EXHIBIT 10(b)
EXECUTION COPY
SENIOR SUBORDINATED
NOTE PURCHASE AGREEMENT
dated as of
November 1, 1996
among
HANGER ORTHOPEDIC GROUP, INC.
and
The Purchasers listed on the
signature pages hereof
505298\0057\02050\969WL85X.NPA
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS.............................. 1
SECTION 1.1. Definitions......................................... 1
SECTION 1.2. Accounting Terms and Determinations................. 17
ARTICLE II
PURCHASE AND SALE OF NOTES AND WARRANTS................ 17
SECTION 2.1. Commitments to Purchase Notes....................... 17
SECTION 2.2. Commitments to Warrants............................. 18
SECTION 2.3. The Closing......................................... 18
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY............................. 18
SECTION 3.1. Incorporation, Standing, etc........................ 18
SECTION 3.2. Capitalization; Ownership........................... 19
SECTION 3.3. Subsidiaries........................................ 20
SECTION 3.4. Qualification....................................... 20
SECTION 3.5. Business and Financial Statements................... 20
SECTION 3.6. Changes, etc........................................ 21
SECTION 3.7. Tax Returns and Payments............................ 21
SECTION 3.8. Debt................................................ 21
SECTION 3.9. Title to Properties; Liens.......................... 22
SECTION 3.10. Litigation......................................... 22
SECTION 3.11. Compliance with Other Instruments.................. 22
SECTION 3.12. Governmental Consents.............................. 23
SECTION 3.13. Permits, Patents, Trademarks, etc.................. 23
SECTION 3.14. Representations in Acquisition Agreement........... 24
SECTION 3.15. Offer of Notes..................................... 24
SECTION 3.16. Federal Reserve Regulations........................ 24
SECTION 3.17. Status Under Certain Federal Statutes.............. 25
SECTION 3.18. Compliance with ERISA.............................. 25
SECTION 3.19. Solvency........................................... 26
SECTION 3.20. Disclosure......................................... 26
SECTION 3.21. Use of Proceeds.................................... 26
SECTION 3.22. Environmental Compliance........................... 26
SECTION 3.23. Note Purchase Agreement............................ 27
ARTICLE IV
505298\0057\02050\969WL85X.NPA
-i-
PAGE
REPRESENTATIONS AND WARRANTIES OF PURCHASERS.............. 27
SECTION 4.1. Private Placement................................... 27
SECTION 4.2. Margin Compliance................................... 27
SECTION 4.3. Accredited Investor................................. 27
SECTION 4.4. Source of Funds..................................... 27
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING.................... 28
SECTION 5.1. Conditions to Purchasers' Obligations to Purchase
Notes........................................................ 28
SECTION 5.2. Conditions to Company's Obligations to Issue and
Sell the Notes and to Issue the Warrants..................... 32
ARTICLE VI
COVENANTS............................... 33
SECTION 6.1. Financial Statements, etc........................... 33
SECTION 6.2. Furnishing of Disclosure Information................ 38
SECTION 6.3. Books of Record and Account; ....................... 38
SECTION 6.4. Payment of Taxes and Claims; Tax Consolidation...... 38
SECTION 6.5. Maintenance of Properties; Corporate Existence and
Business..................................................... 39
SECTION 6.6. Insurance........................................... 39
SECTION 6.7. Inspection.......................................... 39
SECTION 6.8. Compliance with Laws, etc........................... 39
SECTION 6.9. Subsidiary Guarantees............................... 40
SECTION 6.10. Limitations on Restricted Payments................. 40
SECTION 6.11. Limitations on Incurrence of Debt and Issuance of
Disqualified Stock....................................... 42
SECTION 6.12. Liens.............................................. 44
SECTION 6.13. Consolidation, Merger, Sale of Assets, etc......... 45
SECTION 6.14. Limitation on Transactions with Affiliates......... 46
SECTION 6.15. Dividend and Other Payment Restrictions Affecting
Subsidiaries................................................. 46
SECTION 6.16. Limitation on Other Senior Subordinated
Indebtedness................................................. 48
SECTION 6.18. Change of Control.................................. 48
SECTION 6.19. Asset Sales........................................ 50
SECTION 6.20. No Restrictive Agreements.......................... 51
SECTION 6.21. Private Placement Numbers.......................... 51
ARTICLE VII
TERMS OF THE NOTES........................... 51
SECTION 7.1. Form of Notes; Issuance of Notes.................... 51
SECTION 7.2. Registration, Transfer, Exchange and Substitution
of Notes..................................................... 51
SECTION 7.3. Payments on the Notes............................... 52
505298\0057\02050\969WL85X.NPA
-ii-
PAGE
SECTION 7.4. Optional Prepayment................................. 53
SECTION 7.5. Mandatory Prepayments Upon Equity Offerings......... 54
SECTION 7.6. Events of Default; Acceleration of Maturity;
Waiver of Default............................................ 54
SECTION 7.7. Powers and Remedies Cumulative; Delay or Omission
Not Waiver of Default........................................ 56
SECTION 7.8. Waiver of Past Defaults............................. 57
ARTICLE VIII
SUBORDINATION OF NOTES......................... 57
SECTION 8.1. Notes Subordinated to Senior Indebtedness........... 57
SECTION 8.2. Payment Over of Proceeds Upon Dissolution, etc...... 57
SECTION 8.3. No Payment When Senior Indebtedness is in Default... 59
SECTION 8.4. Payment Permitted if No Default..................... 60
SECTION 8.5. Subrogation to Rights of Holders of Senior
Indebtedness................................................. 60
SECTION 8.6. Provisions Solely to Define Relative Rights......... 61
SECTION 8.7. No Waiver of Subordination Provisions............... 61
SECTION 8.8. Notice to Holders of Notes.......................... 61
SECTION 8.9. Reliance of Holders of Senior Indebtedness.......... 62
SECTION 8.10. Reliance on Judicial order or Certificate of
Liquidating Agent............................................ 62
SECTION 8.11. This Article Not to Prevent Events of Default...... 62
SECTION 8.12. Reinstatement...................................... 63
ARTICLE IX
SUBSTITUTION; LIMITATION ON TRANSFERS................. 63
SECTION 9.1. Substitution of Purchasers Prior to Closing Date.... 63
SECTION 9.2. Restrictions on Transfer............................ 63
ARTICLE X
INDEMNIFICATION............................ 64
SECTION 10.1. Indemnification.................................... 64
ARTICLE XI
MISCELLANEOUS............................. 65
SECTION 11.1. Notices............................................ 65
SECTION 11.2. No Waivers; Amendments............................. 66
SECTION 11.3. Survival of Provisions............................. 66
SECTION 11.4. Expenses; Documentary Taxes........................ 66
SECTION 11.5. Termination; Termination Fees...................... 66
SECTION 11.6. Confidentiality.................................... 67
SECTION 11.7. Successors and Assigns............................. 67
SECTION 11.8. NEW YORK LAW....................................... 67
505298\0057\02050\969WL85X.NPA
-iii-
SECTION 11.9. Counterparts; Effectiveness........................ 67
SECTION 11.10. Entire Agreement.................................. 67
SECTION 11.11. Consent to Jurisdiction........................... 68
ARTICLE XII
SMALL BUSINESS ADMINISTRATION MATTERS................. 68
SECTION 12.1. SBIC Forms......................................... 68
SECTION 12.2. SBIC Information................................... 68
SECTION 12.3. Inspection......................................... 68
SECTION 12.4. Information........................................ 68
SECTION 12.5. Use of Proceeds.................................... 69
SECTION 12.6. Business........................................... 69
SECTION 12.7. Non-Discrimination................................. 69
SECTION 12.8. Company Awareness.................................. 69
505298\0057\02050\969WL85X.NPA
-iv-
Schedule 3.2 - Capital Stock
Schedule 3.3 - Subsidiaries
Schedule 3.5 - Financial Statements
Schedule 3.8 - Debt
Schedule 3.9 - UCC Financing Statements
Schedule 3.10 - Litigation
Schedule 3.12 - Governmental Consents
Schedule 3.13 - Permits, Patents, Trademarks, etc.
Schedule 3.18 - Multiemployer Plan Contribution Obligations
Schedule 5.1(h) - Consents
Schedule 5.1(l) - Company Projections
Exhibit A - Form of Senior Subordinated Note
Exhibit B - Form of Subsidiary Guaranty Agreement
Exhibit C - Opinion of Freedman, Levy, Xxxxx & Xxxxxxx
505298\0057\02050\969WL85X.NPA
-v-
SENIOR SUBORDINATED
NOTE PURCHASE AGREEMENT
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT, dated as of November 1,
1996 among HANGER ORTHOPEDIC GROUP, INC., a Delaware corporation (together
with its successors, the "COMPANY") and the Purchasers listed on the signature
pages hereof (the "PURCHASERS").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. The following terms, as used herein,
having the following meanings:
"ACQUIRED DEBT" means, with respect to any specified Person, (i)
Debt of any other Person existing at the time such other Person merged with or
into or became a Restricted Subsidiary of such specified Person, including
Debt incurred in connection with, or in contemplation of, such other Person
merging with or into or becoming a Restricted Subsidiary of such specified
Person and (ii) Debt encumbering any asset acquired by such specified Person.
"ACQUISITION" shall mean the acquisition by the Company of 100% of
the issued and outstanding shares of capital stock of Southern pursuant to the
merger of Newco with and into Southern in accordance with the Acquisition
Agreement.
"ACQUISITION AGREEMENT" shall mean the Agreement and Plan of Merger,
dated as of July 29, 1996, between the Company, Newco and Southern as in
effect on the date hereof.
"ACQUISITION COSTS" shall mean all costs and expenses incurred by
the Company in connection with the Acquisition and the financing thereof,
including, without limitation, (a) payments in respect of the purchase price
pursuant to the Acquisition Agreement; and (b) all fees, commissions and
expenses relating to the Acquisition and the financing thereof (including,
without limitation, investment banking, brokerage, investment advisory,
finder's, accounting, publicity, appraisal, engineering, environmental audit,
legal, syndication, placement, commitment and interest rate hedging fees,
commissions and expenses).
"AFFILIATE" shall mean, with respect to any designated Person, any
other Person that has a relationship with the designated Person whereby either
of such Persons directly or indirectly controls or is controlled by or is
under common control with the other of such Persons, excluding the Purchasers
and the Senior Lenders. The term "control" means the
505298\0057\02050\969WL85X.NPA
2
possession, directly or indirectly, of the direction of the management or
policies of any Person, whether through ownership of voting securities, by
contract or otherwise.
"AGENT BANK" means Banque Paribas, in its capacity as agent under
the Credit Agreement, and any successor agent thereunder.
"AGREEMENT" shall mean this Senior Subordinated Note Purchase
Agreement, as the same may be amended from time to time.
"ASSET SALE" means:
(a) the sale, conveyance, transfer or other disposition (whether in
a single transaction or a series of related transactions) of property or
assets (including by way of a sale and leaseback) of the Company or any
Restricted Subsidiary other than in the ordinary course of business (each
referred to in this definition as a "disposition") or
(b) the issuance or sale of Equity Interests of any Restricted
Subsidiary (whether in a single transaction or a series of related
transactions), in each case, other than:
(i) a disposition of obsolete equipment in the ordinary course
of business;
(ii) the disposition of all or substantially all of the assets
of the Company in a manner permitted pursuant to the provisions
described under Section 6.13 or any disposition that constitutes a
Change of Control pursuant to this Agreement;
(iii) any disposition that is a Restricted Payment or that is a
dividend or distribution permitted under the covenant described
under Section 6.10 or any Investment that is not prohibited
thereunder or any disposition of cash or Cash Equivalents;
(iv) any disposition, or related series of dispositions, of
assets with an aggregate fair market value of less than $1,000,000;
(v) any sale of Equity Interests in, or Indebtedness or other
securities of, an Unrestricted Subsidiary; and
(vi) foreclosures on assets.
"BASIC DOCUMENTS" shall mean this Agreement, the Subsidiary Guaranty
Agreement, the Acquisition Agreement, the Credit Agreement and Warrants.
"BUSINESS DAY" shall mean any day on which commercial banks are not
authorized or required to close in New York City.
505298\0057\02050\969WL85X.NPA
3
"CAPITAL STOCK" means with respect to any Person, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock of such Person, including, without limitation,
if such Person is a partnership, partnership interests (whether general or
limited) and any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, such partnership.
"CAPITALIZED LEASE OBLIGATION" shall mean the obligation to pay rent
or other amounts under a lease of (or other agreement conveying the right to
use) real and/or personal property which obligations are required to be
classified and accounted for as a capital lease on a balance sheet of the
lessee under GAAP and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.
"CASH EQUIVALENTS" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof, (iii) certificates of
deposit, time deposits and eurodollar time deposits with maturities of one
year or less from the date of acquisition, bankers' acceptances with
maturities not exceeding one year and overnight bank deposits, in each case
with any commercial bank having capital and surplus in excess of $500,000,000,
(iv) repurchase obligations for underlying securities of the types described
in clauses (ii) and (iii) entered into with any financial institution meeting
the qualifications specified in clause (iii) above, (v) commercial paper rated
A-1 or the equivalent thereof by Xxxxx'x or S&P and in each case maturing
within one year after the date of acquisition, (vi) investment funds investing
95% of their assets in securities of the types described in clauses (i)-(v)
above, (vii) readily marketable direct obligations issued by any state of the
United States of America or any political subdivision thereof having one of
the two highest rating categories obtainable from either Xxxxx'x or S&P,
(viii) Indebtedness or Preference Stock issued by Persons with a rating of "A"
or higher from S&P or "A2" or higher from Xxxxx'x and (ix) Cash Equivalents,
as defined under the Credit Agreement, as in effect on the Closing Date.
"CHANGE OF CONTROL" shall occur at any time that (i) any "person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act), in a
single transaction or through a series of related transactions, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of more than 50% of the total Voting Stock of the
Company; (ii) the Company consolidates or merges with or into another
corporation or conveys, transfers or leases all or substantially all of its
assets to any Person, or any corporation consolidates or merges with or into
the Company, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Company is changed into or exchanged for cash,
securities or other property, other than any such transaction where (A) the
outstanding Voting Stock of the Company is changed into or exchanged for (x)
Voting Stock of the surviving corporation which is not Disqualified Stock
and/or (y) cash, securities or other property in an amount which could be paid
by the Company as a Restricted Payment and (B) the holders of the Voting Stock
of the Company immediately prior to such transaction own, directly or
indirectly, not less than 50% of the Voting Stock of the surviving corporation
immediately after such transaction, (iii) during any period of two consecutive
505298\0057\02050\969WL85X.NPA
4
years, individuals who at the beginning of such period constituted the Board
of Directors of the Company (together with any new directors whose election by
such Board of Directors or whose nomination for election by the stockholders
of the Company was approved by a vote of at least 50% of the directors then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors of the
Company then in office; or (iv) the Company is liquidated or dissolved or
adopts a plan of liquidation.
"CLOSING" and "CLOSING DATE" shall have the meanings set forth in
Section 2.2(a).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" shall mean the shares of common stock, par value $.01
per share, of the Company.
"COMPANY FINANCIAL STATEMENTS" shall have the meaning ascribed to
such term in Section 3.5(b).
"COMPANY PROJECTIONS" shall have the meaning specified in Section
5.1(m).
"CONSOLIDATED" shall mean, with respect to any Person, the
consolidation of the accounts of such Person and its Subsidiaries in
accordance with GAAP, including in the case of the Company and its
Subsidiaries, principles of consolidation consistent with those applied in the
preparation of the Company's financial statements unless the context provides
which Subsidiaries are to be Consolidated.
"CONSOLIDATED DEPRECIATION AND AMORTIZATION EXPENSE" means with
respect to any Person for any period, the total amount of depreciation and
amortization expense and other noncash charges (excluding any noncash item
that represents an accrual, reserve or amortization of a cash expenditure for
a future period) of such Person and its Restricted Subsidiaries for such
period on a consolidated basis and otherwise determined in accordance with
GAAP.
"CONSOLIDATED INCOME TAX EXPENSE" for any Person for any period
means, without duplication, the aggregate amount of net taxes based on income
or profits for such period of the operations of such Person and its Restricted
Subsidiaries with respect to such period in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any period,
the sum of: (a) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued (except to
the extent accrued in a prior period), to the extent such expense was deducted
in computing Consolidated Net Income (including amortization of original issue
discount, non-cash interest payments, the interest component of Capitalized
Lease Obligations, and net payments (if any) pursuant to Hedging Obligations,
excluding amortization of deferred financing fees) and (b) consolidated
capitalized interest of such
505298\0057\02050\969WL85X.NPA
5
Person and its Restricted Subsidiaries for such period, whether paid or
accrued, to the extent such expense was deducted in computing Consolidated Net
Income.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, and otherwise
determined in accordance with GAAP; provided, however, that (i) the Net Income
for such period of any Person that is not a Subsidiary, or is an Unrestricted
Subsidiary, or that is accounted for by the equity method of accounting, shall
be included only to the extent of the amount of dividends or distributions or
other payments paid in cash (or to the extent converted into cash) to the
referent Person or a Wholly Owned Restricted Subsidiary thereof in respect of
such period, (ii) the Net Income of any Person acquired in a pooling of
interests transaction shall not be included for any period prior to the date
of such acquisition and (iii) the Net Income for such period of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of its Net
Income is not at the date of determination permitted without any prior
governmental approval (which has not been obtained) or, directly or
indirectly, by the operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders, unless such
restriction with respect to the payment of dividends or in similar
distributions has been legally waived.
"CONTINGENT OBLIGATIONS" means, with respect to any Person, any
obligation of such Person guaranteeing any leases, dividends or other
obligations that do not constitute Indebtedness ("primary obligations") of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, or (c)
to purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation against loss in
respect thereof.
"CREDIT AGREEMENT" shall mean the Credit Agreement dated as of
November 1, 1996 among the Company, JEH Acquisition Corporation, the banks
from time to time parties thereto and the Agent Bank, together with all
related documents, instruments and agreements executed in connection therewith
(including, without limitation, any guarantee agreements and security
documents), in each case as such agreements, documents or instruments may be
amended (including any amendment or restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including,
without limitation, increasing the amount of available borrowings thereunder
or adding subsidiaries of the Company as additional borrowers or guarantors
thereunder) all or any portion of the Debt under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders.
505298\0057\02050\969WL85X.NPA
6
"CVCA" shall mean Chase Venture Capital Associates, L.P., a
California limited partnership.
"DEBT" shall mean with respect to any Person, (a) any indebtedness
of such Person, whether or not contingent (i) in respect of borrowed money,
(ii) evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof), (iii) representing
the balance deferred and unpaid of the purchase price of any property
(including Capitalized Lease Obligations), except any such balance that
constitutes an accrued expense or trade payable or any other monetary
obligation of a trade creditor (whether or not an Affiliate), or (iv)
representing any Hedging Obligations, if and to the extent any of the
foregoing Debt (other than letters of credit and Hedging Obligations) would
appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, (b) to the extent not otherwise included, any Contingent
Obligations (other than by endorsement of negotiable instruments for
collection in the ordinary course of business) and (c) to the extent not
otherwise included, Debt of another Person secured by a Lien on any asset
owned by such Person (whether or not such Debt is assumed by such Person);
provided, however, that Contingent Obligations incurred in the ordinary course
of business shall be deemed not to constitute Debt.
"DEFAULT" shall mean any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"DISINTERESTED DIRECTOR" means, with respect to any transaction or
series of related transactions, a member of the Board of Directors of the
Company who does not have any material direct or indirect financial interest
in or with respect to such transaction or series of related transactions.
"DISQUALIFIED STOCK" means, with respect to any Person, any Capital
Stock of such Person which, by its terms (or by the terms of any security into
which it is convertible or for which it is putable or exchangeable), or upon
the happening of any event, matures or is mandatorily redeemable, pursuant to
a sinking fund obligation or otherwise, or redeemable at the option of the
holder thereof, in whole or in part, on or prior to November 1, 2004;
provided, however, that if such Capital Stock is either (i) redeemable or
repurchasable solely at the option of such Person or (ii) issued to employees
of the Company or its Subsidiaries or to any plan for the benefit of such
employees, such Capital Stock shall not constitute Disqualified Stock unless
so designated.
"EBITDA" shall mean for any period the Consolidated Net Income for
such period plus the sum of the following for any Person (determined on a
Consolidated basis in accordance with GAAP and without duplication) to the
extent deducted in calculating Consolidated Net Income: (i) Consolidated
Income Tax Expense, (ii) Consolidated Interest Expense, (iii) Consolidated
Depreciation and Amortization Expense and (iv) all other non-cash charges
(excluding any such non-cash charge constituting an extraordinary item or loss
or any non-cash item which require an accrual of or reserve for cash charges
in future
505298\0057\02050\969WL85X.NPA
7
periods) and less any non-cash items which have the effect of increasing
(decreasing in the case of a loss) Consolidated Net Income for such period.
"ENVIRONMENTAL LAWS" shall mean 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 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.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EQUITY OFFERING" shall mean any sale or issuance after the Closing
Date of equity of the Company or any of its Subsidiaries (other than equity
issued on the Closing Date to the shareholders of Southern in connection with
the Acquisition).
"EQUITY OFFERING PROCEEDS" shall mean 100% of the cash proceeds (net
of underwriting discounts and commissions and all other reasonable costs
associated with such transaction) from any Equity Offering.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"EVENT OF DEFAULT" shall have the meaning ascribed to such term in
Section 7.6.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect at the time.
"EXISTING DEBT" means Debt of the Company or its Restricted
Subsidiaries in existence on the Closing Date, plus interest accruing thereon,
after application of the net proceeds of the sale of the Notes until such
amounts are repaid.
"EXISTING LOAN DOCUMENTS" shall mean any and all agreements, notes,
pledges, guarantees or other documents governing the Refinanced Indebtedness
(as defined in the Credit Agreement).
"FACILITY LETTER OF CREDIT" shall mean any letter of credit issued
pursuant to the Credit Agreement.
"FINANCIAL STATEMENTS" shall mean the collective reference to the
Southern Financial Statements and the Company Financial Statements.
505298\0057\02050\969WL85X.NPA
8
"FISCAL QUARTER" shall mean the three month period ending on March
31, June 30, September 30 or December 31, as applicable.
"FISCAL YEAR" shall mean the fifty-two week period ending on
December 31.
"FIXED ASSETS" of any Person shall mean any real property, plant or
equipment used by such Person in the ordinary course of its business.
"FIXED CHARGE COVERAGE RATIO" means, with respect to any Person for
any period, the ratio of EBITDA of such Person for such period to the Fixed
Charges of such Person for such period. In the event that the Company or any
of its Restricted Subsidiaries incurs, assumes, guarantees or redeems any Debt
(other than repayments of revolving credit borrowings with respect to which
the related commitment remains outstanding) or issues or redeems Preference
Stock subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation
Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro
forma effect to such incurrence, assumption, guarantee or redemption of Debt,
or such issuance or redemption of Preference Stock, as if the same had
occurred at the beginning of the applicable four-quarter period. For purposes
of making the computation referred to above, Investments, acquisitions,
dispositions which constitute all or substantially all of an operating unit of
a business and discontinued operations (as determined in accordance with GAAP)
that have been made by the Company or any of its Restricted Subsidiaries,
including all mergers, consolidations and dispositions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be calculated on a pro forma basis
assuming that all such Investments, acquisitions, dispositions, discontinued
operations, mergers, consolidations (and the reduction of any associated fixed
charge obligations and the change in EBITDA resulting therefrom) had occurred
on the first day of the four-quarter reference period and without regard to
clause (ii) of the definition of Consolidated Net Income. If since the
beginning of such period any Person (that subsequently became a Restricted
Subsidiary or was merged with or into the Company or any Restricted Subsidiary
since the beginning of such period) shall have made any Investment,
acquisition, disposition which constitutes all or substantially all of an
operating unit of a business, discontinued operation, merger or consolidation
that would have required adjustment pursuant to this definition, then the
Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
thereto for such period as if such Investment, acquisition, disposition,
discontinued operation, merger or consolidation had occurred at the beginning
of the applicable four-quarter period and without regard to clause (ii) of the
definition of Consolidated Net Income. For purposes of this definition,
whenever pro forma effect is to be given to a transaction, the pro forma
calculations shall be made in good faith by a responsible financial or
accounting officer of the Company. If any Debt bears a floating rate of
interest and is being given pro forma effect, the interest of such Debt shall
be calculated as if the rate in effect on the Calculation Date had been the
applicable rate for the entire period (taking into account any Hedging
Obligations applicable to such Debt). Interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
by a responsible financial or accounting officer of the Company to be the rate
of interest implicit in such Capitalized Lease Obligation in accordance with
GAAP.
505298\0057\02050\969WL85X.NPA
9
Interest on Debt that may optionally be determined at an interest rate based
upon a factor of a prime or similar rate, a eurocurrency interbank offered
rate, or other rate, shall be deemed to have been based upon the rate actually
chosen, or, if none, then based upon such optional rate chosen as the Company
may designate.
"FIXED CHARGES" shall mean, for any period, the sum of (a)
Consolidated Interest Expense of such Person for such period and (b) all cash
dividend payments (excluding items eliminated in consolidation) on any series
of Preference Stock of such Person.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the Closing Date. For the
purposes of this Agreement, the term "consolidated" with respect to any Person
shall mean such Person consolidated with its Restricted Subsidiaries, and
shall not include any Unrestricted Subsidiary.
"GUARANTEE" shall mean, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to
any indebtedness, lease, dividend or other obligation of another, including,
without limitation, any such obligation directly or indirectly guaranteed,
endorsed (otherwise than for collection or deposit in the ordinary course of
business) or discounted or sold with recourse by such Person, or in respect of
which such Person is otherwise directly or indirectly liable, including,
without limitation, any such obligation of a partnership in which such Person
is a general partner, and any such obligation in effect guaranteed by such
Person through any agreement (contingent or otherwise) to purchase, repurchase
or otherwise acquire such obligation or any security therefor, or to provide
funds for the payment or discharge of such obligation (whether in the form of
loans, advances, stock purchases, capital contributions or otherwise), or to
maintain the solvency or any balance sheet or other financial condition of the
obligor of such obligation, or to make payment for any products, materials or
supplies or for any transportation or services regardless of the non-delivery
or non-furnishing thereof, in any such case if the purpose or intent of such
agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected against loss in respect
thereof.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under (i) currency exchange or interest rate swap
agreements, currency exchange or interest rate cap agreements and currency
exchange or interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in currency
exchange or interest rates.
"INTEREST PAYMENT DATE" shall mean June 30 and December 31 of each
year, commencing June 30, 1997.
505298\0057\02050\969WL85X.NPA
10
"INVESTMENTS" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the form of loans
(including guarantees), advances or capital contributions (excluding advances
to customers, commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions of securities issued by any other Person and investments that are
required by GAAP to be classified on the balance sheet of the Company in the
same manner as the other investments included in this definition to the extent
such transactions involve the transfer of cash or other property. For purposes
of the definition of "Unrestricted Subsidiary" and the covenant contained in
Section 6.10, (i) "Investments" shall include the portion (proportionate to
the Company's equity interest in such Subsidiary) of the fair market value of
the net assets of a Subsidiary of the Company at the time that such Subsidiary
is designated an Unrestricted Subsidiary; PROVIDED, HOWEVER, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall
be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary equal to the amount (if positive) equal to (x) the Company's
Investment in such Subsidiary at the time of such redesignation less (y) the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of such Subsidiary at the time of such
redesignation; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair value at the time of such transfer, in
each case as determined in good faith by the Board of Directors.
"LIEN" shall mean, as to any Person, any mortgage, lien, pledge,
adverse claim, charge, security interest or other encumbrance in or on, 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 with respect to, any property or asset owned or held by such
Person, or the signing or filing of a financing statement which names such
Person as debtor, or the signing of any security agreement authorizing any
other party as the secured party thereunder to file any financing statement.
For the purposes of this Agreement, a Person shall be deemed to be the owner
of any assets which it has placed in trust for the benefit of the holders of
Debt of such Person and such trust shall be deemed to be a Lien if such Debt
is deemed to be extinguished under GAAP but such Person remains legally liable
therefor.
"MOODY'S" means Xxxxx'x Investors Service, Inc.
"MULTIEMPLOYER PLAN" shall mean any Plan which is a "multiemployer
plan" (as such term is defined in Section 4001(a)(3) of ERISA).
"NET INCOME" of any Person shall mean, for any period, such Person's
after-tax net income determined in accordance with GAAP.
"NET PROCEEDS" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale,
net of the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and brokerage and
sales commissions), and any relocation expenses incurred as a result thereof,
taxes paid or payable as a result thereof (after taking into account any
available tax
505298\0057\02050\969WL85X.NPA
credits or deductions and any tax sharing arrangements), amounts required to
be applied to the repayment of principal, premium (if any) and interest on
Indebtedness required (other than required by clause (i) of Section 6.19(b))
to be paid as a result of such transaction and any deduction of appropriate
amounts to be provided by the Company as a reserve in accordance with GAAP
against any liabilities associated with the asset disposed of in such
transaction and retained by the Company after such sale or other disposition
thereof, including, without limitation, pension and other post-employment
benefit liabilities and liabilities related to environmental matters or
against any indemnification obligations associated with such transaction.
"NEWCO" shall mean JEH Acquisition Corporation, a corporation
organized and existing under the laws of the State of Georgia and a
wholly-owned subsidiary of the Company.
"NONVOTING STOCK" shall mean the Company's non-voting,
non-convertible Class C Preferred Stock and the Company's non-voting,
non-convertible Class F Preferred Stock, each par value $.01 per share.
"NOTEHOLDERS" or "HOLDERS" shall mean the registered holders from
time to time of the Notes.
"NOTES" shall mean (a) the Company's $8,000,000 aggregate principal
amount of Subordinated Notes originally issued hereunder or (b) any Subsequent
Notes issued hereunder, each substantially in the form of Exhibit A hereto, or
any note delivered in substitution or exchange for any such Note.
"OBLIGATIONS" means any principal, interest, premium, penalties,
fees, expenses, indemnification, reimbursements (including, without
limitation, reimbursement obligations with respect to letters of credit and
bankers' acceptances), damages and other liabilities payable under the
documentation governing any Debt.
"OFFICERS' CERTIFICATE" shall mean for any Person a certificate
executed on behalf of such Person by the Chairman of the Board or its
President or one of its Vice Presidents and its Chief Financial Officer.
"ORIGINAL NOTES" shall have the meaning ascribed to such term in
Section 5.1(a).
"PARI PASSU INDEBTEDNESS" means (a) with respect to the Notes, Debt
which ranks pari passu in right of payment to the Notes and (b) with respect
to the Subsidiary Guaranty Agreement, Debt which ranks pari passu in right of
payment to such Subsidiary Guaranty Agreement.
"PARIBAS PRINCIPAL, INC." means Paribas Principal, Inc.
505298\0057\02050\969WL85X.NPA
12
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
governmental authority succeeding to any of its functions.
"PERMITTED BUSINESS" shall mean a line of business in which the
Company is engaged on the Closing Date and reasonably related extensions
thereof.
"PERMITTED INVESTMENTS" means (a) any Investment in the Company or
any Restricted Subsidiary that in each case is a Permitted Business; (b) any
Investment in cash and Cash Equivalents; (c) any Investment by the Company or
any Restricted Subsidiary of the Company in a Person that is a Permitted
Business if as a result of such Investment (i) such Person becomes a
Restricted Subsidiary of the Company or (ii) such Person, in one transaction
or a series of related transactions, is merged, consolidated or amalgamated
with or into, or transfers or conveys substantially all of its assets to, or
is liquidated into, the Company or a Restricted Subsidiary of the Company; (d)
any Investment in securities or other assets not constituting cash or Cash
Equivalents and received in connection with an Asset Sale made pursuant to the
provisions of Section 6.18 or any other disposition of assets not constituting
an Asset Sale; (e) any Investment existing on the Closing Date; (f) any
Investment by Restricted Subsidiaries in other Restricted Subsidiaries and
Investments by Subsidiaries that are not Restricted Subsidiaries in other
Subsidiaries that are not Restricted Subsidiaries; (g) advances to employees
not in excess of $750,000 outstanding at any one time; (h) any Investment
acquired by the Company or any of its Restricted Subsidiaries (i) in exchange
for any other Investment or accounts receivable held by the Company or any
such Restricted Subsidiary in connection with or as a result of a bankruptcy,
workout, reorganization or recapitalization of the issuer of such other
Investment or accounts receivable or (ii) as a result of a foreclosure by the
Company or any of its Restricted Subsidiaries with respect to any secured
Investment or other transfer of title with respect to any secured Investment
in default; (i) Hedging Obligations; (j) loans and advances to officers,
directors and employees for business-related travel expenses, moving expenses
and other similar expenses, in each case incurred in the ordinary course of
business; and (k) Investments the payment for which consists exclusively of
Equity Interests (exclusive of Disqualified Stock) of the Company.
"PERSON" shall mean any individual, corporation, partnership, trust,
joint venture, unincorporated association or other enterprise or any
government or any agency, instrumentality or political subdivision thereof.
"PLAN" shall mean an "employee pension benefit plan" (as defined in
Section 3 of ERISA).
"PREFERENCE STOCK" shall mean with respect to any Person any shares
of such Person which shall be entitled to preference or priority over any
other shares of such Person in respect of either the payment of dividends or
the distribution of assets upon liquidation or both.
505298\0057\02050\969WL85X.NPA
12
"PREFERRED STOCK" shall mean the Company's non-voting,
non-convertible Class C Preferred Stock and the Company's non-voting,
non-convertible Class F Preferred Stock, each par value $.01 per share.
"PURCHASERS" shall mean the Purchasers listed on the signature pages
hereto.
"RELATED PERSON" shall mean any corporation or trade or business
that is a member of the same controlled group of corporations (within the
meaning of section 414(b) of the Code) as the Company or is under common
control (within the meaning of section 414(c) of the Code) with the Company or
is a member of any affiliated service group (within the meaning of section
414(m) of the Code) which includes the Company or is otherwise treated as part
of the controlled group which includes the Company (within the meaning of
section 414(o) of the Code).
"REIMBURSEMENT OBLIGATIONS" shall mean, at any time, the aggregate
of the obligations of the Company to the Senior Lenders and the Agent Bank in
respect of all unreimbursed payments or disbursements made by the Lenders and
the Agent under or in respect of any letters of credit issued pursuant to the
Credit Agreement.
"REPORTABLE EVENT" means an event described in Section 4043(c) of
ERISA with respect to a Plan that is subject to Title IV of ERISA other than
those events as to which the 30-day notice period is waived under subsection
.13, .14, .16, .18, .19 or .20 of PBGC Regulation Section 4043.
"REQUIRED HOLDERS" shall mean, at any time, Noteholders of at least
50.1% of the aggregate principal amount of the Notes then outstanding.
"REQUIRED LENDERS" shall mean the "Required Banks" under the Credit
Agreement.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" shall mean any Subsidiary of the Company
which is not an Unrestricted Subsidiary; PROVIDED, HOWEVER, that upon the
occurrence of any Unrestricted Subsidiary ceasing to be an Unrestricted
Subsidiary, such Subsidiary shall be included in the definition of "Restricted
Subsidiary."
"RESTRICTED PAYMENT" shall have the meaning set forth in Section
6.10.
"REVOLVING CREDIT COMMITMENT" shall mean the obligation of the
Senior Lenders to make Revolving Credit Loans and issue Facility Letters of
Credit under the Credit Agreement.
"REVOLVING CREDIT LOANS" shall mean the revolving credit loans made
pursuant to the Credit Agreement.
505298\0057\02050\969WL85X.NPA
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time.
"SECURITY AGREEMENT" shall have the meaning ascribed to such term in
the Credit Agreement.
"SECURITY DOCUMENTS" shall have the meaning ascribed to such term in
the Credit Agreement.
"SENIOR INDEBTEDNESS" shall mean, without duplication, (i) all
Obligations of the Company at any time payable under or in respect of, the
Credit Agreement; (ii) all Debt and other obligations of the Company permitted
to be incurred by the Company under the terms of this Agreement, unless the
instrument under which such Debt is incurred expressly provides that it is on
a parity with or subordinated in right of payment to the Notes; and (iii)
post-petition interest accruing on Indebtedness under (i) and (ii) above, at
the applicable contract rate (including the default rate), after the filing of
a petition initiating any bankruptcy, insolvency or similar proceeding,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding. Notwithstanding the foregoing, the term Senior Indebtedness
shall not include (a) Debt of the Company which, when incurred and without
respect to any election under Section 1111(b) of Xxxxx 00, Xxxxxx Xxxxxx Code,
was without recourse to the Company, (b) any Debt of the Company to an
Affiliate of the Company (including Subsidiaries), (c) any Debt of the Company
incurred in violation of this Agreement, (d) Debt to any officer, director or
employee of the Company, (e) Trade Payables, (f) Debt evidenced by the Notes,
(g) Capital Stock of the Company, (h) any liability for federal, state, or
other taxes owed or owing by the Company and (i) any Debt, guarantee or
obligation of the Company which is subordinate or junior in right to any other
Debt, guarantee or obligation of the Company.
"SENIOR LENDERS" shall mean each of the banks or financial
institutions which have commitments or outstanding amounts under the Credit
Agreement.
"SENIOR LOANS" shall have the meaning ascribed to "Loans" under the
Credit Agreement.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the Closing Date.
"SOLVENT" shall 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 saleable value of
the assets of such Person is not less than the amount that will be required to
pay the probable liabilities of such Person on its debts as they become
absolute
505298\0057\02050\969WL85X.NPA
15
and matured, (c) such Person is able to realize upon its assets and pay its
debts and other liabilities, contingent obligations and other commitments as
they mature in the normal course of business, (d) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (e) such
Person is not engaged in a business or a transaction, and is not about to
engage in a business or transaction, for which such Person's property would
constitute unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which such Person is engaged.
"SOUTHERN" shall mean X.X. Xxxxxx Inc. of Georgia, a Georgia
corporation, and its successors.
"SOUTHERN FINANCIAL STATEMENTS" shall have the meaning ascribed to
such term in Section 3.5(a).
"SPECIFIED SENIOR INDEBTEDNESS" shall mean all Senior Indebtedness
from time to time outstanding under the Credit Agreement.
"SUBORDINATED INDEBTEDNESS" means any Debt of the Company which is
by its terms subordinated in right of payment to the Notes.
"S&P" means Standard and Poor's Ratings Group.
"SUBORDINATED OBLIGATIONS" shall mean all Obligations payable under
the documentation governing the Notes, including, without limitation, any
amounts received upon the exercise of rights of recision or other rights of
action (including claims for damages) or otherwise, to the extent relating to
the purchase price of the Notes.
"SUBSEQUENT NOTES" shall have the meaning ascribed to such term in
Section 7.3(c).
"SUBSIDIARY" shall mean, with respect to any Person, any
corporation, association, partnership, joint venture, joint adventure or other
business entity whether now existing or hereafter organized or acquired in
which such Person or one or more Subsidiaries of such Person owns sufficient
voting securities to enable it or them (as a group) ordinarily, in the absence
of contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity.
"SUBSIDIARY GUARANTORS" shall mean the Subsidiaries of the Company
from time to time parties to the Subsidiary Guaranty Agreement and their
respective successors.
"SUBSIDIARY GUARANTY AGREEMENT" shall mean the Subsidiary Guaranty
Agreement dated as of November 1 , 1996 among the Subsidiary Guarantors and
the Purchasers listed on the signature pages thereto, substantially in the
form of Exhibit B hereto.
505298\0057\02050\969WL85X.NPA
"TRADE PAYABLES" shall mean accounts payable or any other
indebtedness or monetary obligations to trade creditors created or assumed by
the Company or any Subsidiary of the Company in the ordinary course of
business in connection with the obtaining of materials or services.
"TRANSACTIONS" means the transactions contemplated by the Basic
Documents.
"UNFUNDED CURRENT LIABILITY" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits
under the Plan as of the close of its most recent plan year exceeds the fair
market value of the assets allocable thereto, each determined in accordance
with Statement of Financial Accounting Standards No. 87, based upon the
actuarial assumptions used by the Plan's actuary in the most recent annual
valuation of the plan.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of the Company
which at the time of determination is an Unrestricted Subsidiary (as
designated by the Board of Directors of the Company, as provided below) and
(ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of
the Company may designate any Subsidiary of the Company (including any
Subsidiary and any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary unless such subsidiary owns any Equity Interests of,
or owns, or holds any Lien on, any property of, any Subsidiary of the Company
(other than any Subsidiary of the Subsidiary to be so designated), provided
that (a) any Unrestricted Subsidiary must be an entity of which shares of the
capital stock or other equity interests (including partnership interests)
entitled to cast at least a majority of the votes that may be cast by all
shares or equity interests having ordinary voting power for the election of
directors or other governing body are owned, directly or indirectly, by the
Company, (b) the Company certifies that such designation complies with Section
6.10 and (c) each of (I) the Subsidiary to be so designated and (II) its
Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to any Debt pursuant to which the lender has
recourse to any of the assets of the Company or any of its Restricted
Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; provided that, immediately after giving effect
to such designation, the Company could incur at least $1.00 of additional Debt
pursuant to the Fixed Charge Coverage Ratio test described under Section 6.10
on a pro forma basis taking into account such designation.
"VOTING STOCK" means stock of the class or classes pursuant to which
the holders hereof have the general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers or trustees
of a corporation (irrespective of whether or not at the time stock of any
other class or classes shall have or might have voting power by reason of the
happening of any contingency).
"WARRANTS" shall mean (a) the Warrant, dated as of November 1, 1996,
between the Company and CVCA and (b) the Warrant, dated as of November 1,
1996, between the Company and Paribas Principal, Inc., each substantially in
the form of Exhibit B hereto, and any Warrants issued upon transfer, division
or combination thereof, or in substitution therefor.
505298\0057\02050\969WL85X.NPA
17
"WARRANTHOLDER" shall mean any person holding a Warrant.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Debt
or Disqualified Stock, as the case may be, at any date, the number of years
obtained by dividing (a) the sum of the products obtained by multiplying (x)
the amount of each then remaining installment, sinking fund, serial maturity
or other required payments of principal, including payment at final maturity,
in respect thereof, by (y) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment, by (b) the then outstanding principal amount or liquidation
preference, as applicable, of such Debt or Disqualified Stock, as the case may
be.
"WHOLLY-OWNED" shall mean, as applied to any Subsidiary, a
Subsidiary all the outstanding shares (other than directors' qualifying
shares, if required by law) of every class of stock of which are at the time
owned by the Company or by one of the Wholly-Owned Subsidiaries or by the
Company and one or more Wholly-Owned Subsidiaries.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" is any Wholly Owned Subsidiary
that is a Restricted Subsidiary.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such
Person 95% of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person and one
or more Wholly Owned Subsidiaries of such Person.
SECTION 1.2. ACCOUNTING TERMS AND DETERMINATIONS. (a) Except as
otherwise expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Noteholders hereunder shall
(unless otherwise disclosed to the Noteholders in writing at the time of
delivery thereof in the manner described in paragraph (b) below) be prepared,
in accordance with GAAP. All calculations made for the purposes of determining
compliance with the provisions of this Agreement shall (except as otherwise
expressly provided herein) be made by application of GAAP applied on a basis
consistent with those used in the preparation of the financial statements
furnished to the Noteholders pursuant to Section 6.1 hereof (or at any time
prior to the delivery of the initial such financial statements, consistent
with those in effect on the date hereof).
(b) To enable the ready and consistent determination of compliance
with the covenants set forth herein, unless otherwise required by law, the
Company will not change the last day of its Fiscal Year, or its Fiscal
Quarters as defined herein.
ARTICLE II
PURCHASE AND SALE OF NOTES AND WARRANTS
505298\0057\02050\969WL85X.NPA
18
SECTION 2.1. COMMITMENTS TO PURCHASE NOTES. (a) Upon the basis of
the representations and warranties herein contained of each Purchaser, but
subject to the terms and conditions hereinafter stated, the Company agrees to
issue and sell to each Purchaser listed on the signature pages hereto and each
Purchaser, upon the basis of the representations and warranties herein
contained of the Company, but subject to the terms and conditions hereinafter
stated, agrees severally but not jointly, to purchase from the Company the
principal amount of Notes and set forth below such Purchaser's name on the
signature pages hereof.
(b) The purchase price for the Notes shall, in the case of each
Purchaser, be the principal amount of Notes being purchased by such Purchaser.
SECTION 2.2. COMMITMENTS TO WARRANTS. Upon the basis of the
representations and warranties herein contained of each Purchaser, but subject
to the terms and conditions hereinafter stated, the Company agrees to issue to
each Purchaser listed on the signature pages hereto the Warrants for the
number of shares set forth below such Purchaser's name on the signature pages
hereof.
SECTION 2.3. THE CLOSING. (a) The purchases and sales of the Notes
and the issuance of the Warrants will both take place at a closing (the
"Closing") at the offices of White & Case, 1155 Avenue of the Americas, New
York, New York, at 9:00 a.m., New York City time on November 1, 1996 or on
such other Business Day thereafter as agreed upon by the Company and the
Purchasers. The Company shall notify the Purchasers of the date and time of
the Closing not less than two Business Days prior to the date thereof (or
within such other time period as the parties hereto may agree). The date and
time of Closing are referred to herein as the "Closing Date."
(b) Each Purchaser shall, not later than the Closing Date, deliver
to the Company in immediately available funds an amount equal to the aggregate
purchase price of the Notes being purchased by such Purchaser from the
Company.
(c) At the Closing, the Company shall deliver to each Purchaser, (a)
the Warrants (b) against payment of the purchase price therefor Notes in
definitive form and registered in such names and in such denominations as such
Purchaser shall have requested not later than one Business Day prior to the
Closing Date. The authorized denominations for the Notes are $1,000,000 and
any larger multiple of $100,000.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to each Purchaser that as
of the date hereof and after giving effect to the Acquisition and the other
transactions contemplated hereby and thereby:
505298\0057\02050\969WL85X.NPA
19
SECTION 3.1. INCORPORATION, STANDING, ETC. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority (i) to own and operate its properties, (ii) to carry on its business
as now conducted and as proposed to be conducted following the Acquisition,
(iii) to enter into the this Agreement, the Acquisition Agreement and the
Subsidiary Guarantee Agreement, (iv) to issue and sell the Notes, (v) to issue
the Warrants and (vi) to carry out the terms of the Basic Documents.
SECTION 3.2. CAPITALIZATION; OWNERSHIP. Immediately following the
Acquisition, the authorized capital stock of the Company will consist of (i)
25,000,000 shares of Common Stock, of which (a) 9,315,634 shares (including
1,000,000 shares issued in connection with the Acquisition) will be
outstanding and validly issued, fully paid and nonassessable, (b) 1,600,000
shares will be reserved for issuance upon exercise of the Warrants, (c)
480,000 shares will be reserved for issuance upon the exercise of options
granted under the Company's 1991 Stock Option Plan at an exercise price of the
market price of Common Stock as of the date hereof, (d) 100,000 shares will be
reserved for issuance upon the exercise of options granted to the Company's
management under the Company's 1991 Stock Option Plan at an exercise price of
the market price of Common Stock as of the date hereof, (e) 153,945 shares
will be reserved for issuance upon the exercise of warrants exercisable
through December 31, 2001 at a price of $4.16 per share, (f) 322,699 shares
will be reserved for issuance upon the exercise of warrants exercisable
through December 31, 2001 at a price of $7.65 per share, (g) 773,950 shares
will be reserved for issuance upon the exercise of options granted under the
Company's 1991 Stock Option Plan at prices ranging from $2.75 to $12.25 per
share, (h) 113,750 shares will be reserved for issuance upon the exercise of
options granted under the Company's 1993 Non-Employee Directors Stock Option
Plan at prices ranging from $3.00 to $6.00 per share and (i) 70,000 shares
will be reserved for issuance upon the exercise of non-qualified options
granted other than pursuant to the Company's 1991 Stock Option Plan or the
Parent's 1993 Non-Employee Directors Stock Option Plan and exercisable at
prices ranging from $3.00 to $12.00 per share; (ii) 300 shares of Class C
Preferred Stock, par value $.01 per share, of which 300 shares will be
outstanding and validly issued to the Persons listed in Schedule 3.2 hereto
and will be fully paid and nonassessable and (iii) 100,000 shares of Class F
Preferred Stock, par value $.01 per share, of which no shares will be
outstanding. Schedule 3.2 hereto lists the Persons who will hold more than 5%
of any class of such capital stock immediately following the Acquisition.
Except as set forth above, no shares of capital stock or other equity
securities of the Company are issued, reserved for issuance or outstanding.
All outstanding shares of capital stock of the Company are, and all shares
which may be issued pursuant to the Company's stock option plans in existence
on the date hereof will be, when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights. Except as
set forth above, there are no outstanding bonds, debentures, notes or other
indebtedness or other securities of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which shareholders of the Company may vote. Except as set forth
above, there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Company or any of its subsidiaries is a party or by which any of them is bound
obligating the Company or any of its subsidiaries to issue, deliver or sell,
or cause to be issued, delivered or sold,
505298\0057\02050\969WL85X.NPA
20
additional shares of capital stock or other equity or voting securities of the
Company or of any of its subsidiaries or obligating the Company or any of its
subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking.
SECTION 3.3. SUBSIDIARIES. Schedule 3.3 correctly lists as to each
Subsidiary of the Company (a) its name, (b) the jurisdiction of its
incorporation, (c) the percentage of its issued and outstanding shares owned
by the Company or another such Subsidiary (specifying such other Subsidiary),
and (d) whether it is a Restricted Subsidiary of the Company. Each such
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has all
requisite corporate power and authority to own and operate its properties and
to carry on its business as now conducted and as proposed to be conducted
following the Acquisition and to enter into the Subsidiary Guaranty Agreement
to which such Subsidiary is a party. All the outstanding shares of capital
stock of each Subsidiary of the Company are validly issued, fully paid and
nonassessable, and all such shares indicated in Schedule 3.3 as owned by the
Company or by any other such Subsidiary are so owned beneficially and of
record by the Company or by such other Subsidiary free and clear of any Lien
except as contemplated hereby. The income of Hanger Europe N.V. during its
previous fiscal year represented less than 5% of the Consolidated Net Income
of the Company.
SECTION 3.4. QUALIFICATION. Each of the Company and its Subsidiaries
is duly qualified and in good standing as a foreign corporation authorized to
do business in each jurisdiction (other than the jurisdiction of its
incorporation) in which its ownership, lease or operation of property or the
conduct of its business as now conducted and as proposed to be conducted
following the Acquisition require such qualification, except those
jurisdictions in which the failure of the Company or such Subsidiary so to
qualify would not, individually or in the aggregate, have a material adverse
effect on the business, operations, affairs, condition, properties or
prospects of the Company or such Subsidiary.
SECTION 3.5. BUSINESS AND FINANCIAL STATEMENTS. (a) Southern has
delivered to the Purchasers complete and correct copies of (i) the audited
balance sheets of Southern as of December 31, 1994 and December 31, 1995 and
the related statements of operations for the Fiscal Years then ended and (ii)
the unaudited historical balance sheet of Southern as of June 30, 1996 and the
related statements of operations and cash flows for the period then ended
(collectively, the "SOUTHERN FINANCIAL STATEMENTS"). Except as disclosed on
Schedule 3.5, to the best knowledge of the Company, the Southern Financial
Statements have been prepared in accordance with GAAP (except as otherwise
specified therein) applied on a consistent basis throughout the periods
specified and present fairly the financial position, results of operations and
cash flows, of Southern as of the respective dates and for the respective
periods specified. The Company Projections are based on good faith estimates
and assumptions which the management of the Company and Southern believe to be
reasonable. In preparing the Company Projections, such estimates and
assumptions have been applied in a consistent manner.
505298\0057\02050\969WL85X.NPA
21
(b) The Company has delivered to the Purchasers complete and correct
copies of (i) the audited balance sheets of the Company as of December 31,
1994 and December 31, 1995 and the related statement of operations and cash
flows for the Fiscal Years then ended and (ii) the unaudited historical
balance sheets of the Company as of March 31, 1996 and June 30, 1996 and the
related statement of operations and cash flows for the period then ended
(collectively, the "COMPANY FINANCIAL STATEMENTS"). Except as disclosed on
Schedule 3.5, to the best knowledge of the Company, the Company Financial
Statements have been prepared in accordance with GAAP (except as otherwise
specified therein) applied on a consistent basis throughout the periods
specified and present fairly the financial position, results of operations and
cash flows, of the Company as of the respective dates and for the respective
periods specified.
(c) The pro forma financial statements of the Company and its
subsidiaries included in the Company's Information Memorandum, dated as of
October 17, 1996, relating to the Transactions, present fairly the information
shown therein, have been prepared in accordance with the SEC's rules and
guidelines with respect to pro forma financial statements and have been
properly compiled on the bases described therein, and the assumptions used in
the preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein.
SECTION 3.6. CHANGES, ETC. (a) Since June 30, 1996, there has been
no change in the business, operations, affairs, condition, properties or
prospects of the Company and its Subsidiaries which has been materially
adverse to the Company and its Subsidiaries, other than such changes as are
contemplated by or disclosed herein. To the best knowledge of the Company,
after reasonable inquiry and review, since June 30, 1996, there has been no
change in the business, operations, affairs, conditions, properties or
prospects of the Company and its Subsidiaries which has been materially
adverse to the Company and its Subsidiaries, other than such changes as are
contemplated by or disclosed herein.
SECTION 3.7. TAX RETURNS AND PAYMENTS. Each of the Company and its
Subsidiaries and, to the best knowledge of the Company, Southern and its
Subsidiaries has filed all tax returns required by law to be filed by them and
have paid all taxes, assessments and other governmental charges levied upon
each of the Company, Southern and their respective Subsidiaries or any of
their respective properties, assets, income or franchises which are due and
payable. There are no tax liens upon any assets of each of the Company and
Southern and their respective Subsidiaries except for statutory liens for
taxes accruing but not yet due and payable. The charges, accruals and reserves
on the books of the Company, Southern and their respective Subsidiaries in
respect of federal, state or other income taxes for all fiscal periods are
adequate in all material respects, and the Company does not know of any unpaid
assessment for additional federal, state or other income taxes for any period
or any basis for any such assessment.
SECTION 3.8. DEBT. Schedule 3.8 correctly summarizes, as of the date
hereof, all Debt (other than the Notes and the Debt issued under the Credit
Agreement) of the Company and its Subsidiaries (including Southern and its
Subsidiaries) (a) outstanding, or proposed to be outstanding at the Closing
and after giving effect to the Acquisition and the
505298\0057\02050\969WL85X.NPA
22
other transactions contemplated thereby and hereby, or (b) for which the
Company and any of its Subsidiaries has commitments, or will have commitments
at the Closing and after giving effect to the Acquisition and the other
transactions contemplated thereby and hereby. As of the date hereof and after
giving effect to the Acquisition and the other transactions contemplated
thereby and hereby, neither the Company nor any of its Subsidiaries will be in
default with respect to any Debt or any instrument or agreement relating
thereto, and no instrument or agreement applicable to or binding on the
Company or such Subsidiary will contain any restriction on the incurrence by
the Company or any such Subsidiary of Debt except this Agreement and the
Credit Agreement.
SECTION 3.9. TITLE TO PROPERTIES; LIENS. The Company and each
Subsidiary of the Company will have good and, in the case of real property,
marketable title to all property necessary to the conduct of its business, and
none of such properties or assets will be subject to any Liens except such as
are permitted by Section 6.12. At the time of Closing and after giving effect
to the Acquisition, the Company and each Subsidiary of the Company will enjoy
peaceful and undisturbed possession under all leases of real property on which
facilities owned or operated by them are situated, and all such leases will be
valid and subsisting and in full force and effect and no default on the part
of the Company or any Subsidiary of the Company shall exist thereunder. Except
to perfect security interests of the character permitted by Section 6.12, at
the time of the Closing and after giving effect to the Acquisition and the
other transactions contemplated hereby, (i) except as described in Schedule
3.9, no presently effective financing statement under the Uniform Commercial
Code which names the Company or any Subsidiary of the Company as debtor or
lessee will be on file in any jurisdiction in which the Company or any
Subsidiary of the Company will own or lease real property or in which the
inventory of the Company or any Subsidiary of the Company will be located
after the Acquisition or, to the Company's best knowledge, in any other
jurisdiction, except financing statements in respect of Liens which will be
discharged prior to or concurrently with the Acquisition, and (ii) except as
described in Schedule 3.9, neither the Company nor any Subsidiary of the
Company has signed any presently effective financing statement or any
presently effective security agreement authorizing any secured party
thereunder to file any such financing statement.
SECTION 3.10. LITIGATION. Except as described in Schedule 3.10 there
is no action or proceeding pending or, to the knowledge of the Company,
threatened (or any basis therefor known to the Company) or to the best
knowledge of the Company, any investigation which questions the validity of
the Basic Documents, or any action taken or to be taken pursuant to the Basic
Documents, or which is reasonably likely to result, either in any case or in
the aggregate, in any adverse change in the business, operations, condition,
properties or prospects of the Company and its Subsidiaries, taken as a whole,
or in any material liability on the part of the Company or any Subsidiary of
the Company.
SECTION 3.11. COMPLIANCE WITH OTHER INSTRUMENTS. (a) Neither the
execution, delivery or performance by the Company, Southern or any of their
Subsidiaries of any the Basic Documents to which any of them are a party, nor
compliance by any of them with the terms and provisions thereof, (i) will
contravene any provision of any applicable law, statute, rule or regulation or
any order, writ, injunction or decree of any court or
505298\0057\02050\969WL85X.NPA
23
governmental instrumentality, (ii) will conflict with or result in any breach
of any of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition or (or the obligation
to create or impose) any Lien (except pursuant to the Credit Agreement) upon
any of the property or assets of the Company, Southern or any of their
Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust,
credit agreement or loan agreement, or any other agreement, contract or
instrument to which the Company, Southern or their Subsidiaries is a party or
by which it or any of their property or assets is bound or to which they my be
subject or (iii) will violate any provision of the Certificate of
Incorporation of By-Laws (or similar organizational documents) of the Company,
Southern or any of their Subsidiaries.
(b) On the date hereof and after giving effect to the Acquisition
and the other transactions contemplated hereby, neither the Company nor any
Subsidiary of the Company will be in violation of any term of any agreement or
instrument to which it is a party or by which it is bound, or any applicable
law, ordinance, rule or regulation of any governmental authority, or of any
applicable order, judgment or decree of any court, arbitrator or governmental
authority (including, without limitation, any such law, ordinance, rule,
regulation, order, judgment or decree relating to environmental protection and
pollution control, occupational health and safety requirements), the
consequence of any of which violation is reasonably likely to have a material
adverse effect on the business, operations, condition, properties or prospects
of the Company and its Subsidiaries taken as a whole. Neither the execution,
delivery and performance of the Basic Documents nor the consummation of the
Acquisition and the other transactions contemplated hereby or thereby will
result in any violation of or be in conflict with or constitute a default
under any such term or result in the creation of (or impose any obligation on
the Company or any of its Subsidiaries to create) any Lien upon any of the
properties of the Company or any of its Subsidiaries pursuant to any such term
other than the Security Documents; and there are no such terms which, either
in any case or in the aggregate, materially adversely affect, or in the future
is reasonably likely to materially adversely affect, the business, operations,
condition, properties or prospects of the Company and its Subsidiaries taken
as a whole.
SECTION 3.12. GOVERNMENTAL CONSENTS. Except as disclosed in Schedule
3.12, no consent, approval or authorization of, or declaration or filing with,
any governmental authority on the part of the Company or any of its
Subsidiaries is required for the valid execution and delivery of the Basic
Documents, or the consummation of the Acquisition and the other transactions
contemplated thereby or hereby, or the valid offer, issue, sale and delivery
of the Notes pursuant hereto.
SECTION 3.13. PERMITS, PATENTS, TRADEMARKS, ETC. (a) The Company,
together with its Subsidiaries, has a license to use or otherwise has the
right to use, free and clear of pending or threatened Liens, all the material
patents, patent applications, trademarks, service marks, trade names, trade
secrets, copyrights, proprietary information, computer programs, data bases,
licenses, franchises and formulas, or rights with respect to the foregoing
(collectively, "Intellectual Property"), and has obtained all licenses and
other rights of whatever nature, necessary for the present conduct of its
business, without any known conflict with the rights of others which, or the
failure to obtain which, as the case may be, could
505298\0057\02050\969WL85X.NPA
24
reasonably be expected to have a material adverse effect on the performance,
business, assets, nature of assets, liabilities, operations, properties,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries taken as a whole.
(b) The Company, together with its Subsidiaries, has the right to
practice under and use all Intellectual Property used in connection with
Southern which Southern had a right to practice under and use immediately
prior to the Acquisition.
(c) Neither the Company nor any of its Subsidiaries has knowledge of
any claim by any third party contesting the validity, enforceability, use or
ownership of the Intellectual Property, or of any existing state of facts that
would support a claim that use by the Company or any of its Subsidiaries of
any such Intellectual Property has infringed or otherwise violated any
Intellectual Property right of any other Person and that to the best knowledge
of the Company and its Subsidiaries no claim is threatened except for such
claims that could not individually or in the aggregate reasonably be expected
to have a material adverse effect on the performance, business, assets, nature
of assets, liabilities, operations, properties, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries taken as a whole.
SECTION 3.14. REPRESENTATIONS IN ACQUISITION AGREEMENT. To the best
knowledge of the Company, the representations and warranties made in and
pursuant to the Acquisition Agreement by Southern were true and correct in all
material respects when made, are true and correct in all material respects as
of the date hereof, and will be true and correct in all material respects as
of the Closing, and such representations and warranties made by Southern are
hereby incorporated herein by reference with the same effect as though set
forth herein in their entirety.
SECTION 3.15. OFFER OF NOTES. Neither the Company nor any Person
acting on its behalf has directly or indirectly offered the Notes or any part
thereof 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, anyone other than the Purchasers. Neither the Company nor any Person
acting on its behalf has taken or will take any action which would subject the
issuance and sale of the Notes to the provisions of Section 5 of the
Securities Act, or to the provisions of any state securities law requiring
registration of securities, notification of the issuance or sale thereof or
confirmation of the availability of any exemption from such registration.
SECTION 3.16. FEDERAL RESERVE REGULATIONS. Neither the Company nor
any of its Subsidiaries will, directly or indirectly, use any of the proceeds
of the sale of the Notes or the Warrants, as the case may be, for the purpose,
whether immediate, incidental or ultimate, of buying any "margin stock" or of
maintaining, reducing or retiring any Debt originally incurred to purchase a
stock that is currently any "margin stock", or for any other purpose which
might constitute this transaction a "purpose credit", in each case within the
meaning of Regulation G of the Board of Governors of the Federal Reserve
System (12 C.F.R. 207, as amended), or Regulation U of such board (12 C.F.R.
221, as amended), or otherwise take or permit to be taken any action which
would involve a violation of such
505298\0057\02050\969WL85X.NPA
25
Regulation G or Regulation U or of Regulation T (12 C.F.R. 220, as amended) or
Regulation X (12 C.F.R. 224, as amended) or any other regulation of such
board. No Debt being reduced or retired out of the proceeds of the sale of the
Notes or the Warrants, as the case may be, was incurred for the purpose of
purchasing or carrying any such "margin stock", and neither the Company nor
any of its Subsidiaries owns or has any present intention of acquiring any
such "margin stock."
SECTION 3.17. STATUS UNDER CERTAIN FEDERAL STATUTES. The Company is
not (a) a "holding company" or a "subsidiary company" of a "holding company",
or an "affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended, (b) a "public utility", as such term is
defined in the Federal Power Act, as amended, or (c) an "investment company",
or a company "controlled" by an "investment company", within the meaning of
the Investment Company Act of 1940, as amended. Neither the Company nor any of
its Subsidiaries is a "rail carrier", or a "person controlled by or affiliated
with a rail carrier", within the meaning of Title 49 U.S.C., and the Company
is not a "carrier" to which 49 U.S.C. ss. 11301(b)(1) is applicable.
SECTION 3.18. COMPLIANCE WITH ERISA. (a) Neither the Company,
Southern nor any of their Subsidiaries has breached the fiduciary rules of
ERISA or engaged in any prohibited transaction with respect to the assets of
any Plan in connection with which the Company, Southern or any of their
Subsidiaries could be subjected to or incur liability in respect of (in the
case of any such breach) a suit for damages or (in the case of any such
prohibited transaction) either a civil penalty assessed under section 502(i)
of ERISA or a tax imposed by section 4975 of this Code, which suit, penalty or
tax, in any case, would be materially adverse to the Company and its
Subsidiaries, taken as a whole.
(b) Neither the Company, Southern nor any Related Person has
incurred nor do any of them expect to incur any liability to the PBGC, other
than for the payment of premiums, or to any Plan, other than for the payment
of contributions in the ordinary course. Each Plan is in compliance in all
material respects with, and has been operated and administered in accordance
with the applicable provisions of, ERISA, the Code and any other applicable
Federal or state law except to the extent the failure to so comply, or to so
operate or administer any such Plan, would not be materially adverse to the
Company and its Subsidiaries, taken as a whole.
(c) Full payment has been timely made of all amounts which the
Company, Southern or any Related Person is required under applicable law, the
terms of each Plan or any applicable collective bargaining agreement to have
paid as contributions to such Plan as of the date hereof and no accumulated
funding deficiency (as defined in section 302 of ERISA or section 412 of the
Code), whether or not waived, has occurred or is expected to occur with
respect to any Plan (other than a Multiemployer Plan or a "multiple employer
Plan"). Neither the Company, Southern nor any Related Person is subject to any
lien arising under ERISA or Section 412(n) of the Code. The present value of
the benefit liabilities (whether or not vested) under each Plan subject to
Title IV of ERISA (other than a Multiemployer Plan or a "multiple employer
Plan") did not exceed the current value of the
505298\0057\02050\969WL85X.NPA
26
assets of such Plan allocable to such benefit liabilities by more than
$100,000 and the aggregate present value of the benefit liabilities under all
Plans subject to Title IV of ERISA (other than Multiemployer Plans and
"multiple employer Plans") did not exceed the current value of the assets of
such Plans, in all cases, determined as of the end of such Plans' most
recently ended plan year on the basis of actuarial assumptions which would be
used in a termination of such Plan. The terms "benefit liabilities" and
"current value" have the respective meanings specified in section 3 or 4001 of
ERISA, as applicable.
(d) Except as set forth in Schedule 3.18, neither the Company,
Southern nor any Related Person is or has ever been obligated to contribute to
any "multiple employer plan" (within the meaning of section 4063 of ERISA) or
to any Multiemployer Plan.
(e) The execution and delivery of this Agreement and the Subsidiary
Guaranty Agreement, and the issue and sale of the Notes hereunder will not
constitute any transaction which is subject to the prohibitions of section 406
of ERISA or in connection with which a tax could be imposed pursuant to
section 4975 of the Code. The representation by the Company in the preceding
sentence is made in reliance upon and subject to the accuracy of the
representation in Section 4.3 as to the source of the funds used to pay the
purchase price of the Notes purchased by the Purchasers.
SECTION 3.19. SOLVENCY. The Company is, and immediately after the
Closing (after giving effect to the Transactions) will be, Solvent.
SECTION 3.20. DISCLOSURE. Neither this Agreement, the Financial
Statements, the Pro Forma Financial Statements nor any other document,
certificate or instrument delivered to you by or on behalf of the Company in
connection with the transactions contemplated hereby, all such information
taken as a whole, contains (in the case of the Southern Financial Statements,
to the best knowledge of the Company) any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading. There is no fact known to the
Company which materially adversely affects or in the future is reasonably
likely to have a material adverse effect on the business, operations,
condition, properties or prospects of the Company and its Subsidiaries, taken
as a whole, which has not been set forth herein or in the other documents,
certificates and instruments delivered to the Purchasers by or on behalf of
the Company specifically for use in connection with the transactions
contemplated hereby.
SECTION 3.21. USE OF PROCEEDS. Subject to Section 12.5, the Company
will apply the proceeds of the sale of the Notes solely to refinance Debt
outstanding under the Existing Loan Documents, pay related fees, commissions
and expenses, finance ongoing working capital requirements and other general
corporate purposes of the Company and its Subsidiaries.
SECTION 3.22. ENVIRONMENTAL COMPLIANCE. Each of the Company and its
Subsidiaries has been complying, and to the best knowledge of the Company,
each of Southern and its Subsidiaries has been complying, since its
incorporation with, and, upon consummation of the Acquisition, will be in
compliance with, all Environmental Laws in each
505298\0057\02050\969WL85X.NPA
27
jurisdiction where it has done business, is presently doing business or will
be doing business after the Acquisition and where the consequence of such
violation would have a material adverse effect on the business, operations,
condition, properties or prospects of the Company and its Subsidiaries taken
as a whole.
SECTION 3.23. NOTE PURCHASE AGREEMENT. This Agreement has been duly
authorized by all necessary corporate action on the part of the Company. This
Agreement has been executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws of general application relating to or affecting the rights and
remedies of creditors and by general principles of equity.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Each Purchaser severally, and not jointly, hereby represents and
warrants to the Company as follows:
SECTION 4.1. PRIVATE PLACEMENT. The Notes to be acquired by such
Purchaser pursuant to this Agreement are being acquired for its own account
and not as nominee or agent for any other Person and not for offer or sale in
any manner that would be in violation of the securities laws of the United
States of America or any state thereof, without prejudice, however, to its
right at all times to sell or otherwise dispose of all or any part of said
Notes under a registration under the Securities Act or under an exemption from
such registration available under such Securities Act. The Purchasers
understand that the Notes have 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 exemption is required
by law, and that the Company is not required to register the Notes.
SECTION 4.2. MARGIN COMPLIANCE. Such Purchaser is not relying,
directly or indirectly, on any "margin stock" (as defined in Regulation G of
the Federal Reserve Board) as collateral for the Notes.
SECTION 4.3. ACCREDITED INVESTOR. Such Purchaser is an "accredited"
investor within the meaning of Regulation D promulgated under the Securities
Act.
SECTION 4.4. SOURCE OF FUNDS. If any part of the funds to be used to
purchase the Notes constitutes assets of any employee benefit plan within the
meaning of Section 3 of ERISA, such Notes are being purchased pursuant to an
available exemption from the provisions of Section 406 of ERISA and Section
4975 of the Code.
505298\0057\02050\969WL85X.NPA
28
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
SECTION 5.1. CONDITIONS TO PURCHASERS' OBLIGATIONS TO PURCHASE
NOTES. The obligation of each Purchaser to purchase the Notes to be purchased
by it hereunder is subject to the satisfaction, at or prior to the Closing
Date, of the following conditions:
(a) NOTES. Such Purchaser shall have received duly executed
certificates representing the Notes being purchased by such
Purchaser pursuant hereto (the "ORIGINAL NOTES").
(b) WARRANTS. Such Purchaser shall have received a duly
executed counterpart of each of the Warrants and the Company shall
have complied with all agreements on its part contained therein and
delivered all documents called for thereunder on or prior to the
Closing Date.
(c) CORPORATE ACTION. Such Purchaser shall have received
certified copies of the charter and by-laws (or equivalent
documents) of the Company and each Subsidiary Guarantor and of all
corporate action taken by the Company and each Subsidiary Guarantor
(including, without limitation, a certificate of the secretary of
the Company and each Subsidiary Guarantor setting forth the
resolutions of its Board of Directors authorizing the transactions
contemplated thereby) authorizing the making and performance of each
of the Basic Documents to which each of the Company and the
Subsidiary Guarantor is a party and (in the case of the Company)
authorizing the issuance of the Notes and the Warrants hereunder.
(d) INCUMBENCY. The Company and each Subsidiary Guarantor shall
have delivered a certificate to each Purchaser in respect of each of
the name and signature of each of the officers (i) who is authorized
to execute on its behalf the Basic Documents to which it is a party
and (ii) who will, until replaced by another officer or officers
duly authorized for that purpose, act as its representative for the
purposes of signing documents and giving notices and other
communications in connection with such Basic Documents (and each
Purchaser may conclusively rely on such certificates until it
receives notice in writing from the Company to the contrary).
(e) ACQUISITION AGREEMENT. The Acquisition Agreement shall have
been duly executed and delivered by the Company, as the case may be,
and the other parties thereto and shall be in full force and effect,
and no term or condition has been amended, modified or waived
without the prior written consent of the Purchasers. Such Purchaser
shall have received copies of the Acquisition Agreement, each as
originally executed and delivered by the parties, together with all
exhibits and schedules thereto, and each agreement, certificate,
opinion of counsel or other writing required under the Acquisition
Agreement to be delivered or filed in connection with the
consummation of the Acquisition on or prior to the date hereof, each
of the foregoing documents certified as complete and correct by the
Company.
505298\0057\02050\969WL85X.NPA
29
(f) ACQUISITION CERTIFICATE. Such Purchaser shall have received
an Officers' Certificate to the effect that: (i) the Acquisition
Agreement as originally executed and delivered by the parties
thereto and delivered to such Purchaser, or any provision thereof,
has not been amended, waived or otherwise modified without the prior
written consent of the Purchasers; and (ii) (x) each of the
conditions precedent to the consummation of the Acquisition
contained in the Acquisition Agreement have been satisfied (or
waived with the prior written consent of the Purchasers), (y) all
governmental and third party authorization, consents, approvals,
exemptions or other actions required in connection with the
Acquisition shall have been duly received or taken; and (z) the
Acquisition has been duly consummated substantially in accordance
with the terms of the Acquisition Agreement.
(g) ADVERSE LITIGATION, ETC. There shall be no suit, action,
investigation, inquiry or other proceeding by any governmental body
or any other Person or any other legal or administrative proceeding
pending or threatened which (a) seeks to enjoin or otherwise prevent
the consummation of, or to recover any damages or obtain relief as a
result of, the Acquisition or the financing thereof or the other
transactions contemplated hereby, or (b) is related to the
Acquisition, this Agreement, the Subsidiary Guaranty Agreement, any
other Basic Document or the Notes and would, in your reasonable
opinion, have a reasonable likelihood of having a material adverse
effect on either of the parties hereto or any of the transactions
contemplated hereby or thereby.
(h) CONSENTS. Except as set forth in Schedule 5.1(h), all
necessary governmental and third party consents and approvals in
connection with the execution, delivery, performance, validity and
enforceability of each of the Basic Documents have been obtained and
are in full force and effect.
(i) INSURANCE. Such Purchaser shall have received an Officer's
Certificate from the Company dated the Closing Date certifying that
insurance with respect to its properties and business complying with
the provisions of Section 6.6 is in full force and effect.
(j) CREDIT AGREEMENT. The Company and the Senior Lenders shall
have entered into the Credit Agreement, the terms and provisions of
which shall be satisfactory to such Purchaser, and such Purchaser
shall have received a copy of the Credit Agreement certified by the
Company as being complete and correct. The Credit Agreement shall be
in full force and effect as on the date hereof, no term or condition
of the Credit Agreement or any other document or agreement delivered
pursuant to the Credit Agreement shall have been amended, modified
or waived without the prior written consent of the Purchasers, and
the Company shall have borrowed such amounts pursuant to the Credit
Agreement (not exceeding $57,000,000, which together with the
proceeds of the sale of the Notes and the Common Stock shall be
sufficient to consummate the Acquisition). The Senior Lenders shall
have confirmed to the Company that (i) the Closing Date (as defined
in the Credit
505298\0057\02050\969WL85X.NPA
30
Agreement) has occurred and (ii) the conditions set forth in Section
5 of the Credit Agreement have been fulfilled to their satisfaction.
(k) CAPITALIZATION. Prior to or concurrently with the Closing,
(i) pursuant to the terms of the Acquisition Agreement, the Company
shall have sold to the shareholders of Southern for cash or the fair
market value of contributed property one million shares of Common
Stock for an aggregate of $5,250,000.
(l) FINANCIAL STATEMENTS. Such Purchaser shall have received
copies of (i) the consolidated pro forma balance sheet and pro forma
five-year financial projections of the Company and its Subsidiaries
as at the Closing Date attached hereto as Schedule 5.1(l) (the
"COMPANY PROJECTIONS") giving effect to the issuance and sale of the
Notes, borrowings under the Credit Agreement, the Acquisition, the
other Transactions and the other transactions contemplated hereby,
which Company Projections, pro forma balance sheets and pro forma
financial projections shall be in form and substance satisfactory to
the Purchasers and (ii) the due diligence report by Coopers &
Xxxxxxx relating to the historical financial statements of Southern
and the pro forma financial statements provided by Southern, in form
and substance satisfactory to the Purchasers.
(m) PAYMENT OF ACQUISITION COSTS. Such Purchaser shall have
received evidence satisfactory to such Purchaser that all
Acquisition Costs required to be paid by the Company on or prior to
the Closing Date shall have been paid.
(n) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of (i) the Company contained or incorporated herein, (ii)
Southern contained or incorporated by reference herein and (iii) of
each Subsidiary Guarantor contained or incorporated in the
Subsidiary Guaranty Agreement and otherwise made in writing by or on
behalf of the Company, Southern or any Subsidiary Guarantor in
connection with the transactions contemplated hereby shall be true
and correct when made and on and as of the Closing Date as if made
on and as of such date.
(o) NO DEFAULT. As of the Closing Date and after giving effect
to the Acquisition and the transactions contemplated by the Basic
Documents, no Default shall have occurred and be continuing.
(p) PERFORMANCE OF BASIC DOCUMENTS. The Company and each
Subsidiary shall have performed and complied with all agreements and
conditions required by any of the Basic Documents to be performed or
complied with by it at or prior to the Closing Date.
(q) OFFICERS' CERTIFICATE. Such Purchaser shall have received
an Officers' Certificate from the Company dated the Closing Date (i)
to the effect set forth in subsections (o), (p) and (q) of this
Section and (ii) certifying that after giving effect to the
Acquisition and the other transactions contemplated hereby
(including the sale of the Notes), the Company will be in compliance
with all limitations on the incurrence
505298\0057\02050\969WL85X.NPA
31
by the Company of Debt contained in any instrument or agreement
applicable to or binding the Company or any of its Subsidiaries.
(r) SOLVENCY CERTIFICATE. Such Purchaser shall have received a
certificate from the chief financial officer or controller of the
Company, in the form of Exhibit K to the Credit Agreement,
supporting the conclusions that, after giving effect to the
Acquisition, the Credit Agreement, this Agreement and the
transactions and financings contemplated thereby, the Company and
its subsidiaries taken as a whole are not insolvent and will not be
rendered insolvent by the Debt to be incurred in connection with the
Acquisition, the Credit Agreement, this Agreement and the
transactions and financings contemplated thereby, will not be left
with unreasonably small capital with which to engage in their
respective businesses and will not have incurred debts beyond their
ability to pay such debts as they mature.
(s) COMPLIANCE WITH REGULATORY MATTERS. The offering and sale
of the Notes to be issued at the Closing, the actions to be taken in
connection with the consummation of the Acquisition on or prior to
the Closing and the other transactions contemplated hereby shall
have complied with all applicable requirements of federal, state and
local laws, including, without limitation, Regulation G of the Board
of Governors of the Federal Reserve System (12 C.F.R. 207, as
amended), Regulation U of such board (12 C.F.R. 221, as amended),
Regulation T of such board (12 C.F.R. 220, as amended) or Regulation
X of such board (12 C.F.R. 224, as amended), and such Purchaser
shall have received evidence thereof satisfactory to it.
(t) COMPLIANCE WITH SECURITIES LAWS. The offering and sale of
the Notes to be issued at the Closing and the other actions taken in
connection with the consummation of the Acquisition shall have
complied with all applicable requirements of Federal and state
securities laws, and such Purchaser shall have received evidence
thereof satisfactory to it.
(u) NO CONTRAVENTION. The purchase of the Notes by any
Purchaser shall not violate any law, rule or regulation applicable
to such Purchaser.
(v) OPINIONS OF COUNSEL. Such Purchaser shall have received an
opinion dated the Closing Date and satisfactory to it of Freedman,
Levy, Xxxxx & Xxxxxxx, counsel to the Company and the Subsidiary
Guarantors, substantially in the form of Exhibit C hereto and
covering such other matters relating to the transactions
contemplated hereby as it may reasonably request. In addition, such
Purchaser shall have received copies of the opinions delivered in
connection with the Acquisition, accompanied by letters from counsel
rendering such opinions stating that such Purchaser is entitled to
rely on such opinions as if they were addressed to such Purchaser.
(w) SUBSIDIARY GUARANTY AGREEMENTS. Such Purchaser shall have
received the Subsidiary Guaranty Agreement, duly executed by each of
the Subsidiary Guarantors party thereto.
505298\0057\02050\969WL85X.NPA
32
(x) TAX ASSUMPTIONS, ETC. Such Purchaser shall have reviewed
and determined that each of the following is satisfactory to it: (i)
the Company tax assumptions, (ii) the ownership, capital, corporate,
organizational and legal structure of the Company and its
Subsidiaries and (iii) material contracts.
(aa) NO ADVERSE LEGISLATION, ACTION OR DECISION, ETC. No
legislation shall have been enacted by either house of Congress or
by any state legislature, no other action shall have been taken by
any United States or state or local governmental authority, whether
by order, regulation, rule, ruling or otherwise, and no decision
shall have been rendered by any court of competent jurisdiction in
the United States which would materially adversely affect the Notes
or the Warrants being purchased by the Purchasers hereunder as an
investment.
(bb) EXISTING LOAN DOCUMENTS. The Company shall have satisfied
in full all amounts then due and payable under the Existing Loan
Documents and the Company shall have caused all Liens securing and
all Guarantees of the obligations thereunder to be released and
terminated.
(cc) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated hereby
and all documents and instruments incident to such transactions
shall be satisfactory to such Purchaser and its counsel, and such
Purchaser and its counsel shall have received all such counterpart
originals or certified or other copies of such documents as it or
they may reasonably request.
(dd) OTHER DOCUMENTS. Such Purchaser shall have received such
other documents relating to the transactions contemplated hereby or
by any of the Basic Documents as it may reasonably request.
(ee) FEES. The Company shall have paid to the Purchasers, for
their accounts, such other fees as have been agreed to in writing by
the Company and the Purchasers.
SECTION 5.2. CONDITIONS TO COMPANY'S OBLIGATIONS TO ISSUE AND SELL
THE NOTES AND TO ISSUE THE WARRANTS. The obligations of the Company to issue
and sell the Notes and to issue the Warrants pursuant to this Agreement to any
Purchaser are subject to the satisfaction, at or prior to the Closing Date, of
the following conditions:
(a) The representations and warranties of such Purchaser
contained herein shall be true and correct in all material respects
on and as of the Closing Date as if made on and as of such date,
except that any such representation or warranty stated to relate to
a specific earlier date will be true and correct as of such earlier
date; and
(b) Such Purchaser shall have performed and complied in all
material respects with all agreements required by this Agreement to
be performed or complied with by such Purchaser at or prior to the
Closing Date.
505298\0057\02050\969WL85X.NPA
33
ARTICLE VI
COVENANTS
The Company hereby agrees as follows for the benefit of each
Noteholder for so long as any amount is payable with respect to any Note of
which it is the Holder:
SECTION 6.1. FINANCIAL STATEMENTS, ETC. The Company will deliver to
each Noteholder holding Notes on the date hereof so long as such Noteholder or
its nominee shall hold any Notes and to any other Noteholder holding at least
$250,000 outstanding principal amount of Notes at the time outstanding:
(a) as soon as practicable, and in any event within 45 days after
the end of each fiscal month in each Fiscal Year, the consolidated
balance sheet of the Company and the Restricted Subsidiaries as at the
end of such period and the related consolidated statements of income of
the Company and the Restricted Subsidiaries for such period and setting
forth in comparative form the consolidated historical figures for the
corresponding periods of the previous Fiscal Year (or, in the case of the
balance sheet, at the end of the previous Fiscal Year) and the
corresponding figures included in the Company Projections, all in
reasonable detail and certified as complete and correct by the chief
financial officer of the Company and as fairly presenting the financial
condition and results of operation of the Company and its Restricted
Subsidiaries in accordance with GAAP, consistently applied, as at the end
of, and for, such period (subject to normal year-end audit adjustments
and the omission of footnotes), and (ii) as soon as practicable, and in
any event within 45 days after the end of each fiscal month in each
Fiscal Year, the consolidated balance sheet of the Unrestricted
Subsidiaries as at the end of such period and the related consolidated
statements of income and retained earnings and of cash flows of the
Unrestricted Subsidiaries for such period and (in the case of the first
eleven calendar months in any Fiscal Year) for the period from the
beginning of such Fiscal Year to the end of such fiscal month, setting
forth in comparative form the consolidated figures for the corresponding
periods of the previous Fiscal Year (or, in the case of the balance
sheet, at the end of the previous Fiscal Year), all in reasonable detail
and certified as complete and correct by the chief financial officer of
the Company and as fairly presenting the financial condition and results
of operation of the Company and its Unrestricted Subsidiaries in
accordance with GAAP, consistently applied, as at the end of, and for,
such period (subject to normal year-end audit adjustments and the
omission of footnotes);
(b) within 60 days after the end of each of the first three Fiscal
Quarters in each Fiscal Year, the consolidated balance sheet of the
Company and the Restricted Subsidiaries as at the end of such period and
the related consolidated statements of income and retained earnings and
cash flows and changes in financial position of the Company and the
Restricted Subsidiaries for such period and (in the case of the second
and third Fiscal Quarters) for the period from the beginning of the
current
505298\0057\02050\969WL85X.NPA
34
Fiscal Year to the end of such Fiscal Quarter, setting forth in
comparative form the consolidated figures for the corresponding periods
of the previous Fiscal Year (or, in the case of such balance sheet, at
the end of the previous Fiscal Year) and setting forth in each case
comparisons with the Company Projections for the period for which such
financial statements are being provided, all in reasonable detail and
certified as complete and correct by the chief financial officer of the
Company and as fairly presenting the financial condition and results of
operation of the Company and its Restricted Subsidiaries in accordance
with GAAP, consistently applied, as at the end of, and for, such period
(subject to normal year-end audit adjustments and the omission of
footnotes);
(c) within 120 days after the end of each Fiscal Year, the
consolidated balance sheet of the Company and the Restricted Subsidiaries
as at the end of such year and the related consolidated statements of
income and retained earnings and cash flows and changes in financial
position of the Company and the Restricted Subsidiaries for such Fiscal
Year, setting forth in each case in comparative form the consolidated
figures for the previous Fiscal Year, all in reasonable detail and in the
case of such consolidated financial statements, accompanied by an
unqualified report thereon of Coopers & Xxxxxxx or other independent
public accountants of recognized national standing selected by the
Company, which report shall state that such financial statements present
fairly the financial position of the Company and the Restricted
Subsidiaries as at the dates indicated and the results of their
operations and cash flows for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years (except as otherwise
specified in such report) and that the audit by such accountants in
connection with such financial statements has been made in accordance
with generally accepted auditing standards;
(d) within 60 days after the end of each of the first three Fiscal
Quarters in each Fiscal Year, the consolidated balance sheets of the
Unrestricted Subsidiaries as at the end of such period and the related
consolidated statements of income and retained earnings and cash flows of
the Unrestricted Subsidiaries for such period and (in the case of the
second and third Fiscal Quarters) for the period from the beginning of
the current Fiscal Year to the end of such Fiscal Quarter, setting forth
in comparative form the consolidated figures for the corresponding
periods of the previous Fiscal Year (or, in the case of such balance
sheets, at the end of the previous Fiscal Year), all in reasonable detail
and certified as complete and correct by the chief financial officer of
the Company;
(e) within 120 days after the end of each Fiscal Year, the
consolidated balance sheet of the Unrestricted Subsidiaries as at the end
of such year and the related consolidated statements of income and
retained earnings and cash flows of the Unrestricted Subsidiaries for
such Fiscal Year, setting forth in each case in comparative form the
consolidated figures for the previous Fiscal Year, all in reasonable
detail and in the case of such consolidated financial statements,
accompanied by the report thereon of Coopers & Xxxxxxx or other
independent public accountants of recognized national standing selected
by the Company, which report
505298\0057\02050\969WL85X.NPA
35
shall state that such financial statements present fairly the financial
position of the Unrestricted Subsidiaries as at the dates indicated and
the results of their operations and cash flows for the periods indicated
in conformity with GAAP applied on a basis consistent with prior years
(except as otherwise specified in such report) and that the audit by such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards;
(f) together with each delivery of financial statements pursuant to
subdivisions (b), (c), (d) and (e) above, an Officers' Certificate (i)
stating that the signers have reviewed the terms hereof and of the Notes
and have made, or caused to be made under their supervision, a review of
the transactions and condition of the Company and its Subsidiaries during
the accounting period covered by such financial statements and that such
review has not disclosed the existence during or at the end of such
accounting period, and that the signers do not have knowledge of the
existence as at the date of such Officers' Certificate, of any condition
or event which constitutes a Default or Event of Default, or, if any such
condition or event existed or exists, specifying the nature and period of
existence thereof and what action the Company has taken or is taking or
proposes to take with respect thereto, and (ii) demonstrating in
reasonable detail compliance during and at the end of such accounting
period with the restrictions contained in this Agreement;
(g) as soon as available, and in any event within 60 days after the
end of each Fiscal Year, a financial plan of the Company and its
Subsidiaries consisting of the operating budget, proposed capital
expenditures, and projected cash flow and profit and loss statements on a
quarterly and month-by-month basis for the immediately succeeding Fiscal
Year, in form customarily prepared by the Company, such budget and
projections to be accompanied by an Officer's Certificate specifying the
assumptions on which budget and projections were prepared and stating
that such officer has no reason to question the reasonableness of any
material assumptions on which such budget and projections were prepared;
(h) promptly upon receipt thereof, copies of all reports submitted
to the Company by independent public accountants in connection with each
annual, interim or special audit of the books of the Company or any of
its Subsidiaries made by such accountants, including, without limitation,
any comment letter submitted to management by such accountants in
connection with their annual audit and any report as to material
inadequacies in accounting controls (including reports as to the absence
of any such inadequacies) submitted by independent public accountants in
connection with any audit of the Company or any of its Subsidiaries;
(i) promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available
generally by the Company to its public security holders (if any) or by
any Subsidiary of the Company to its security holders other than the
Company or another Subsidiary, of all regular and periodic reports and
all registration statements (other than on Form S-8) and prospectuses
filed by the Company or any such Subsidiary with any securities
505298\0057\02050\969WL85X.NPA
36
exchange or with the SEC or any governmental authority succeeding to any
of its functions, and of all press releases and other written statements
made available generally by the Company or any such Subsidiary to the
public concerning material developments in the business of the Company or
such Subsidiary;
(j) promptly and in any event, within 5 days of any officer of the
Company obtaining knowledge of any condition or event which constitutes a
Default or Event of Default, or that the holder of any Note has given any
notice or taken any other action with respect to a claimed default
hereunder, or that any Person has given any notice to the Company or any
of its Subsidiaries or taken any other action with respect to a claimed
default of the type referred to in Section 7.6(e), an Officers'
Certificate describing the same and the period of existence thereof and
specifying what action the Company has taken or is taking or proposes to
take with respect thereto;
(k) as soon as possible and, in any event, within ten (10) days
after the Company, any Subsidiary of the Company or any Related Person
knows or has reason to know of the occurrence of any of the following, a
certificate of the chief financial officer of the Company setting forth
the full details as to such occurrence and the action, if any that the
Company, such Subsidiary or such Related Party is required or proposes to
take, together with any notices required or proposed to be given to or
filed with or by the Company, the Subsidiary, the Related Party, the
PBGC, a Plan participant of the Plan administrator with respect thereto:
that a Reportable Event has occurred; that an accumulated funding
deficiency, within the meaning of Section 412 of the Code of Section 302
of ERISA, has been incurred or any application may be or has been made
for a waiver or modification of the minimum funding standard (including
any required installment payments) or an extension of any amortization
period under Section 412 of the Code or Section 303 or 304 of ERISA with
respect to a Plan; that any contribution required to be made with respect
to a Plan has not been timely made; that a Plan has been or may be
terminated, reorganized, partitioned or declared insolvent under Title IV
of ERISA; that a Plan has an Unfunded Current Liability; that proceedings
may be or have been instituted to terminate or appoint a trustee to
administer a Plan which is subject to Title IV of ERISA; that a
proceeding has been instituted pursuant to Section 515 of ERISA to
collect a delinquent contribution to a Plan; that the Company, any
Subsidiary of the Company or any ERISA Affiliate will or may incur any
liability (including any indirect, contingent, or secondary liability) to
or on account of the termination of or withdrawal from a Plan under
Section 4062, 4063, 4064, 6069, 4201, 4204 or 4212 or ERISA or with
respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980 of the
Code of Section 409 or 502(i) or 502(1) of ERISA or with respect to a
group health plan (as defined in Section 607(1) of ERISA or Section
4980B(g)(2) of the Code) under Section 4980B of the Code; or that the
Borrower or any Subsidiary of the Borrower may incur any material
liability pursuant to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) that provides benefits to retired employees or
other former employees (other than as required by Section 601 of ERISA)
or any Plan. The company will deliver to each Noteholder a complete copy
of the annual report (on Internal Revenue Service Form 5500-series) of
each Plan (including, to the extent required, the related
505298\0057\02050\969WL85X.NPA
37
financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information) required to be
filed with the Internal Revenue Service. In addition to any certificates
or notices delivered to the Noteholders pursuant to the first sentence
hereof, copies of annual reports and any material notices received by the
Company, any Subsidiary of the Company and any Related Party with respect
to any Plan shall be delivered to the Noteholders no later than ten (10)
days after the date such report has been filed with the Internal Revenue
Services or such notice has been received by the Company, the Subsidiary
or the Related Party, as applicable.
(l) promptly upon the occurrence of any of the following events, an
Officers' Certificate describing such event: (i) the Company or any
Subsidiary of the Company shall have filed any amendment to its charter
documents or changed its jurisdiction of incorporation, or (ii) the
Company or any Subsidiary of the Company shall have changed its corporate
name, or (iii) the Company or any Subsidiary of the Company shall have
changed its principal place of business or its chief executive offices,
or (iv) the Company or any Subsidiary of the Company shall have become a
party to any suit, action or proceeding which, if adversely determined,
would have a materially adverse effect on the business, operations,
condition, properties or prospects of the Company and its Subsidiaries
taken as a whole, or (v) the Company or any of its Subsidiaries shall
have opened or closed other than in the ordinary course of business any
material place of business, or (vi) any strike, walkout, work stoppage or
other material employee disruption relating to any plant or facility
owned or leased by the Company or any of its Subsidiaries, or the
expiration of any labor contract to which the Company or any of its
Subsidiaries is a party or by which it is bound (unless there exists a
new labor contract in substitution therefor), or (vii) the Company or any
of its Subsidiaries shall have obtained knowledge that any of its
insurance policies will be cancelled or not renewed and such cancellation
or failure to renew could have a material adverse effect on the business,
operations, condition, properties or prospects of the Company or any of
its Subsidiaries (unless there exists, or the Company or such Subsidiary
reasonably expects to obtain upon such policy's termination, a similar
insurance policy in substitution therefor);
(m) as soon as practicable and in any event no later than December
31, 1996, a copy of the unaudited balance sheet of the Company at the
time of the Closing after giving effect to the Acquisition and the other
transactions contemplated hereby, certified as fairly presenting the
condition of the Company in all material respects (subject to year end
adjustments and the omission of footnotes) by the chief financial officer
of the Company;
(n) on or before April 15 of each year and at such other times as
any holder of Notes may reasonably request, a statement setting forth the
amount, if any, of any distribution with respect to any stock of the
Company made or deemed to be made pursuant to the Code during the
calendar year preceding such year that constitutes a dividend within the
meaning of section 316 of the Code, and promptly after request the
certification referred to in Treasury Regulations ss. 1.897-2(h) to the
505298\0057\02050\969WL85X.NPA
38
effect that the interest of such holder in the Company is not a United
States real property interest;
(o) within 5 days after receipt by the Company of a written request
from any Noteholder holding Notes on the date hereof, so long as such
Noteholder or its nominee shall be a Noteholder, or any other holder of
at least $1,000,000 principal amount of Notes at the time outstanding,
the Company shall request, and promptly upon receipt thereof, provide to
all holders of the Notes, the most current statement of withdrawal
liability from each Multiemployer Plan PROVIDED that the Company shall
not be obligated to request or deliver such statement for any
Multiemployer Plan more than once in any Fiscal Year; and
(p) with reasonable promptness, such other information and data with
respect to the Company or any Subsidiary as from time to time may be
reasonably requested.
SECTION 6.2. FURNISHING OF DISCLOSURE INFORMATION. For so long as
the Company is subject to the reporting requirements of Section 13 or 15 of
the Exchange Act, the Company covenants that it will file reports required to
be filed by it under Section 13(a) or 15(d) of the Exchange Act and the rules
and regulations adopted by the SEC thereunder, that if it ceases to be so
required to file such reports, it will upon the request of any Noteholder (i)
make publicly available such information as is necessary to permit sales
pursuant to Rule 144 under the Securities Act, (ii) deliver such information
to a prospective purchaser as is necessary to permit sales pursuant to Rule
144A under the Securities Act and it will take such further action as any
Noteholder may reasonably request, and (iii) take such further action that is
reasonable in the circumstances, in each case, to the extent required from
time to time to enable such Noteholder to sell its Notes without registration
under the Securities Act within the limitation of the exemptions provided by
(x) Rule 144 under the Securities Act, as such Rule may be amended from time
to time, (y) Rule 144A under the Securities Act, as such Rule may be amended
from time to time, or (z) any similar rules or regulations hereafter adopted
by the SEC. Upon the request of any Noteholder, the Company will deliver to
such Noteholder a written statement as to whether it has complied with such
requirements.
SECTION 6.3. BOOKS OF RECORD AND ACCOUNT; RESERVES. The Company
will, and will cause each of its Subsidiaries to, keep proper books of record
and account and set aside appropriate reserves, all in accordance with GAAP.
SECTION 6.4. PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION. (a) The
Company will, and will cause each of its Subsidiaries to, pay all taxes,
assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its franchises, business, income
or profits when the same become due and payable as shown on the return
therefor as prepared in good faith by the Company, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for
sums which have become due and payable and which by law have or might become a
Lien upon any of its properties or assets, PROVIDED that no such charge or
claim need be paid if being
505298\0057\02050\969WL85X.NPA
39
contested in good faith by appropriate proceedings promptly initiated and
diligently conducted and if such reserves or other appropriate provision, if
any, as shall be required by GAAP shall have been made therefor.
(b) The Company will not consent to or permit the filing of or be a
party to any consolidated income tax return on behalf of itself or, in the
case of the Company, on behalf of any of its Subsidiaries with any Person
(other than a consolidated return of the Company and the Subsidiaries of the
Company).
SECTION 6.5. MAINTENANCE OF PROPERTIES; CORPORATE EXISTENCE AND
BUSINESS. The Company will maintain or cause to be maintained in good repair,
working order and condition all material properties used or useful in the
business of the Company and its Subsidiaries and from time to time will make
or cause to be made all appropriate repairs, renewals, replacements and
improvements thereof in order that such business may be conducted in the
ordinary course. The Company will at all times preserve and keep in full force
and effect its corporate existence, and rights and franchises material to its
business, and those of each of its Subsidiaries. The Company will not, and
will not permit, any of its Subsidiaries to engage in any business other than
a Permitted Business.
SECTION 6.6. INSURANCE. The Company will, and will cause each of its
Subsidiaries to, carry and maintain in full force and effect at all times with
financially sound and reputable insurers (or, as to workers' compensation or
similar insurance, in an insurance fund or by self-insurance authorized by the
jurisdiction in which its operations are carried on) insurance against such
other risks as are customarily insured against by corporations of established
reputation engaged in the same or similar businesses and similarly situated.
Such insurance may be subject to co-insurance, deductibility or similar
clauses which, in effect, result in self-insurance of certain losses, PROVIDED
that such self-insurance is in accord with the practices of corporations
similarly situated and adequate insurance reserves are maintained in
connection with such self-insurance.
SECTION 6.7. INSPECTION. The Company will permit any authorized
representatives designated by each Noteholder holding Notes on the date
hereof, so long as such Noteholder or its nominee shall be a Noteholder, or by
any other Noteholder holding at least $1,000,000 in principal amount of Notes
at the time outstanding, without expense to the Company, to visit and inspect
any of the properties of the Company or any of its Subsidiaries, including its
and their books of account, and to make copies and take extracts therefrom,
and to discuss its and their affairs, finances and accounts with its and their
officers and independent public accountants (and by this provision the Company
authorizes such accountants to discuss with such representatives the affairs,
finances and accounts of the Company and its Subsidiaries, whether or not the
Company is present), all at such reasonable times and as often as may be
reasonably requested.
SECTION 6.8. COMPLIANCE WITH LAWS, ETC. The Company covenants that
it will, and will cause each of its Subsidiaries to, comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority, the noncompliance with which could reasonably be
expected to have a material adverse effect on the business,
505298\0057\02050\969WL85X.NPA
40
financial condition, assets, properties or operations of the Company and its
Subsidiaries taken as a whole.
SECTION 6.9. SUBSIDIARY GUARANTEES. The Company shall cause each
Person that becomes a Restricted Subsidiary of the Company after the Closing
Date (if such Person guarantees Obligations arising under the Credit
Agreement) to execute and deliver to each Noteholder the Subsidiary Guaranty
Agreement pursuant to which such Restricted Subsidiary shall become a
Subsidiary Guarantor and shall guarantee on a senior subordinated basis the
obligations of the Company under the Notes hereunder. Such Subsidiary Guaranty
Agreement shall be appropriately completed, accompanied by such corporate or
partnership resolutions, as the case may be, authorizing the execution and
delivery of the Subsidiary Guaranty Agreement and evidence as to its due
execution. Notwithstanding the foregoing, Hanger Europe N.V. shall not be
required to execute and deliver to each Noteholder a Subsidiary Guaranty
Agreement.
SECTION 6.10. LIMITATIONS ON RESTRICTED PAYMENTS. The Company will
not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly: (i) declare or pay any dividend or make any distribution on
account of the Company's or any of its Restricted Subsidiaries' Equity
Interests (other than (1) dividends or distributions by the Company payable in
Equity Interests (other than Disqualified Stock) of the Company or (2)
dividends or distributions by a Restricted Subsidiary of the Company so long
as, in the case of any dividend or distribution payable on or in respect of
any class or series of securities issued by a Subsidiary other than a Wholly
Owned Subsidiary, the Company or a Restricted Subsidiary of the Company
receives at least its pro rata share of such dividend or distribution in
accordance with its Equity Interests in such class or series of securities);
(ii) purchase, redeem, defease or otherwise acquire or retire for value any
Equity Interests of the Company; (iii) make any principal payment on, or
redeem, repurchase, defease or otherwise acquire or retire for value in each
case, prior to any scheduled repayment, or maturity, any Subordinated
Indebtedness; or (iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above being collectively
referred to as "RESTRICTED PAYMENTS"), unless, at the time of such Restricted
Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) immediately before and immediately after giving effect to such
transaction on a pro forma basis, the Company could incur $1.00 of additional
Debt under the provisions of the first paragraph of Section 6.11; and
(c) such Restricted Payment, together with the aggregate of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
after the Closing Date (including Restricted Payments permitted by clause (i)
below of the next succeeding paragraph, but excluding all other Restricted
Payments permitted by the next succeeding paragraph), is less than the sum of
(U) 50% of the Consolidated Net Income of the Company for the period (taken as
one accounting period) from the fiscal quarter that first begins after the
Closing Date to the end of the Company's most recently ended fiscal quarter
for which
505298\0057\02050\969WL85X.NPA
41
internal financial statements are available at the time of such Restricted
Payment (or, in the case such Consolidated Net Income for such period is a
deficit, minus 100% of such deficit), plus (V) 100% of the aggregate net cash
proceeds and the fair market value, as determined in good faith by the Board
of Directors, of marketable securities received by the Company since the
Closing Date from the issue or sale of Equity Interests (including Retired
Capital Stock (as defined below)), or debt securities of the Company that have
been converted into such Equity Interests of the Company (other than Refunding
Capital Stock (as defined below) or Equity Interests or convertible debt
securities of the Company sold to a Restricted Subsidiary of the Company and
other than Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus (W) 100% of the aggregate amounts contributed to the
capital of the Company, plus (X) 100% of the aggregate amounts received in
cash and the fair market value of marketable securities (other than Restricted
Investments) received from (i) the sale or other disposition of Restricted
Investments made by the Company and its Restricted Subsidiaries or (ii) a
dividend from, or the sale of the stock of, an Unrestricted Subsidiary, plus
(Y) other Restricted Payments in an aggregate amount not to exceed $5,000,000.
The foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date
of declaration thereof, if at the date of declaration such payment
would have complied with the provisions of this Agreement;
(ii) the redemption, repurchase, retirement or other
acquisition of any Equity Interests (the "Retired Capital Stock") or
Subordinated Indebtedness of the Company or any Restricted
Subsidiary in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Restricted Subsidiary
of the Company) of Equity Interests of the Company (other than any
Disqualified Stock) (the "Refunding Capital Stock");
(iii) the redemption, repurchase or other acquisition or
retirement of Subordinated Indebtedness of the Company made by
exchange for, or out of the proceeds of the substantially concurrent
sale of, new Debt of the Company so long as (A) the principal amount
of such new Debt does not exceed the principal amount of the
Subordinated Indebtedness being so redeemed, repurchased, acquired
or retired for value (plus the amount of any premium required to be
paid under the terms of the instrument governing the Subordinated
Indebtedness being so redeemed, repurchased, acquired or retired),
(B) such Debt is subordinated to Senior Indebtedness and the Notes
at least to the same extent as such Subordinated Indebtedness so
purchased, exchanged, redeemed, repurchased, acquired or retired for
value, (C) such Debt has a final scheduled maturity date later than
the final scheduled maturity date of the Notes and (D) such Debt has
a Weighted Average Life to Maturity equal to or greater than the
remaining Weighted Average Life to Maturity of the Notes; and
(iv) repurchases of Equity Interests deemed to occur upon
exercise of stock options if such Equity Interests represent a
portion of the exercise price of such options;
505298\0057\02050\969WL85X.NPA
42
provided, further, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (i), (ii), (iii) and (iv), no
Default or Event of Default shall have occurred and be continuing or would
occur as a consequence thereof; and provided further that for purposes of
determining the aggregate amount expended for Restricted Payments in
accordance with clause (c) of the immediately preceding paragraph, only the
amounts expended under clause (i) shall be included.
As of the Issuance Date, all of the Company's Subsidiaries will be
Restricted Subsidiaries. The Company will not permit any Unrestricted
Subsidiary to become a Restricted Subsidiary except pursuant to the last
sentence of the definition any Restricted Subsidiary as an Unrestricted
Subsidiary, all outstanding Investments by the Company and its Restricted
Subsidiaries (except to the extent repaid) in the Subsidiary so designated
will be deemed to be Restricted Payments in an amount equal to the book value
of such Investment at the time of such designation. Such designation will only
be permitted if a Restricted Payment in such amount would be permitted at such
time and if such Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary. Unrestricted Subsidiaries will not be subject to any of the
restrictive covenants set forth in this Agreement.
SECTION 6.11. LIMITATIONS ON INCURRENCE OF DEBT AND ISSUANCE OF
DISQUALIFIED STOCK. The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, Guarantee or otherwise become directly or indirectly liable with
respect to (collectively, "incur" and correlatively, an "incurrence" of) any
Debt (including Acquired Debt) or any shares of Disqualified Stock; provided,
however, that the Company may incur Debt or issue shares of Disqualified Stock
if the Fixed Charge Coverage Ratio for the Company and its Restricted
Subsidiaries for the most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date of
such incurrence would have been at least 2.00 to 1.00 determined on a pro
forma basis (including a pro forma application of the net proceeds therefrom),
as if the additional Debt had been incurred or the Disqualified Stock had been
issued, as the case may be, and the application of proceeds had occurred at
the beginning of such four-quarter period.
The foregoing limitations will not apply to:
(a) the incurrence (i) by the Company and Southern of Debt under the
Credit Agreement and the issuance of letters of credit thereunder (with
letters of credit being deemed to have a principal amount equal to the
face amount thereof) up to an aggregate principal amount of $90,000,000
outstanding at any one time, less principal repayments of term loans and
permanent commitment reductions with respect to revolving and acquisition
loans and letters of credit under the Credit Agreement made after the
Closing Date, if any (excluding any principal repayments or commitment
reductions to the extent refinanced at the time of payment under a
replaced Credit Agreement); PROVIDED that Southern shall be limited to
the incurrence of $44,000,000 of Debt under the Credit Agreement;
PROVIDED, FURTHER that the amount of Debt permitted to be incurred
pursuant to the Credit Agreement by the Company in accordance with this
clause (a) shall be in addition to any Indebtedness permitted to be
505298\0057\02050\969WL85X.NPA
43
incurred under the Credit Agreement in reliance on, and in accordance
with, clause (i) of this Section 6.11;
(b) the obligations of the Restricted Subsidiaries and the Company
incurred in connection with guarantees entered into in connection with
the Credit Agreement;
(c) Existing Indebtedness;
(d) the incurrence by the Company of Debt represented by the Notes
and the obligations of the Restricted Subsidiaries under the Subsidiary
Guaranty Agreement;
(e) Debt incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to
letters of credit issued in the ordinary course of business, including
without limitation letters of credit in respect of workers' compensation
claims or self-insurance, or other Debt with respect to reimbursement
type obligations regarding workers' compensation claims;
(f) Debt arising from agreements of the Company or a Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with
the disposition of any business, assets or a Subsidiary, other than
Guarantees of Debt incurred by any Person acquiring all or any portion of
such business, assets or a Subsidiary for the purpose of financing such
acquisition; provided that the maximum assumable liability in respect of
all such Debt shall at no time exceed the gross proceeds actually
received by the Company and its Restricted Subsidiaries in connection
with such disposition;
(g) Debt of the Company to a Restricted Subsidiary and Debt of a
Restricted Subsidiary to the Company or another Restricted Subsidiary;
provided however, that any subsequent issuance or transfer of any Capital
Stock or any other event which results in any such Restricted Subsidiary
ceasing to be a Restricted Subsidiary or any other subsequent transfer of
any such Debt (except to the Company or a Restricted Subsidiary) shall be
deemed, in each case to be an incurrence of Debt at the time the
Restricted Subsidiary ceased to be a Restricted Subsidiary;
(h) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted
Subsidiary in the ordinary course of business;
(i) Debt not otherwise permitted hereunder in an amount under this
clause (i) not to exceed $10,000,000 at any one time;
(j) Debt or Disqualified Stock of Persons that are acquired by the
Company or any of its Restricted Subsidiaries or merged into a Restricted
Subsidiary in accordance with the terms of this Agreement; provided that
such Debt or Disqualified Stock is not incurred in contemplation of such
acquisition or merger; and provided further that the Fixed Charge
Coverage Ratio for the Company and its Restricted Subsidiaries for the
505298\0057\02050\969WL85X.NPA
44
most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date of such
transaction would have been at least 2.00 to 1.00 determined on a pro
forma basis, as if such transaction had occurred at the beginning of such
four-quarter period and such Debt or Disqualified Stock and the EBITDA of
such merged or acquired Person had been included for all purposes in such
pro forma calculation;
(k) any Guarantee by the Company of Debt or other obligations of any
of its Restricted Subsidiaries so long as the incurrence of such Debt
incurred by such Restricted Subsidiary is permitted under the terms of
the Indenture;
(l) Debt (including Capitalized Lease Obligations) incurred by the
Company or any of its Restricted Subsidiaries to finance the purchase,
lease or improvement of property (real or personal) or equipment (whether
through the direct purchase of assets or the Capital Stock of any Person
owning such assets) in an aggregate principal amount which, when
aggregated with the principal amount of all other Debt then outstanding
and incurred pursuant to this clause (l) (including any refinancing
thereof), does not exceed $5,000,000;
(m) Indebtedness in respect of Hedging Obligations to establish a
fixed or maximum interest rate for an aggregate notional amount of at
least 50% of the outstanding principal amount of the Term Loans for a
period of at least three years; and
(n) the incurrence by the Company or any of its Restricted
Subsidiaries of Debt which serves to refund, refinance or restructure any
Debt incurred as permitted under the first paragraph of this covenant or
any other Debt incurred as permitted under the first paragraph of this
covenant and clauses (c), (d) and (j) above, or any Debt issued to so
refund, refinance or restructure such Debt including additional Debt
incurred to pay premiums and fees in connection therewith (the
"REFINANCING INDEBTEDNESS") prior to its respective maturity; provided
however that such Refinancing Indebtedness (a) has a Weighted Average
Life to Maturity at the time such Refinancing Indebtedness is incurred
which is not less than the remaining Weighted Average Life to Maturity of
Debt being refunded or refinanced and (b) to the extent such Refinancing
Indebtedness refinances Subordinated Indebtedness or Pari Passu
Indebtedness, such Refinancing Indebtedness is subordinated or pari passu
to the Notes at least to the same extent as the Debt being refinanced or
refunded; and provided further that subclauses (a) and (b) of this clause
(k) will not apply to any refunding or refinancing of any Senior
Indebtedness.
SECTION 6.12. LIENS. The Company will not directly or indirectly
create, incur, assume or suffer to exist any Lien that secures obligations
under any Pari Passu Indebtedness or Subordinated Indebtedness on any asset or
property of the Company or such Restricted Subsidiary, or any income or
profits therefrom, or assign or convey any right to receive income therefrom,
unless the Notes are equally and ratably secured with the obligations so
secured or until such time as such obligations are no longer secured by a
Lien.
505298\0057\02050\969WL85X.NPA
45
The Restricted Subsidiaries of the Company will not, directly or
indirectly, create, incur, assume or suffer to exist any Lien that secures
obligations under any Pari Passu Indebtedness or Subordinated Indebtedness of
such Restricted Subsidiary on any asset or property of such Restricted
Subsidiary or any income or profits therefrom, or assign or convey any right
to receive income therefrom, unless the Guarantee of such Restricted
Subsidiary under the Subsidiary Guaranty Agreement is equally and ratably
secured with the obligations so secured or until such time as such obligations
are no longer secured by a Lien.
SECTION 6.13. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC. The
Company may not consolidate or merge with or into or wind up into (whether or
not the Company is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, any Person unless
(i) the Company is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
will have been made is a corporation organized or existing under the laws of
the United States, any state thereof, the District of Columbia, or any
territory thereof; (ii) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or the Person to which
such sale, assignment, transfer, lease, conveyance or other disposition shall
have been made assumes all the obligations of the Company under this Agreement
and the Notes pursuant to documents or instruments in form reasonably
satisfactory to the Required Holders under this Agreement and the Notes; (iii)
immediately after such transaction no Default or Event of Default exists; and
(iv) the Company or any Person formed by or surviving any such consolidation
or merger, or to which such sale, assignment, transfer, lease, conveyance or
other disposition will have been made will, at the time of such transaction
and after giving pro forma effect thereto as if such transaction had occurred
at the beginning of the applicable four-quarter period, be permitted to incur
at least $1.00 of additional Debt pursuant to the Fixed Charge Coverage Ratio
test set forth in the covenant described under Section 6.11. Notwithstanding
the foregoing clauses (iii) and (iv), (a) any Restricted Subsidiary may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company and (b) the Company may merge with an Affiliate
incorporated solely for the purpose of reincorporating the Company in another
jurisdiction.
Each Subsidiary Guarantor shall not, and the Company will not permit
a Subsidiary Guarantor to, consolidate or merge with or into or wind up into
(whether or not such Subsidiary Guarantor is the surviving corporation), or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions to, any Person unless (i) such Subsidiary Guarantor is the
surviving corporation or the Person formed by or surviving any such
consolidation or merger (if other than such Subsidiary Guarantor) or to which
such sale, assignment, transfer, lease, conveyance or other disposition will
have been made is a corporation organized or existing under the laws of the
United States, any state thereof, the District of Columbia, or any territory
thereof (such Subsidiary Guarantor or such Person, as the case may be, being
herein called the "Successor Guarantor"); (ii) the Successor Guarantor (if
other than such Subsidiary Guarantor) expressly assumes all the obligations of
such Subsidiary Guarantor under the Subsidiary Guaranty Agreement pursuant to
documents or instruments in form reasonably satisfactory to the
505298\0057\02050\969WL85X.NPA
46
Required Holders; (iii) immediately after such transaction no Default or Event
of Default exists; and (iv) the Company shall have delivered to the Trustee an
Officers' Certificate and an opinion of counsel, each stating that such
consolidation, merger or transfer and such documents (if any) comply with this
Agreement. The Successor Guarantor will succeed to, and be substituted for,
such Subsidiary Guarantor under this Agreement and the Subsidiary Guaranty
Agreement.
SECTION 6.14. LIMITATION ON TRANSACTIONS WITH AFFILIATES. The
Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, enter into any transaction or series of related
transactions (including, without limitation, the sale, purchase, exchange or
lease of assets, property or services) with any Affiliate of the Company
(other than the Company or a Wholly Owned Restricted Subsidiary) unless (a)
such transaction or series of related transactions is in writing and on terms
that are no less favorable to the Company or such Restricted Subsidiary, as
the case may be, than those that would be available in a comparable
transaction in arm's-length dealings with an unrelated third party, (b) with
respect to any transaction or series of related transactions involving
aggregate value in excess of $1,000,000, the Company delivers an Officers'
Certificate to the Noteholders certifying that such transaction or series of
related transactions complies with clause (a) above and such transaction or
series of transactions has been approved by a majority of the board of
directors of the Company, (c) with respect to any transaction or series of
related transactions involving aggregate payments in excess of $2,000,000,
such transaction or series of related transactions has been approved by the
Disinterested Directors of the Company (or in the event there is only one
Disinterested Director, by such Disinterested Director) and (d) with respect
to any transaction or series of related transactions involving aggregate
payments in excess of $5,000,000, such transaction or series of related
transactions has been approved by the Disinterested Directors of the Company
(or in the event there is only one Disinterested Director, by such
Disinterested Director) and the Company delivers to the Noteholders a written
opinion of an investment banking firm of national standing or other recognized
independent expert with experience appraising the terms and conditions of the
type of transaction or series of related transactions for which an opinion is
required stating that the transaction or series of related transactions is
fair to the Company or such Restricted Subsidiary from a financial point of
view; PROVIDED, HOWEVER, that the provision with respect to clause (d) above
shall not apply to (A) any transaction with an officer or director of the
Company entered into in the ordinary course of business (including
compensation or employee benefit arrangements with any officer or director of
the Company) or (B) any agreements, transactions or series of related
transactions in existence on the date of this Agreement and any renewal or
extension thereof under substantially the same terms as the original terms.
SECTION 6.15. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES. The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause to become
effective any consensual encumbrance or consensual restriction on the ability
of any such Restricted Subsidiary to:
(a) (i) pay dividends or make any other distributions to the Company
or any of its Restricted Subsidiaries on its Capital Stock or any other
interest or participation in,
505298\0057\02050\969WL85X.NPA
47
or measured by, its profits or (ii) pay any Debt owed to the Company or
any of its Restricted Subsidiaries;
(b) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(c) sell, lease, or transfer any of its properties or assets to the
Company, or any of its Restricted Subsidiaries, except (in each case) for
such encumbrances or restrictions existing under or by reason of:
(1) contractual encumbrances or restrictions in effect on the
Closing Date, including pursuant to the Credit Agreement and its related
documentation;
(2) this Agreement and the Notes;
(3) by reason of customary non-assignment or subletting provisions
in leases entered into in the ordinary course of business and consistent
with past practices;
(4) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions acquired;
(5) applicable law or any applicable rule, regulation or order;
(6) Existing Indebtedness and Debt or Capital Stock of Restricted
Subsidiaries that are acquired by or merged with or into the Company or
any of its Restricted Subsidiaries after the Issuance Date; provided that
such Debt or Capital Stock is in existence at the time of such
acquisition and was not incurred, assumed or issued in contemplation of
such acquisition or merger;
(7) other Debt permitted to be incurred subsequent to the Closing
Date pursuant to Section 6.11; provided that any such restrictions are
ordinary and customary with respect to the type of Debt being incurred
(under the relevant circumstances);
(8) contracts for the sale of assets, including, without limitation
customary restrictions with respect to a Restricted Subsidiary pursuant
to agreement that has been entered into for the sale or disposition of
all or substantially all of the Capital Stock or assets of such
Subsidiary;
(9) secured Debt otherwise permitted to be incurred pursuant to the
covenants described under Section 6.11 and Section 6.12 that limit the
right of the debtor to dispose of the assets securing such Debt;
(10) customary provisions contained in leases and other agreements
entered into in the ordinary course of business;
505298\0057\02050\969WL85X.NPA
48
(11) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business; and
(12) any encumbrances or restrictions imposed by any amendments,
modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings of the contracts, instruments or
obligations referred to in clauses (1) through (11) above, provided that
such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are, in the good
faith judgment of the Company's Board of Directors, no more restrictive
with respect to such dividend and other payment restrictions than those
contained in the dividend or other payment restrictions prior to such
amendment, modification, restatement, renewal, increase, supplement,
refunding, placement or refinancing.
SECTION 6.16. LIMITATION ON OTHER SENIOR SUBORDINATED INDEBTEDNESS.
The Company will not, directly or indirectly, incur any Debt (including
Acquired Debt) that is subordinate in right of payment to any Debt of the
Company unless such Debt is either (a) Pari Passu Indebtedness or (b)
subordinate in right of payment to the Notes, in the same manner and at least
to the same extent as the Notes are subordinate to Senior Indebtedness.
SECTION 6.17. LIMITATION ON PREFERENCE STOCK OF RESTRICTED
SUBSIDIARIES. The Company will not permit any of its Restricted Subsidiaries
to issue, directly or indirectly, any Preference Stock, except (i) Preference
Stock issued to and held by the Company or a Wholly Owned Restricted
Subsidiary, except that any subsequent issuance or transfer of any Capital
Stock which results in any Wholly Owned Restricted Subsidiary ceasing to be a
Wholly Owned Restricted Subsidiary or any transfer of such Preference Stock to
a Person no a Wholly Owned Restricted Subsidiary will be deemed an issuance of
Preference Stock; (ii) Preference Stock issued by a Person prior to the time
(a) such Person became a Restricted Subsidiary of the Company, (b) such person
merges with or into a Restricted Subsidiary or (c) another person merges with
or into such Person (in a transaction in which such Person becomes a
Restricted Subsidiary), in each case if such Preference Stock was not issued
in anticipation of such transaction; and (iii) Preference Stock issued in
exchange for, or the proceeds of which are used to refund Debt or refinance
Preference Stock issued pursuant to clauses (i) or (ii) (other than
Disqualified Stock); provided that (a) the liquidation value of such
Preference Stock so issued shall not exceed the principal amount or the
liquidation value of the Debt or Preference Stock, as the case may be, so
refunded or refinanced and (b) the Preference Stock so issued (i) shall have a
stated maturity not earlier than the stated maturity of the Debt or Preference
Stock being refunded or refinanced and (2) shall have a Weighted Average Life
to Maturity equal to or greater than the remaining Weighted Average Life to
Maturity of the Debt or Preference Stock being refinanced or refunded.
SECTION 6.18. CHANGE OF CONTROL. (a) Upon the occurrence of a Change
of Control, the Company will make an offer to purchase all or any part (equal
to $1,000 or an integral multiple thereof) of the Notes pursuant to the offer
described below (the "Change of Control Offer") at a price in cash (the
"Change of Control Payment") equal to 100% of the aggregate principal amount
thereof plus accrued and unpaid interest thereon, if any, to the date of
purchase. Within 30 days following any Change of Control, the Company will
mail a
505298\0057\02050\969WL85X.NPA
49
notice to each Noteholder with the following information: (1) a Change of
Control Offer is being made pursuant to the covenant entitled "Change of
Control," and that all Notes properly tendered pursuant to such Change of
Control Offer will be accepted for payment; (2) the purchase price and the
purchase date, which will be no earlier than 30 days nor later than 60 days
from the date such notice is mailed, except as may be otherwise required by
applicable law (the "Change of Control Payment Date"); (3) any Note not
properly tendered will remain outstanding and continue to accrue interest; (4)
unless the Company defaults in the payment of the Change of Control Payment,
all Notes accepted for payment pursuant to the Change of Control Offer will
cease to accrue interest on the Change of Control Payment Date; (5)
Noteholders electing to have any Notes purchased pursuant to a Change of
Control Offer will be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed,
and at the address specified in the notice prior to the close of business on
the third Business Day preceding the Change of Control Payment Date; (6)
Noteholders will be entitled to withdraw their tendered Notes and their
election to require the Company to purchase such Notes, provided, that the
Company receives, not later than the close of business on the last day of the
offer period, a telegram, telex, facsimile transmission or letter setting
forth the name of the Noteholder, the principal amount of Notes tendered for
purchase, and a statement that such Holder is withdrawing his tendered Notes
and his election to have such Notes purchased; and (7) that Holders whose
Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or an integral
multiple thereof.
(b) Prior to complying with the provisions of this covenant, but in
any event within 30 days following a Change of Control, the Company will
either repay all outstanding amounts under the Credit Agreement or offer to
repay in full all outstanding amounts under the Credit Agreement and repay the
obligations held by each lender who has accepted such offer or obtain the
requisite consents, if any, under the Credit Agreement to permit the
repurchase of the Notes required by this covenant.
(c) The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws or regulations are applicable in connection
with the repurchase of the Notes pursuant to a Change of Control Offer. To the
extent that the provisions of any securities laws or regulations conflict with
the provisions of this Agreement, the Company will comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations hereunder.
On the Change of Control Payment Date, the Company will, to the
extent permitted by law, (1) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (2) deposit an
amount equal to the aggregate Change of Control Payment in respect of all
Notes or portions thereof so tendered and (3) cancel the Notes so accepted
together with an Officers' Certificate stating that such Notes or portions
thereof have been tendered to and purchased by the Company. The Company will
promptly mail to each Noteholder the Change of Control Payment for such Notes,
and the Company will promptly mail to each Noteholder a new Note equal in
principal amount to any
505298\0057\02050\969WL85X.NPA
50
unpurchased portion of the Notes surrendered, if any, provided, that each such
new Note will be in a principal amount of $1,000 or an integral multiple
thereof.
SECTION 6.19. ASSET SALES. (a) The Company will not, and will not
permit any of its Restricted Subsidiaries to, cause, make or suffer to exist
an Asset Sale, unless (x) the Company, or its Restricted Subsidiaries, as the
case may be, receives consideration at the time of such Asset Sale at least
equal to the fair market value (as determined in good faith by the Company) of
the assets sold or otherwise disposed of and (y) at least 75% of the proceeds
from such Asset Sale when received consists of cash or Cash Equivalents;
provided that, the amount of (a) any liabilities (as shown on the Company's or
such Restricted Subsidiary's most recent balance sheet) of the Company or any
Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the Notes) that are assumed by the transferee of any such
assets and (b) any notes or other obligations received by the Company or any
such Restricted Subsidiary from such transferee that are immediately converted
by the Company or such Restricted Subsidiary into cash or Cash Equivalents (to
the extent of the cash received), shall be deemed to be cash for the purposes
of this provision.
(b) Within 365 days after the Company's or any Restricted
Subsidiary's receipt of the Net Proceeds of any Asset Sale, the Company or
such Restricted Subsidiary may apply the Net Proceeds from such Asset Sale, at
its option, (i) to permanently reduce Obligations under the Credit Agreement
(and, if applicable, to correspondingly reduce commitments with respect
thereto) or other Senior Indebtedness or Pari Passu Indebtedness, (ii) to an
investment in any one or more businesses, capital expenditures or acquisitions
of other assets in each case, used or useful in a Permitted Business or (iii)
to an investment in properties or assets that replace the properties and
assets that are the subject of such Asset Sale. Pending the final application
of any such Net Proceeds, the Company or such Restricted Subsidiary may
temporarily reduce Indebtedness under a revolving credit facility, if any, or
otherwise invest such Net Proceeds in Cash Equivalents. Any Net Proceeds from
the Asset Sale that are not invested as provided and within the time period
set forth in the first sentence of this paragraph will be deemed to constitute
"EXCESS PROCEEDS." When the aggregate amount of Excess Proceeds exceeds
$5,000,000, the Company shall make an offer to all Noteholders (an "ASSET SALE
OFFER") to purchase the maximum principal amount of Notes, that is an integral
multiple of $1,000, that may be purchased out of the Excess Proceeds at an
offer price in cash in an amount equal to 100% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date fixed for the
closing of such offer. The Company will commence an Asset Sale Offer with
respect to Excess Proceeds within ten business days after the date that Excess
Proceeds exceeds $5,000,000 by mailing a notice to the Noteholders. To the
extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company may use any remaining
Excess Proceeds for general corporate purposes. If the aggregate principal
amount of Notes surrendered by Noteholders thereof exceeds the amount of
Excess Proceeds, the Company shall select the Notes to be purchased in the
manner described below in paragraph (c). Upon completion of any such Asset
Sale Offer, the amount of Excess Proceeds shall be reset at zero.
505298\0057\02050\969WL85X.NPA
51
(c) If less than all of the Notes are to be redeemed in an Asset
Sale Offer at any time, selection of such Notes for redemption will be made by
the Company on a pro rata basis, by lot or by such other method as the Company
shall deem fair and appropriate (and in such manner as complies with
applicable legal requirements); provided that no Notes of $1,000 or less shall
be redeemed in part.
(d) Notices of an Asset Sale Offer shall be mailed by first class
mail, postage prepaid, at least 30 but not more than 60 days before the
purchase date to each Noteholder to be purchased or redeemed at such
Noteholder's registered address. If any Note is to be purchased or redeemed in
part only, any notice of purchase or redemption that relates to such Note
shall state the portion of the principal amount thereof that has been or is to
be purchased or redeemed. A new Note in principal amount equal to the
unpurchased portion of any Note purchased in part will be issued in the name
of the Noteholder thereof upon cancellation of the original Note. On and after
the purchase date, unless the Company defaults in payment of the purchase or
redemption price, interest shall cease to accrue on Notes or portions thereof
purchased.
SECTION 6.20. NO RESTRICTIVE AGREEMENTS. Except for the Credit
Agreement, the Company will not and will not permit any of its Subsidiaries to
enter into any agreement that would restrict or prohibit the amendment,
modification, waiver or termination of this Agreement, the Notes, the Warrants
or the Subsidiary Guaranty Agreement.
SECTION 6.21. PRIVATE PLACEMENT NUMBERS. Upon request by any
Purchaser, the Company shall obtain for the Notes a Private Placement Number
issued by Standard & Poor's CUSIP Service Bureau.
ARTICLE VII
TERMS OF THE NOTES
SECTION 7.1. FORM OF NOTES; ISSUANCE OF NOTES. The Notes shall be in
registered form in the form of Exhibit A hereto and shall be transferrable in
accordance with the limitations set forth in this Agreement.
SECTION 7.2. REGISTRATION, TRANSFER, EXCHANGE AND SUBSTITUTION OF
NOTES. (a) The Company shall keep at its principal office a register (the
"REGISTER") in which shall be entered the names and addresses and account
numbers of the registered holders of the Notes and particulars of the
respective Notes held by them and of all transfers of such Notes. References
to the "NOTEHOLDER" or "HOLDER" shall mean the Person listed in the Register
as the payee of any Note unless the payee shall have presented such Note to
the Company for transfer and the transferee shall have been entered in the
Register as a subsequent holder. The ownership of the Notes shall be proved by
the Register. For the purpose of paying interest and principal and all other
amounts due on the Notes, the Company shall be entitled to rely on the names
and addresses in the Register.
505298\0057\02050\969WL85X.NPA
52
(b) If any Note is presented at the Company's office for the purpose
of transfer or exchange (accompanied in the case of a transfer by a written
instrument of transfer duly executed by or on behalf of the Noteholder), the
Company, at its own expense, will deliver in exchange one or more new Notes in
any authorized denominations, as requested by the Noteholder, of like tenor
and aggregate unpaid principal amount. Any Note or Notes issued in the
transfer or exchange shall carry the same rights to interest (unpaid and to
accrue) carried by the Note or Notes so exchanged or transferred so that there
will not be any loss or gain of interest on the Note or Notes surrendered.
(c) Upon receipt by the Company of evidence satisfactory to it of
the loss, theft, destruction or mutilation of any Note, and upon surrender and
cancellation of such Note, if mutilated, the Company will pay any unpaid
principal and interest (and any prepayment charge) then or theretofore due and
payable on such Note and will deliver in lieu of such Note a new Note of like
tenor for any remaining balance.
SECTION 7.3. PAYMENTS ON THE NOTES. (a) The Company shall pay the
principal amount of the Notes and all accrued but unpaid interest on such
amount to the Noteholder on November 1, 2004 (the "MATURITY DATE").
(b) Interest on the Notes will accrue at the rate of 8% per annum
and will be payable on each June 30 and December 31, commencing June 30, 1997,
to the Noteholders of record of Notes at the close of business on the June 15
and December 15 preceding such Interest Payment Dates. Interest on the Notes
will accrue from the most recent date to which interest has been paid or, if
no interest has been paid, from the Closing Date. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months.
(c) Interest payable on any Interest Payment Date (except on the
Maturity Date) may be paid by the Company to the Noteholders either (i)
entirely in cash in the amount of 8.00% per annum of the unpaid principal
amount of the Notes on such Interest Payment Date OR, at the option of the
Company, (ii) in a combination of (A) cash in an amount at least equal to the
3.2% per annum of the unpaid principal amount of the Notes (inclusive of
Subsequent Notes) on such Interest Payment Date AND (B) newly-issued Notes
(each, a "SUBSEQUENT NOTE") issued to the Noteholders in an aggregate
principal amount equal to the remaining amount of accrued interest on the
Notes for such period (inclusive of Subsequent Notes) on such Interest Payment
Date. Interest payable on the Maturity Date shall only be payable in cash.
(d) Interest on principal of, premium, if any, and interest on the
Notes that is not paid when due shall accrue from and including the date the
same became due to but excluding the date the same is paid in full at the rate
per annum which is 2% above the otherwise applicable interest rate on the
Notes ("DEFAULT INTEREST"). Default Interest shall be payable on demand to the
Noteholders either (i) entirely in cash OR at the option of the Company (ii)
in a combination of (A) cash in an amount at least equal to 40% of Default
Interest and (B) Subsequent Notes issued to the Noteholders in an aggregate
principal amount equal to the remaining amount of the Default Interest
(inclusive of Subsequent Notes).
505298\0057\02050\969WL85X.NPA
53
(e) All payments on the Notes shall be made by wire transfer of
immediately available funds by 11:00 am on the date when due to the account of
the Noteholder at a bank in the United States specified in writing by the
Noteholder to the Company or in the case of a Purchaser to the account
specified beneath such Purchaser's name on the signature pages hereof (or to
such other account as such Purchaser may specify in writing to the Company)
and shall be in lawful funds of the United States of America; PROVIDED that
the Noteholders must surrender Notes to the Company to collect principal
payments.
(f) All payments made by the Company hereunder or under any Note
will be made free and clear of, and without deduction or withholding for, any
present or future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature or hereafter imposed by any taxing jurisdiction or
by any political subdivision or taxing authority thereof or therein with
respect to such payments, and all interest, penalties or similar liabilities
assessed with respect thereto. If any taxes are so levied or imposed, the
Company agrees to pay the full amount of such taxes, and such additional
amounts as may be necessary so that every payment of all amounts due under
this Agreement or any Note after withholding or deduction for or on account of
any taxes, will not be less than the amount provided for herein or in such
Note. If any amounts are payable in respect of taxes pursuant to the preceding
sentence, the Company agrees to reimburse each Noteholder, upon the written
request of such Noteholder, for taxes imposed on or measured by the net income
or net profits of such Noteholder pursuant to the laws of the jurisdiction in
which such Noteholder is located or under the laws of any political
subdivision or taxing authority of any such jurisdiction in which such
Noteholder is organized or in which the principal office or applicable lending
office of such Noteholder is located and for any withholding of taxes as such
Noteholder shall determine are payable by, or withheld from, such Noteholder,
in respect of such amounts so paid to or on behalf of such Noteholder pursuant
to the preceding sentence and in respect of any amounts paid to or on behalf
of such Noteholder pursuant to this sentence.
(g) Each Noteholder that is not a United States person for U.S.
federal income tax purposes agrees to deliver to the Company on or prior to
the Closing Date, or in the case of a Noteholder that is an assignee or
transferee of an interest under this Agreement, on the date of such
Assignment, (i) two accurate and complete original signed copies of Internal
Revenue Service Form 4224 or 1001 (or successor forms) certifying to such
Noteholder's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any note. All Noteholders a party to this Agreement or any Assignment
shall provide additional original signed copies of Form 4224 or 1001 when a
lapse in time or a change in circumstances renders the previously filed forms
inaccurate or obsolete, or said Noteholders shall notify the Company and the
Agent of its inability to deliver such forms or certificates.
SECTION 7.4. OPTIONAL PREPAYMENT. The Company may, at any time, at
its option on not less than 30 and not more than 60 Business Days' notice to
each Noteholder, prepay the Notes in whole but not in part at a price equal to
the principal amount of such Notes outstanding with accrued but unpaid
interest through the date of prepayment (in cash).
505298\0057\02050\969WL85X.NPA
54
At least two and not more than five Business Days prior to the date of
prepayment specified in the Company's notice, the Company will give each
Noteholder further written notice specifying the amount (if any) payable on
such date with respect to such principal amount to be prepaid.
SECTION 7.5. MANDATORY PREPAYMENTS UPON EQUITY OFFERINGS. Upon the
repayment in full of all Obligations under the Credit Agreement and permanent
reduction of all lending commitments under the Credit Agreement to zero or to
the extent permitted by the Credit Agreement, in the event that the Company
shall complete an Equity Offering, the Company shall, within two Business Days
after receipt of any related Equity Offering Proceeds, apply, or cause to be
applied, such Equity Offering Proceeds to prepay on a pro rata basis the
principal amount of the Notes which is equal to the amount of such Equity
Offering Proceeds. The Notes to be prepaid pursuant to this Section 7.5 shall
be prepaid at the principal amount of such Notes together with interest
accrued to the date of prepayment.
SECTION 7.6. EVENTS OF DEFAULT; ACCELERATION OF MATURITY; WAIVER OF
DEFAULT. In case one or more of the following events (each an "EVENT OF
DEFAULT") (whatever the reason for such Event of Default and whether it shall
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body or otherwise) shall have occurred and
be continuing:
(a) if the Company shall default in the payment of any principal or
premium, 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) if the Company shall default in the payment of any interest on
any Note or on any other amount payable under this Agreement for more
than 30 days after the same becomes due and payable; or
(c) if the Company shall default in the performance of or compliance
with any term contained herein other than those referred to above in this
Section 7.6, and such default shall not have been remedied within 40 days
after receipt by the Company of written notice of such default from any
holders representing 25% in aggregate principal amount of the Notes; or
(d) if any representation or warranty made by or on behalf of the
Company or any Subsidiary Guarantor herein or in the Subsidiary Guaranty
Agreement, as the case may be, shall be false on the date as of which it
was made except to the extent such falsehood does not have a material
adverse effect on the business, operations, affairs, condition,
properties or prospects of the Company or such Subsidiary Guarantor; or
(e) (i) there shall have occurred one or more defaults by the
Company or any of its Restricted Subsidiaries (as principal or as
guarantor or other surety) in the payment of the principal of (or
premium, if any) on any Debt aggregating at least
505298\0057\02050\969WL85X.NPA
55
$1,000,000 or more when the same becomes due and payable at its final
maturity or (ii) Debt of the Company or any of its Restricted
Subsidiaries aggregating $1,000,000 or more shall have been accelerated
or otherwise declared due and payable prior to its maturity (which
acceleration or declaration is not rescinded, annulled or otherwise cured
within 20 days of receipt by the Company or such Restricted Subsidiary of
notice of any such acceleration, declaration or demand); or
(f) if the Company or any Significant Subsidiary shall (i) admit in
writing its inability to pay its debts as they become due, (ii) file, or
consent 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 or
insolvency law of any jurisdiction, (iii) make any general assignment for
the benefit of its creditors, (iv) consent 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, or
(v) take corporate action for the purpose of any of the foregoing; or
(g) if a court or governmental authority of competent jurisdiction
shall enter an order appointing, without consent by the Company or any
Significant Subsidiary of the Company 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 or winding-up if any such petition shall be filed against the
Company or any Significant Subsidiary of the Company and such petition is
not controverted within 15 days or is not discharged or dismissed within
60 days; or
(h) if a final judgment which, with other outstanding final
judgments against the Company or its Significant Subsidiaries exceeds
$5,000,000 shall be entered against the Company or any Significant
Subsidiary of the Company and if, within 60 days after entry thereof,
such judgment shall not have been discharged or execution thereof stayed
pending appeal, or if, within 60 days after the expiration of any such
stay, such judgment shall not have been discharged; or
(i) Cessation of all or any portion of the Subsidiary Guaranty
Agreement to be in full force and effect or the declaration of all or any
portion of the Subsidiary Guaranty Agreement to be null and void and
unenforceable or the finding that all or any portion of such Subsidiary
Guaranty Agreement is invalid or the denial of any Subsidiary Guarantor
of its liability under the Subsidiary Guarantee Agreement (other than by
reason of release of a Subsidiary Guarantor in accordance with its
terms).
then, and in each and every such case (other than an Event of Default with
respect to the Company specified in subsections (f) or (g) hereof), unless the
principal of all of the Notes shall have already become due and payable, the
holders of not less than 25% in aggregate principal amount of the Notes then
outstanding, by notice in writing to the Company (the
505298\0057\02050\969WL85X.NPA
56
"ACCELERATION NOTICE"), may declare the Notes to be due and payable
immediately, and upon any such declaration there shall become immediately due
and payable an amount (the "DEFAULT AMOUNT") equal to the sum of the entire
principal amount of the Notes plus interest accrued thereon; PROVIDED that, so
long as any Specified Senior Indebtedness is outstanding, such declaration
shall not become effective until the earlier of (i) 15 days after delivery of
the Acceleration Notice to the Company if at such time the Default or Event of
Default which gave rise to the Acceleration Notice has not been cured or
waived, and (ii) acceleration of any Specified Senior Indebtedness. If an
Event of Default specified in subsection (f) or (g) occurs, the Default Amount
on the Notes shall become and be immediately due and payable without any
declaration or other act on the part of any Noteholder.
The provision, however, is subject to the condition that if at any
time after the principal of the Notes shall have been so declared due and
payable, and before any judgment or decree for the payment of the moneys due
shall have been obtained or entered as hereinafter provided, the Company shall
pay or shall deposit in trust for the benefit of the Noteholders a sum
sufficient to pay all matured installments of interest upon all the Notes and
the principal of any and all Notes which shall have become due otherwise than
by acceleration (with interest upon such principal and, to the extent that
payment of such interest is enforceable under applicable law, on overdue
installments of interest, at the same rate as the rate of interest specified
herein, to the date of such payment or deposit), and if any and all Events of
Default under this Note, other than the non-payment of the principal of the
Notes which shall have become due by acceleration, shall have been cured,
waived or otherwise remedied as provided herein, then and in every such case
the Required Holders, by written notice to the Company, may waive all defaults
and rescind and annul such declaration and its consequences, but no such
waiver or rescission and annulment shall extend to or shall affect any
subsequent default or shall impair any right consequent thereon.
The Company shall promptly upon receipt of an Acceleration Notice
provide written notice to the Agent Bank of the receipt of such Acceleration
Notice. Failure to deliver such notice shall not affect the validity of the
notice delivered by the Noteholders in accordance with the provisions referred
to above.
SECTION 7.7. POWERS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT
WAIVER OF DEFAULT. No right or remedy herein conferred upon or reserved to the
Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
No delay or omission of the Noteholders to exercise any right or
power accruing upon any Event of Default occurring and continuing as aforesaid
shall impair any such right or power or shall be construed to be a waiver of
any such Event of Default or an acquiescence therein; and every power and
remedy given by the Notes or by law may be exercised from time to time, and as
often as shall be deemed expedient, by the Noteholders.
505298\0057\02050\969WL85X.NPA
57
SECTION 7.8. WAIVER OF PAST DEFAULTS. Prior to the declaration of
the acceleration of maturity of the Notes as provided in Section 7.6, the
Required Holders may on behalf of the Holders of all the Notes waive any past
Default or Event of Default hereunder and its consequences, except a Default
in the payment of principal of or interest on any of the Notes. In the case of
any such waiver, the Company and the Holders of the Notes shall be restored to
their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other Default or impair any right consequent
thereon.
Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured, and not to have occurred
for every purpose of this Note; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.
ARTICLE VIII
SUBORDINATION OF NOTES
SECTION 8.1. NOTES SUBORDINATED TO SENIOR INDEBTEDNESS. Any term or
provision of this Agreement or the Notes to the contrary notwithstanding, the
Company covenants and agrees, and each holder of any Note, whether upon
original issue or upon transfer, assignment or exchange thereof, by its
acceptance thereof, shall be deemed likewise to have covenanted and agreed,
that, to the extent and in the manner hereinafter set forth in this Article
VIII, the Subordinated Obligations are hereby expressly made subordinate and
subject in right of payment to the prior payment in full in cash or cash
equivalents of all Senior Indebtedness of the Company and shall not be
subordinated to any indebtedness of the Company other than Senior Indebtedness
of the Company.
SECTION 8.2. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. (a)
Upon any payment, distribution or transfer of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors upon
(i) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization, readjustment, composition or other similar case
or proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its assets, or (ii) any liquidation, dissolution or
other winding up of the Company, whether voluntary or involuntary and whether
or not involving insolvency or bankruptcy proceedings, or (iii) any assignment
for the benefit of creditors or any other marshalling of assets and
liabilities of the Company, then.and in any such event:
(1) all amounts due or to become due upon all Senior Indebtedness
shall first be paid in full in cash or cash equivalents before any
payment is made on account of the Subordinated Obligations, or to acquire
any of the Notes for cash or property; and
(2) any payment, distribution or transfer of assets of the Company
of any kind or character, whether in cash, property or securities, to
which the holders of the
505298\0057\02050\969WL85X.NPA
58
Notes would be entitled but for the provisions hereof, including any
such payment, distribution or transfer which may be payable or
deliverable by reason of the payment of any other Debt of the
Company being subordinated to the payment of the Notes (except for
any such payment, distribution or transfer of equity or debt
securities, the payment of which debt securities is subordinated, to
at least the same extent as provided in this Article VIII with
respect to the Notes, to the payment of all Senior Indebtedness and
to any securities issued in respect of such Senior Indebtedness then
outstanding and which equity or debt securities are not redeemable
or payable until one year after the maturity of the Senior
Indebtedness, as such maturity may have been extended in the case or
proceeding referred to in this Section 8.2 and after the maturity of
any such securities issued in respect of Senior Indebtedness) shall
be paid by the liquidating trustee or agent or other person making
such payment, distribution or transfer, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly
to the holders of Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture
under which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the Senior
Indebtedness, to the extent necessary to make payment in full in
cash or cash equivalents of all Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment, distribution
or transfer to the holders of such Senior Indebtedness.
(b) In the event that, notwithstanding the foregoing, the holder of
any Note shall have received any such payment, distribution or transfer of
assets of the Company of any kind or character, whether in cash, property or
securities (other than the securities referred to in the parenthetical of the
foregoing subclause (2)), including any such payment, distribution or transfer
which may be payable, deliverable or transferrable by reason of the payment of
any other Debt of the Company being subordinated to the payment of the Notes,
before all Senior Indebtedness is paid in full in cash or cash equivalents or
payment thereof provided for, then and in such event such payment,
distribution or transfer shall be paid over, delivered or transferred
forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment, distribution or
transfer of assets of the Company for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full in cash or cash equivalents, after giving effect to any
concurrent payment, distribution or transfer to or for the holders of Senior
Indebtedness.
(c) The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its properties and assets as
an entirety, or substantially as an entirety, to another corporation upon the
terms and conditions set forth in Section 6.13 shall not be deemed a
dissolution, winding up, liquidation, reorganization, assignment for the
benefit of creditors or marshalling of assets and liabilities of the Company
for the purposes of this Article VIII if the corporation formed by such
consolidation or into which the Company is merged or the corporation which
acquires by conveyance or transfer such properties and assets as an entirety,
or substantially as an entirety, as the case may be, shall, as a part of
505298\0057\02050\969WL85X.NPA
59
such consolidation, merger, conveyance or transfer, comply with the conditions
set forth in Section 6.13.
(d) Any term or provision of this Section 8.2 to the contrary
notwithstanding, if any case or proceeding referred to above is commenced by
or against the Company, and if the holders of the Notes do not file a proper
claim or proof of claim in the form required in such case or proceeding prior
to 30 days before the expiration of time to file such claims or proofs or fail
to respond to any objection of any party or applicable order in such case or
proceeding in a timely manner, then so long as any Senior Indebtedness remains
outstanding, any holder of Senior Indebtedness is hereby authorized and
empowered (in its own name or in the name of any holder of the Notes or
otherwise), but shall have no obligation, to file such proof of claim or
respond to such objection or order on behalf of such holders of the Notes, as
their interests may appear.
SECTION 8.3. NO PAYMENT WHEN SENIOR INDEBTEDNESS IS IN DEFAULT. In
the event that (a) any payment with respect to any Obligations with respect to
any Specified Senior Indebtedness is not made when due (whether at maturity,
by acceleration or otherwise) (a "SENIOR PAYMENT DEFAULT"), or (b) unless the
foregoing clause (a) shall apply, any other default occurs and is continuing
with respect to Specified Senior Indebtedness permitting the holders of such
Specified Senior Indebtedness to declare such Specified Senior Indebtedness
due and payable prior to the date on which it would otherwise have become due
and payable (a "NON-PAYMENT DEFAULT"), then no direct or indirect payment by
or on behalf of the Company or any Subsidiary Guarantor or from any of the
Company's assets, any judgments or any other sources (in cash, property or
securities or by set-off or otherwise, other than the payment, distribution or
transfer of equity or debt securities, the payment of which debt securities is
subordinated, at least to the same extent as provided in this Article VIII
with respect to the Notes, to the payment of all Senior Indebtedness and to
any securities issued in respect of such Senior Indebtedness) shall be made or
agreed to be made on account of the principal of, or premium, if any, or
interest on or other amounts with respect to any Subordinated Obligations, or
as a sinking fund for Subordinated Obligations, or in respect of any
redemption, retirement, purchase or other acquisition or defeasance of any
Subordinated Obligations (x) in case of a Senior Payment Default described in
clause (a), unless and until such defaulted Senior Indebtedness shall have
been paid in the amount then due or discharged or until the holders of such
Senior Indebtedness or their agents have waived in writing the benefits of
this Section 8.3 in respect of such Senior Payment Default, or (y) in case of
any non-payment default specified in clause (b), from the earlier of the date
the Company receives written notice of such non-payment default from the
Required Lenders or the Agent Bank (a "BLOCKAGE NOTICE") until the earlier of
(1) 179 days after such date and (2) the date, if any, on which the Specified
Senior Indebtedness to which such non-payment default relates is discharged or
such non-payment default is waived (and no other non-payment default is then
in existence) in writing by the holders of such Specified Senior Indebtedness
or otherwise cured (the "BLOCKAGE PERIOD"), PROVIDED, HOWEVER, that (i) only
one Blockage Notice may be given during any one 360-day period and (ii) a
further Blockage Notice relating to the same or any other non-payment default
which had given rise to, or had occurred and was continuing during, any prior
Blockage Period shall not be effective for purposes of this clause (y) unless
such non-payment default shall in the interim have been cured or waived for a
505298\0057\02050\969WL85X.NPA
60
period of at least 90 consecutive days. At the expiration of a Blockage Period
the Company shall, subject to foregoing provisions, promptly pay to the
holders of the Notes all amounts which it would have been obligated to pay
during such period but for the operation of such provisions.
In the event that, notwithstanding the foregoing, any payment,
distribution or transfer shall be collected or received by the holder of any
Note, in contravention of the foregoing provisions of this Section 8.3, then
and in such event such payment, distribution or transfer shall be paid over
and delivered forthwith to the Agent Bank on behalf of the holders of
Specified Senior Indebtedness or to the holders of Senior Indebtedness, in
either case, for application to the payment of Senior Indebtedness remaining
unpaid, to the extent necessary to pay all Senior Indebtedness remaining
unpaid in full in cash or cash equivalents, after giving effect to any
concurrent payment, distribution or transfer to or for the holders of Senior
Indebtedness and until so paid over and delivered, the same shall be held in
trust by any such holder of a Note as the property of the holders of such
Senior Indebtedness.
The provisions of this Section 8.3 shall not apply to any payment
with respect to which Section 8.2 would be applicable.
SECTION 8.4. PAYMENT PERMITTED IF NO DEFAULT. Nothing contained in
this Article VIII or elsewhere in this Agreement or in any of the Notes shall
prevent the Company, at any time except during the pendency of any case or
proceeding referred to in Section 8.2 or under the conditions described in
Section 8.3, from making payments on the scheduled payment dates or thereafter
at any time of the Subordinated Obligations.
SECTION 8.5. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR
INDEBTEDNESS. Upon the payment in full in cash or cash equivalents of all
Senior Indebtedness, the holders of the Notes shall be subrogated (equally and
ratably with the holders of all Debt of the Company which by its express terms
is subordinated to Senior Indebtedness of the Company to the same extent as
the Notes are subordinated and which is entitled to like rights of
subrogation) to the rights of the holders of such Senior Indebtedness to
receive payments, distributions or transfers of cash, property and securities
applicable to the Senior Indebtedness until the principal of and interest on
the Notes shall be paid in full. For purposes of such subrogation, (a) no
payments, distributions or transfers to the holders of Senior Indebtedness of
any cash, property or securities to which the holders of the Notes would be
entitled except for the provisions of this Article VIII, and no payments over
pursuant to the provisions of this Article VIII to the holders of Senior
Indebtedness by holders of the Notes, shall, as among the Company, its
creditors other than holders of Senior Indebtedness, and the holders of the
Notes, be deemed to be a payment, distribution or transfers by the Company to
or on account of the Senior Indebtedness, and (b) no payments, distributions
or transfers of cash, property or securities to or for the benefit of the
holders of the Notes pursuant to the subrogation provision of this Article
VIII, which would otherwise have been paid to the holders of Senior
Indebtedness, shall be deemed to be a payment by the Company to or for the
account of the Notes.
505298\0057\02050\969WL85X.NPA
61
In the event that, notwithstanding the foregoing, any payment,
distribution or transfer shall be collected or received by any holder of
Senior Indebtedness to which the Noteholders would otherwise have been
entitled under this Section 8.5, then and in such case, the Noteholders shall
be entitled to receive from such holders of Senior Indebtedness any payments,
distributions or transfer received by such holders of Senior Indebtedness in
excess of the amount required to make payment in full of such Senior
Indebtedness.
SECTION 8.6. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The
provisions of this Article VIII are solely and are intended solely for the
purpose of defining the relative rights of the holders of the Notes on the one
hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article VIII or elsewhere in this Agreement or in the Notes
is intended to or shall (a) impair, as among the Company, its creditors other
than holders of Senior Indebtedness and the holders of the Notes, the
obligation of the Company, which is absolute and unconditional, to pay to the
holders of the Notes the principal of and interest on the Notes as and when
the same shall become due and payable in accordance with their terms; or (b)
affect the relative rights against the Company of the holders of the Notes and
creditors of the Company other than the holders of Senior Indebtedness; or (c)
prevent the holder of any Note from exercising all remedies otherwise
permitted by this Agreement (including without limitation Section 7.6 hereof)
and by applicable law upon default under this Agreement, subject to the rights
under this Article VIII of the holders of Senior Indebtedness, under the
conditions specified in Sections 8.2 and 8.3, to receive cash, property and
securities otherwise payable or deliverable to such holder.
SECTION 8.7. NO WAIVER OF SUBORDINATION PROVISIONS. No right of any
present or future holder of any Senior Indebtedness to enforce subordination
as herein provided shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of the Company or by any act or failure
to act by any such holder, or by any non-compliance by the Company with the
terms, provisions and covenants of this Agreement, regardless of any knowledge
thereof any such holder may have or be otherwise charged with. The holders of
Senior Indebtedness may release, sell or exchange or enforce any security
thereof or Guarantee thereof or elect any right or remedy, or delay in
enforcing or release any right or remedy and otherwise deal freely with the
Company and any guarantor, all without notice to the holders of Notes and all
without affecting the liabilities and obligation of the holders of the Notes.
SECTION 8.8. NOTICE TO HOLDERS OF NOTES. The Company shall give
prompt written notice to each holder of any Note of any fact known to the
Company which would prohibit the making of any payment to it in respect of the
Notes. Notwithstanding the provisions of this Article VIII or any other
provision of this Agreement (but without however limiting any rights of the
holders of Senior Indebtedness under this Article VIII to recover from
Noteholders any payment made to such Noteholder which it is not entitled to
retain under this Article VIII), (a) no holder of any Note shall be charged
with knowledge of the existence of any facts which would prohibit the making
of any payment to it in respect of the Notes, unless and until such holder
shall have received written notice thereof from the Company, or a holder of
Senior Indebtedness or from any trustee, fiduciary or agent therefor;
505298\0057\02050\969WL85X.NPA
62
and, (b) prior to the receipt of any such written notice absent actual
knowledge thereof, each such holder of the Notes shall be entitled in all
respects to assume that no such facts exist.
Each holder of any Note shall be entitled to rely (provided such
holder is acting reasonably and in good faith) on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee, fiduciary or agent therefor) to establish that
such notice has been given by a holder of Senior Indebtedness (or a trustee,
fiduciary or agent therefor). In the event that such holder reasonably
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of Senior Indebtedness to participate in any
payment, distribution or transfer pursuant to this Article VIII, such holder
may request such Person to furnish evidence to the reasonable satisfaction of
such holder as to the amount of Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment,
distribution or transfer and any other facts pertinent to the rights of such
Person under this Article VIII, and if such evidence is not furnished, such
holder may defer any payment to such Person until such evidence is furnished.
SECTION 8.9. RELIANCE OF HOLDERS OF SENIOR INDEBTEDNESS. Each
Noteholder by its acceptance thereof shall be deemed to acknowledge and agree
that the foregoing subordination provisions are, and are intended to be, an
inducement and a consideration to each holder of any Senior Indebtedness,
whether such Senior Indebtedness was created or acquired before or after the
creation of Subordinated Obligations, to acquire and hold, or to continue to
hold, such Senior Indebtedness, and such holder of Senior Indebtedness shall
be deemed conclusively to have relied on such subordination provision in
acquiring and holding, or in continuing to hold, such Senior Indebtedness.
SECTION 8.10. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT. Upon any payment, distribution or transfer of assets of the
Company referred to in this Article VIII, the holders of the Notes shall be
entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other
Person making such payment, distribution or transfer, delivered to the holders
of Notes, for the sole purpose of ascertaining the Persons receiving such
payment, distribution or transfer, the holders of Senior Indebtedness and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid, distributed or transferred thereon and all other facts
pertinent thereto or to this Article VIII. Nothing contained in this Section
8.10 shall affect the respective substantive rights of the holders of the
Notes and the holders of Senior Indebtedness under this Article VIII.
SECTION 8.11. THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT. The
failure to make a payment on account of principal of or interest on the Notes
by reason of any provision of this Article will not be construed as preventing
the occurrence of an Event of Default.
505298\0057\02050\969WL85X.NPA
63
SECTION 8.12. REINSTATEMENT The agreements contained in this Article
VIII shall continue to be effective or be reinstated, as the case may be, if
at any time any payment of any of the Senior Indebtedness is rescinded or must
otherwise be returned by a holder of Senior Indebtedness upon any bankruptcy
or similar proceeding of the Company or any of its Subsidiaries, all as though
such payment had not been made.
ARTICLE IX
SUBSTITUTION; LIMITATION ON TRANSFERS
SECTION 9.1. SUBSTITUTION OF PURCHASERS PRIOR TO CLOSING DATE. If
(i) any Purchaser (a "DEFAULTING PURCHASER") shall not purchase all or part of
the Notes such Defaulting Purchaser has agreed to purchase hereunder, and (ii)
one or more other Persons satisfactory to the Company is willing to assume the
obligations of such Defaulting Purchaser under this Agreement, then the
obligations of such Defaulting Purchaser to purchase Notes pursuant to this
Agreement may be assumed by such other Person by executing and delivering a
copy of this Agreement (or, if such other Person is already a Purchaser under
this Agreement, by executing and delivering an amended signature page of this
Agreement with the amount of Notes to be purchased hereunder appropriately
increased) and documents and representations satisfactory to the Company for
the purpose of assuring the Company that the purchase of Notes hereunder by
such Person hereunder will not result in a violation of any provision of
applicable law. The assumption by such other Person of the obligations of a
Defaulting Purchaser pursuant to this Section 9.1 shall not constitute a
waiver of any rights the Company may have against such Defaulting Purchaser
that has defaulted in its obligations under this Agreement.
SECTION 9.2. RESTRICTIONS ON TRANSFER. No Purchaser or Noteholder
shall dispose of all or any part of the Notes (other than pursuant to an
effective registration statement under the Securities Act or a sale or other
disposition made pursuant to Rule 144 or Rule 144A) unless, if requested by
the Company, such Purchaser or Noteholder, as the case may be, delivers to the
Company an opinion of counsel (who may be in-house counsel), reasonably
satisfactory in form and substance to the Company, that an exemption from
registration under the Securities Act is available. In the case of sales or
other dispositions pursuant to Rule 144 or Rule 144A, if requested by the
Company, such holder will deliver certificates evidencing compliance with Rule
144 or Rule 144A, reasonably satisfactory in form and substance to the
Company. Each certificate for the Notes issued to a Purchaser or to a
subsequent transferee shall, unless at such time as the same is no longer
required under the applicable requirements of the Securities Act, shall bear
the following legend:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED
505298\0057\02050\969WL85X.NPA
64
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501 (a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN
"ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS NOTE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN
THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS NOTE RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO HANGER ORTHOPEDIC GROUP, INC. (THE
"COMPANY"), OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) TO AN
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE COMPANY A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE COMPANY), (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE), OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO
WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THREE
YEARS AFTER THE ORIGINAL ISSUANCE HEREOF, THE NOTEHOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT."
ARTICLE X
INDEMNIFICATION
SECTION 10.1. INDEMNIFICATION.
The Company agrees to indemnify and hold harmless each Purchaser or
Noteholder, its directors, officers, employees, Affiliates and each Person, if
any, who controls such Purchaser or Noteholder within the meaning of the
Securities Act or the Exchange Act (any and all of whom are referred to as the
"INDEMNIFIED PARTY") from and against any and all losses, claims, damages and
liabilities, joint or several (including all reasonable legal fees and other
expenses reasonably incurred by any Indemnified Party in connection with the
preparation for or defense of any pending or threatened claim, action or
proceeding, whether or not resulting in any liability), to which such
Indemnified Party may become subject (whether or not such Indemnified Party is
a party thereto) under any applicable xxxxxxx, xxxxx
000000\0000\00000\000XX00X.XXX
65
or local law or otherwise caused by or arising out of, or allegedly caused by
or arising out of, the Basic Documents or any transaction contemplated hereby
or thereby (including without limitation, the Acquisition), other than losses,
claims, damages or liabilities resulting from any representation made by such
Purchaser or Noteholder in Article IV.
Promptly after receipt by an Indemnified Party of notice of any
claim, action or proceeding with respect to which an Indemnified Party is
entitled to indemnity hereunder, such Indemnified Party will notify the
Company of such claim or the commencement of such action or proceeding,
provided that the failure of an Indemnified Party to give notice as provided
herein shall not relieve the Company of its obligations under this Section
10.1 with respect to such Indemnified Party, except to the extent that the
Company is actually prejudiced by such failure. The Company will assume the
defense of such claim, action or proceeding and will employ counsel
satisfactory to the Indemnified Party and will pay the fees and expenses of
such counsel. Notwithstanding the preceding sentence, the Indemnified Party
will be entitled, at the expense of the Company, to employ counsel separate
from counsel for the Company and for any other party in such action if the
Indemnified Party reasonably determines that a conflict of interest or other
reasonable basis exists which makes representation by counsel chosen by the
Company not advisable. The Company further agrees to reimburse each
Indemnified Party for all legal or other expenses (including, without
limitation, fees and expenses of counsel) incurred by the Indemnified Party in
connection with investigating, defending or participating in any such loss,
claim, damage, liability or action or other proceeding (whether or not such
Indemnified Party is a party to any action or proceeding out of which such
expenses arise), including, without limitation, the Indemnified Party
appearing as a witness in any action or proceeding brought against the Company
or any of its Subsidiaries (or any of its officers, directors or employees).
In the event that the foregoing indemnity is unavailable or
insufficient to hold an Indemnified Party harmless, then the Company shall
contribute to amounts paid or payable by such Indemnified Party in respect of
such losses, claims, damages, liabilities and expenses in such proportion as
appropriately reflects the relative benefits received by, and fault of, the
Company on the one hand and such Indemnified Party on the other hand in
connection with matters as to which such losses, claims, damages, liabilities
or expenses relate and other equitable considerations. The agreement of the
Company in this paragraph shall be in addition to any liability the Company
may otherwise have.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
or similar writing) and shall be given to such party at its address or
facsimile number set forth on the signature pages hereof, or such other
address or facsimile number as such party may hereinafter specify to the party
giving such notice. Each such notice, request or other communication shall be
effective (i) if given by facsimile, when such facsimile is transmitted to the
facsimile number referred to in
505298\0057\02050\969WL85X.NPA
66
this Section 11.1 and a telephone call that confirms the receipt of the
facsimile is made or received or, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or, (iii) if given by any other means, when delivered
at the address referred to in this Section 11.1.
SECTION 11.2. NO WAIVERS; AMENDMENTS. (a) No failure or delay on the
part of any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
(b) Any provision of this Agreement or the Notes may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed
by the Company and the Required Holders; PROVIDED that no such amendment or
waiver shall, unless signed by all of the Purchasers or the Noteholders, as
the case may be, (i) except as provided in Section 9.1, change the amount of
any Notes to be purchased by any Purchaser pursuant to this Agreement, (ii)
extend the period of time during which the Purchasers shall be obligated to
purchase Notes pursuant to this Agreement, (iii) change the number of
Purchasers or the Noteholders, as the case may be, that shall be required for
the Purchasers or the Noteholders, as the case may be, or any of them to take
any action under this Section 11.2(b) or any other provision of this
Agreement, (iv) reduce the rate or amount or extend the time for payment of
interest or premium, if any, on any Note, (v) reduce the principal amount of
or extend the fixed maturity of any Notes or alter the redemption provisions
with respect thereto or (vi) make any Note payable in money or property other
than as stated herein.
SECTION 11.3. SURVIVAL OF PROVISIONS. The representations and
warranties, covenants and agreements contained in this Agreement shall survive
beyond the Closing Date and the issuance of the Notes.
SECTION 11.4. EXPENSES; DOCUMENTARY TAXES. The Company agrees to pay
all fees and disbursements of each Purchaser (including reasonable fees and
expenses of counsel) in connection with the purchase and sale of the Notes as
contemplated by this Agreement or any amendments thereto and the fees and
disbursements of each Noteholder (including reasonable fees and expenses of
counsel) in connection with this Agreement, the Notes, the Subsidiary Guaranty
Agreement, the Warrants or any waiver or consent under, or any amendment of
any of, the foregoing or any enforcement action relating thereto. In addition,
the Company agrees to pay any and all stamp, transfer and other similar taxes
payable or determined to be payable in connection with the execution and
delivery of this Agreement, any Notes or the issuance or transfer of the
Notes.
SECTION 11.5. TERMINATION; TERMINATION FEES. (a) This Agreement may
be terminated by the Company and the Required Purchasers by mutual agreement
at any time prior to the Closing Date. This Agreement will terminate
automatically at 5:00 p.m. on November 1, 1996 unless all conditions to the
Purchasers' obligations hereunder are satisfied or waived by such date.
505298\0057\02050\969WL85X.NPA
67
(b) Upon termination of this Agreement, the Company hereby agrees to
pay the Purchasers the fees and expenses which are payable pursuant to Section
11.4 hereof.
SECTION 11.6. CONFIDENTIALITY. Each Noteholder agrees that it will
use reasonable efforts not to disclose without the prior consent of the
Company (other than to its investment advisers, employees, auditors or counsel
or to another Noteholder) any information with respect to the Company or any
Subsidiary which is furnished pursuant to Section 6.1 and which is designated
by the Company to such Noteholder in writing as confidential, PROVIDED that it
may disclose any such information (a) as has become generally available to the
public, (b) as may be required or appropriate in any report, statement or
testimony submitted to any municipal, state or Federal regulatory body having
or claiming to have jurisdiction over such Noteholder, (c) as may be required
or appropriate in response to any summons or subpoena or in connection with
any litigation or as otherwise required by law, (d) to the extent that such
Noteholder believes it appropriate in order to protect its investment in the
Notes or Warrants or in order to comply with any law, order, regulation or
ruling applicable to such Noteholder, (e) to the prospective transferee in
connection with any contemplated transfer of any of the Notes or Warrants by
such Noteholder, or (f) upon the request or demand of any regulatory agency or
authority having jurisdiction over such Noteholder and PROVIDED FURTHER that
the Company agrees that such Noteholder will not be liable for damages to the
Company unless any such information is disclosed as a result of such
Noteholder's gross negligence or willful misconduct.
SECTION 11.7. SUCCESSORS AND ASSIGNS. (a) All covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall inure to the benefit of the respective successors and assigns of
the parties hereto including the holders from time to time of the Notes or
Warrants whether so expressed or not, except that the Company may not assign
or transfer any of its rights or obligations under this Agreement.
(b) All provisions hereunder purporting to give rights to the
Purchasers shall extend to and include those entities receiving the beneficial
interest of the Notes at the Closing Date.
SECTION 11.8. NEW YORK LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF. Each of the parties hereto
agrees to submit to the jurisdiction of the courts of the State of New York in
any action or proceeding arising out of or relating to this Agreement.
SECTION 11.9. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in any number of counterparts each of which shall be an original with
the same effect as if the signatures thereto and hereto were upon the same
instrument.
SECTION 11.10. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement and understanding among the parties hereto and supersedes any
and all prior agreements and understandings, written or oral, relating to the
subject matter hereof.
505298\0057\02050\969WL85X.NPA
68
SECTION 11.11. CONSENT TO JURISDICTION. The Company hereby
irrevocably consents to the nonexclusive jurisdiction of the courts of the
State of New York and of any federal court located in such state over each of
them in connection with any action or proceeding arising out of or relating to
this Agreement and, to the fullest extent permitted by law, further agrees
(and shall not contest) that the proper venue for filing and maintaining any
such action or proceeding shall be in the State of New York. In any such
action or proceeding, the Company waives personal service of any summons,
complaint or other process or notice and agrees that service by first class
mail, return receipt requested, to the Company at its address for notices
hereunder, or any other form of service provided for in the New York civil
practice law and rules then in effect shall constitute good and sufficient
service or notice upon such person or entity.
ARTICLE XII
SMALL BUSINESS ADMINISTRATION MATTERS
SECTION 12.1. SBIC FORMS. On the date hereof, the Purchasers shall
have received from the Company fully executed Small Business Administration
Forms 480 and 652 (together with Small Business Administration Form 1031, the
"SBA Forms").
SECTION 12.2. SBIC INFORMATION. All information set forth in the SBA
Forms regarding the Company and its Affiliates is accurate and complete.
Copies of such forms have been, on or prior to the date hereof (or within 20
days of closing in the case of Form 1031), completed and executed by the
Company and delivered to the Purchasers.
SECTION 12.3. INSPECTION. The Company covenants and agrees that it
will permit the Purchasers and their permitted transferees and their
representatives (including without limitation, examiners from the Small
Business Administration) to inspect the properties of the Company and to
examine and make extracts and copies from the books and records of the Company
during normal business hours (including, without limitation, for purposes of
verifying the certifications and representations made by the Company in the
SBA Forms and this Note Purchase Agreement and in verifying compliance with
the covenants contained in this Note Purchase Agreement).
SECTION 12.4. INFORMATION. In addition, the Company covenants and
agrees to provide to the Noteholders any other information which the
Noteholders reasonably requests, including without limitation, at least
annually, sufficient financial and other information necessary to allow the
Noteholder to evaluate the financial condition of the Company for the purpose
of valuing the Noteholder's interest in the Company, to determine the
continued eligibility of the Company under the Small Business Investment Act
of 1958, as amended (the "SBIA") and the regulations thereunder, including
Title 13, Code of Federal Regulations, Section 121.301, and to verify the use
of the proceeds received by the Company from the purchase of the shares. All
such information shall be certified by the President, Chief Executive Officer,
Treasurer or Chief Financial Officer of the Company. Within 20 days of the
date hereof, the Company shall have provided the Purchasers a completed Small
505298\0057\02050\969WL85X.NPA
69
Business Administration Form 1031. Promptly after the end of each fiscal year
of the Company (and in any event prior to February 28 of each year), the
Company shall provide to the Purchasers a written assessment in form and
substance satisfactory to the Purchasers of the economic impact of the
financing assistance provided to the Company by the Purchasers, specifying the
full time equivalent jobs created or retained, and the impact of the financing
on the revenues and profits of the business and on taxes paid by the business
and its employees. Upon the request of any Purchaser the Company will also
provide all information requested by such Purchaser in order for it to prepare
and file SBA Form 468 and any other information requested or required by any
governmental agency asserting jurisdiction over such Purchaser.
SECTION 12.5. USE OF PROCEEDS. The Company agrees that it will not
use the proceeds from the sale of the Notes for any purpose that would be a
violation of Section 1- 07.720 of Title 13 of the Code of Federal Regulations.
SECTION 12.6. BUSINESS. For a period of one year following the date
hereof, the Company will not change its business activity if such change would
render the Company ineligible to receive financial assistance from a Small
Business Investment Company under the Small Business Act and the regulations
thereunder.
SECTION 12.7. NON-DISCRIMINATION. The Company will at all times
comply with the nondiscrimination requirements of 13 C.F.R., Parts 112, 113
and 117.
SECTION 12.8. COMPANY AWARENESS. The Company acknowledges its
awareness that the Purchasers are Federal licensees under the Small Business
Investment Act of 1958, as amended.
505298\0057\02050\969WL85X.NPA
70
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers (or, in the case of
parties that are not corporations, other authorized persons), as of the date
first above written.
HANGER ORTHOPEDIC GROUP, INC.
By ______________________________
Title:
CHASE VENTURE CAPITAL ASSOCIATES, L.P.,
a California limited partnership
By: Chase Capital Partners, its general partner
By: ______________________________
Title: General Partner
Principal Amount of Notes: $4,000,000.00
Address: c/o Chase Capital Partners
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxxxxxx Xxxxx
Telephone: 000-000-0000
Telecopier: 000-000-0000
PARIBAS PRINCIPAL, INC.
By: ______________________________
Title:
Principal Amount of Notes: $4,000,000.00
Address: 000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: 000-000-0000
Telecopier: 000-000-0000
505298\0057\02050\969WL85X.NPA
