipation thereof), provided that in any such case no such Lien shall extend to or cover any other property of the Company or such Restricted Subsidiary, as the case may be; (d) Liens securing Indebtedness owed by a Restricted Subsidiary to the Company or to a Wholly-Owned Restricted Subsidiary; and (e) Liens which would otherwise not be permitted by Section 10.2(a), (b), (c) or (d), securing additional Indebtedness of the Company or a Restricted Subsidiary, provided that after giving effect thereto Priority Debt does not exceed 15% of Consolidated Capitalization and Adjusted Priority Debt does not exceed 5% of Consolidated Capitalization. For purposes of this Section 10.2 any Lien existing in respect of property at the time such property is acquired or in respect of property of a Person at the time such Person is acquired, consolidated or merged with or into the Company or a Restricted Subsidiary shall be deemed to have been created at that time. 10.3. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. The Company will not, and will not permit any Restricted Subsidiary to sell, lease, transfer or otherwise dispose of (collectively, a "TRANSFER") any asset on terms whereby the asset or a substantially similar asset is or may be leased or reacquired by the Company or any Restricted Subsidiary over a period in excess of three years, unless either 31 27 (a) after giving effect to such transaction and the incurrence of Attributable Debt in respect thereof Priority Debt does not exceed 15% of Consolidated Capitalization and Adjusted Priority Debt does not exceed 5% of Consolidated Capitalization, or (b) the net proceeds realized from the transfer are applied within 180 days after the receipt thereof to reinvest in property or assets for use in the business of the Company and its Restricted Subsidiaries or to repay unsubordinated Funded Indebtedness of the Company or a Restricted Subsidiary. 10.4. MAINTENANCE OF CONSOLIDATED NET WORTH. The Company will not at any time permit Consolidated Net Worth to be less than the sum of (a) $190,000,000 plus (b) 35% of Consolidated Net Income for the period of three consecutive fiscal quarters ending December 31, 1998 (if Consolidated Net Income for such period is positive) plus (c) 35% of Consolidated Net Income for each fiscal year thereafter for which Consolidated Net Income is positive. 10.5. MERGER, CONSOLIDATION, ETC. The Company will not and will not permit any Restricted Subsidiary to consolidate with or merge with any other corporation or convey, transfer or lease all or substantially all of its assets in a single transaction or series of transactions to any Person except: (a) a Restricted Subsidiary may consolidate with or merge with any other corporation or convey or transfer all or substantially all of its assets to (i) the Company (provided that the Company shall be the continuing or surviving corporation) or a then existing Wholly-Owned Restricted Subsidiary, or (ii) any other Person, provided that (A) if such Restricted Subsidiary is a Subsidiary Guarantor, the continuing, surviving or acquiring corporation (if not such Subsidiary) shall have (1) executed and delivered to each holder of a Note its assumption of the due and punctual performance and observance of all obligations of such Restricted Subsidiary under its Subsidiary Guarantee and (2) caused to be delivered to each holder of a Note an opinion of counsel reasonably satisfactory to the Required Holders to the effect that all agreements or instruments effecting such assumption are 32 28 enforceable in accordance with their terms and comply with the terms hereof, and (B) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and (b) the Company may consolidate with or merge with any other corporation or convey or transfer all or substantially all of its assets to a corporation organized and existing under the laws of the United States or any State thereof, provided that (i) the continuing, surviving or acquiring corporation (if not the Company) shall have (A) executed and delivered to each holder of a Note its assumption of the due and punctual performance and observance of all obligations of the Company under this Agreement, the Other Agreements and the Notes and (B) caused to be delivered to each holder of a Note an opinion of counsel reasonably satisfactory to the Required Holders to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof, and (ii) immediately after giving effect to such transaction, (A) no Default or Event of Default shall have occurred and be continuing and (B) the Company (or such continuing, surviving or acquiring corporation if not the Company) would be permitted to incur at least $1 of additional Indebtedness under Section 10.1(a). No such conveyance, transfer or lease of substantially all of the assets of the Company or a Subsidiary Guarantor shall have the effect of releasing the Company or such Subsidiary Guarantor or any successor corporation that shall theretofore have become such in the manner prescribed in this Section 10.5 from its liability under this Agreement or the Notes or its Subsidiary Guarantee, as the case may be. 10.6. LINES OF BUSINESS. The Company will not and will not permit any Restricted Subsidiary to engage to any substantial extent in any business other than the businesses in which the Company and its Restricted Subsidiaries are engaged on the date of the Closing (as described in the Memorandum) and businesses reasonably related thereto or in furtherance thereof. 10.7. TRANSACTIONS WITH AFFILIATES. The Company will not and will not permit any Restricted Subsidiary to enter into directly or indirectly any Material 33 29 transaction or Material group of related transactions (including without limitation the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate (other than the Company or another Restricted Subsidiary), except in the ordinary course and pursuant to the reasonable requirements of the Company's or such Restricted Subsidiary's business and upon fair and reasonable terms no less favorable to the Company or such Restricted Subsidiary than would be obtainable in a comparable arm's-length transaction with a Person not an Affiliate. 10.8. DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES. (a) Subject to paragraph (c) below, the Company will not designate any Subsidiary as an Unrestricted Subsidiary after the date of the Closing unless such Subsidiary was not previously (directly or indirectly) an Unrestricted Subsidiary, except that any Unrestricted Subsidiary that is designated as a Restricted Subsidiary after the date of the Closing pursuant to paragraph (b) below may subsequently be redesignated as an Unrestricted Subsidiary so long as such Subsidiary is not thereafter (directly or indirectly) redesignated as a Restricted Subsidiary for at least five years after such redesignation as an Unrestricted Subsidiary. After the expiration of such five-year period before the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the foregoing limitations as to designations and redesignations shall apply with respect to such Subsidiary during successive five-year periods. (b) Subject to paragraph (c) below, the Company will not designate any Subsidiary as a Restricted Subsidiary after the date of the Closing unless such Subsidiary was not previously (directly or indirectly) a Restricted Subsidiary, except that any Restricted Subsidiary that is designated as an Unrestricted Subsidiary after the date of the Closing pursuant to paragraph (a) above may subsequently be redesignated as a Restricted Subsidiary so long as such Subsidiary is not thereafter (directly or indirectly) redesignated as an Unrestricted Subsidiary for at least five years after such redesignation as a Restricted Subsidiary. After the expiration of such five-year period before the redesignation of a Restricted Subsidiary as an Unrestricted Subsidiary, the foregoing limitations as to designations and redesignations shall apply with respect to such Subsidiary during successive five-year periods. (c) The Company will not designate any Restricted Subsidiary as an Unrestricted Subsidiary or any Person as a Restricted Subsidiary unless immediately after giving pro forma effect to such designation, (i) no Default or Event of Default shall have occurred and be continuing and (ii) the Company would be permitted to incur at least $1 of additional Indebtedness under Section 10.1(a). 34 30 (d) Forthwith and in any event within ten Business Days after a designation pursuant to paragraph (a) or (b) above, the Company will furnish each holder of the Notes with a certificate of a Senior Financial Officer specifying the effective date of such designation and setting forth calculations in reasonable detail demonstrating compliance with the conditions to such designation set forth in paragraph (c) above. 11. EVENTS OF DEFAULT. An "EVENT OF DEFAULT" shall exist if any of the following conditions or events shall occur and be continuing: (a) the Company defaults in the payment of any principal or Make-Whole Amount, if any, on any Note 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 Company defaults in the payment of any interest on any Note for more than five Business Days after the same becomes due and payable; or (c) the Company defaults in the performance of or compliance with any term contained in Section 7.1(d) or Sections 10.1 to 10.5, inclusive, or Section 10.8; or (d) the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b) and (c) of this Section 11) and such default is not remedied within 30 days after a Responsible Officer obtains knowledge of such default; or (e) any representation or warranty made in writing by or on behalf of the Company or any Subsidiary or by any officer of the Company or any Subsidiary in this Agreement or a Subsidiary Guarantee 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) (i) the Company or any Restricted Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Indebtedness (other than the Notes) that is outstanding in an aggregate principal amount of at least $5,000,000 beyond any period of grace provided with respect thereto, or (ii) the Company or any Restricted Subsidiary is in default in the performance of or compliance with any term of any evidence of any Indebtedness outstanding in an aggregate principal amount of at least $5,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Indebtedness 35 31 has become, or has been declared, due and payable before its stated maturity or before its regularly scheduled dates of payment, or (iii) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Indebtedness outstanding in an aggregate principal amount of at least $5,000,000 to convert such Indebtedness into equity interests or a sale of assets or other transaction that is permitted if made in connection with a repayment of Indebtedness), the Company or any Restricted Subsidiary has become obligated to purchase or repay such Indebtedness before its regular maturity or before its regularly scheduled dates of payment; or (g) the Company or any Significant Subsidiary (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 corporate action for the purpose of any of the foregoing; or (h) a court or governmental authority of competent jurisdiction enters an order appointing, without consent by the Company or any Significant Subsidiary, 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 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 Company or any such Subsidiary, or any such petition shall be filed against the Company or any such Subsidiary and such petition shall not be dismissed within 60 days; or (i) a final judgment or judgments for the payment of money aggregating in excess of $5,000,000 are rendered against one or more of the Company and its Restricted Subsidiaries which judgments are not, within 60 days after entry thereof, bonded, paid, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay; or (j) if (i) any Significant Subsidiary (or any Person at its authorized direction or on its behalf) shall assert 36 32 in writing that the Subsidiary Guarantee of such Significant Subsidiary is unenforceable in any material respect or the Subsidiary Guarantee of any such Significant Subsidiary shall cease to be in full force and effect as an enforceable instrument, or (ii) any other Subsidiary Guarantee shall cease to be in full force and effect as an enforceable instrument (other than solely by reason of an event described in paragraph (g) or (h) above) or any other event described in clause (i) above shall occur both with respect to any such other Subsidiary Guarantee and with respect to the obligations of the respective Subsidiary Guarantor under the Bank Credit Agreement; or (k) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Company or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the aggregate "amount of unfunded benefit liabilities" (within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined in accordance with Title IV of ERISA, shall exceed $1,000,000, (iv) the Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (v) the Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or any Subsidiary establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Company or any Subsidiary thereunder; and any such event or events described in clauses (i) through (vi) above, either individually or together with any other such event or events, would reasonably be expected to have a Material Adverse Effect. As used in Section 11(k), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms in section 3 of ERISA. 12. REMEDIES ON DEFAULT, ETC. 12.1. ACCELERATION. (a) If an Event of Default with respect to the Company described in paragraph (g) or (h) of Section 11 has occurred, all the Notes then outstanding shall automatically become immediately due and payable. 37 33 (b) If any other Event of Default has occurred and is continuing, the Required Holders may at any time at its or their option, by notice or notices to the Company, declare all the Notes at the time outstanding to be immediately due and payable. (c) If any Event of Default described in paragraph (a) or (b) of Section 11 has occurred and is continuing, any holder or holders of Notes at the time outstanding affected by such Event of Default may at any time, at its or their option, by notice or notices to the Company, declare all the Notes held by it or them to be immediately due and payable. Upon any Note becoming due and payable under this Section 12.1, whether automatically or by declaration, such Note will forthwith mature and the entire unpaid principal amount of such Note, plus (x) all accrued and unpaid interest thereon and (y) the Make-Whole Amount 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 further notice, all of which are hereby waived. The Company acknowledges, and the parties hereto agree, that each holder of a Note has the right to maintain its investment in the Notes free from repayment by the Company (except as herein specifically provided) and that the provision for payment of a Make-Whole Amount by the Company in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances. 12.2. OTHER REMEDIES. If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under Section 12.1, the holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in any Note, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise. 12.3. RESCISSION. At any time after any Notes have been declared due and payable pursuant to paragraph (b) or (c) of Section 12.1, the Required Holders, by written notice to the Company, may rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue interest on the Notes, all principal of and Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if any, and (to the extent permitted by applicable law) any 38 34 overdue interest in respect of the Notes, at the Default Rate, (b) all Events of Default and Defaults, other than the non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 17, and (c) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this Section 12.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon. 12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC. No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder's rights, powers or remedies. No right, power or remedy conferred by this Agreement or by any Note upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Company under Section 15, the Company will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all costs and expenses of such holder incurred in any enforcement or collection under this Section 12, including without limitation reasonable attorneys' fees, expenses and disbursements. 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. 13.1. REGISTRATION OF NOTES. The Company shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary. The Company shall give to any holder of a Note that is an Institutional Investor promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes. 13.2. TRANSFER AND EXCHANGE OF NOTES. Upon surrender of any Note at the principal executive office of the Company for registration of transfer or exchange (and in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or his attorney duly authorized in writing and accompanied by the address for notices of each transferee of such Note or part 39 35 thereof), within five Business Days thereafter the Company shall execute and deliver, at the Company's expense (except as provided below), one or more new Notes (as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than $500,000, provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than $500,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representation set forth in Section 6.2 and shall also be deemed to have agreed to provide customary assurances as to the matters referred to in Section 6.1. 13.3. REPLACEMENT OF NOTES. Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser or any other Institutional Investor, such Person's own unsecured agreement of indemnity shall be deemed to be satisfactory), or (b) in the case of mutilation, upon surrender and cancellation thereof, within five Business Days thereafter the Company at its own expense shall execute and deliver, in lieu thereof, a new Note , dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon. 14. PAYMENTS ON NOTES. 14.1. PLACE OF PAYMENT. Subject to Section 14.2, payments of principal, premium, if any, and interest becoming due and payable on the 40 36 Notes shall be made at the principal office of Citibank, N.A. in New York City. The Company may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment shall be either the principal office of the Company in New York City or the principal office of a bank or trust company in New York City. 14.2. HOME OFFICE PAYMENT. So long as you or your nominee shall be the holder of any Note, and notwithstanding anything contained in Section 14.1 or in such Note to the contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, and interest by the method and at the address specified for such purpose below your name in Schedule A, or by such other method or at such other address as you shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, you shall surrender such Note for cancellation, reasonably promptly after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company pursuant to Section 14.1. Prior to any sale or other disposition of any Note held by you or your nominee you will, at your election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes pursuant to Section 13.2. The Company will afford the benefits of this Section 14.2 to any Institutional Investor that is the direct or indirect transferee of any Note purchased by you under this Agreement and that has made the same agreement relating to such Note as you have made in this Section 14.2. 15. EXPENSES, ETC. 15.1. TRANSACTION EXPENSES. Whether or not the transactions contemplated hereby are consummated, the Company will pay all costs and expenses (including reasonable attorneys' fees of your special counsel and, if reasonably required, local or other counsel) incurred by you and each Other Purchaser or holder of a Note in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of this Agreement or the Notes (whether or not such amendment, waiver or consent becomes effective), including without limitation: (a) the costs and expenses incurred in enforcing or defending (or reasonably determining whether or how to enforce or defend) any rights under this Agreement or the Notes or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement or the Notes, or by reason of being a holder of any Note, and (b) the costs and expenses, 41 37 including financial advisors' fees, incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes. The Company will pay, and will save you and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses if any, of brokers and finders (other than those retained by you). In furtherance of the foregoing, on the date of the Closing the Company will pay or cause to be paid the fees and disbursements and other charges (including estimated unposted disbursements and other charges as of the date of the Closing) of your special counsel which are reflected in the statement of such special counsel submitted to the Company on or prior to the date of the Closing. The Company will also pay, promptly upon receipt of supplemental statements therefor, reasonable additional fees, if any, and disbursements and charges of such special counsel in connection with the transactions hereby contemplated (including disbursements and other charges unposted as of the date of the Closing to the extent such disbursements exceed estimated amounts paid as aforesaid). 15.2. SURVIVAL. The obligations of the Company under this Section 15 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement or the Notes, and the termination of this Agreement. 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Notes, the purchase or transfer by you of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of you or any other holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of the Company pursuant to this Agreement shall be deemed representations and warranties of the Company under this Agreement. Subject to the preceding sentence, this Agreement and the Notes embody the entire agreement and understanding between you and the Company and supersede all prior agreements and understandings relating to the subject matter hereof. 17. AMENDMENT AND WAIVER. 17.1. REQUIREMENTS. This Agreement and the Notes may be amended, and the observance of any term hereof or of the Notes may be waived 42 38 (either retroactively or prospectively), with (and only with) the written consent of the Company and the Required Holders, except that (a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21, or any defined term (as it is used therein), will be effective as to you unless consented to by you in writing, and (b) no such amendment or waiver may, without the written consent of the holder of each Note at the time outstanding affected thereby, (i) subject to the provisions of Section 12 relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or change the rate or the time of payment or method of computation of interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20. 17.2. SOLICITATION OF HOLDERS OF NOTES. (a) Solicitation. The Company will provide each holder of the Notes (irrespective of the amount of Notes then owned by it) with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof or of the Notes. The Company will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 17 to each holder of outstanding Notes promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite holders of Notes. (b) Payment. The Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security, to any holder of Notes as consideration for or as an inducement to such holder's consideration of or entering into by any holder of Notes of any waiver or amendment of any of the terms and provisions hereof unless such remuneration is concurrently paid, or security is concurrently granted, on the same terms, ratably to each holder of Notes then outstanding even if such holder did not consent to such waiver or amendment. 17.3. BINDING EFFECT, ETC. Any amendment or waiver consented to as provided in this Section 17 applies equally to all holders of Notes and is binding upon them and upon each future holder of any Note and upon the Company without regard to whether such Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing between the Company and the holder of any Note nor any 43 39 delay in exercising any rights hereunder or under any Note shall operate as a waiver of any rights of any holder of such Note. As used herein, the term "THIS AGREEMENT" and references thereto shall mean this Agreement as it may from time to time be amended or supplemented. 17.4. NOTES HELD BY COMPANY, ETC. Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement or the Notes, or have directed the taking of any action provided herein or in the Notes to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to be outstanding. 18. NOTICES. All notices and communications provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with charges prepaid). Any such notice must be sent: (i) if to you or your nominee, to you or it at the address specified for such communications in Schedule A, or at such other address as you or it shall have specified to the Company in writing, (ii) if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing, or (iii) if to the Company, to the Company at its address set forth at the beginning hereof to the attention of Chief Financial Officer, or at such other address as the Company shall have specified to the holder of each Note in writing. Notices under this Section 18 will be deemed given only when actually received. 19. REPRODUCTION OF DOCUMENTS. This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by you at the Closing (except the Notes themselves), and (c) financial statements, certificates and other information 44 40 previously or hereafter furnished to you, may be reproduced by you by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and you may destroy any original document so reproduced. The Company agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by you in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This Section 19 shall not prohibit the Company or any other holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction. 20. CONFIDENTIAL INFORMATION. For the purposes of this Section 20, "CONFIDENTIAL INFORMATION" means information delivered to you by or on behalf of the Company or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by you as being confidential information of the Company or such Subsidiary, provided that such term does not include information that (a) was publicly known or otherwise known to you prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by you or any person acting on your behalf, (c) otherwise becomes known to you other than through disclosure by the Company or any Subsidiary or (d) constitutes financial statements delivered to you under Section 7.1 that are otherwise publicly available. You will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by you in good faith to protect confidential information of third parties delivered to you, provided that you may deliver or disclose Confidential Information to (i) your directors, officers, trustees, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by your Notes), (ii) your financial advisors and other professional advisors whose duties require them to hold confidential the Confidential Information substantially in accordance with the terms of this Section 20, (iii) any other holder of any Note, (iv) any Institutional Investor to which you sell or offer to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20), (v) any Person from which you offer to purchase any security of the Company (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20), (vi) any federal or state regulatory authority having jurisdiction over you, (vii) the National Association of 45 41 Insurance Commissioners or any similar organization, or any nationally recognized rating agency that requires access to information about your investment portfolio or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or order applicable to you, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which you are a party or (z) if an Event of Default has occurred and is continuing, to the extent you may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under your Notes and this Agreement. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 20 as though it were a party to this Agreement. On reasonable request by the Company in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Company embodying the provisions of this Section 20. 21. SUBSTITUTION OF PURCHASER. You shall have the right to substitute any one of your Affiliates as the purchaser of the Notes that you have agreed to purchase hereunder, by written notice to the Company, which notice shall be signed by both you and such Affiliate, shall contain such Affiliate's agreement to be bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with respect to it of the representations set forth in Section 6. Upon receipt of such notice, wherever the word "you" is used in this Agreement (other than in this Section 21), such word shall be deemed to refer to such Affiliate in lieu of you. In the event that such Affiliate is so substituted as a purchaser hereunder and such Affiliate thereafter transfers to you all of the Notes then held by such Affiliate, upon receipt by the Company of notice of such transfer, wherever the word "you" is used in this Agreement, such word shall no longer be deemed to refer to such Affiliate, but shall refer to you, and you shall have all the rights of an original holder of the Notes under this Agreement. 22. MISCELLANEOUS. 22.1. SUCCESSORS AND ASSIGNS. All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including without limitation any subsequent holder of a Note) whether so expressed or not. 46 42 22.2. CONSTRUCTION. Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person. 22.3. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement or the Notes to the contrary notwithstanding (but without limiting the requirement in Section 8.1 that notice of any optional prepayment specify a Business Day as the date fixed for such prepayment), any payment of principal of or Make-Whole Amount (if any) or interest on any Note that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day. 22.4. SEVERABILITY. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the fullest extent permitted by applicable law) not invalidate or render unenforceable such provision in any other jurisdiction. 22.5. ACCOUNTING TERMS; PRO FORMA CALCULATIONS. All accounting terms used herein which are not expressly defined in this Agreement have the meanings respectively given to them in accordance with GAAP. Except as otherwise specifically provided herein, all computations made pursuant to this Agreement shall be made in accordance with GAAP and all balance sheets and other financial statements with respect thereto shall be prepared in accordance with GAAP. Except as otherwise specifically provided herein, any consolidated financial statement or financial computation shall be done in accordance with GAAP; and, if at the time that any such statement or computation is required to be made the Company shall not have any Restricted Subsidiary, such terms shall mean a financial statement or a financial computation, as the case may be, with respect to the Company only. Any pro forma computation required to be made hereby shall include adjustments (without limitation as to other 47 43 appropriate pro forma adjustments in accordance with generally accepted financial practice) giving effect to all acquisitions and dispositions made during the period with respect to which such computation is being made as if such acquisitions and dispositions were made on the first day of such period. 22.6. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto. 22.7. GOVERNING LAW. This Agreement and the Notes shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. 48 44 If you are in agreement with the foregoing, please sign the form of agreement in the space below provided on a counterpart of this Agreement and return it to the Company, whereupon the foregoing shall become a binding agreement between you and the Company. Very truly yours, PAXAR CORPORATION By______________________ President The foregoing is hereby agreed to as of the date thereof. [Purchaser] By________________________ 49 SCHEDULE A This Schedule A shows the names and addresses of the Purchasers under the foregoing Note Purchase Agreement and the Other Agreements referred to therein and the respective principal amounts of Notes to be purchased by each.
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- THE NORTHWESTERN MUTUAL LIFE $50,000,000 INSURANCE COMPANY (1) All payments on account of the Notes shall be made by wire transfer of immediately available funds to the account of The Northwestern Mutual Life Insurance Company, at Account No. 00-000-027 at Bankers Trust Company, 16 Wall Street, Insurance Unit - 4th Floor, New York, NY 10005, ABA #021-001-033 with sufficient information to identify the source and application of such funds including the PPN: 704227 A* 8 for the 6.74% Senior Notes due 2008. (2) Address for all notices in respect of payments: 720 East Wisconsin Avenue Milwaukee, WI 53202 Attention: Investment Operations Fax: 414-299-5714 (3) Address for all other communications: 720 East Wisconsin Avenue Milwaukee, WI 53202 Attention: Securities Department Fax: 414-299-7124 (4) Tax Identification No.: 39-0509570
50
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- TEACHERS INSURANCE AND ANNUITY $20,000,000 ASSOCIATION OF AMERICA (1) All payments on account of the Notes shall be made in immediately available funds prior to 12:00 noon (New York time) on the due date by electronic funds transfer through the Automated Clearing House System (identifying each payment as "Paxar Corporation, PPN 704227 A* 8 6.74% Senior Notes due 2008 (principal or interest or premium)") to: The Chase Manhattan Bank ABA No. 021-000-021 New York, New York Account of: Teachers Insurance and Annuity Association of America Account Number: 900-9-000200 For Further Credit to TIAA Account # G07040 On Order of: Paxar Corporation (2) Contemporaneous with the above electronic funds transfer payment, written confirmation of each such payment setting forth: (a) the full name, private placement number, interest rate and maturity date of the Notes; (b) allocation of payment between principal, interest, premium and any special payment; and (c) the name and address of the bank from which such electronic funds transfer was sent shall be delivered, mailed or faxed to: Teachers Insurance and Annuity Association of America 730 Third Avenue New York, NY 10017 Attention: Securities Accounting Division Telephone Number: (212) 916-6004 Facsimile Number: (212) 916-6955 (3) All other communications shall be delivered or mailed to:
A-2 51 Teachers Insurance and Annuity Association of America 730 Third Avenue New York, NY 10017 Attention: Securities Division, Private Placements Michelle Lee Telephone Number: (212) 916-5781 General Telephone Number: (212) 490-9000 Facsimile Number: (212) 916-6582 (4) Taxpayer I.D. Number: 13-1624203 A-3 52
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- GENERAL ELECTRIC CAPITAL LIFE ASSURANCE $10,000,000 COMPANY OF NEW YORK (I/N/O SALKELD & CO.) (1) All payments on account of Notes held by such purchaser shall be made by wire transfer of immediately available funds for credit to: Bankers Trust Company 16 Wall Street New York, NY 10015 ABA 021001033 Attn: 99-911-145 FCC #098620 Each such wire transfer shall set forth the name of the Company, a reference to Paxar Corporation 6.74% Senior Notes due 2008, Security No. INV ____, and the due date and application (as among principal, interest and Modified Make-Whole Amount) of the payment being made (2) Address for all notices relating to payments: General Electric Capital Life Assurance Company of New York c/o GE Financial Assurance Two Union Square 601 Union Street Seattle, WA 98101 Attn: Investment Accounting, 14th Floor Telephone: 206-516-2871 Fax: 206-516-4740 (3) Address for all other communications and notices: General Electric Capital Life Assurance Company of New York c/o GE Financial Assurance Two Union Square 601 Union Street Seattle, WA 98101 Attn: Investment Accounting, VP Private Placements Telephone: 206-516-2894 Fax: 206-516-4863 (4) Tax Identification No.: 22-2882416
A-4 53
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- GE CAPITAL EDISON LIFE INSURANCE COMPANY $10,000,000 (I/N/O AUER & CO.) (1) All payments on account of Notes held by such purchaser shall be made by wire transfer of immediately available funds for credit to: Bankers Trust Company 16 Wall Street New York, NY 10015 ABA 021001033 Attn: 00-154-093 FCC #501551253 Each such wire transfer shall set forth the name of the Company, a reference to Paxar Corporation 6.74% Senior Notes due 2008, Security No. INV ____, and the due date and application (as among principal, interest and Modified Make-Whole Amount) of the payment being made (2) Address for all notices relating to payments: GE Capital Life Insurance Company c/o GE Financial Assurance Two Union Square 601 Union Street Seattle, WA 98101 Attn: Investment Accounting, 14th Floor Telephone: 206-516-2871 Fax: 206-516-4740 (3) Address for all other communications and notices: GE Capital Life Insurance Company c/o GE Financial Assurance Two Union Square 601 Union Street Seattle, WA 98101 Attn: Investment Accounting, VP Private Placements Telephone: 206-516-2894 Fax: 206-516-4863
A-5 54
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- MASSACHUSETTS MUTUAL LIFE INSURANCE $15,000,000 COMPANY (1) All payments on account of the Notes shall be made by crediting in the form of bank wire transfer of Federal or other immediately available funds (identifying each payment as Paxar Corporation 6.74% Senior Notes due 2008, interest and principal) as follows: (a) for the Note in the original principal amount of $12,500,000: Citibank, N.A. 111 Wall Street New York, NY 10043 ABA No. 021000089 For MassMutual Long Term Pool Account No. 4067-3488 Re: Description of security, principal and interest split (b) for the Note in the original principal amount of $2,500,000: The Chase Manhattan Bank 4 Chase MetroTech Center New York, NY 10081 ABA No. 032000032 For MassMutual IFM Non-Traditional Account No. 910-2509073 Re: Description of security, principal and interest split Each with telephone advice of payment to the Securities Custody and Collection Department of Massachusetts Mutual Life Insurance Company at (413) 744-3878 (2) All notices and communications to be addressed to: Massachusetts Mutual Life Insurance Company 1295 State Street Springfield, MA 01111
A-6 55 Attn: Securities Investment Division (3) Notices with respect to payments and corporate actions to be addressed as provided in clause (2) above: Attention: Securities Custody and Collection Department F 381 (4) Tax Identification Number: 04-1590850 A-7 56
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- KEMPER INVESTORS LIFE INSURANCE COMPANY $8,100,000 (I/N/O HARE & CO) (1) All payments on account of the Notes shall be made by wire transfer of Federal or other immediate available funds to: HARE & CO - Account No. 195279 at The Bank of New York ABA No. 021000018 BNF IOC 566 Attn: Security Income Collection with sufficient information (including issuer, interest rate, maturity, PPN 704227 A* 8 and whether payment is of principal, premium or interest) to identify the source and application of such funds. (2) Address for all communications: Kemper Investors Life Insurance Company c/o Zurich Investment Management, Inc. 222 South Riverside Plaza Chicago, IL 60606-5808 Attn: Private Placements (3) Tax Identification Number: 36-3050975
A-8 57
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- FEDERAL KEMPER LIFE ASSURANCE COMPANY $4,000,000 (I/N/O HARE & CO) (1) All payments on account of the Notes shall be made by wire transfer of Federal or other immediate available funds to: HARE & CO - Account No. 195269 at The Bank of New York ABA No. 021000018 BNF IOC 566 Attn: Security Income Collection with sufficient information (including issuer, interest rate, maturity, PPN 704227 A* 8 and whether payment is of principal, premium or interest) to identify the source and application of such funds. (2) Address for all communications: Federal Kemper Life Assurance Company c/o Zurich Investment Management, Inc. 222 South Riverside Plaza Chicago, IL 60606-5808 Attn: Private Placements (3) Tax Identification Number: 04-6046830
A-9 58
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- FIDELITY LIFE ASSOCIATION $1,300,000 (I/N/O HARE & CO) (1) All payments on account of the Notes shall be made by wire transfer of Federal or other immediate available funds to: HARE & CO - Account No. 195271 at The Bank of New York ABA No. 021000018 BNF IOC 566 Attn: Security Income Collection with sufficient information (including issuer, interest rate, maturity, PPN 704227 A* 8 and whether payment is of principal, premium or interest) to identify the source and application of such funds. (2) Address for all communications: Fidelity Life Association c/o Zurich Investment Management, Inc. 222 South Riverside Plaza Chicago, IL 60606-5808 Attn: Private Placements (3) Tax Identification Number: 36-1068685
A-10 59
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- ZURICH LIFE INSURANCE COMPANY OF AMERICA $600,000 (I/N/O HARE & CO) (1) All payments on account of the Notes shall be made by wire transfer of Federal or other immediate available funds to: HARE & CO - Account No. 399609 at The Bank of New York ABA No. 021000018 BNF IOC 566 Attn: Security Income Collection with sufficient information (including issuer, interest rate, maturity, PPN 704227 A* 8 and whether payment is of principal, premium or interest) to identify the source and application of such funds. (2) Address for all communications: Zurich Life Insurance Company of America 222 South Riverside Plaza Chicago, IL 60606-5808 Attn: Private Placements (3) Tax Identification Number: 36-6071398
A-11 60
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- RELIASTAR LIFE INSURANCE COMPANY $6,000,000 (1) All payments on account of the Notes shall be made by wire transfer of Federal or other immediate available funds to: US Bank N.A./Mpls 601 2nd Ave. S., Mpls, MN Bank ABA #091000022 Acct Name: ReliaStar Life Insurance Co. Acct. #110240014461 Attn: Securities Accounting with sufficient information (including issuer, interest rate, maturity, PPN 704227 A* 8 and whether payment is of principal, premium or interest) to identify the source and application of such funds. (2) Address for all communications: Reliastar Investment Research 100 Washington Avenue South Suite 800 Minneapolis, MN 55401-2121 Ref: James Tobin 612-342-3204 Fax: 612-372-5368 (3) Tax Identification Number: 41-0451140
A-12 61
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- NORTHERN LIFE INSURANCE COMPANY $2,000,000 (1) All payments on account of the Notes shall be made by wire transfer of Federal or other immediate available funds to: US Bank N.A./Mpls 601 2nd Ave. S. Acct. #160232376105 Bank ABA #091000022 with sufficient information (including issuer, interest rate, maturity, PPN 704227 A* 8 and whether payment is of principal, premium or interest) to identify the source and application of such funds. (2) Address for all communications: Reliastar Investment Research 100 Washington Avenue South Suite 800 Minneapolis, MN 55401-2121 Ref: James Tobin 612-342-3204 Fax: 612-372-5368 (3) Tax Identification Number: 41-1295933
A-13 62
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- SECURITY CONNECTICUT LIFE INSURANCE COMPANY $2,000,000 (I/N/O SIGLER & CO.) (1) All payments on account of the Notes shall be made by wire transfer of Federal or other immediate available funds to: Chase Manhattan Bank New York, New York ABA #021-000-021 Beneficiary Account #544755102 Reference: Sigler & Co. Tax I.D.: 13-3641527 F/C #G54426 with sufficient information (including issuer, interest rate, maturity, PPN 704227 A* 8 and whether payment is of principal, premium or interest) to identify the source and application of such funds. (2) Address for all notices in respect of payment: Sigler & Co. c/o Chase Manhattan Bank Dept. #3492 P.O. Box 5000 Newark, NJ 07101-8006 (3) Address for all communications: Reliastar Investment Research 100 Washington Avenue South Suite 800 Minneapolis, MN 55401-2121 Ref: James Tobin 612-342-3204 Fax: 612-372-5368 (4) Tax Identification Number: 35-1468921
A-14 63
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- MUTUAL OF OMAHA INSURANCE COMPANY $6,000,000 (1) All principal and interest payments on the Notes shall be made by wire transfer of immediately available funds to: Chase Manhattan Bank ABA #021000021 Private Income Processing For Credit to: Mutual of Omaha Insurance Company Account #900-9000200 a/c: G07096 Cusip/PPN: 704227 A* 8 Interest Amount: Principal Amount: (2) Address for all notices in respect of payment of Principal and Interest, Corporate Actions, and Reorganization Notifications: The Chase Manhattan Bank 4 New York Plaza - 13th Floor New York, NY 10004 Attn: Income Processing - J. Pipperato a/c: G07096 (3) Address for all other communications: 4 - Investment Loan Administration Mutual of Omaha Insurance company Mutual of Omaha Plaza Omaha, NE 68175-1011 (4) Tax Identification Number: 47-0246511
A-15 64
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- UNITED OF OMAHA LIFE INSURANCE COMPANY $3,000,000 (1) All principal and interest payments on the Notes shall be made by wire transfer of immediately available funds to: Chase Manhattan Bank ABA #021000021 Private Income Processing For Credit to: United of Omaha Life Insurance Company Account #900-9000200 a/c: G07097 Cusip/PPN: 704227 A* 8 Interest Amount: Principal Amount: (2) Address for all notices in respect of payment of Principal and Interest, Corporate Actions, and Reorganization Notifications: The Chase Manhattan Bank 4 New York Plaza - 13th Floor New York, NY 10004 Attn: Income Processing - J. Pipperato a/c: G07097 (3) Address for all other communications: 4 - Investment Loan Administration Mutual of Omaha Insurance company Mutual of Omaha Plaza Omaha, NE 68175-1011 (4) Tax Identification Number: 47-0322111
A-16 65
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- UNITED WORLD LIFE INSURANCE COMPANY $1,000,000 (1) All principal and interest payments on the Notes shall be made by wire transfer of immediately available funds to: Chase Manhattan Bank ABA #021000021 Private Income Processing For Credit to: United World Life Insurance Company Account #900-9000200 a/c: G07098 Cusip/PPN: 704227 A* 8 Interest Amount: Principal Amount: (2) Address for all notices in respect of payment of Principal and Interest, Corporate Actions, and Reorganization Notifications: The Chase Manhattan Bank 4 New York Plaza - 13th Floor New York, NY 10004 Attn: Income Processing - J. Pipperato a/c: G07098 (3) Address for all other communications: 4 - Investment Loan Administration Mutual of Omaha Insurance company Mutual of Omaha Plaza Omaha, NE 68175-1011 (4) Tax Identification Number: 75-6010770
A-17 66
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- STATE FARM LIFE INSURANCE COMPANY $6,000,000 (1) All payments on account of the Notes shall be made by wire transfer of immediately available funds to The Chase Manhattan Bank ABA No. 021000021 SSG Private Income Processing A/C #900-9-000200 For Credit to Account Number G 06893 with sufficient information setting forth (i) the name of the Company, (ii) the maturity date, (iii) the PPN: 704227 A* 8 of the Notes, (iv) the amount of principal, interest and premium, if any, and (v) the due date of the payment being made. (2) All communications, including payment notices (as well as a photocopy of the original security), to: State Farm Life Insurance Company Investment Dept. E-10 One State Farm Plaza Bloomington, IL 61710 (3) Address for delivery of securities (via registered mail): Chase Manhattan Bank Attn: Barbara Walsh (North America Insurance) 3 Chase Metrotech Center-6th Floor Brooklyn, NY 11245 with a copy to: State Farm Life Insurance Companies One State Farm Plaza E-8 Bloomington, IL 61710 Attn: Investment Legal E-8 Larry Rottunda, Investment Counsel (5) Tax Identification Number: 37-0533090
A-18 67
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- AMERICAN UNITED LIFE INSURANCE $4,000,000 COMPANY (1) All payments on account of the Notes shall be made by wire transfer of federal or other immediately available funds to: Bank of New York Attn: P&I Department One Wall Street, 3rd Floor Window A New York, New York 10286 ABA #21000018 BNF: IOC566 Account #186683/AUL With sufficient information (including interest rate and maturity) to identify the breakdown of principal and interest and should identify the full description of the Notes and payment date, including the PPN: 704227 A* 8 of the Notes. (2) Address for all communications: Securities Department American United Life Insurance Company One American Square Indianapolis, IN 46282 (3) Tax Identification No.: 35-0145825
A-19 68
Principal Amount of Name and Address of Purchaser Notes to be Purchased - ----------------------------- --------------------- THE STATE LIFE INSURANCE COMPANY $1,000,000 (1) All payments on account of the Notes shall be made by wire transfer of federal or other immediately available funds to: Bank of New York Attn: P&I Department One Wall Street, 3rd Floor Window A New York, New York 10286 ABA #21000018 BNF: IOC566 Account #343761 State Life, c/o American United Life With sufficient information (including interest rate and maturity) to identify the breakdown of principal and interest and should identify the full description of the Notes and payment date, including the PPN: 704227 A* 8 of the Notes. (2) Address for all communications: Securities Department American United Life Insurance Company One American Square Indianapolis, IN 46282 (3) Tax Identification No.: 35-0684263
A-20 69 SCHEDULE B DEFINED TERMS As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term: "ADDITIONAL BORROWING FACILITY INDEBTEDNESS" means, at any time, any Borrowing Facility Indebtedness incurred after the date of this Agreement other than pursuant to clause (ii) or (iii) of Section 10.1(a) to the extent outstanding at such time. "ADJUSTED PRIORITY DEBT" is defined in Section 10.1. "AFFILIATE" means, at any time, (a) with respect to any Person (including without limitation the Company), 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, and (b) with respect to the Company, any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or equity interests of the Company or any Subsidiary or any corporation of which the Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of any class of voting or equity interests. 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 Company. "ATTRIBUTABLE DEBT" means, as to any particular lease relating to a sale and leaseback transaction, the total amount of rent (discounted semiannually from the respective due dates thereof at the interest rate implicit in such lease) required to be paid by the lessee under such lease during the remaining term thereof. The amount of rent required to be paid under any such lease for any such period shall be (a) the total amount of the rent payable by the lessee with respect to such period after excluding amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, utilities, operating and labor costs and similar charges plus (b) without duplication, any guaranteed residual value in respect of such lease to the extent such guarantee would be included in indebtedness in accordance with GAAP. "BANK CREDIT AGREEMENT" means the Amended and Restated Credit Agreement dated as of August 11, 1998 between the Company and Fleet Bank, N.A., as Administrative Agent, and the Lenders named therein, as supplemented, amended, restated or refinanced from time to time. Schedule B 70 -2- "BORROWING FACILITY INDEBTEDNESS" means Funded Indebtedness of the Company or any Restricted Subsidiary which either (a) has a final maturity of less than 12 months from the date of determination but which by its terms is renewable or extendible beyond 12 months from such date at the option of the obligor or (b) is issued under a credit facility having a final termination or maturity date of more than 12 months from the date of determination but which permits amounts to be repaid and reborrowed thereunder at the option of the obligor prior to such final termination or maturity date. "BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed. "CAPITAL LEASE" means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP. "CAPITALIZED LEASE OBLIGATIONS" means with respect to any Person, all outstanding obligations of such Person in respect of Capital Leases, taken at the capitalized amount thereof accounted for as indebtedness in accordance with GAAP. "CLOSING" is defined in Section 3. "CODE" means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time. "COMPANY" means Paxar Corporation, a New York corporation. "CONFIDENTIAL INFORMATION" is defined in Section 20. "CONSOLIDATED CAPITALIZATION" means, at any date, the sum of (a) Consolidated Indebtedness plus (b) Consolidated Net Worth plus (c) deferred tax liabilities (if any), all as determined on a consolidated basis for the Company and its Restricted Subsidiaries in accordance with GAAP. "CONSOLIDATED INDEBTEDNESS" means, at any date, all Indebtedness of the Company and its Restricted Subsidiaries determined on a consolidated basis in accordance with GAAP, excluding Borrowing Facility Indebtedness in an amount not exceeding the Maximum Amount. "CONSOLIDATED INTEREST EXPENSE" for any period means the sum for the Company and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP, of all amounts which would be deducted in computing Consolidated Net Income on account of interest on Indebtedness (including imputed Schedule B 71 -3- interest in respect of Capitalized Lease Obligations and amortization of debt discount and expense). "CONSOLIDATED NET INCOME" for any period means the net income of the Company and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, excluding (a) the proceeds of any life insurance policy, (b) any gains arising from (i) the sale or other disposition of any assets (other than current assets) to the extent that the aggregate amount of the gains during such period exceeds the aggregate amount of the losses during such period from the sale, abandonment or other disposition of assets (other than current assets), (ii) any write-up of assets or (iii) the acquisition of outstanding securities of the Company or any Restricted Subsidiary, (c) any amount representing any interest in the undistributed earnings of any other Person (other than a Restricted Subsidiary), (d) any earnings, prior to the date of acquisition, of any Person acquired in any manner, and any earnings of any Restricted Subsidiary prior to its becoming a Restricted Subsidiary, (e) any earnings of a successor to or transferee of the assets of the Company prior to its becoming such successor or transferee, (f) any deferred credit (or amortization of a deferred credit) arising from the acquisition of any Person, and (g) any extraordinary gains not covered by clause (b) above. "CONSOLIDATED NET WORTH" means, at any date, on a consolidated basis for the Company and its Restricted Subsidiaries, (a) the sum of (i) capital stock taken at par or stated value plus (ii) capital in excess of par or stated value relating to capital stock plus (iii) retained earnings (or minus any retained earning deficit) minus (b) the sum of treasury stock, capital stock subscribed for and unissued and other contra-equity accounts, all determined in accordance with GAAP. "CONSOLIDATED TOTAL ASSETS" means, at any date, the total assets of the Company and its Restricted Subsidiaries determined on a consolidated basis in accordance with GAAP. "DEFAULT" means an event or condition the occurrence or existence of which would, with the giving of notice or the lapse of time, or both, become an Event of Default. Schedule B 72 -4- "DEFAULT RATE" means that rate of interest that is the greater of (i) 8.74% per annum and (ii) 2% above the rate of interest publicly announced by Citibank, N.A. from time to time at its principal office in New York City as its prime rate. "DOMESTIC RESTRICTED SUBSIDIARY" means any Restricted Subsidiary organized under the laws of the United States or any State thereof and conducting substantially all of its business in the United States. "EBITDA" for any period means Consolidated Net Income plus all amounts deducted in the computation thereof on account of (a) Consolidated Interest Expense, (b) depreciation and amortization expenses and other non-cash charges and (c) income and profits taxes. "ENVIRONMENTAL LAWS" means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including but not limited to those related to hazardous substances or wastes, air emissions and discharges to waste or public systems. "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. "ERISA AFFILIATE" means any trade or business (whether or not incorporated) that is treated as a single employer together with the Company under section 414 of the Code. "EVENT OF DEFAULT" is defined in Section 11. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time to time. "FUNDED INDEBTEDNESS" of any Person as of any date means all Indebtedness of such Person which by its terms or by the terms of any instrument or agreement relating thereto matures, or which is otherwise payable or unpaid, one year or more from, or is directly or indirectly renewable or extendible at the option of the obligor in respect thereof to a date one year or more (including without limitation an option of such obligor under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of one year or more) from, the date of the creation thereof, and shall also include the current maturities of any such Indebtedness as of such date. "GAAP" means generally accepted accounting principles as in effect from time to time in the United States of America. Schedule B 73 -5- "GOVERNMENTAL AUTHORITY" means (a) the government of (i) the United States of America or any State or other political subdivision thereof, or (ii) any jurisdiction in which the Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company or any Subsidiary, or (b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government. "GUARANTY" 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; (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 Guaranty, the Indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor. "HAZARDOUS MATERIAL" means any and all pollutants, toxic or hazardous wastes or any other substances that might pose a hazard to health or safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage, or filtration of which is or shall be restricted, prohibited or Schedule B 74 -6- penalized by any applicable law (including without limitation asbestos, urea formaldehyde foam insulation and polycholorinated biphenyls). "HOLDER" means, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Company pursuant to Section 13.1. "INDEBTEDNESS" with respect to any Person means, at any time, without duplication, (a) its liabilities for borrowed money or its redemption obligations in respect of Preferred Stock that is mandatorily redeemable prior to the final maturity of the Notes, (b) its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable arising in the ordinary course of business and not overdue but including all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property), (c) its Capitalized Lease Obligations, (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) Swaps 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) above, provided that no obligation of the Company of the type described in clause (b)(ii) of the definition of "Guaranty", with respect to liabilities of any other Person, shall be deemed to constitute Indebtedness of the Company if at the time such obligation is not required to be shown as a liability on a balance sheet of the Company prepared in accordance with GAAP. Indebtedness of any person shall include all obligations of such person of the character described in clauses (a) through (g) above to the extent such person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP. Schedule B 75 -7- "INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note, (b) any holder of a Note holding (together with one or more of its Affiliates) more than 2% of the aggregate principal amount of the Notes then outstanding, and (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form. "LIEN" means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person (including in the case of stock, stockholder agreements, voting trust agreements and all similar arrangements). "MAKE-WHOLE AMOUNT" is defined in Section 8.5. "MATERIAL" means material in relation to the business, operations, affairs, financial condition, assets or properties of the Company and its Restricted Subsidiaries taken as a whole. "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of the Company and its Restricted Subsidiaries taken as a whole, (b) the ability of the Company to perform its obligations under this Agreement and the Notes or (c) the validity or enforceability of this Agreement or the Notes or the Subsidiary Guarantee of any Significant Subsidiary. "MAXIMUM AMOUNT" means on any date an amount equal to 20% of pro forma consolidated net revenues of the Company and its Restricted Subsidiaries for the four consecutive fiscal quarters then most recently ended, determined on a consolidated basis in accordance with GAAP. "MEMORANDUM" is defined in Section 5.3. "MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA). "NOTES" is defined in Section 1.1. "OFFICER'S CERTIFICATE" means a certificate of a Senior Financial Officer or of any other officer of the Company whose responsibilities extend to the subject matter of such certificate. "OTHER AGREEMENTS" is defined in Section 2. "OTHER PURCHASERS" is defined in Section 2. Schedule B 76 -8- "PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto. "PERSON" means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof. "PLAN" means an "employee benefit plan" (as defined in section 3(3) of ERISA) that is or, within the preceding five years, has been established or maintained, or to which contributions are or, within the preceding five years, have been made or required to be made, by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability. "PREFERRED STOCK", as applied to any corporation, means shares of such corporation that shall be entitled to preference or priority over any other shares of such corporation in respect of either the payment of dividends or the distribution of assets upon liquidation, or both. "PRIORITY DEBT" is defined in Section 10.1. "PROPERTY" or "PROPERTIES" means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, inchoate or otherwise. "PTE" is defined in Section 6.2. "QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14 issued on March 13, 1984 by the United States Department of Labor. "REQUIRED HOLDERS" means, at any time, the holders of at least a majority in unpaid principal amount of the Notes at the time outstanding. "RESPONSIBLE OFFICER" means any Senior Financial Officer and any other officer of the Company with responsibility for the administration of the relevant portion of this Agreement. "RESTRICTED SUBSIDIARY" means as of the date of this Agreement each Subsidiary as designated in Schedule 5.4 and thereafter means each such Subsidiary not designated as an Unrestricted Subsidiary pursuant to Section 10.8(a) and each other Subsidiary that is not an Unrestricted Subsidiary; provided that each of Monarch Marking Systems, Inc. and International Imaging Materials, Inc. shall at all times remain a Restricted Subsidiary, in each case so long as such corporation is a Subsidiary. "SECURITIES ACT" means the Securities Act of 1933, as amended from time to time. Schedule B 77 -9- "SENIOR FINANCIAL OFFICER" means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company. "SIGNIFICANT SUBSIDIARY" means, at any date, a Restricted Subsidiary (a) which, together with its Subsidiaries, produced more than 10% of Consolidated Net Income for the fiscal year then most recently ended (calculated on a pro forma basis in the case of any Person which became a Subsidiary during or after the end of such fiscal year) or (b) the assets of which, together with the assets of its Subsidiaries, exceeded 10% of the Consolidated Total Assets as of the last day of such fiscal year (calculated on a pro forma basis as of the last day of such fiscal year in the case of any Person which became a Restricted Subsidiary thereafter). "SUBSIDIARY" means, as to any Person, any corporation or other business entity a majority of the combined voting power of all Voting Stock of which is owned by such Person or one or more of its Subsidiaries or such Person and 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 Company. "SUBSIDIARY GUARANTEE" is defined in Section 1.2. "SUBSIDIARY GUARANTORS" is defined in Section 4.5. "SWAPS" means, with respect to any Person, payment obligations with respect to interest rate swaps, currency swaps and similar obligations obligating such Person to make payments, whether periodically or upon the happening of a contingency. For the purposes of this Agreement, the amount of the obligation under any Swap shall be the amount determined in respect thereof as of the end of the then most recently ended fiscal quarter of such Person, based on the assumption that such Swap had terminated at the end of such fiscal quarter, and in making such determination, if any agreement relating to such Swap provides for the netting of amounts payable by and to such Person thereunder or if any such agreement provides for the simultaneous payment of amounts by and to such Person, then in each such case, the amount of such obligation shall be the net amount so determined. "TOTAL INDEBTEDNESS TO EBITDA RATIO" means, at any date, the ratio of (a) Consolidated Indebtedness as at such date to (b) pro forma EBITDA for the four consecutive fiscal quarters then most recently ended. "UNRESTRICTED SUBSIDIARY" means any Subsidiary that has been designated as an Unrestricted Subsidiary pursuant to Section 10.8(a) and has not been subsequently redesignated as a Restricted Subsidiary pursuant to Section 10.8(b). Schedule B 78 -10- "VOTING STOCK" means, with respect to any Person, any shares of stock or other equity interests of any class or classes of such Person whose holders are entitled under ordinary circumstances (irrespective of whether at the time stock or other equity interests of any other class or classes shall have or might have voting power by reason of the happening of any contingency) to vote for the election of a majority of the directors, managers, trustees or other governing body of such Person. "WHOLLY-OWNED RESTRICTED SUBSIDIARY" means, at any time, any Restricted Subsidiary all of the equity interests (except directors' qualifying shares) and voting interests of which are owned by any one or more of the Company and the Company's other Wholly-Owned Restricted Subsidiaries at such time. Schedule B 79 EXHIBIT 1.1 [FORM OF NOTE] PAXAR CORPORATION 6.74% SENIOR NOTE DUE 2008 No. R-[_____] New York, New York $[_______] [Date] PPN: 704227 A* 8 FOR VALUE RECEIVED, the undersigned, PAXAR CORPORATION (the "COMPANY"), a New York corporation, hereby promises to pay to [__________________ ], or registered assigns, the principal sum of [________________ ] DOLLARS on August 11, 2008, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) from the date hereof on the unpaid balance thereof at the rate of 6.74% per annum, payable semiannually on February 11 and August 11 in each year, until the principal hereof shall have become due and payable, and (b) on any overdue payment of principal, any overdue payment of interest (to the extent permitted by applicable law) and any overdue payment of any premium or Make-Whole Amount (as defined in the Note Purchase Agreements referred to below), payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand) at a rate per annum from time to time equal to the greater of (i) 8.74% and (ii) 2% above the rate of interest publicly announced by Citibank, N.A. from time to time at its principal office in New York City as its prime rate. Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at said principal office of Citibank, N.A. in New York City or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreements referred to below. This Note is one of a series of 6.74% Senior Notes due 2008 issued pursuant to separate Note Purchase Agreements dated as of August 4, 1998 (as from time to time amended, the "NOTE PURCHASE AGREEMENTS") between the Company and the respective Purchasers named therein and is entitled to the benefits thereof. This Note is also entitled to the benefits of certain Subsidiary Guarantees that were executed and delivered pursuant to the Note Purchase Agreements. Each holder of this Note will be deemed, by its acceptance hereof, to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreements. This Note is a registered Note and, as provided in the Note Purchase Agreements, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a 80 -2- written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary. The Company may make optional prepayments of principal, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreements, but not otherwise. If an Event of Default, as defined in the Note Purchase Agreements, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable premium or Make-Whole Amount) and with the effect provided in the Note Purchase Agreements. This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder hereof shall be governed by, the laws of the State of New York, excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. PAXAR CORPORATION By_________________________ Title: 81 Exhibit 1.2 GUARANTEE AGREEMENT GUARANTEE AGREEMENT dated as of _____________, ___ made by ________________________, a _________________ corporation (the "GUARANTOR"), in favor of the holders from time to time of the Notes referred to below (collectively the "OBLIGEES"). WHEREAS, Paxar Corporation, a New York corporation (the "COMPANY"), has entered into several Note Purchase Agreements dated as of August 4, 1998 (as amended or otherwise modified from time to time, collectively the "NOTE AGREEMENTS" and terms defined therein and not otherwise defined herein are being used herein as so defined) with the institutional purchasers listed in Schedule A thereto, pursuant to which the Company proposes to issue and sell to such purchasers $150,000,000 aggregate principal amount of its 6.74% Senior Notes due 2008 (the "NOTES"); and WHEREAS, it is a [condition precedent to the purchase of the Notes by such purchasers under/requirement of] the Note Agreements that the Guarantor shall execute and deliver this Guarantee Agreement; NOW, THEREFORE, in consideration of the premises the Guarantor hereby agrees as follows: SECTION 1. Guarantee. The Guarantor unconditionally and irrevocably guarantees, as primary obligor and not merely as surety, A. the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all obligations of the Company arising under the Notes and the Note Agreements, including all extensions, modifications, substitutions, amendments and renewals thereof, whether for principal, interest (including without limitation interest on any overdue principal, premium and interest at the rate specified in the Notes and interest accruing or becoming owing both prior to and subsequent to the commencement of any proceeding against or with respect to the Company under any chapter of the Bankruptcy Code of 1978, 11 U.S.C. Section101 et seq.), Make-Whole Amount, Additional Amounts, fees, expenses, indemnification or otherwise, and B. the due and punctual performance and observance by the Company of all covenants, agreements and conditions on its part to be performed and observed under the Notes and the Note Agreements; (all such obligations are called the "GUARANTEED OBLIGATIONS"); provided that the aggregate liability of the Guarantor hereunder 82 - 2 - in respect of the Guaranteed Obligations shall not exceed at any time the lesser of (1) the amount of the Guaranteed Obligations and (2) the maximum amount for which the Guarantor is liable under this Guarantee Agreement without such liability being deemed a fraudulent transfer under applicable Debtor Relief Laws (as hereinafter defined), as determined by a court of competent jurisdiction. As used herein, the term "DEBTOR RELIEF LAWS" means any applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar debtor relief laws affecting the rights of creditors generally from time to time in effect. The Guarantor also agrees to pay, in addition to the amount stated above, any and all reasonable expenses (including reasonable counsel fees and expenses) incurred by any Obligee in enforcing any rights under this Guarantee Agreement or in connection with any amendment of this Guarantee Agreement. Without limiting the generality of the foregoing, this Guarantee Agreement guarantees, to the extent provided herein, the payment of all amounts which constitute part of the Guaranteed Obligations and would be owed by any other Person to any Obligee but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving such Person. SECTION 2. Guarantee Absolute. The obligations of the Guarantor under Section 1 of this Guarantee Agreement constitute a present and continuing guaranty of payment and not of collectability and the Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Notes and the Note Agreements, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Obligee with respect thereto. The obligations of the Guarantor under this Guarantee Agreement are independent of the Guaranteed Obligations, and a separate action or actions may be brought and prosecuted against the Guarantor to enforce this Guarantee Agreement, irrespective of whether any action is brought against the Company or any other Person liable for the Guaranteed Obligations or whether the Company or any other such Person is joined in any such action or actions. The liability of the Guarantor under this Guarantee Agreement shall be primary, absolute, irrevocable, and unconditional irrespective of: A. any lack of validity or enforceability of any Guaranteed Obligation, any Note, the Note Agreements or any agreement or instrument relating thereto; B. any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other amendment or waiver of or any consent to departure from any Note, the Note Agreements or this Guarantee Agreement; 83 - 3 - C. any taking, exchange, release or non-perfection of any collateral, or any taking, release or amendment or waiver of or consent to departure by the Guarantor or other Person liable, or any other guarantee, for all or any of the Guaranteed Obligations; D. any manner of application of collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any collateral or any other assets of the Company or any other Subsidiary; E. any change, restructuring or termination of the corporate structure or existence of the Company or any other Subsidiary; or F. any other circumstance (including without limitation any statute of limitations) that might otherwise constitute a defense, offset or counterclaim available to, or a discharge of, the Company or the Guarantor, other than payment in full in cash. This Guarantee Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by any Obligee, or any other Person upon the insolvency, bankruptcy or reorganization of the Company or otherwise, all as though such payment had not been made. SECTION 3. Waivers. The Guarantor hereby irrevocably waives, to the extent permitted by applicable law: A. promptness, diligence, presentment, notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this Guarantee Agreement; B. any requirement that any Obligee or any other Person protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right or take any action against the Company or any other Person or any collateral; C. any defense, offset or counterclaim arising by reason of any claim or defense based upon any action by any Obligee; D. any duty on the part of any Obligee to disclose to the Guarantor any matter, fact or thing relating to the business, operation or condition of any Person and its assets now known or hereafter known by such Obligee; and E. any rights by which it might be entitled to require suit on an accrued right of action in respect of any of the 84 - 4 - Guaranteed Obligations or require suit against the Company or the Guarantor or any other Person. SECTION 4. Waiver of Subrogation and Contribution. The Guarantor shall not assert, enforce, or otherwise exercise (A) any right of subrogation to any of the rights, remedies, powers, privileges or liens of any Obligee or any other beneficiary against the Company or any other obligor on the Guaranteed Obligations or any collateral or other security, or (B) any right of recourse, reimbursement, contribution, indemnification, or similar right against the Company, and the Guarantor hereby waives any and all of the foregoing rights, remedies, powers, privileges and the benefit of, and any right to participate in, any collateral or other security given to any Obligee or any other beneficiary to secure payment of the Guaranteed Obligations, until such time as the Guaranteed Obligations have been paid in full. SECTION 5. Representations and Warranties. The Guarantor hereby represents and warrants as follows: A. The Guarantor is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. The execution, delivery and performance of this Guarantee Agreement have been duly authorized by all necessary action on the part of the Guarantor. B. The execution, delivery and performance by the Guarantor of this Guarantee Agreement 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 Guarantor or any Subsidiary of the Guarantor under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other material agreement or instrument to which the Guarantor or any Subsidiary of the Guarantor is bound or by which the Guarantor or any Subsidiary of the Guarantor or any of their respective 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 Guarantor or any Subsidiary of the Guarantor or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Guarantor or any Subsidiary of the Guarantor. C. The Guarantor and the Company are members of the same consolidated group of companies and are engaged in related businesses and the Guarantor will derive substantial direct and indirect benefit from the execution and delivery of this Guarantee Agreement. 85 - 5 - SECTION 6. Amendments, Etc. No amendment or waiver of any provision of this Guarantee Agreement and no consent to any departure by the Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by the Required Holders, 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, waiver or consent shall, unless in writing and signed by all Obligees, (i) limit the liability of or release the Guarantor hereunder, (ii) postpone any date fixed for, or change the amount of, any payment hereunder or (iii) change the percentage of Notes the holders of which are, or the number of Obligees, required to take any action hereunder. SECTION 7. Addresses for Notices. All notices and other communications provided for hereunder shall be in writing and (A) by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (B) by registered or certified mail with return receipt requested (postage prepaid), or (C) by a recognized overnight delivery service (with charges prepaid). Such notice if sent to the Guarantor shall be addressed to it at the address of the Guarantor provided below its name on the signature page of this Guarantee Agreement or at such other address as the Guarantor may hereafter designate by notice to each holder of Notes, or if sent to any holder of Notes, shall be addressed to it as set forth in the Note Agreements. Any notice or other communication herein provided to be given to the holders of all outstanding Notes shall be deemed to have been duly given if sent as aforesaid to each of the registered holders of the Notes at the time outstanding at the address for such purpose of such holder as it appears on the Note register maintained by the Company in accordance with the provisions of Section 13.1 of the Note Agreements. Notices under this Section 7 will be deemed given only when actually received. SECTION 8. No Waiver; Remedies. No failure on the part of any Obligee to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 9. Continuing Guarantee. This Guarantee Agreement is a continuing guarantee of payment and performance and shall (A) remain in full force and effect until payment in full of the Guaranteed Obligations and all other amounts payable under this Guarantee Agreement, (B) be binding upon the Guarantor, its successors and assigns and (C) inure to the benefit of and be enforceable by the Obligees and their successors, transferees and assigns. 86 - 6 - SECTION 10. Jurisdiction and Process; Waiver of Jury Trial. The Guarantor irrevocably submits to the non-exclusive in personam jurisdiction of any New York State or federal court sitting in the Borough of Manhattan, The City of New York, over any suit, action or proceeding arising out of or relating to this Guarantee Agreement. To the fullest extent permitted by applicable law, the Guarantor irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the in personam jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. The Guarantor consents to process being served in any suit, action or proceeding of the nature referred to in this Section by mailing a copy thereof by registered or certified mail, postage prepaid, return receipt requested, to the Guarantor at its address specified in Section 7 or at such other address of which you shall then have been notified pursuant to said Section. The Guarantor agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to the Guarantor. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any recognized courier or overnight delivery service. Nothing in this Section 10 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders of any of the Notes may have to bring proceedings against the Guarantor in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction. SECTION 11. [Tax Indemnification. 11.1. Payments Without Tax Withholding. All payments whatsoever by the Guarantor under this Guarantee Agreement shall be made in the lawful currency of the United States free and clear of, and without reduction or liability for or on account of, any present or future taxes (whether income, documentary, sales, stamp, registration, issue, capital, property, excise or otherwise), levies, imposts, duties, fees, charges, deductions, withholding, restrictions or conditions or any penalties, interest or additions thereto of any nature whatsoever (herein called "TAX") unless any withholding or deduction for or on account of any Tax is required by law. 11.2. Gross-Up for Required Tax Withholding. If the Guarantor shall be obligated by law to make any such withholding 87 - 7 - or deduction for any Tax imposed, levied, collected, assessed or withheld by or within the jurisdiction in which the Guarantor is organized or resident for tax purposes (other than the United States) or any political subdivision or taxing authority thereof or therein or by any other jurisdiction (or any taxing authority thereof or therein) other than the United States from or through which payments under the Guaranteed Obligations by the Guarantor are actually made (hereinafter a "TAXING JURISDICTION"), then the Guarantor will promptly (i) notify the affected holders of Guaranteed Obligations of such requirement, (ii) pay such additional amounts of interest ("GUARANTEE ADDITIONAL AMOUNTS") as may be necessary so that the net amount received by each holder of Guaranteed Obligations (including Guarantee Additional Amounts) after such withholding or deduction will not be less than the amount such holder would have received if such Taxes had not been withheld or deducted, (iii) make such withholding or deduction and remit the full amount deducted or withheld to the relevant authority in accordance with applicable law and (iv) furnish such holder with the original receipt of such payment from such government or taxing authority (or such other evidence sufficient under United States Treasury Regulations 1.905-2(a)(2) under the Code (or any successor or subsequent provisions) so as to allow such holder to verify that such Tax has been paid to such government or taxing authority). Notwithstanding the provisions of this Section 11, no such Guarantee Additional Amounts shall be payable for or on account of: (a) any Tax which would not have been imposed but for (1) the connection of a holder with the Taxing Jurisdiction (other than the mere holding of a Note) including the existence of a permanent establishment or other fixed place of business of such holder in such Taxing Jurisdiction or (2) the appointment by a holder of a collecting agent in such Taxing Jurisdiction; (b) any Tax that is imposed or withheld by reason of the failure by the holder of any Note, notwithstanding its legal and practical ability, promptly after becoming a holder of a Note to provide information concerning the nationality, residence or identity of such holder or to make such declaration or other similar claim or report (provided such declaration or claim does not require the holder to reveal any confidential or proprietary tax return or other information and does not require the holder to incur any undue expense) as may be required by a statute, treaty or regulation of the Taxing Jurisdiction as a precondition to exemption from all or part of such Tax; and (c) any combination of clauses (A) and (B) above; provided further, however, that no Guarantee Additional Amounts shall be payable (x) in respect of any Guaranteed Obligation held by a holder who is a fiduciary or a partnership or a beneficial 88 - 8 - owner who is other than the sole beneficial owner of such Guaranteed Obligation to the extent a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner would not have been entitled to such Guarantee Additional Amounts had it been the holder of such Guaranteed Obligation or (y) in respect of any Guaranteed Obligation in excess of the amount which the Guarantor would have been obligated to pay if such Guaranteed Obligation had been beneficially owned at all relevant times by Persons who were resident in the United States for purposes of the income tax treaty in effect between the United States and such Taxing Jurisdiction. If the Guarantor fails to pay any withheld or deducted Taxes pursuant to clause (iii) of Section 11.2 in accordance with applicable law, then the Guarantor shall indemnify and hold harmless the affected holder and reimburse such holder for the amount of Taxes imposed on and paid by such holder so that the net amount received by such holder after such reimbursement will not be less than the net amount such holder would have received if Taxes on such reimbursement had not been imposed, but excluding any Taxes on such holder's net income generally or based on such holder's capital generally. 11.3. Taxes Imposed by Means Other Than Withholding. If any Taxes are imposed on a holder of a Guaranteed Obligation (other than Taxes imposed by the United States, any State thereof or other political subdivision thereof) with respect to any payment made by the Guarantor hereunder by means other than deduction or withholding and the Guarantor would be obligated to pay Guarantee Additional Amounts to such holder hereunder if such Taxes had been withheld or deducted, the Guarantor shall indemnify and hold harmless each such holder and will upon notice by such holder and provided that reasonable supporting documentation is provided, reimburse each such holder for the amount of (i) any Taxes so levied or imposed and paid to such holder as a result of payments made under or with respect to the Guaranteed Obligation and (ii) any Taxes so levied or imposed with respect to any reimbursement under the foregoing clause (i) so that the net amount received by such holder after such reimbursement will not be less than the net amount the holder would have received if Taxes on such reimbursement had not been imposed, but excluding any Taxes on such holder's net income generally or based on such holder's capital generally. 11.4. Tax Information Disclosure. For the avoidance of doubt, nothing herein shall require any Person to disclose any information regarding its tax affairs or computations to the Guarantor other than as shall be necessary to permit the Guarantor to determine whether any Guarantee Additional Amounts would be required to be paid pursuant to the provisions of this Section; provided, however, that no Person shall be obligated to disclose any of its tax returns to the Guarantor or any agent of the Guarantor. 89 - 9 - 11.5. Reimbursement of Guarantee Additional Amounts by Holder. If any Taxes imposed on any holder are paid or indemnified against by the Guarantor under this Section 11, and such holder receives a refund of any amount of Taxes paid or reimbursed by such Guarantor and such holder is able, in good faith, to identify the tax refund as being attributable to such payment or reimbursement, such holder shall pay to such Guarantor an amount equal to such refund. Section 12. Judgment Currency. Any payment on account of an amount that is payable hereunder by the Guarantor in U.S. Dollars which is made to or for the account of any Obligee in any other currency, whether as a result of any judgment or order or the enforcement thereof or the realization of any security or the liquidation of such Guarantor, shall constitute a discharge of such Guarantor's obligation under this Guarantee Agreement only to the extent of the amount of U.S. Dollars which such Obligee could purchase in the foreign exchange markets in London, England, with the amount of such other currency in accordance with normal banking procedures at the rate of exchange prevailing on the London Banking Day following receipt of the payment first referred to above. If the amount of U.S. Dollars that could be so purchased is less than the amount of U.S. Dollars originally due to such Obligee, the Guarantor agrees, to the fullest extent permitted by law, to indemnify and save harmless such Obligee from and against all loss or damage arising out of or as a result of such deficiency. This indemnity shall, to the fullest extent permitted by law, constitute an obligation separate and independent from the other obligations contained in this Guarantee Agreement, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by such Obligee from time to time and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due hereunder or under any judgment or order. As used herein the term "LONDON BANKING DAY" shall mean any day other than Saturday or Sunday or a day on which commercial banks are required or authorized by law to be closed in London, England. SECTION 13.]* Governing Law. This Guarantee Agreement shall be construed and enforced in accordance with, and the rights of the Guarantor and the Obligees shall be governed by, the laws of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State. - -------- * Bracketed Sections 11 and 12 to be inserted if the Guarantor is a Subsidiary with a jurisdiction of incorporation outside the United States. 90 - 10 - IN WITNESS WHEREOF, the Guarantor has caused this Guarantee Agreement to be duly executed and delivered as of the date first above written. [GUARANTOR] By________________________ Title: Address: Attention: Telephone: Telecopy: -----END PRIVACY-ENHANCED MESSAGE-----