Exhibit 10.4
DIMAC HOLDINGS, INC
and
DIMAC CORPORATION
15 1/2% Senior Notes due October 22, 2009,
Common Stock
and
Warrants to Purchase Shares of Common Stock
of
DIMAC Holdings, Inc.
SECURITIES PURCHASE AGREEMENT
Dated as of October 22, 1998
TABLE OF CONTENTS
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SECTION 1. PURCHASE AND SALE OF SECURITIES 1
1.1 Issue of Securities 1
1.2 Purchase and Sale of Securities 3
1.3 Registration of Securities 5
1.4 Delivery Expenses 5
1.5 Issue Taxes 5
1.6 Direct Payment 6
1.7 Lost, Etc. Securities 6
1.8 Indemnification 6
1.9 Further Actions 8
1.10 Stay, Extension and Usury Laws 9
1.11 ERISA Notices 9
1.12 Inconsistent Agreements 10
1.13 Inspection of Properties and Records 10
1.14 Board of Directors Observation Rights 10
1.15 Private Placement Number 11
1.16 Rating of the Notes 11
1.17 Financial Statements and Reports 11
1.18 Pre-Emptive Rights 14
1.19 Other Covenants 16
SECTION 2. CLOSING CONDITIONS 17
2.1 Delivery of Documents 17
2.2 Legal Investment; Purchase Permitted by Applicable Laws 19
2.3 Payment of Fees 19
2.4 Compliance with Agreements 20
2.5 Completion of Other Transactions 20
2.6 Truth of Representations and Warranties 21
2.7 Proceedings Satisfactory 21
2.8 Consents and Permits 21
2.9 No Material Adverse Effect 21
2.10 No Material Judgment or Order 21
SECTION 3. REPRESENTATIONS AND WARRANTIES OF DIMAC OPERATING AND DIMAC
HOLDINGS 21
3.1 Authorization; Capitalization 22
3.2 No Violation or Conflict; No Default 23
3.3 Use of Proceeds 23
3.4 No Material Adverse Change; Financial Statements 23
3.5 Full Disclosure 24
3.6 Third Party Consents 25
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3.7 No Violation of Regulations of Board of Governors of Federal Reserve System 25
3.8 Private Offering 25
3.9 Governmental Regulations 26
3.10 Brokers 26
3.11 Solvency 26
3.12 Representations and Warranties 26
3.13 Litigation 27
3.14 Labor Relations 27
3.15 Taxes 27
3.16 Environmental Matters 28
3.17 ERISA 29
3.18 Intellectual Property 30
3.19 Compliance with Laws 30
3.20 Survival of Representations and Warranties 30
SECTION 4. REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER 30
4.1 Purchase for Own Account 30
4.2 Accredited Investor 31
4.3 Authorization 31
4.4 Securities Restricted 31
4.5 ERISA 32
SECTION 5. DEFINITIONS 32
5.1 Definitions 32
5.2 Rules of Construction 38
SECTION 6. MISCELLANEOUS 38
6.1 Amendments and Waivers 38
6.2 Notices 38
6.3 Successors and Assigns 39
6.4 Counterparts 39
6.5 Headings 39
6.6 Governing Law; Submission to Jurisdiction 39
6.7 Entire Agreement 39
6.8 Severability 40
6.9 Further Assurances 40
6.10 Disclosure of Financial Information 40
Annexes:
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Annex A Warrant Agreement
Annex B Indenture
Annex C Notes Registration Rights Agreement
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Annex D Stockholders' Agreement (including supplemental letter)
Annex E Opinion of Counsel to DIMAC Holdings and DIMAC Operating
Schedules:
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1.1
1.2
3.1(a)
3.1(b)
3.17
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement dated as of October 22, 1998 (this
"Agreement") is entered into by and among DIMAC Holdings, Inc., a Delaware
corporation ("DIMAC Holdings"), DIMAC Corporation, a Delaware corporation
("DIMAC Operating"), and the purchasers listed on the signature pages hereto
(each a "Purchaser" and collectively, the "Purchasers").
Capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in Section .
In consideration of the premises, mutual covenants and agreements
hereinafter contained and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, DIMAC Operating and DIMAC
Holdings agree, jointly and severally, and each of the Purchasers agrees,
severally but not jointly, as follows:
SECTION 1. PURCHASE AND SALE OF SECURITIES
1.1. Issue of Securities
(a) On or before the Closing, DIMAC Holdings will have authorized the
original issue and sale to the Purchasers, in the respective amounts set
forth on Schedule 1.1 hereto, of (i) $30,000,000 aggregate principal amount
of its 15 1/2% Senior Notes due October 22, 2009, Series A (the "Series A
Notes"), (ii) 20,000 shares (the "Shares") of its Common Stock, par value
$.001 per share ("Common Stock"), and (iii) warrants (the "Warrants") to
purchase an aggregate of 28,205 shares of Common Stock, pursuant to a
Warrant Agreement in the form attached hereto as Annex A (the "Warrant
Agreement").
The Series A Notes will be issued pursuant to an indenture in the form
attached hereto as Annex B (the "Indenture"), to be dated as of October 22,
1998, between DIMAC Holdings and Wilmington Trust Company, a Delaware
banking corporation, as trustee (the "Trustee"). Each Holder of Series A
Notes will have certain registration rights as set forth in the
Registration Rights Agreement in the form attached hereto as Annex C (the
"Notes Registration Rights Agreement"). Pursuant to the Notes Registration
Rights Agreement, the DIMAC Holdings will agree, among other things, to
file with the SEC (i) a registration statement under the Securities Act
(the "Exchange Offer Registration Statement") relating to, among other
things, the 15 1/2% Senior Notes due October 22, 2009, Series B, of DIMAC
Holdings (the "Series B Notes" and, together with the Series A Notes, the
"Notes"), identical in all material respects to the Series A Notes (except
that the Series B Notes shall have been registered pursuant to such
registration statement and shall not be subject to any registration rights
of the holders thereof) to be offered in exchange for the Series A Notes
(such offer to exchange being referred to as the "Registered Exchange
Offer") and/or (ii) under certain circumstances, a shelf registration
statement pursuant to Rule 415 under the Act (the "Shelf Registration
Statement") relating to the resale by certain holders of the Series A
Notes.
In addition, on or before the Closing, DIMAC Holdings shall authorize
the issue and delivery of PIK Notes pursuant to Section 1 of the Notes. The
aggregate principal amount of the Notes outstanding at any time may not
exceed $30,000,000 plus the aggregate
principal amount of PIK Notes issued pursuant to Section 1 of the Notes.
The Notes, the Shares and the Warrants shall each individually be referred
to herein as a "Security" and collectively referred to herein as the
"Securities."
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Securities Act,
the Series A Notes shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE
THAT IS TWO YEARS (OR SUCH SHORTER PERIOD THAT MAY HEREAFTER BE
PROVIDED UNDER RULE 144(k) AS PERMITTING RESALES BY NON-AFFILIATES OF
RESTRICTED SECURITIES WITHOUT RESTRICTION) AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH DIMAC HOLDINGS,
INC. (THE "ISSUER") OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF
THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) EXCEPT (A) TO THE
ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER
THE SECURITIES ACT THAT IS PURCHASING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED
INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
ISSUER'S AND THE
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TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER
IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY
THE TRANSFEROR TO THE TRUSTEE.
Upon original issuance thereof and until such time as is no longer
required under the applicable requirements of the Internal Revenue Code of
1986, as amended, the Notes shall bear the following legend:
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID") FOR
PURPOSES OF SECTIONS 1271 ET. SEQ. OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED. THE ISSUE DATE OF THIS NOTE IS OCTOBER 22, 1998. FOR
INFORMATION REGARDING THE ISSUE PRICE, AMOUNT OF OID PER $1,000 OF
PRINCIPAL AMOUNT AND YIELD TO MATURITY FOR PURPOSES OF THE OID RULES,
PLEASE CONTACT THE CHIEF FINANCIAL OFFICER OF THE ISSUER AT 0000
XXXXXXXXX XXXXXXXX XXXX, XXXXX X-000, XXXXXXX, XX, XXXXXXXX NO. (404)
705-9929.
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(b) Each Warrant shall be substantially in the form attached as Exhibit A
to the Warrant Agreement. Each Warrant shall be dated the date of its
issuance. The Warrants will be exercisable, in the manner provided in the
Warrant Agreement and the Warrants, for a number of shares of Common Stock
as provided in the Warrant Agreement (the "Warrant Shares"). Each Holder of
Shares or Warrant Shares will have certain registration rights and other
rights and obligations with respect to the Shares and the Warrant Shares,
as provided in the Stockholders' Agreement (and the related supplemental
letter from DIMAC Holdings, XxXxxx De Leeuw & Co. XX, L.P. and XxXxxx De
Leeuw & Co. IV Associates, L.P.) in the form attached hereto as Annex D
(such Stockholders' Agreement, as supplemented and modified by such letter,
being referenced herein as the "Stockholders' Agreement"). The terms and
provisions contained in the Notes, the Notes Registration Rights Agreement,
the Stockholders' Agreement, the Warrants and the Warrant Agreement shall
constitute, and are hereby expressly made, a part of this Agreement and, to
the extent applicable, the parties hereto, by their execution and delivery
of this Agreement, expressly agree to such terms and provisions and to be
bound thereby.
1.2 Purchase and Sale of Securities
(a) Purchase and Sale. DIMAC Holdings agrees to sell and, subject to the
terms and conditions set forth herein and in reliance on the
representations and warranties of the Companies contained or incorporated
herein, each of the Purchasers agrees, severally but not jointly, to
purchase the Securities set forth below such Purchaser's name on Schedule
1.1 hereto at the purchase price indicated therein. Based on their
determination of the relative fair market values of the Notes, the Shares
and the Warrants, DIMAC Holdings and the Purchasers hereby agree to treat,
for Federal income and all other tax purposes, (i) the Notes as having an
aggregate issue price equal to $29,000,000 (taking into account any amounts
payable by DIMAC Holdings to the Purchasers at closing as an adjustment to
the issue price under applicable Treasury regulations) and (ii) the Shares
as having an aggregate issue price equal to $2,000,000, (iii) the Warrants
as having an aggregate issue price equal to $1,000,000. Unless otherwise
required by applicable law, DIMAC Holdings and the Purchasers shall not
take any position contrary to such treatment for any Federal income or
other tax purposes.
(b) Closing. The purchase and sale of the Securities shall take place at a
closing (the "Closing") at the offices of White & Case LLP, 0000 Xxxxxx xx
xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m. on October 22, 1998,
or such other business day as may be agreed upon by the Purchasers, DIMAC
Operating and DIMAC Holdings (the "Closing Date"). At the Closing, DIMAC
Holdings will deliver to each of the Purchasers the Securities to be
purchased by such Purchaser (in such denomination or denominations and
registered in such Purchaser's name or the name of such nominee or nominees
as such Purchaser may request), dated the Closing Date, against payment of
the purchase price therefor by intra-bank or Federal funds bank wire
transfer of same day funds to such bank account which is
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identified on Schedule hereto or such other account as DIMAC Holdings shall
designate at least two Business Days prior to the Closing.
(c) Fees and Expenses. Regardless of whether the Securities are sold, Each
of DIMAC Holdings and DIMAC Operating agrees, jointly and severally, to pay
or reimburse all reasonable expenses relating to this Agreement, including
but not limited to:
(i) each Purchaser's reasonable expenses incurred in connection with
the transactions contemplated by this Agreement, the Indenture, the
Notes, the Notes Registration Rights Agreement, the Warrant Agreement,
the Warrants, the Stockholders' Agreement and the other Documents
including, without limitation, travel and lodging expenses and all
costs incurred in connection with such Purchaser's review of each of
the Companies' business and operations;
(ii) the fees and other charges and expenses of the Purchasers'
counsel, Xxxxxxx, Arps, Slate, Xxxxxxx & Xxxx LLP, in connection
herewith and with the other Documents;
(iii) the cost of printing, reproducing and delivering to each
Purchaser's home office or the office of such Purchaser's designee,
insured to such Purchaser's satisfaction, this Agreement, the
Indenture, the Notes, the Notes Registration Rights Agreement, the
Warrant Agreement, the Warrants, the Stockholders' Agreement and the
other Documents;
(iv) the reasonable fees and expenses (including the reasonable fees
and expenses of counsel) in connection with any registration or
qualification of the Securities required in connection with the offer
and sale of the Securities pursuant to this Agreement under the
securities or "blue sky" laws of any jurisdiction requiring such
registration or qualification or in connection with obtaining any
exemptions from such requirements;
(v) all expenses and listing fees in connection with the application
for quotation of the Notes, the Shares and the Warrant Shares in the
Private Offering, Resales, and Trading through Automated Linkages
market of the National Association of Securities Dealers, Inc.;
(vi) all fees and expenses (including fees and expenses of counsel) in
connection with the approval of the Notes, the Shares and the Warrant
Shares by DTC for "book-entry" transfer;
(vii) each Purchaser's expenses (including the reasonable fees and
expenses of counsel) relating to any amendment to, or modification of,
or any waiver or consent or preservation of rights under, this
Agreement or any of the other Documents;
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(viii) all fees charged by rating agencies in connection with the
rating of the Notes;
(ix) all costs, expenses, fees and taxes incident to and in connection
with the issuance and delivery of the Notes, including the reasonable
fees and expenses of the Trustee;
(x) all other expenses, including without limitation reasonable
counsel's fees, accountants' fees incurred by the Companies in
connection with the transactions contemplated by this Agreement and
the other Documents.
DIMAC Operating and DIMAC Holdings, jointly and severally, shall
deliver to each of the Purchasers or to such other persons as such
Purchaser shall direct, concurrently with the Closing, by intra-bank or
Federal funds bank wire transfer of same day funds, payment for any
documented out-of-pocket expenses for which such Purchaser is entitled to
reimbursement pursuant to this Section (c), including, without limitation,
the documented fees and expenses of such Purchaser's counsel.
(d) Other Purchasers. Each Purchaser's obligations hereunder are subject to
the execution and delivery of this Agreement by the other Purchasers listed
on the signature pages hereof. The obligations of each Purchaser shall be
several and not joint, and no Purchaser shall be liable or responsible for
the acts of any other Purchaser under this Agreement.
1.3 Registration of Securities
DIMAC Holdings shall cause to be kept at its principal office (or in the
case of the Notes, at the offices of the Registrar (as defined in the Indenture)
(a) a register for the registration and transfer of the Notes (the "Notes
Register"), (b) a register for the registration and transfer of the Common Stock
(the "Common Stock Register") and (c) a register for the registration and
transfer of the Warrants (the "Warrant Register"). The names and addresses of
the Holders of Notes, the issuance of PIK Notes, the transfer of Notes and the
names and addresses of the transferees of the Notes shall be registered in the
Notes Register. The names and addresses of the Holders of Common Stock, the
transfer of Common Stock and the names and addresses of the transferees of
Common Stock shall be registered in the Common Stock Register. The names and
addresses of the Holders of Warrants, the transfer of Warrants and the names and
addresses of the transferees of Warrants shall be registered in the Warrant
Register.
The Person in whose name any registered Security shall be registered shall
be deemed and treated as the owner and holder thereof for all purposes of this
Agreement, and DIMAC Holdings shall not be affected by any notice to the
contrary, until due presentment of such Security for registration of transfer as
provided in this Section . Payment of or on account of the principal, premium,
if any, and interest on any registered Securities shall be made to or upon the
written order of such registered holder.
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When Securities are presented to DIMAC Holdings with a request to register
the transfer of such Securities or to exchange such Securities for an equal
principal amount of Securities of other authorized denominations, DIMAC Holdings
shall register the transfer or make the exchange as requested if its reasonable
requirements for such transaction are met.
1.4 Delivery Expenses
If a Holder surrenders any Security to DIMAC Holdings for any reason, DIMAC
Holdings agrees to pay the cost of delivering to such Xxxxxx's home office or to
the office of such Xxxxxx's designee from DIMAC Holdings, insured to such
Xxxxxx's satisfaction, the surrendered Security and each Security issued in
substitution, replacement or exchange for the surrendered Security.
1.5 Issue Taxes
DIMAC Holdings agrees to pay all documentary stamp taxes and other
governmental charges (other than taxes in the nature of income, franchise,
property, estate, inheritance, gift or similar taxes) and governmental fees in
connection with the issuance or delivery by DIMAC Holdings to each Holder of the
Securities and the execution and delivery of the other Documents and any
modification of any of such Securities and Documents and will save such Holder
harmless without limitation as to time against any and all liabilities with
respect to all such taxes and fees. The obligations of DIMAC Holdings under this
Section are in addition to any other obligations of DIMAC Holdings contained
elsewhere in this Agreement and shall survive the payment or prepayment of the
Notes, at maturity, upon redemption or otherwise, the exercise of the Warrants
and the termination of this Agreement and the other Documents.
1.6 Direct Payment
Notwithstanding any provision to the contrary in the Indenture or the
Notes, DIMAC Holdings will pay or cause to be paid all amounts payable with
respect to any Note held by any Holder that is a Purchaser (without any
presentment of such Note and without any notation of such payment being made
thereon) by crediting (before 12:00 Noon, New York time), by Federal funds bank
wire transfer in same day funds to such Holder's account in any bank in the
United States of America as may be designated and specified in writing by such
Holder at least two Business Days prior thereto. Each Purchaser's initial bank
account for this purpose is on Schedule 1.1 hereto. In the event that DIMAC
Holdings elects to make a PIK Interest Payment, then, in addition to making the
wire transfer of the cash portion of the PIK Interest Payment, DIMAC Holdings
shall deliver or cause to be delivered the portion of such PIK Interest Payment
being paid in PIK Notes to each Holder at such Holder's address as it appears in
the Notes Register or at such address as may be designated and specified in
writing by such Holder at least two Business Days prior thereto.
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1.7 Lost, Etc. Securities
If a mutilated Security is surrendered to DIMAC Holdings or if the Holder
of a Security claims and submits an affidavit or other evidence, satisfactory to
DIMAC Holdings, to the effect that the Security has been lost, destroyed or
wrongfully taken, DIMAC Holdings shall issue a replacement Security if the
customary requirements relating to replacement securities are reasonably
satisfied. If required by DIMAC Holdings, such Holder must provide an indemnity
bond, or other form of indemnity, sufficient in the judgment of DIMAC Holdings
to protect DIMAC Holdings from any loss which it may suffer if a Security is
replaced. If any Purchaser or any other institutional Holder (or nominee
thereof) is the owner of any such lost, stolen or destroyed Security, then the
affidavit of an authorized officer of such owner, setting forth the fact of
loss, theft or destruction and of its ownership of the Security at the time of
such loss, theft or destruction shall be accepted as satisfactory evidence
thereof, and no further indemnity shall be required as a condition to the
execution and delivery of a new Security other than the unsecured written
agreement of such owner reasonably satisfactory to DIMAC Holdings, to indemnify
DIMAC Holdings or at the option of the Purchaser, an indemnity bond in the
amount of the Security remaining outstanding.
Every replacement Security is an obligation of DIMAC Holdings.
1.8 Indemnification
In addition to all other sums due hereunder or provided for in this
Agreement or any of the other Documents and any and all obligations of DIMAC
Holdings or DIMAC Operating to indemnify any Purchaser hereunder or under any of
the other Documents, DIMAC Operating and DIMAC Holdings (each, an "Indemnifying
Party") hereby agree, jointly and severally, without limitation as to time, to
indemnify each Purchaser, each Affiliate of a Purchaser and each director,
officer, employee, counsel, agent or representative of such Purchaser and its
Affiliates (collectively, the "Indemnified Parties") against, and hold it and
them harmless from, to the fullest extent lawful, all losses, claims, damages,
liabilities, costs (including, without limitation, costs of preparation and
attorneys' fees and disbursements) and expenses, including expenses of
investigation (collectively, "Losses"), incurred by it or them and arising out
of or in connection with this Agreement, the Indenture, the Notes, the Notes
Registration Rights Agreement, the Warrant Agreement, the Warrants, the
Stockholders' Agreement and the other Documents or the transactions contemplated
hereby or thereby (or any other document or instrument executed herewith or
pursuant hereto or thereto), regardless of whether the transactions contemplated
by this Agreement are consummated and regardless of whether any Indemnified
Party is a formal party to any proceeding; provided, however, that the
Indemnifying Parties shall not be liable to any Indemnified Party for any Losses
to the extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or review) that such
Losses arose from the gross negligence or willful misconduct of such Indemnified
Party, which (i) is independent of any wrongful act by the Indemnifying Parties,
their Affiliates or any of their respective representatives and (ii) was not
taken by such Indemnified Party in reliance upon any of the representations,
warranties, covenants or promises of any Indemnifying Party herein (including,
without limitation, those incorporated by reference herein) or in the other
Documents, including (without limitation) the certificates delivered by any of
the Companies pursuant hereto or thereto. Each Indemnifying Party
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agrees, jointly and severally, to reimburse any Indemnified Party promptly for
all such Losses as they are incurred by such Indemnified Party (regardless of
whether it is or may be ultimately determined that an Indemnified Party is not
entitled to indemnification hereunder). The obligations of each Indemnifying
Party to each Indemnified Party hereunder shall be separate obligations, and the
Indemnifying Party's liability to any such Indemnified Party hereunder shall not
be extinguished solely because any other Indemnified Party is not entitled to
indemnity hereunder. The obligations of each Indemnifying Party under this
Section shall survive the payment or prepayment of the Notes, at maturity, upon
acceleration, redemption or otherwise, the exercise of the Warrants purchased by
any Purchaser, the redemption or repurchase of any Warrant Shares, any transfer
of the Securities by any Purchaser and the termination of this Agreement, the
Indenture, the Notes, the Notes Registration Rights Agreement, the Warrant
Agreement, the Warrants, the Stockholders' Agreement the Senior Credit
Agreement, the DIMAC Operating Indenture, the DIMAC Operating Notes, the DIMAC
Operating Notes Purchase Agreement and any of the other Documents.
In addition, each Indemnifying Party jointly and severally, shall,
without limitation as to time, indemnify, reimburse, defend, and hold harmless
the Indemnified Parties for, from, and against all Losses asserted against,
resulting to, imposed on, or incurred by any of the Indemnified Parties,
directly or indirectly, in connection with any of the following: (i) the events,
circumstances and conditions relating to environmental matters described in the
Offering Circular; (ii) any pollution or threat to human health or the
environment that is related in any way to the management, use, control,
ownership or operation of the business or property in connection with the
business of the Companies, by the Companies, or any Person for whom any Company
is or may be responsible by law or contract, including, without limitation, all
on-site and off-site activities involving Materials of Environmental Concern,
and that occurred, existed, arises out of conditions or circumstances that
occurred or existed, or was caused, in whole or in part, on or before the
Closing Date, regardless of whether the pollution or threat to human health or
the environment is described in the Offering Circular; (iii) any Environmental
Claim against any Person whose liability for such Environmental Claim any
Company has assumed or retained either contractually or by operation of law,
including but not limited to any pollution or threat to human health or the
environment, or any Federal, state, local or foreign approvals; or (iv) the
breach of any environmental representation or warranty set forth or incorporated
by reference herein.
In case any action, claim or proceeding shall be brought against any
Indemnified Party with respect to which indemnity may be sought against any
Indemnifying Party hereunder, such Indemnified Party shall promptly notify each
Indemnifying Party in writing and such Indemnifying Party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such Indemnified Party and payment of all fees and expenses incurred in
connection with the defense thereof. The failure to so notify such Indemnifying
Party shall not affect any obligation it may have to any Indemnified Party under
this Agreement or otherwise except to the extent that (as finally determined by
a court of competent jurisdiction (which determination is not subject to review
or appeal)) such failure materially and adversely prejudiced such Indemnifying
Party. Each Indemnified Party shall have the right to employ separate counsel in
such action, claim or proceeding and participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of each Indemnified
Party unless: (i) such Indemnifying Party has agreed to pay such expenses; or
(ii) such Indemnifying Party has failed promptly to assume the defense and
employ counsel reasonably satisfactory to such
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Indemnified Party; or (iii) the named parties to any such action, claim or
proceeding (including any impleaded parties) include any Indemnified Party and
such Indemnifying Party or an Affiliate of such Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that either (x) there may
be one or more legal defenses available to it which are different from or in
addition to those available to such Indemnifying Party or such Affiliate or (y)
a conflict of interest may exist if such counsel represents such Indemnified
Party and such Indemnifying Party or its Affiliate; provided that, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel in the circumstances described in clause (ii) or (iii)
above, such Indemnifying Party shall not have the right to assume the defense
thereof and such counsel shall be at the expense of the Indemnifying Parties;
provided, however, that such Indemnifying Party shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be responsible hereunder for the fees and
expenses of more than one such firm of separate counsel (in addition to any
local counsel), which counsel shall be designated by such Indemnified Party. No
Indemnifying Party shall be liable for any settlement of any such action
effected without its written consent (which shall not be unreasonably withheld).
Each Indemnifying Party agrees, jointly and severally, that it will not, without
the Indemnified Party's prior written consent, consent to entry of any judgment
or settle or compromise any pending or threatened claim, action or proceeding in
respect of which indemnification or contribution may be sought hereunder unless
the foregoing contains an unconditional release, in form and substance
reasonably satisfactory to the Indemnified Parties, of the Indemnified Parties
from all liability and obligation arising therefrom.
If the indemnification provided for in this Section is unavailable
to, or insufficient to hold harmless, any Indemnified Party in respect of any
Losses referred to therein, then each Indemnifying Party shall have an
obligation to contribute to the amount paid or payable by such Persons as a
result of such Losses in such proportion as is appropriate to reflect the
relative fault of each Indemnifying Party, its subsidiaries and Affiliates, on
the one hand, and such Indemnified Party, on the other hand, in connection with
the actions which resulted in such Losses as well as any other relevant
equitable considerations. The amount paid or payable by any such Person as a
result of the Losses referred to above shall be deemed to include, subject to
the limitations set forth in this Section , any legal or other fees or expenses
reasonably incurred by such Person in connection with any investigation, lawsuit
or legal or administrative action or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section were determined by pro rata allocation or
by any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who is not
guilty of such fraudulent misrepresentation.
9
1.9 Further Actions
During the period from the date hereof to the Closing Date, DIMAC
Operating and DIMAC Holdings each shall (i) take all actions necessary or
appropriate to cause its representations and warranties contained in Section to
be true and correct as of the Closing Date (unless stated to refer to another
date), both before and after giving effect to the transactions contemplated by
this Agreement and the other Documents, as if made on and as of such date, and
(ii) take, or cause to be taken, all action, and do, or cause to be done, all
things necessary, proper or advisable under applicable law and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, obtaining all consents and approvals of all
Persons and removing all injunctive or other impediments or delays, legal or
otherwise, which are necessary to the consummation of the transactions
contemplated by this Agreement and the other Documents.
1.10 Stay, Extension and Usury Laws
DIMAC Holdings covenants and agrees (to the extent that it may lawfully do
so) that it will not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, and will use its best efforts to
resist any attempts to claim or take the benefit of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of its obligations under this Agreement
or the Notes; and DIMAC Holdings (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Holders, but will suffer and permit the
execution of every such power as though no such law has been enacted.
10
1.11 ERISA Notices
Promptly, but in any event within thirty (30) days thereafter, DIMAC
Holdings shall deliver to the Purchasers (or, if no Purchaser continues to be a
Holder, such Person as the Majority Holders shall designate), if and when DIMAC
Holdings or when to the knowledge of DIMAC Holdings, any of its Subsidiaries (i)
gives or is required to give notice to the Pension Benefit Guaranty Corporation
(the "PBGC") of any "reportable event" (as defined in Section 4043 of ERISA)
with respect to any employee pension benefit plan maintained by DIMAC Holdings
or any of its Subsidiaries or any entity which is a member of the same
controlled group as DIMAC Holdings, which "reportable event" would constitute
grounds for a termination of such plan under Title IV of ERISA or the imposition
of a tax under Section 4971 of the Code, or knows that the plan administrator of
any such plan has given or is required to give notice of any such reportable
event, a copy of the notice of such reportable event given or required to be
given to the PBGC, (ii) receives notice of complete or partial withdrawal
liability under Title IV of ERISA or notice that any multiemployer plan to which
DIMAC Holdings or any of its Subsidiaries or any entity which is a member of the
same controlled group as DIMAC Holdings contributes or is obligated to
contribute is in reorganization or has been terminated, a copy of such notice,
(iii) receives notice from the PBGC under Title IV of ERISA of an intent to
terminate or appoint a trustee to administer any employee pension benefit plan
maintained by DIMAC Holdings or any of its Subsidiaries or any entity which is a
member of the same controlled group as DIMAC Holdings, a copy of such notice,
(iv) applies for a waiver of the minimum funding standard under Section 412 of
the Code, a copy of such application, (v) gives notice of intent to terminate
any employee pension benefit plan, subject to Title IV of ERISA, maintained by
DIMAC Holdings or any of its Subsidiaries or any entity which is a member of the
same controlled group as DIMAC Holdings under Title IV of ERISA, a copy of such
notice, (vi) fails to make any payment or contribution to any employee pension
benefit plan (or multiemployer plan or in respect of any benefit arrangement) or
makes any amendment to any employee pension benefit plan or benefit arrangement
which would result in the imposition of a lien or the posting of a bond or other
security, a certificate of the Chief Executive Officer of DIMAC Holdings setting
forth details as to such occurrence and action, if any, which DIMAC Holdings or
any of its Subsidiaries is required or proposes to take, (vii) adopts,
establishes, maintains or enters into any obligation to make contributions that
are material with respect to DIMAC Holdings or any of its Subsidiaries to any
new employee benefit plan or multiemployer plan, a certificate of the Chief
Executive Officer of DIMAC Holdings setting forth details as to such obligation,
(viii) modifies in any material respect any existing employee benefit plan
maintained by DIMAC Holdings or any of its Subsidiaries or any entity which is a
member of the same controlled group as DIMAC Holdings (other than any
modification to medical, dental or other employee welfare benefit plans in the
ordinary course of business) so as to materially increase its obligations
thereunder, a certificate of the Chief Executive Officer of DIMAC Holdings
setting forth details as to such modification or (ix) materially increases a
contribution obligation to any multiemployer plan contributed to or required to
be contributed to by DIMAC Holdings or any of its Subsidiaries or any entity
which is a member of the same controlled group as DIMAC Holdings, a certificate
of the Chief Executive Officer of DIMAC Holdings setting forth details as to
such increase.
As used in this Section , the terms "employee pension benefit plan,"
"employee welfare benefit plan," "multiemployer plan" and "employee benefit
plan" shall have the meanings assigned to such
11
terms in Section 3 of ERISA and the term "controlled group" shall have the
meaning assigned to such term in Section 414(b) and (c) of the Code.
1.12 Inconsistent Agreements
So long as the Purchasers and their Affiliates shall collectively hold at
least $20,000,000 aggregate principal amount of the Notes, except to the extent
permitted or not otherwise prohibited by the terms of the Indenture, DIMAC
Holdings and DIMAC Operating shall not, and each shall cause each of its
Subsidiaries to not, (i) enter into any agreement or arrangement that is
inconsistent with, or would impair the ability of DIMAC Holdings or any of its
Subsidiaries to fulfill the obligations of DIMAC Holdings or any of its
Subsidiaries under, this Agreement or any of the other Documents, or (ii)
supplement, amend or otherwise modify the terms of any agreement or arrangement
or of their respective Charter Documents, if the effect thereof would be
materially adverse to the Holders. Notwithstanding the foregoing, DIMAC Holdings
and DIMAC Operating shall not be precluded from entering into any amendment,
modification or supplement to or of the Senior Credit Agreement.
1.13 Inspection of Properties and Records
So long as any of the Purchasers or any of their Affiliates shall hold any
of the Notes, DIMAC Holdings shall allow, and each shall cause each of its
Subsidiaries to allow, each Purchaser and each Holder of at least $20,000,000
aggregate principal amount of Notes (or such Persons as any of them may
designate) (individually and collectively, "Inspectors"), subject to appropriate
agreements as to confidentiality, (i) to visit and inspect any of the properties
of DIMAC Holdings or any of its Subsidiaries, (ii) to examine all their books of
account, records, reports and other papers and to make copies and extracts
therefrom, (iii) to discuss their respective affairs, finances and accounts with
their respective officers and employees, and (iv) to discuss the financial
condition of DIMAC Holdings and its Subsidiaries with their independent
accountants upon reasonable notice to DIMAC Holdings of its intention to do so
and so long as DIMAC Holdings shall be given the reasonable opportunity to
participate in such discussions (and by this provision DIMAC Holdings authorizes
said accountants to have such discussions with the Inspectors). All such visits,
examinations and discussions set forth in the preceding sentence shall be upon
prior notice at such reasonable times and as often as may be reasonably
requested. If a Default or an Event of Default shall have occurred and be
continuing, DIMAC Holdings shall pay or reimburse all Inspectors for expenses
which such Inspectors may reasonably incur in connection with any such
visitations or inspections.
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1.14 Board of Directors Observation Rights
So long as any of the Purchasers or any of their Affiliates shall hold any
of the Notes, the Purchasers shall have the right to designate one
representative for all such Purchasers to be present (whether in person or by
telephone) at all meetings of the Boards of Directors (and committees thereof)
of DIMAC Holdings and DIMAC Operating; provided that such representative shall
not be entitled to vote at such meetings. DIMAC Holdings and DIMAC Operating
shall send to each such representative all of the notices, information and other
materials that are distributed to the members of the Boards of Directors of
DIMAC Holdings and DIMAC Operating, respectively, and shall provide each of the
Purchasers and each Holder of at least $20,000,000 aggregate principal amount of
Notes with a notice and agenda of each meeting of the Board of Directors (and
committees thereof) of DIMAC Holdings or DIMAC Operating, respectively, at the
same time as delivered to the members of such Board of Directors; provided,
however, that upon the request of any such representative, DIMAC Holdings or
DIMAC Operating, as the case may be, shall refrain from sending such notices,
information and other materials for so long as such representative shall
request. DIMAC Holdings or DIMAC Operating shall pay or reimburse not more than
one of such representatives for expenses which such representative may
reasonably incur in connection with any such attendance of meetings of the
Boards of Directors of DIMAC Holdings and DIMAC Operating. The Purchasers shall
provide notice to DIMAC Holdings and DIMAC Operating of the identity and address
of, or any change with respect to the identity or address of, their
representative. DIMAC Holdings and DIMAC Operating hereby acknowledge and agree
on behalf of themselves and on behalf of each of their Subsidiaries, that at any
time, the Purchasers may purchase or sell securities issued by DIMAC Holdings,
DIMAC Operating or any of their Subsidiaries, notwithstanding the receipt by the
Purchasers of any confidential or non-public information regarding DIMAC
Holdings, DIMAC Operating, or any of their Subsidiaries.
1.15 Private Placement Number
DIMAC Holdings consents to the filing of copies of this Agreement with
Standard & Poor's Corporation to obtain a private placement number and with the
National Association of Insurance Commissioners.
1.16 Rating of the Notes
DIMAC Holdings shall, upon the request of any Purchaser and in order
to obtain a rating of the Notes, deliver to a securities rating agency
designated by such Purchaser, copies of this Agreement, the other Documents and
any other materials reasonably requested by such Purchaser.
1.17 Financial Statements and Reports
(a) DIMAC Holdings will maintain, and will cause each of its Subsidiaries
to maintain, a system of accounting established and administered in
accordance with sound business practices to permit preparation of financial
statements in conformity with GAAP. As long as any Purchaser is a Holder of
any of the Securities, DIMAC Holdings will deliver to such Purchaser the
financial statements and other reports described below:
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(i) Monthly Financials. As soon as available and in any event
within thirty (30) days after the end of each month ending after the
Closing Date, DIMAC Holdings will deliver the consolidated balance
sheets of DIMAC Holdings and its Subsidiaries as at the end of such
month and the related consolidated statements of income and
stockholders' equity and cash flows for such month and in each case
for the period from the beginning of the then current fiscal year
to the end of such month, setting forth in each case in comparative
form the corresponding figures for the corresponding periods of the
previous fiscal year and the corresponding figures from the
consolidated plan and financial forecast for the current fiscal
year delivered pursuant to subsections (a)(v), (a)(viii) and (b) of
this Section , to the extent prepared on a monthly basis, all in
reasonable detail and certified by the chief financial officer of
DIMAC Holdings that they fairly present in all material respects
the financial condition of DIMAC Holdings and its Subsidiaries as
at the dates indicated and the results of their operations and
their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments; provided,
however, that the financial data provided pursuant to this clause
(i) shall include, without limitation, cost savings amounts for
such month and for the period from the beginning of the then
current fiscal year to the end of such month and on an annualized
basis and the corresponding projected cost savings figures from the
consolidated plan and financial forecast for the current fiscal
year delivered pursuant to subsections (a)(v), (a)(viii) and (b) of
this Section;
(ii) Quarterly Financials. As soon as available and in any event
within forty-five (45) days after the end of each fiscal quarter
(other than the last quarter of any fiscal year), the DIMAC Holdings
shall deliver: (A) the consolidated balance sheet of DIMAC Holdings
and its Subsidiaries as at the end of such fiscal quarter and the
related consolidated statements of income, stockholders' equity and
cash flows of DIMAC Holdings and its Subsidiaries for such fiscal
quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous
fiscal year and the corresponding figures from the consolidated
plan and financial forecast delivered pursuant to subsections
(a)(v), (a)(viii) and (b) of this Section for the fiscal year
covered by such financial statements, all in reasonable detail and
certified by the chief financial officer of DIMAC Holdings that
they fairly present in all material respects the financial
condition of DIMAC Holdings and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows
for the periods indicated, (B) a narrative report describing the
operations of DIMAC Holdings and its Subsidiaries in the form
prepared for presentation to senior management for such fiscal
quarter and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter, including a
comparison to and discussion of any variances from the
corresponding periods of the previous fiscal year and from the
financial forecast for such fiscal period contained in the forecast
delivered pursuant to subsections (a)(v), (a)(viii) and (b) of this
Section and (C) a schedule of the outstanding Indebtedness for
borrowed money of DIMAC Holdings and its Subsidiaries describing in
reasonable detail each such debt issue or loan outstanding and the
principal amount (excluding original issue discount) and amount of
accrued and unpaid interest with
14
respect to each such debt issue or loan;
(iii) Year-End Financials. As soon as available and in any event
within ninety (90) days after the end of each fiscal year, DIMAC
Holdings will deliver: (A) the consolidated balance sheet of DIMAC
Holdings and its Subsidiaries as at the end of such year and the
related consolidated statements of income, stockholders' equity and
cash flows of DIMAC Holdings and its Subsidiaries for such fiscal
year, setting forth in each case in comparative form the corresponding
figures for the previous fiscal year and the corresponding figures
from the consolidated plan and financial forecast delivered
pursuant to subsection (a)(v) and (b) of this Section for the
fiscal year covered by such financial statements, all in reasonable
detail and certified by the chief financial officer of DIMAC
Holdings that they fairly present in all material respects the
financial condition of DIMAC Holdings and its Subsidiaries as at
the dates indicated and the results of their operations and their
cash flows for the periods indicated, (B) a narrative report
describing the operations of DIMAC Holdings and its Subsidiaries in
the form prepared for presentation to senior management for such
fiscal year, and (C) in the case of such consolidated financial
statements, a report thereon of independent certified public
accountants of recognized national standing selected by DIMAC
Holdings, which report shall be unqualified, shall express no
doubts about the ability of DIMAC Holdings and its Subsidiaries to
continue as a going concern, and shall state that such consolidated
financial statements fairly present in all material respects the
consolidated financial position of DIMAC Holdings and its
Subsidiaries as of the dates indicated and the results of their
operations, stockholders' equity and their cash flows for the
periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants
in connection with such consolidated financial statements has been
made in accordance with United States generally accepted auditing
standards;
(iv) Promptly upon receipt thereof, copies of all reports
submitted to the management of DIMAC Holdings or DIMAC Operating by
independent public accountants, whether in connection with each
annual, interim or special audit of the consolidated financial
statements of DIMAC Holdings made by such accountants or otherwise,
including the management letter submitted by such accountants to
management in connection with their annual audit;
(v) Copies of any financial or other report or notice
delivered to, or received from, (a) any lenders pursuant to
Section 6.1 of the Senior Credit Agreement and (b) the trustee
pursuant to Section 4.02 of the DIMAC Operating Indenture (or
any similar provision contained in any successor agreements) not
otherwise delivered to the Holders pursuant to this Section;
provided, however, that regardless of whether DIMAC Holdings or
DIMAC Operating is required to deliver any financial plan pursuant
to the Senior Credit Agreement or the DIMAC Operating Indenture,
DIMAC Holdings shall deliver to each Holder an annual financial plan
of DIMAC Holdings and its Subsidiaries (including monthly financial
planning data and projected monthly cost
15
savings amounts attributable to planned cost savings measures)
on or prior to December 15 of the year preceding the year to which
such plan relates;
(vi) Copies of all material reports, letters and other
correspondence from local, state or Federal regulatory or other
agencies relating to business, licenses or operating contracts of
DIMAC Holdings or any of its Subsidiaries;
(vii) Notice to each Holder of (i) any violation of or
noncompliance with any Environmental Laws that could reasonably be
expected to have a Material Adverse Effect, (ii) any communication
(written or oral) or Environmental Claim, whether from a governmental
authority, citizens group, employee or otherwise, alleging that any
of the Companies is not in compliance with any Environmental law or
asserting liability of any of the Companies for contamination from
or as a result (directly or indirectly) of any Materials of
Environmental Concern, which noncompliance or liability could
reasonably be expected to have a Material Adverse Effect, or (iii)
any releases or threatened releases (including, without limitation,
any releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposing or
dumping, on-site or off-site) of any Materials of Environmental
Concern for which any of the Companies could be held liable, either
in fact or by law, which releases could reasonably be expected to
have a Material Adverse Effect; and
(viii) Copies of such other information and data with respect
to DIMAC Holdings or any of its Subsidiaries as from time to time may
be reasonably requested by any Holder.
(b) Each financial statement delivered pursuant to subsections
(a)(i), (a)(ii) and (a)(iii) of this Section shall be in a form reasonably
acceptable to each Purchaser and, in the case of financial statements
delivered pursuant to subsections (a)(ii) and (a)(iii) of this Section ,
shall be accompanied by a brief narrative description of business and
financial trends and developments material to DIMAC Holdings and its
Subsidiaries and significant transactions that have occurred in the
appropriate period or periods covered thereby.
1.18 Pre-Emptive Rights
(a) Right to Purchase New Equity Securities. DIMAC Holdings hereby
grants to each TCW Entity the right to purchase, its Pro Rata Share of
all New Equity Securities that DIMAC Holdings may, from time to time,
propose to sell and issue after the date hereof at the price and on the
terms on which DIMAC Holdings proposes to sell such New Equity Securities.
The right to purchase New Equity Securities shall be subject to the
following additional provisions of this Section.
(b) Required Notices. In the event DIMAC Holdings proposes to
undertake an issuance of New Equity Securities, it shall give each TCW
Entity written notice, in accordance with the provisions of Section,
of its intention, describing the type of New Equity Securities, the price,
the number of shares and the general terms upon which DIMAC Holdings
proposes to issue the
16
same. Each TCW Entity shall have fifteen (15) days from the date of receipt
of any such notice to agree to purchase any or all of such TCW Entity's Pro
Rata Share of such New Equity Securities for the price and upon the general
terms specified in the notice by giving written notice to DIMAC Holdings
and stating therein the quantity of New Equity Securities to be purchased.
(c) DIMAC Holding's Right to Sell. In the event the TCW Entities fail
to exercise the right of first refusal as to all New Equity Securities
offered within said fifteen (15) day period, DIMAC Holdings shall have
ninety (90) days thereafter to sell or enter into an agreement (pursuant
to which the sale of New Equity Securities covered thereby shall be closed,
if at all, within twenty (20) days from the date of said agreement) to sell
all such New Equity Securities respecting which the right to purchase
provided in Section (a) was not exercised, at a price and upon terms no
more favorable to the purchasers thereof than specified in DIMAC
Holdings's notice. In the event DIMAC Holdings has not sold within said
ninety (90) day period or entered into an agreement to sell all such New
Equity Securities within said ninety (90) day period (or sold and issued
all such New Equity Securities in accordance with the foregoing within
twenty (20) days from the date of said agreement), DIMAC Holdings shall
not thereafter issue or sell any New Equity Securities, without first
offering such securities to the TCW Entities in the manner provided above.
(d) Expiration of Right. The rights provided under this Section shall
not apply to a Public Offering Event and shall expire on the effective date
of a registration statement filed with the SEC in connection with a Public
Offering Event (provided, that such right shall be reinstated if such
Public Offering Event is not consummated pursuant to such registration
statement).
(e) Certain Adjustments. In the event of any increase or decrease in
the number of outstanding shares of Common Stock of DIMAC Holdings
resulting from any recapitalization, payment of a Common Stock dividend,
stock split, combination of shares, or any other increase or decrease in
the number of such outstanding shares effected without DIMAC Holdings's
receipt of consideration therefor, any maximum, minimum, or threshold
number of shares of Common Stock referred to herein shall be
proportionately adjusted to reflect such increase or decrease and any
additional securities issued with respect to the Common Stock of DIMAC
Holdings shall become subject to the terms and conditions of this
Agreement. The provisions of this Agreement shall apply to the full extent
set forth herein with respect to any and all shares of capital stock of
DIMAC Holdings or any successor or assign of DIMAC Holdings (whether by
merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in exchange for, or in substitution for the Shares, the Warrant
Shares or other shares of Common Stock of DIMAC Holdings, by combination,
recapitalization, reclassification, merger, consolidation or otherwise.
In the event of any change in the capitalization of DIMAC Holdings, as a
result of any stock split, stock dividend or stock combination or
otherwise, the provisions of this Section shall be appropriately
adjusted.w
(f) Definitions. As used in this Section , the following terms shall
have the meanings set forth below:
17
(i) "Common Stock" shall include all such other securities and shall
include all shares of Common Stock or other securities issuable upon
exercise of the Warrants.
(ii) "New Equity Securities" shall mean any capital stock (including
common stock or preferred stock) of DIMAC Holdings whether now
authorized or not, and rights, options or warrants to purchase capital
stock, and securities of any type whatsoever that are, or may become,
convertible into or exchangeable or exercisable for capital stock;
provided, however, that the term New Equity Securities shall not
include (i) securities issued in connection with the acquisition of
another Person by DIMAC Holdings by merger, purchase of substantially
all of the assets or other reorganization whereby DIMAC Holdings
acquires more than fifty percent (50%) of the voting power or assets
of such Person; (ii) Common Stock (including options to purchase
Common Stock and shares of Common Stock issued upon exercise thereof)
issued to employees or directors of DIMAC Holdings pursuant to plans
or agreements approved by the Board of Directors of DIMAC Holdings;
(iii) securities issued pursuant to any stock dividend, stock split,
combination or other reclassification by DIMAC Holdings of any of its
capital stock; (iv) securities issued upon exercise of the Warrants;
or (v) any securities issued to any Person other than any of the MDC
Entities.
(iii) "Public Offering Event" means the closing of a public offering
of Common Stock pursuant to a registration statement under the
Securities Act (other than a registration statement on Form S-4 or S-8
or any successor form(s)), after which at least twenty-five percent
(25%) of the outstanding shares of Common Stock is publicly held and
such Common Stock is listed or admitted to trading on a national
securities exchange or quoted on the NASDAQ National Market.
(iv) A TCW Entity's "Pro Rata Share" shall be equal to a fraction (i)
the numerator of which is the number of shares of Common Stock held by
such TCW Entity (including those issuable upon exercise of all
outstanding Warrants) on the date of DIMAC Holdings's written notice
pursuant to Section (b); and (ii) the denominator of which is the
number of shares of Common Stock outstanding (on a fully diluted basis
assuming exercise of all outstanding options and Warrants) on such
date.
(v) "TCW Entities" means Trust Company of the West and its Affiliates
and any of the Purchasers and their Affiliates and any Person to whom
any shares of Common Stock or Warrants that were held by any of the
Purchasers, may be transferred in accordance with the terms of the
Stockholders' Agreement.
1.19. Other Covenants
DIMAC Holdings further covenants and agrees:
(a) to not, and will ensure that no affiliate (as defined in Rule 501(b) of
the Securities Act) of DIMAC Holdings will, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined
in the Securities Act) that would be integrated with the sale
18
of the Securities in a manner that would require the registration under the
Securities Act of the sale to the Purchasers of the Securities;
(b) for so long as any of the Securities remain outstanding and during any
period in which DIMAC Holding is not subject to Section 13 or 15(d) of the
Exchange Act, to make available to any beneficial owner of Securities and
to any prospective purchaser thereof from such beneficial owner, the
information required by Rule 144A(d)(4) under the Securities Act;
(c) to comply with all of its agreements in the Indenture, the Notes, the
Notes Registration Rights Agreement, the Warrant Agreement, the Warrants,
the Stockholders' Agreement and the other Documents;
(d) to use its best efforts to cause the Notes, the Shares and the Warrant
Shares to be designated PORTAL securities in accordance with the rules and
regulations adopted by the NASD and to permit the Notes, the Shares and the
Warrant Shares to be eligible for clearance and settlement through DTC;
(e) To (i) advise the Purchasers promptly after obtaining knowledge (and,
if requested by any of the Purchasers, confirm such advice in writing)
of the issuance by any state securities commission of any stop order
suspending the qualification or exemption from qualification of any of the
Notes for offer or sale in any jurisdiction, or the initiation of any
proceeding for such purpose by any state securities commission or other
regulatory authority, (ii) use its commercially reasonable efforts to
prevent the issuance of any stop order or order suspending the
qualification or exemption from qualification of any of the Notes under any
state securities or Blue Sky laws, and (iii) if at any time any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of any of the
Notes under any such laws, use its commercially reasonable efforts to
obtain the withdrawal or lifting of such order at the earliest possible
time;
(f) to comply with the representation letter of DIMAC Holdings to DTC
relating to the approval of the Notes by DTC for "book entry" transfer;
(g) for so long as the Notes are outstanding, and regardless of whether
required to do so by the rules and regulations of the SEC, (1) to furnish
to the Trustee and deliver or cause to be delivered to the Holders of the
Notes and the Purchasers (i) all quarterly and annual financial information
that would be required to be contained in a filing with the SEC on Forms
10-Q and 10-K if DIMAC Holdings were required to file such Forms, including
for each a "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual information only, a
report thereon by DIMAC Holdings' independent certified public accountants
and (ii) all reports that would be required to be filed with the SEC on
Form 8-K if DIMAC Holdings were required to file such reports and (2) from
and after the time the Exchange Offer Registration Statement or the Shelf
Registration Statement (or such other registration statement with respect
to the Notes) is filed with the SEC, to file such information with the SEC
so long as the SEC will accept such filings; and
19
(h) not to enter into any agreement that would preclude the exercise of the
Warrants for the Warrant Shares, except in accordance with the terms of the
Warrant Agreement and the Warrants.
SECTION 2. CLOSING CONDITIONS
The obligations of each Purchaser to purchase and pay for the Securities to
be delivered to such Purchaser at the Closing shall be subject to the
satisfaction of each of the following conditions on or before the Closing Date:
2.1 Delivery of Documents
DIMAC Holdings shall have delivered to each Purchaser, in form and
substance satisfactory to such Purchaser, the following:
(a) The Notes being purchased by such Purchaser, duly executed by DIMAC
Holdings, in the aggregate principal amount set forth below such
Purchaser's name on Schedule 1.1 hereto, certificates representing the
number of Shares being purchased by such Purchaser as set forth below such
Purchaser's name on Schedule 1.1 hereto and the Warrants being purchased by
such Purchaser, representing the number of Warrants set forth below such
Purchaser's name on Schedule 1.1 hereto.
(b) Xxxx executed original counterparts of this Agreement, the Indenture,
the Notes, the Notes Registration Rights Agreement, the Warrant Agreement,
the Warrants, the Stockholders' Agreement and the other Documents.
(c) The following legal opinions:
(i) An legal opinion, dated the Closing Date and addressed to the
Purchasers, from White & Case LLP, counsel for DIMAC Holdings and
DIMAC Operating, as to the matters set forth on Annex E.
(ii) A reliance letter from White & Case LLP, counsel for DIMAC
Holdings and DIMAC Operating, authorizing the Purchasers to rely on
each of the legal opinions of such firm rendered in connection with
the Senior Credit Agreement and the DIMAC Operating Notes Purchase
Agreement, together with copies of such opinions.
(iii) A legal opinion, dated the Closing Date and addressed to the
Purchasers, from Xxxxxxx, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for
the Purchasers.
(iv) Such other legal opinions covering matters incidental to the
transactions contemplated by this Agreement and the other Documents as
any Purchaser may reasonably request.
In rendering such opinions described in this subsection (c), each
counsel may rely as to
20
factual matters upon certificates or other documents furnished by officers
and directors of the Companies (copies of which shall be delivered to such
Purchaser) and by government officials, and upon such other documents as
such counsel deem appropriate as a basis for their opinion. Such counsel
shall opine, as applicable, as to the Federal laws of the United States,
the General Corporation Law of the State of Delaware, the laws of the
States of New York and the laws of the state or states of incorporation of
the Companies, if other than Delaware or New York.
(d) Resolutions of the Board of Directors of DIMAC Operating, certified by
the Secretary or Assistant Secretary of DIMAC Operating, to be duly adopted
and in full force and effect on such date, authorizing (i) the execution,
delivery and performance of this Agreement and the other Documents to which
DIMAC Operating is a party and the consummation of the transactions
contemplated hereby and thereby and (ii) specific officers of DIMAC
Operating to execute and deliver this Agreement and any other Documents to
which DIMAC Operating is a party.
(e) Resolutions of the Board of Directors of DIMAC Holdings, certified by
the Secretary or Assistant Secretary of DIMAC Holdings, to be duly adopted
and in full force and effect on such date, authorizing (i) the execution,
delivery and performance of this Agreement and the other Documents to which
DIMAC Holdings is a party and the consummation of the transactions
contemplated hereby and thereby, (ii) the issuance of the Notes, the PIK
Notes, the Shares, the Warrants and the Warrant Shares pursuant to this
Agreement and (iii) specific officers of DIMAC Holdings to execute and
deliver this Agreement and any other Documents to which DIMAC Holdings is a
party.
(f) Certificates of the Chief Executive Officer and Chief Financial Officer
of each of DIMAC Holdings and DIMAC Operating, dated the Closing Date,
certifying that (i) all of the conditions set forth in Sections , , , , and
are satisfied on and as of such date and specifying as to each such
condition the satisfaction thereof, (ii) all of the representations and
warranties of DIMAC Operating and DIMAC Holdings, as the case may be,
contained or incorporated by reference herein or in any of the other
Documents are true and correct on and as of such date as though made on and
as of such date (unless stated to relate to another date) and on and as of
the Closing Date as though made on and as of such date (and after giving
effect to the transactions contemplated by this Agreement and the other
Documents), and (iii) as to such other matters as such Purchaser may
reasonably request.
(g) A certificate in form, scope and substance reasonably satisfactory to
the Purchasers, from the Chief Financial Officer of each of DIMAC Holdings
and DIMAC Operating, dated the Closing Date, to the effect that at the
Closing Date,(and after giving effect to the transactions contemplated
hereby (including without limitation, the issuance of the Securities and
the application of the proceeds therefrom)), each of the Companies is
Solvent.
(h) Audited consolidated financial statements of the Companies (as
described in the first sentence of Section (b)) for the fiscal years
ended on December 31, 1997, 1996 and 1995 and unaudited consolidated
financial statements of each of the Companies for the six-month periods
ended June 30, 1998 and 1997, in each case together with a certificate
of the Chief Financial
21
Officer of such Company to the effect that they were prepared in accordance
with GAAP and fairly present the consolidated financial position,
stockholders' equity and income of such Company. The audited financial
statements referred to above shall be delivered together with a report
thereon by the applicable Company's independent accountants, which report
shall be unqualified, shall express no doubts about the ability of such
Company and each of its Subsidiaries to continue as a going concern, and
shall state that such consolidated financial statements fairly present the
consolidated financial position of such Company and each of its
Subsidiaries as of the dates indicated and the results of their operations
and their cash flows for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years (except as otherwise
disclosed in such financial statements) and that the examination by such
accountants in connection with such consolidated financial statements has
been made in accordance with United States of America generally accepted
auditing standards.
(i) Governmental certificates, dated the most recent practicable date
prior to the Closing Date, showing that each of the Companies is
organized, existing and in good standing in the jurisdiction of its
incorporation and is qualified as a foreign corporation and in good
standing in all other or transacts business, jurisdictions in which
it has executive offices except where the failure to be so qualified
could not reasonably be expected to have a Material Adverse Effect.
(j) Copies of each consent, license and approval required in connection
with the execution, delivery and performance by each of the Companies of
this Agreement and the other Documents and the consummation of the
transactions contemplated hereby and thereby.
(k) Copies of the Charter Documents of each of the Companies, certified as
of a recent date by the Secretaries of State of the relevant state of
incorporation and certified by the Secretary or Assistant Secretary of each
Company, as true and correct as of the Closing Date.
(l) Certificates of the Secretary or an Assistant Secretary of each of the
Companies as to the incumbency and signatures of the officers or
representatives of such Company executing this Agreement, the Indenture,
the Notes, the Notes Registration Rights Agreement, the Warrant Agreement,
the Warrants, the Stockholders' Agreement and the other Documents and any
other certificate or other document to be delivered pursuant hereto or
thereto, together with evidence of the incumbency of such Secretary or
Assistant Secretary.
(m) True and correct copies of the Senior Credit Agreement, the DIMAC
Operating Indenture, the DIMAC Operating Notes Purchase Agreement and all
amendments thereto.
(n) Such additional information and materials as any Purchaser may
reasonably request, including, without limitation, copies of any debt
agreements, security agreements and other contracts to which any of the
Companies is a party.
22
2.2 Legal Investment; Purchase Permitted by Applicable Laws
Each Purchaser's acquisition of the Securities (a) shall not be prohibited
by any applicable law or governmental regulation, release, interpretation or
opinion (including, without limitation, Regulations T, U and X of the Board of
Governors of the Federal Reserve System), (b) shall constitute a legal
investment as of the Closing Date under the laws and regulations and orders of
each jurisdiction to which such Purchaser may be subject (without resort to any
"basket" or "leeway" provision), and (c) shall not subject such Purchaser to any
penalty or, in its reasonable judgment, other onerous condition in or pursuant
to any such law, regulation or order; and such Purchaser shall have received
such certificates or other evidence as such Purchaser may reasonably request to
establish compliance with this condition.
2.3 Payment of Fees
DIMAC Holdings shall have delivered to each of the Purchasers or to such
other persons as such Purchaser shall direct on Schedule 1.1 hereto, at the
Closing, by intra-bank or Federal funds bank wire transfer of same day funds,
payment for such Purchaser's fee of such percent of the aggregate purchase price
of the Notes and the Warrants being purchased by such Purchaser as is set forth
on Schedule 1.1 hereto.
2.4 Compliance with Agreements
Each of the Companies shall have performed and complied in all material
respects with all agreements, covenants and conditions contained in this
Agreement, in the Indenture, in the Notes, in the Notes Registration Rights
Agreement, in the Warrant Agreement, in the Warrants, in the Stockholders'
Agreement in the Senior Credit Agreement, in the DIMAC Operating Indenture, in
the DIMAC Operating Notes Purchase Agreement and in any of the other Documents
and in any other document contemplated hereby or thereby, which are required to
be performed or complied with by such Company on or before the Closing Date.
2.5 Completion of Other Transactions
Simultaneously with or prior to the sale to each Purchaser of the
Securities to be purchased by such Purchaser:
(a) Each of the Documents shall have been executed and delivered by each
of the parties thereto (other than such Purchaser) in form and substance
satisfactory to the Purchasers, and such parties shall have consummated the
transactions contemplated thereby in accordance with all applicable laws
(including without limitation, the Securities Act, all applicable state
securities laws and all related rules and regulations under such statutes
and other laws).
(b) Each of the Senior Credit Agreement, the DIMAC Operating Indenture and
the DIMAC Operating Notes Purchase Agreement shall have been executed and
delivered by each of the parties thereto in form and substance satisfactory
to the Purchasers, and such parties shall
23
have consummated the transactions contemplated thereby in accordance with
all applicable laws (including without limitation, the Securities Act, all
applicable state securities laws and all related rules and regulations
under such statutes and other laws).
(c) DIMAC Operating shall have received (i) at least $45,000,000 of
additional term loans pursuant to the Senior Credit Agreement and (ii)
gross proceeds of at least $97,233,000 from the issuance and sale by it of
the DIMAC Operating Notes.
(d) DIMAC Holdings shall have received at least $10,000,000 from the
issuance and sale by it of shares of its Common Stock.
(e) All of the indebtedness under the Credit Agreement dated as of June 28,
1996 by and among AmeriComm Direct Marketing and Xxxxxx Financial, Inc. and
the other lenders party thereto, as lenders, and Xxxxxx Financial, Inc. as
agent, shall have been repaid, and such credit agreement shall have been
permanently terminated.
(f) All of the promissory notes issued under the AmeriComm Direct
Marketing Indenture shall have been repurchased by AmeriComm Direct
Marketing.
(g) All of the other Purchasers listed in the signature pages hereof shall
have consummated their purchase of Securities pursuant to this Agreement.
(h) DIMAC Holdings or any of its Subsidiaries shall have purchased all of
the issued and outstanding AmeriComm Notes from the holders thereof at a
purchase price equal to 106.25% of the aggregate principal amount thereof
plus accrued and unpaid interest thereon to the purchase date.
2.6 Truth of Representations and Warranties
Unless stated to relate to another date, all of the representations
and warranties of each of the Companies contained or incorporated by reference
herein or in any of the other Documents shall be true and correct in all
material respects (except that such phrase "in all material respects" shall be
disregarded to the extent that any such representation and warranty is qualified
by "material," "Material Adverse Effect" or any similar terms or by any phrase
using any of such terms) on and as of the Closing Date, both before and after
giving effect to the other transactions contemplated hereby and by the other
Documents.
2.7 Proceedings Satisfactory
All proceedings taken in connection with the sale of the Securities,
the transactions contemplated hereby, and all documents and papers relating
thereto, shall be reasonably satisfactory to such Purchaser. Such Purchaser and
its counsel shall have received copies of such documents and papers as they may
reasonably request in connection therewith, or as a basis for the Closing
opinions, all in form and substance satisfactory to such Purchaser.
24
2.8 Consents and Permits
Each of the Companies shall have received all consents, permits,
approvals and authorizations and sent or made all notices, filings,
registrations and qualifications as may be required pursuant to any law,
statute, regulation or rule (Federal, state, local or foreign) or pursuant to
any other agreement, order or decree to which any of them is a party or to which
any of them is subject, in connection with the transactions to be consummated on
or prior to the Closing Date as contemplated by this Agreement or any of the
other Documents.
2.9 No Material Adverse Effect
Subsequent to December 31, 1997: (A) none of the Companies shall
have suffered any adverse change in its properties, business, operations,
assets, condition (financial or otherwise) or prospects which could reasonably
be expected to result in a Material Adverse Effect; and (B) (i) except as
described in the Offering Circular, there shall not have been any material
change in the capital stock or long-term debt, or material increase in
short-term debt, of any of the Companies and (ii) none of the Companies shall
have incurred any liability or obligation, direct or contingent, that is
material to such Company, is required to be disclosed on a balance sheet in
accordance with GAAP and is not disclosed on the latest balance sheet previously
provided to the Purchasers.
2.10 No Material Judgment or Order
There shall not be on the Closing Date any judgment or order of a
court of competent jurisdiction or any ruling of any agency of the Federal,
state or local government that, in the reasonable judgment of any Purchaser or
its counsel, would prohibit the sale or issuance of the Securities hereunder or
subject DIMAC Holdings to any material penalty if the Securities were to be
issued and sold hereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF DIMAC OPERATING AND DIMAC
HOLDINGS
Each of DIMAC Holdings and DIMAC Operating represents and warrants, jointly
and severally, on the date hereof and as of the Closing, as follows:
25
3.1 Authorization; Capitalization
Each of the Companies has taken all actions necessary to authorize it (i)
to execute, deliver and perform all of its obligations under each of the
Documents to which it is a party, and (ii) to consummate the transactions
contemplated thereby. Without limiting the generality of the preceding sentence,
DIMAC Holdings has taken all actions necessary to authorize it to issue and
perform all of its obligations under the Notes, the Shares, the Warrants and the
Warrant Shares. Each of the Documents to which any of the Companies is a party
is a legally valid and binding obligation of such Company, enforceable against
it in accordance with its respective terms, except for (a) the effect thereon of
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting the rights of creditors generally and (b) limitations
imposed by equitable principles upon the specific enforceability of any of the
remedies, covenants or other provisions thereof and upon the availability of
injunctive relief or other equitable remedies.
As of the date hereof, DIMAC Operating and the entities identified on
Schedule (a) are the only direct or indirect Subsidiaries of DIMAC Holdings. The
total authorized Capital Stock of DIMAC Holdings consists of (a) 2,200,000
shares of Common Stock, of which 1,100,000 shares, were issued and outstanding
as of the date hereof. All outstanding options and other rights to acquire
shares of Capital Stock of DIMAC Holdings are as set forth on Schedule (b). The
total authorized Capital Stock of DIMAC Operating consists of 100 shares of
common stock, all of which were issued and outstanding on the date hereof. DIMAC
Holdings owns 100% of the outstanding Equity Interests or other securities
evidencing equity ownership of DIMAC Operating. Except for 100 shares of common
stock of DIMAC Operating, DIMAC Holdings does not own any Equity Interest in, or
any other securities of, any Person. As of the date hereof, DIMAC Operating does
not own any Equity Interest in, or any other securities of, any Person, other
than the Equity Interests identified on Schedule (a). DIMAC Operating directly
or indirectly owns 100% of the outstanding Equity Interests or other securities
evidencing equity ownership of the entities identified on Schedule (a), in each
case free and clear of any Lien. All of the outstanding Equity Interests of each
of the Companies and their Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable and were not issued in violation of,
and are not subject to, any preemptive or similar rights.
On the Closing Date, the Securities will be duly authorized and validly
issued, will be fully paid and nonassessable and will not have been issued in
violation of, nor will they be subject to, any preemptive or similar rights.
Except as set forth on Schedule (b), on the Closing Date, there are no
outstanding (i) securities convertible into or exchangeable for any Equity
Interests of any of the Companies, (ii) options, warrants or other rights to
purchase or subscribe to Equity Interests of any of the Companies or securities
convertible into or exchangeable for Equity Interests of any of the Companies,
(iii) contracts, commitments, agreements, understandings, arrangements, calls or
claims of any kind relating to the issuance of any Equity Interests of any of
the Companies, any such convertible or exchangeable securities or any such
options, warrants or rights or (iv) voting trusts, agreements, contracts,
commitments, understandings or arrangements with respect to the voting of any of
the Equity Interests of any of the Companies.
Except for the Notes Registration Rights Agreement and the Stockholders'
Agreement, DIMAC
26
Holdings has not entered into an agreement to register its securities under the
Securities Act. Except for this Agreement, DIMAC Holdings has not entered into
any agreement to issue, purchase or sell any of its securities.
There are no securities of DIMAC Holdings registered under the Exchange Act
or listed on a national securities exchange registered under Section 6 of the
Exchange Act or quoted in a United States automated inter-dealer quotation
system.
3.2 No Violation or Conflict; No Default
(a) Neither the execution, delivery or performance of this Agreement, the
Indenture, the Securities, the Notes Registration Rights Agreement, the
Warrant Agreement, the Stockholders' Agreement, the Senior Credit
Agreement, the DIMAC Operating Notes, the DIMAC Operating Indenture, the
DIMAC Operating Notes Purchase Agreement or any of the other Documents by
any of the Companies, nor the compliance with their respective obligations
hereunder or thereunder, nor the consummation of the transactions
contemplated hereby and thereby, nor the issuance, sale or delivery of the
Securities will:
(i) violate any provision of the Charter Documents of any of the
Companies;
(ii) violate any statute, law, rule or regulation or any judgment,
decree, order, regulation or rule of any court or governmental
authority or body to which any of the Companies or any of their
respective properties may be subject;
(iii) permit or cause the acceleration of the maturity of any debt or
obligation of any of the Companies; or
(iv) violate, or be in conflict with, or constitute a default under,
or permit the termination of, or require the consent of any Person
under, or result in the creation or imposition of any Lien (other
than Permitted Liens (as defined in the Indenture)) upon any property
of any of the Companies under, any mortgage, indenture, loan
agreement, note, debenture, agreement for borrowed money or any other
agreement to which any of the Companies is a party or by which any
of the Companies (or their respective properties) may be bound,
other than such violations, conflicts, defaults, terminations and
Liens, or such failures to obtain consents, which could not reasonably
be expected to result in a Material Adverse Effect.
(b) None of the Companies is in default (without giving effect to any
grace or cure period or notice requirement) under any agreement for
borrowed money or under any agreement pursuant to which any of its
securities were sold.
3.3 Use of Proceeds
All of the net proceeds from the sale of the Securities hereunder
will be used to make a capital contribution to DIMAC Operating.
27
3.4 No Material Adverse Change; Financial Statements
(a) No Material Adverse Change. Since December 31, 1997, none of the
Companies has suffered any material adverse change in their
properties, business, operations, assets, condition (financial or
otherwise) or prospects which could reasonably be expected to result
in a Material Adverse Effect.
(b) Financial Statements. DIMAC Holdings and DIMAC Operating have
previously provided to you (i) the audited consolidated balance sheet
of DIMAC Marketing and its Subsidiaries as of December 31, 1997 and
the related audited consolidated statements of income, changes in
stockholders' equity and cash flows for the eight-month period ended
August 31, 1997 and the four-month period ended December 31, 1997,
(ii) the audited consolidated balance sheet of DIMAC Marketing and its
Subsidiaries as of December 31, 1996 and the related audited
consolidated statements of income, changes in stockholders' equity and
cash flows for the eleven- month period ended December 31, 1996, (iii)
the audited consolidated balance sheet of DIMAC Marketing and its
Subsidiaries as of December 31, 1995 and the related audited
consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal year ended December 31, 1995, (iv) the
audited consolidated balance sheets of AmeriComm and its Subsidiary as
of December 31, 1997, 1996 and 1995 and the related audited
consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years ended December 31, 1997, 1996 and
1995, (v) a consolidated balance sheet for DIMAC Marketing and its
Subsidiaries as of June 26, 1998 and June 30, 1997 and related
statements of income, changes in stockholders' equity and cash flows
for the six-month periods ended June 26, 1998 and June 30, 1997 and
(vi) a consolidated balance sheet for AmeriComm and its Subsidiary as
of June 26, 1998 and June 30, 1997 and related statements of income,
changes in stockholders' equity and cash flows for the six-month
periods ended June 26, 1998 and June 30, 1997. Such financial
statements present fairly the consolidated financial position, results
of operations, stockholders' equity and cash flows of DIMAC Marketing
and AmeriComm at the respective dates or for the respective periods to
which they apply. Except as disclosed therein, such statements and
related notes have been prepared in accordance with GAAP consistently
applied throughout the periods involved. All financial statements
concerning DIMAC Holdings and its Subsidiaries that will hereafter be
furnished by DIMAC Holdings and its Subsidiaries to the Purchasers or
any Holder pursuant to this Agreement will be prepared in accordance
with GAAP consistently applied (except as disclosed therein) and will
present fairly in all material respects the financial condition of the
corporations covered thereby as at the dates thereof and the results
of their operations for the periods then ended.
(c) Pro Forma Balance Sheets. The Pro Forma Balance Sheets were
prepared by DIMAC Holdings in accordance with GAAP, with only such pro
forma adjustments thereto as would be required to present fairly in
all material respects the information contained therein.
28
(d) Projections. True and complete copies of (i) projections of the
consolidated revenues, earnings before depreciation, interest and
taxes, operating margins, fixed charges, net income and capital
expenditures of DIMAC Holdings and its Subsidiaries for each of the
fiscal years ending December 31, 1998, 1999, 2000, 2001, 2002, 2003,
2004, 2005 and 2006, prepared by senior management of DIMAC Holdings
assuming the consummation of the transactions contemplated hereby and
the other Documents (the "Projections") and (ii) the assumptions and
supplemental data used in preparing the Projections (collectively, the
"Supplemental Data") have been delivered by DIMAC Holdings to the
Purchasers. The Projections were prepared on the basis of the
Supplemental Data which represent a reasonable basis for such
preparation. The Projections and the Supplemental Data reflect the
best currently available estimates and judgment of DIMAC Holdings's
senior management as to the expected future financial performance of
DIMAC Holdings and its Subsidiaries, provided that it is understood
that there can be no assurances that suitable acquisition candidates
can be found as shown in the acquisition model of the Projections.
3.5 Full Disclosure
Neither this Agreement (including without limitation the
representations and warranties incorporated herein by reference), the financial
statements referred to in Section , any Document, nor any other document,
certificate or written statement furnished by or on behalf of any of the
Companies to any Purchaser in connection with the negotiation and sale of the
Securities, when taken as a whole, contains any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made. There is no material fact known to any
of the Companies that has had or could reasonably be expected to have a Material
Adverse Effect and that has not been disclosed herein or in such other
documents, certificates and written statements furnished to the Purchasers for
use in connection with the transactions contemplated hereby.
29
3.6 Third Party Consents
Neither the nature of any of the Companies nor of any of their
businesses or properties, nor any relationship between any of the Companies and
any other Person, nor any circumstance in connection with the offer, issuance,
sale or delivery of the Securities at the Closing nor the performance by any of
the Companies of their other obligations hereunder or under, or the consummation
of the transactions contemplated hereby or by the Indenture, the Securities, the
Notes Registration Rights Agreement, the Warrant Agreement, the Stockholders'
Agreement or any other Document, as the case may be, is such as to require a
consent, approval or authorization of, or notice to, or filing, registration or
qualification with, any governmental authority or other Person on the part of
any of the Companies as a condition to the execution and delivery of this
Agreement, the Securities, the Notes Registration Rights Agreement, the Warrant
Agreement, the Stockholders' Agreement or any of the other Documents or the
offer, issuance, sale or delivery of the Securities at the Closing other than
such consents, approvals, authorizations, notices, filings, registrations or
qualifications which shall have been made or obtained on or prior to the Closing
Date and such filings under Federal and state securities laws which are
permitted to be made after the Closing Date and which DIMAC Holdings hereby
agrees to file within the time period prescribed by applicable law.
3.7 No Violation of Regulations of Board of Governors of Federal Reserve
System
None of the transactions contemplated by this Agreement (including,
without limitation, the use of the proceeds from the sale of the Securities)
will violate or result in a violation of Section 7 of the Exchange Act or any
regulation issued pursuant thereto, including, without limitation, Regulations
T, U and X of the Board of Governors of the Federal Reserve System.
3.8 Private Offering
Assuming the truth and correctness of the representations and
warranties set forth in Section 4, the sale of the Securities hereunder is
exempt from the registration and prospectus delivery requirements of the
Securities Act. In the case of each offer or sale of the Securities, no form of
general solicitation or general advertising was used by any of the Companies or
their respective representatives, including, but not limited to, advertisements,
articles, notices or other communications published in any newspaper, magazine
or similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising.
The Purchasers are the sole purchasers of the Securities. No securities
have been issued and sold by any of the Companies within the six-month period
immediately prior to the date hereof. DIMAC Holdings agrees that it will not,
nor will anyone acting on its behalf, offer or sell the Securities, or any
portion of them, if such offer or sale might bring the issuance and sale of the
Securities to any Purchaser hereunder within the provisions of Section 5 of the
Securities Act nor offer any similar securities for issuance or sale to, or
solicit any offer to acquire any of the same from, or otherwise approach or
negotiate with respect thereto with, anyone if the sale of the Securities and
any such securities could be integrated as a single offering for the purposes of
the Securities Act, including
30
without limitation Regulation D thereunder.
3.9 Governmental Regulations
DIMAC Holdings is not subject to regulation under the Investment Company
Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as
amended, the Federal Power Act, the Interstate Commerce Act, the Commodity
Exchange Act or to any Federal or state statute or regulation limiting its
ability to consummate the transactions contemplated hereby and by the other
Documents.
3.10 Brokers
None of the Companies has dealt with any broker, finder, commission agent
or other such intermediary in connection with the sale of the Securities and the
transactions contemplated by this Agreement and the other Documents, other than
XxXxxx De Leeuw & Co., and none of the Companies is under any obligation to pay
any broker's or finder's fee or commission or similar payment in connection with
such transactions (other than $9,900,000 paid to MDC Management Company IV,
LLC).
Each of DIMAC Holdings and DIMAC Operating agrees, jointly and severally,
to indemnify and hold the Holders harmless from and against any and all actions,
suits, claims, costs, expenses, losses, liabilities and/or obligations in
connection with or relating to any broker's or finder's fees or commission or
similar payment in connection with such transactions, except with respect to
such fees or commissions incurred by any Purchaser for its account, so long as
DIMAC Holdings or DIMAC Operating receives notice of any such action, suit,
claim, etc., reasonably promptly after the Holders become aware thereof;
provided that the failure to give such notice as provided in this sentence shall
not relieve DIMAC Holdings or DIMAC Operating of its obligations under this
sentence except to the extent, and only to the extent, that DIMAC Holdings or
DIMAC Operating is materially prejudiced by such failure to give notice (as
determined by a court of competent jurisdiction in a final nonappealable
judgment).
3.11 Solvency
Immediately prior to and after giving effect to the issuance of the
Securities and the execution, delivery and performance of this Agreement, the
other Documents and any instrument governing Indebtedness of any Company
incurred as of the Closing Date, each of the Companies is Solvent.
3.12 Representations and Warranties
All representations and warranties (and the related schedules) of
each of the Companies contained in the Notes Registration Rights Agreement, the
Warrant Agreement, the Stockholders' Agreement, the Senior Credit Agreement, the
DIMAC Operating Notes Purchase Agreement or the other Documents, each in the
form as in effect on the date hereof without amendment or waiver, shall be
deemed to constitute representations and warranties of DIMAC Operating and DIMAC
Holdings under this Agreement with the same force and effect as the
representations and warranties expressly set forth herein. Such representations
and warranties are true and correct in all material respects (except that such
phrase "in all material respects" shall be disregarded to the extent that any
such representation
31
and warranty is qualified by "material," "Material Adverse Effect" or any
similar terms or by any phrase using any of such terms) on the date hereof and
will be true and correct in all material respects (except that such phrase "in
all material respects" shall be disregarded to the extent that any such
representation and warranty is qualified by "material," "Material Adverse
Effect" or any similar terms or by any phrase using any of such terms) as of the
Closing Date as if made at and as of such date, and are hereby incorporated by
reference herein as if made hereby by DIMAC Operating and DIMAC Holdings to the
Purchasers. For purposes of this Section , the definitions contained in the
Notes Registration Rights Agreement, the Senior Credit Agreement, the Warrant
Agreement, the Stockholders' Agreement, the Senior Credit Agreement, the DIMAC
Operating Notes Purchase Agreement and any other Documents (insofar as they
relate to the representations and warranties incorporated herein) are hereby
incorporated by reference herein and made a part hereof.
3.13 Litigation
(a) There is no action, claim, suit, citation or proceeding (including,
without limitation, an investigation or partial proceeding, such as a
deposition), whether commenced, or to the knowledge of DIMAC Holdings or
DIMAC Operating, threatened ("Proceedings") against or affecting any of the
Companies or any of their properties or assets, except for such Proceedings
that, if finally determined adversely to any of the Companies, could not
reasonably be expected to have a Material Adverse Effect, and there is no
Proceeding seeking to restrain, enjoin, prevent the consummation of or
otherwise challenge this Agreement or any of the other Documents or the
transactions contemplated hereby or thereby.
(b) None of the Companies is subject to any judgment, order, decree,
rule or regulation of any court, governmental authority or arbitration
board or tribunal that has had a Material Adverse Effect or that could
reasonably be expected to have a Material Adverse Effect.
3.14 Labor Relations
None of the Companies, nor any Person for whom any Company is or may be
responsible by law or contract, is engaged in any unfair labor practice that
could reasonably be expected to have a Material Adverse Effect. There is (a) no
unfair labor practice charge or complaint pending or threatened against any of
the Companies, or any Person for whom any Company is or may be responsible by
law or contract, before the National Labor Relations Board or any corresponding
state, local or foreign agency, and no grievance or arbitration proceeding
arising out of or under any collective bargaining agreement is so pending or
threatened, (b) no strike, labor dispute, slowdown or stoppage pending or
threatened against any of the Companies, or any Person for whom any Company is
or may be responsible by law or contract, and (c) no union representation claim
or question existing with respect to the employees of any of the Companies, or
any Person for whom any Company is or may be responsible by law or contract, and
no union organizing activities taking place. None of the Companies, nor any
Person for whom any Company is or may be responsible by law or contract, is a
party to any collective bargaining agreement.
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Except such as could not, singly or in the aggregate, reasonably be
expected to result in a Material Adverse Effect, none of the Companies nor any
of their Subsidiaries has violated any applicable Federal, state, provincial or
foreign law relating to employment or employment practices or the terms and
conditions of employment, including, without limitation, discrimination in the
hiring, promotion or pay of employees, wages, hours of work, plant closings and
layoffs, collective bargaining, and occupational safety and health, or any
provisions of ERISA or the rules and regulations promulgated thereunder or any
other applicable law (whether foreign or domestic) relating to or governing the
operation or maintenance of any plan or arrangement falling within the
definition of an "employee benefit plan" (as such term is defined in Section 3
of ERISA) or any other employee benefit plan or arrangement.
3.15 Taxes
All material Tax Returns required to be filed by any of the
Companies have been timely filed and such returns are true, complete and correct
in all material respects. All material Taxes due from any of the Companies that
are due and payable have been paid, other than those (i) being contested in good
faith and for which an adequate reserve or accrual has been established in
accordance with GAAP or (ii) those currently payable without penalty or interest
and for which an adequate reserve or accrual has been established in accordance
with GAAP. Neither DIMAC Operating nor DIMAC Holdings knows of any actual or
proposed material additional tax assessments against any of the Companies.
3.16 Environmental Matters
Except as adequately described in the Offering Circular, or as could
not reasonably be expected to have a Material Adverse Effect:
(a) each of the Companies, and any Person for whom any Company is or may
be responsible by law or contract (which such Person is included in the
definition of "Company" for purposes of this Section ), is in full
compliance with all Environmental Laws, which compliance includes, but is
not limited to, (1) compliance with all standards, schedules and timetables
therein, (2) the possession of all permits, licenses, approvals and other
authorizations required under the Environmental Laws or with respect to the
operation of the Companies' or such Person's business, property and assets,
and compliance with the terms and conditions thereof and (3) any Federal,
state, local or foreign approvals required pursuant to any Environmental
Laws that pertain or relate to the transactions contemplated by this
Agreement;
(b) none of the Companies has received any communication (written or
oral), whether from a governmental authority, citizens group, employee or
otherwise, that alleges that any of the Companies is not in full compliance
with any Environmental Law, none of the Companies has any liability under
any Environmental Law, and there are no past or present actions,
activities, circumstances, conditions, events or incidents that may be
expected to prevent or interfere with full compliance with applicable
Environmental Laws in the future;
(c) there is no Environmental Claim pending or threatened against any of
the Companies;
33
(d) there are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the
release, emission, discharge, presence or disposal of any Material of
Environmental Concern, that could be expected to form the basis of any
Environmental Claim against any of the Companies;
(e) no real property or facility owned, used, operated, leased, managed or
controlled by any of the Companies, or any predecessor in interest, is
listed or proposed for listing on the National Priorities List or the
Comprehensive Environmental Response, Compensation, and Liability
Information System pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act, as amended, or on any other state or local
list established pursuant to any Environmental Law;
(f) there have been no releases (including, without limitation, any past
or present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposing or
dumping, on-site or off-site) of Materials of Environmental Concern by
any of the Companies, or any predecessor in interest, at, on, under, from
or into any facility or real property owned, operated, leased, managed or
controlled by any of the Companies, and none of the Companies has incurred
or expects to incur liability for contamination at, on, under, from or
into any on-site or off-site locations where any of the Companies have
stored, disposed or arranged for the disposal of Materials of
Environmental Concern;
(g) no underground storage tank or other underground storage receptacle,
or related piping, is located on a facility or property currently owned,
operated, leased, managed or controlled by any of the Companies;
(h) there is no asbestos contained in or forming part of any building,
building component, structure or office space, and no polychlorinated
biphenyls ("PCBs") or PCB-containing items are used or stored at any
property, owned, operated, leased, managed or controlled, whether currently
or in the past (for which such matters the Companies could be liable), by
any of the Companies.
"Environmental Claim" means any claim, action, cause of action,
investigation of which the Companies, including any of their employees, are
aware, or notice (written or oral) by any Person alleging potential liability
(including, without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or resulting
from (a) the presence, or release into the environment, of any Material of
Environmental Concern at any location, regardless of whether owned or operated
by any of the Companies, or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all Federal, state, local and foreign laws and
regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), including, without limitation, laws
and regulations relating to emissions, discharges, releases or threatened
releases of Materials of
34
Environmental Concern, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern.
"Materials of Environmental Concern" means chemicals, pollutants,
contaminants, industrial, toxic or hazardous wastes, substances or constituents,
petroleum and petroleum products (or any by-product or constituent thereof),
asbestos or asbestos-containing materials, or PCBs.
3.17 ERISA
Based upon the Purchasers' representation in Section , the execution and
delivery of this Agreement and the other Documents and the sale of the
Securities to be purchased by the Purchasers will not involve any non-exempt
"prohibited transaction." Except as set forth on Schedule hereto, none of the
Companies or any of their ERISA Affiliates is a "party in interest" or a
"disqualified person" with respect to any "employee benefit plan." No condition
exists or event or transaction has occurred in connection with any "employee
benefit plan" maintained or contributed to by any of the Companies or any of
their ERISA Affiliates (any such plan being herein referred to as a "Company
Plan") that has resulted or is reasonably likely to result in any of the
Companies or any such ERISA Affiliate incurring any liability, fine or penalty
except as could not reasonably be expected to have a Material Adverse Effect.
Except as set forth on Schedule 3.17, no Company Plan is subject to Title IV of
ERISA. There is no liability under Title IV of ERISA, whether actual or
contingent that could reasonably be expected to result in a Material Adverse
Effect. No amounts payable pursuant to any compensation or benefit plan, policy,
scheme or arrangement, or any other contract, arrangement or agreement will, in
connection with the transactions contemplated under this Agreement or the other
Documents, fail to be deductible for Federal income tax purposes by virtue of
Section 280G or 162(m) of the Code. The terms "employee benefit plan" and "party
in interest" shall have the meanings assigned to such terms in Section 3 of
ERISA, the term "disqualified person" shall have the meaning assigned to such
term in Section 4975 of the Code, the term "prohibited transaction" shall have
the meaning assigned to such term in Section 406(a) of ERISA and Section 4975 of
the Code, and the term "ERISA Affiliate" shall mean each person (as defined in
Section 3(9) of ERISA) which together with the Companies would be deemed to be a
"single employer" within the meaning of Sections 414(b) and (c) of the Code.
3.18 Intellectual Property
The Companies own or possess adequate licenses or other rights to use all
trademarks, service marks, trade names, copyrights, and know-how necessary to
conduct the business now conducted by them as described in the Offering
Circular, and, none of the Companies has received any notice of infringement of
or conflict with (or knows of such infringement of or conflict with) asserted
rights of others with respect to trademarks, service marks, trade names,
copyrights, or know-how which, individually or in the aggregate, could
reasonably be expected to result in any Material Adverse Effect. The Companies
do not in the conduct of their business as now conducted, infringe or conflict
with any right of any third party, known to any of the Companies, where such
infringement or conflict could reasonably be expected to result in any Material
Adverse Effect.
3.19 Compliance with Laws
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Each of the Companies has obtained and has maintained in good
standing any licenses, permits, consents and authorizations required to be
obtained by it under all laws or regulations relating to its business
(collectively, the "Laws"), the absence of which (individually or in the
aggregate) could reasonably be expected to have a Material Adverse Effect, and
any such licenses, permits, consents and authorizations remain in full force and
effect, except as to any of the foregoing the absence of which (individually or
in the aggregate) could not reasonably be expected to have a Material Adverse
Effect. Each of the Companies is in compliance with the Laws except for such
noncompliance which, singly or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, and there is no pending or, to any
of the Companies' knowledge, threatened, action or proceeding against any of the
Companies under any of the Laws, other than any such actions or proceedings
which, individually or in the aggregate, if adversely determined, could not
reasonably be expected to have a Material Adverse Effect.
3.20 Survival of Representations and Warranties
All of the Companies' representations and warranties hereunder and under
the Senior Credit Agreement, the Notes Registration Rights Agreement, the
Warrant Agreement, the Stockholders' Agreement and the other Documents shall
survive the execution and delivery of the same, any investigation by any
Purchaser and the issuance of the Securities.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER
Each Purchaser (as to itself only) and each Account Manager (as to
the managed accounts of Purchasers) represents and warrants to DIMAC Operating
and DIMAC Holdings that:
4.1 Purchase for Own Account
Such Purchaser or such Account Manager is purchasing the Securities
to be purchased by it solely for its own account (or in the case of Account
Managers, on behalf of managed accounts) and not as nominee or agent for any
other person (other than for such managed accounts, if applicable) and not with
a view to, or for offer or sale in connection with, any distribution thereof
(within the meaning of the Securities Act) 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 Securities pursuant to a registration statement under
the Securities Act or pursuant to an exemption from the registration
requirements of the Securities Act, and subject, nevertheless, to the
disposition of its property being at all times within its control.
36
4.2 Accredited Investor
Such Purchaser or such Account Manager is knowledgeable,
sophisticated and experienced in business and financial matters; it has
previously invested in securities similar to the Securities and it acknowledges
that the Securities have not been registered under the Securities Act and
understands that the Securities must be held indefinitely unless they are
subsequently registered under the Securities Act or such sale is permitted
pursuant to an available exemption from such registration requirement; it (or,
in the case of an Account Manager, the managed account on behalf of which the
Account Manager is acting) is able to bear the economic risk of its investment
in the Securities and is presently able to afford the complete loss of such
investment; it (or, in the case of an Account Manager, the managed account on
behalf of which the Account Manager is acting) is an "accredited investor" as
defined in Regulation D promulgated under the Securities Act; and it has been
afforded access to information about each of the Companies and their financial
condition and business sufficient to enable it to evaluate its investment in the
Securities.
4.3 Authorization
Each Purchaser has taken all actions necessary to authorize it (or,
in the case of an Account Manager, such Account Manager is duly authorized by
the managed account for which it is acting) (i) to execute, deliver and perform
all of its obligations under this Agreement, (ii) to perform all of its
obligations under the Securities and (iii) to consummate the transactions
contemplated hereby and thereby. This Agreement is a legally valid and binding
obligation of each Purchaser enforceable against it in accordance with its
terms, except for (a) the effect thereon of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting the
rights of creditors generally and (b) limitations imposed by Federal or state
law or equitable principles upon the specific enforceability of any of the
remedies, covenants or other provisions thereof and upon the availability of
injunctive relief or other equitable remedies.
4.4 Securities Restricted
Each Purchaser acknowledges that the Securities have not been
registered under the Securities Act and understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or such sale is permitted pursuant to an available exemption from such
registration requirement.
Each Purchaser acknowledges that no transfer or sale (including,
without limitation, by pledge or hypothecation) of Series A Notes by any
Purchaser which is otherwise permitted hereunder, other than a transfer or sale
to DIMAC Holdings, shall be effective unless such transfer or sale is made in
accordance with the restrictive legend required pursuant to Section 1.1 to be
set forth the Series A Notes. No transfer or sale (including, without
limitation, by pledge or hypothecation) of Shares or Warrants by any Holder
which is otherwise permitted hereunder, other than a transfer or sale to DIMAC
Holdings, shall be effective unless such transfer or sale is made (A) pursuant
to an effective registration statement under the Act and a valid qualification
under applicable state securities or "blue sky" laws or (B) without such
registration or qualification as a result of the availability of an exemption
37
therefrom, and, if reasonably requested by DIMAC Holdings, counsel for such
Holder shall have furnished DIMAC Holdings with an opinion, reasonably
satisfactory in form and substance to DIMAC Holdings, to the effect that no such
registration is required because of the availability of an exemption from the
registration requirements of the Securities Act; provided, however, that with
respect to transfers of any of the Securities by Holders to their Affiliates, no
such opinion shall be required. A transfer of any of the Securities made by a
Holder which is a state-sponsored employee benefit plan to a successor trust or
fiduciary pursuant to a statutory reconstitution shall be expressly permitted
and no opinions of counsel shall be required in connection therewith.
4.5 ERISA
Such Purchaser represents that either:
(a) it is not acquiring the Securities for or on behalf of any employee
pension benefit plan or employee welfare benefit plan (as defined in
Section 3 of ERISA) or any "plan" (as defined in Section 4975 of the Code)
(each hereafter a "Plan");
(b) the assets used to acquire the Securities are assets of an insurance
company general account and the purchase of the Securities would be exempt
under the provisions of the Prohibited Transaction Class Exemption ("PTCE")
95-60; or
(c) if it is acquiring the Securities on behalf of a Plan, either directly
or through an investment fund (such as a "bank collective investment fund"
as defined in PTCE 91-38 or an "insurance company pooled separate account"
as defined in PTCE 90-1), then, assuming that the plans listed in Schedule
are the only employee benefit plans (as defined in Section 3 of ERISA) or
Plans with respect to which any of the Companies is a "party in interest"
or "disqualified person" (as such terms are defined in Section 3 of ERISA
and Section 4975 of the Code, respectively), either
(i) no part of the funds to be used to purchase the Securities
constitutes assets allocable to any trust that contains assets of the
employee benefit plans listed in Schedule , or
(ii) an exemption from the prohibited transaction rules applies such
that the use of such funds does not constitute a non-exempt prohibited
transaction in violation of Section 406 of ERISA or Section 4975 of
the Code, which could be subject to a civil penalty assessed pursuant
to Section 502 of ERISA or a tax imposed under Section 4975 of the
Code.
The representations contained in this Section are made in express reliance
on the list of employee benefit plans contained in Schedule .
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SECTION 5. DEFINITIONS
5.1 Definitions
As used in this Agreement, the following terms shall have the
following meanings:
"Account Manager" means each Purchaser, if any, duly authorized to
act as attorney in-fact on behalf of any Person in purchasing, in the name of
and using funds provided by such Person, Securities hereunder.
"Affiliate" means, with respect to any referenced Person, a Person (i)
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such referenced Person, (ii)
which directly or indirectly through one or more intermediaries beneficially
owns or holds 10% or more of the combined voting power of the total Voting
Securities of such referenced Person or (iii) of which 10% or more of the
combined voting power of the total Voting Securities directly or indirectly
through one or more intermediaries is beneficially owned or held by such
referenced Person or a Subsidiary of such referenced Person. When used herein
without reference to any Person, Affiliate means an Affiliate of DIMAC Holdings.
For all purposes of this Agreement, XxXxxx De Leeuw & Co. and its Affiliates
shall be considered an Affiliate of DIMAC Holdings. For purposes of this
definition, "control" when used with respect to any person means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such person, whether through the ownership of Voting
Securities, by agreement or otherwise; and the terms "affiliated," "controlling"
and "controlled" have meanings correlative to the foregoing. Notwithstanding the
foregoing, for purposes of this Agreement, Trust Company of the West and its
Affiliates and any other Purchaser and its Affiliates shall not be considered
Affiliates of DIMAC Holdings or any of its Subsidiaries.
"Agreement" means this Securities Purchase Agreement dated as of October
22, 1998 by and among DIMAC Holdings, DIMAC Operating and the Purchasers.
"AmeriComm" means AmeriComm Holdings, Inc., a Delaware corporation,
formerly named DEC International, Inc.
"AmeriComm Direct Marketing" means AmeriComm Direct Marketing, Inc., a
Delaware corporation formerly known as National Fiberstok Corporation.
"AmeriComm Direct Marketing Indenture" means that certain Indenture, dated
as of June 15, 1996, by and between AmeriComm Direct Marketing, Inc. and
Wilmington Trust Company, as Trustee, together with all related documents,
including security documents.
"AmeriComm Notes" means the 12 1/2% Senior Notes due April 24, 2003 of
AmeriComm and the 13% Senior Notes due April 24, 2003 of AmeriComm, in an
aggregate principal amount of $41,858,176.
39
"Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.
"Business Day" means any day which is not a Legal Holiday.
"Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of corporate stock, including without
limitation all common stock and preferred stock.
"Charter Documents" means the articles of incorporation or certificate of
incorporation and bylaws (or any similar organizational documents), as amended
or restated (or both) to date, of any of the Companies, as applicable.
"Closing" has the meaning given to such term in Section 1.2(b).
"Closing Date" has the meaning given to such term in Section 1.2(b).
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute or law thereto.
"Common Stock" has the meaning given to such term in Section 1.1(a).
"Common Stock Register" has the meaning given to such term in Section 1.3.
"Companies" means, collectively, DIMAC Holdings, DIMAC Operating and each
of their Subsidiaries.
"Default" has the meaning given to such term in the Indenture. "DIMAC
Holdings" means DIMAC Holdings, Inc., a Delaware corporation.
"DIMAC Marketing" means DIMAC Marketing Corporation, a Delaware
corporation.
"DIMAC Operating" means DIMAC Corporation, a Delaware corporation.
"DIMAC Operating Indenture" means that certain Indenture, dated as of
October 15, 1998, by and between DIMAC Operating and Wilmington Trust Company,
as Trustee, together with all related documents, including security documents.
"DIMAC Operating Notes" means the 12 1/2% Senior Subordinated Notes due
2008 of DIMAC Operating, issued pursuant to the DIMAC Operating Indenture.
"DIMAC Operating Notes Purchase Agreement" means the Purchase Agreement
dated as of October 16, 1998 by and among DIMAC Operating and Credit Suisse
First Boston, First Union Capital Markets and Warburg Dillon Read LLC, relating
to the purchase and sale of the DIMAC Operating Notes.
40
"Documents" means this Agreement, the Securities, the Notes Registration
Rights Agreement, the Indenture, the Warrant Agreement and the Stockholders'
Agreement, collectively, or each of such documents singularly, and any documents
or instruments contemplated by or executed in connection with any of them or any
of the transactions contemplated hereby or thereby.
"DTC" means The Depository Trust Company.
"Environmental Claim" has the meaning given to such term in Section 3.16.
"Environmental Laws" has the meaning given to such term in Section 3.16.
"Equity Interest" means (i) with respect to a corporation, any and all
Capital Stock or warrants, options or other rights to acquire Capital Stock (but
excluding any debt security which is convertible into, or exchangeable or
exercisable for, Capital Stock) and (ii) with respect to a partnership, limited
liability company or similar Person, any and all units, interests, rights to
purchase, warrants, options or other equivalents of, or other ownership
interests in any such Person.
"ERISA" means The Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute or law thereto.
"Event of Default" has the meaning given to such term the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, from
time to time, and any successor statute or law thereto.
"Exchange Offer Registration Statement" has the meaning given to such term
in Section 1.1(a).
"GAAP" means those generally accepted accounting principles and practices
which are recognized as such on the Closing Date by the American Institute of
Certified Public Accountants acting through its Accounting Principles Board or
by the Financial Accounting Standards Board or through other appropriate boards
or committees thereof and which are consistently applied for all periods after
the date hereof so as to properly reflect the financial conditions, and the
results of operations, stockholders' equity and cash flows, of DIMAC Holdings
and its consolidated Subsidiaries.
"Holder" or "Holders" means each Purchaser (so long as it holds any
Securities) and any other holder of any of the Securities.
"Indebtedness" has the meaning given to such term in the Indenture.
"Indemnified Parties" has the meaning given to such term in Section 1.8.
"Indemnifying Parties" has the meaning given to such term in Section 1.8.
"Indenture" has the meaning given to such term in Section 1.1(a).
41
"Inspectors" has the meaning given to such term in Section 1.13.
"Laws" has the meaning given to such term in Section 3.19.
"Legal Holiday" means a Saturday, Sunday or day on which banks and trust
companies in the principal place of business of DIMAC Holdings or in New York
are not required to be open.
"Lien" means any mortgage, pledge, lien, encumbrance, charge or adverse
claim affecting title or resulting in a charge against real or personal
property, or security interest of any kind (including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell and any filing of any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Losses" has the meaning given to such term in Section 1.8.
"Majority Holders" means, at any time, the Holder or Holders of at least a
majority in aggregate principal amount of the then outstanding Notes.
"Material Adverse Effect" means (a) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of the Companies taken as a whole or (b) a material adverse effect on
the ability of DIMAC Holdings or DIMAC Operating to perform its obligations
under this Agreement or of any Purchaser or Holder to enforce or collect any of
the obligations hereunder. In determining whether any individual event could
reasonably be expected to result in a Material Adverse Effect, notwithstanding
that such event does not of itself have such effect, a Material Adverse Effect
shall be deemed to have occurred if the cumulative effect of such event and all
other then existing events could reasonably be expected to result in a Material
Adverse Effect.
"Materials of Environmental Concern" has the meaning given to such term in
Section 3.16.
"MDC Entities" means, collectively, XxXxxx De Leeuw & Co. IV, LP, XxXxxx,
Xx Xxxxx & Co. IV Associates, LP and Delta Fund LLC and any of their respective
Affiliates.
"Notes" has the meaning given to such term in Section 1.1(a).
"Notes Register" has the meaning given to such term in Section 1.3.
"Notes Registration Rights Agreement" has the meaning given to such term in
Section 1.1(a).
"Offering Circular" means the Confidential Offering Circular, dated October
16, 1998, of DIMAC Operating relating to, among other things, the DIMAC
Operating Notes. "PBGC" has the meaning given to such term in Section 1.11.
"PCBs" has the meaning given to such term in Section 3.16.
42
"Person" means an individual, partnership, corporation, limited liability
company, trust or unincorporated organization or a government or agency or
political subdivision thereof.
"PIK Interest Payment" means the payment of all or a portion of a payment
of interest on the Notes by the issuance of additional Notes in accordance with
the provisions of Section 1 of the Notes.
"PIK Note" means any Note issued by DIMAC Holdings in order to make a PIK
Interest Payment.
"Plan" has the meaning given to such term in Section 4.5(a).
"Pro Forma Balance Sheets" means the unaudited consolidated balance sheets
of DIMAC Holdings and its Subsidiaries as of June 30, 1998 giving effect to this
Agreement, the Warrant Agreement, the Stockholders' Agreement, the DIMAC
Operating Notes, the refinancing described in the Offering Circular, the Senior
Credit Agreement, the other Documents and the transactions contemplated hereby
and thereby, previously delivered to the Purchasers.
"Proceedings" has the meaning given to such term in Section 3.13.
"PTCE" has the meaning given to such term in Section 4.5.
"Purchasers" means the purchasers on the signature pages hereto.
"Registered Exchange Offer" has the meaning given to such term in Section
1.1(a).
"Rule 144" means Rule 144 as promulgated by the SEC under the Securities
Act, as amended from time to time, and any successor rule or regulation thereto.
"Rule 144A" means Rule 144A as promulgated by the SEC under the Securities
Act, as amended from time to time, and any successor rule or regulation thereto.
"SEC" means the Securities and Exchange Commission and any successor
thereto.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and any successor statute or law thereto.
"Security" or "Securities" has the meaning given to such term in
Section 1.1.
"Senior Credit Agreement" means that certain Amended and Restated Credit
Agreement dated as of October 22, 1998 by and among DIMAC Operating, DIMAC
Holdings, the financial institutions listed on the signature pages thereof,
Credit Suisse First Boston, as administrative agent and arranger, UBS AG,
Stamford Branch, as syndication agent and First Union National Bank, as
documentation agent, as, unless the context in which such term is used requires
otherwise, amended, replaced, refinanced, modified or supplemented from time to
time, and all related documents, including guaranties and security documents,
as, unless the context in which such term is used requires otherwise,
43
amended, replaced, refinanced, modified or supplemented from time to time.
"Series A Notes" has the meaning given to such term in Section 1.1(a).
"Series B Notes" has the meaning given to such term in Section 1.1(a).
"Shares" has the meaning given to such term in Section 1.1(a).
"Shelf Registration Statement" has the meaning given to such term in
Section 1.1(a).
"Solvent" means, with respect to any Person on a particular date, that on
such date, (a) the fair saleable value of the assets of such Person exceeds its
probable liability on its debts as they become absolute and mature; (b) all of
such Person's assets, at a fair valuation, exceed the sum of such Person's
debts; (c) such Person is able to pay its debts or liabilities as such debts and
liabilities mature; and (d) such Person is not engaged in a business or
transaction, and is not about to engage in a business or transaction, for which
such Person's assets would constitute an unreasonably small capital.
"Stockholders' Agreement" has the meaning given to such term in Section
1.1(b).
"Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose Capital Stock with voting power, under ordinary circumstances,
to elect directors is, at the date of determination, directly or indirectly,
owned by such Person, by one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries of such Person or (ii) a partnership in
which such Person or a Subsidiary of such Person is, at the date of
determination, a general or limited partner of such partnership, but, in the
case of a limited partner, only if such Person or its Subsidiary is entitled to
receive more than 50% of the assets of such partnership upon its dissolution, or
(iii) any limited liability company or any other Person (other than a
corporation or a partnership) in which such Person, a Subsidiary of such Person
or such Person and one or more Subsidiaries of such Person, directly or
indirectly, at the date of determination, has (a) at least a majority ownership
interest or (b) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.
"Taxes" means all Federal, state, local and foreign taxes, and other
assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties applicable
thereto.
"Tax Returns" means all Federal, state, local and foreign tax returns,
declarations, statements, reports, schedules, forms and information returns and
any amended Tax Return relating to Taxes.
"Trustee" has the meaning given to such term in Section 1.1(a).
"Voting Securities" means any class of Equity Interests of a Person
pursuant to which the holders thereof have, at the time of determination, the
general voting power ("Voting Power") under ordinary circumstances to vote for
the election of directors, managers, trustees or general partners of such Person
(regardless of whether at the time any other class or classes will have or might
have voting power by reason of the happening of any contingency).
44
"Warrants" has the meaning given to such term in Section 1.1(a).
"Warrant Agreement" has the meaning given to such term in Section 1.1(a).
"Warrant Register" has the meaning given to such term in Section 1.3.
"Warrant Shares" has the meaning given to such term in Section 1.1(b).
5.2 Rules of Construction
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) "or" is not exclusive;
(c) words in the singular include the plural, and words in the plural
include the singular;
(d) provisions apply to successive events and transactions;
(e) "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular Section
or other subdivision; and.
(f) any reference to a "Section," "Annex" or "Schedule" refers to a
Section of, an Annex to, or a Schedule to this Agreement,
respectively.
SECTION 6. MISCELLANEOUS
6.1 Amendments and Waivers
This Agreement may be amended, modified or supplemented, and waivers
or consents to departures from the provisions hereof may be given, provided that
the same are in writing and signed by each of the parties hereto.
6.2 Notices
All notices and other communications provided for or permitted
hereunder shall be made by hand-delivery, first-class mail, telex, telecopier,
or overnight air courier guaranteeing next day delivery:
(a) if to any Purchaser at such Purchaser's address or telecopy number set
forth on Schedule 1.1 hereto, with a copy to Skadden, Arps, Slate, Xxxxxxx
& Xxxx LLP, 000 X. Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
Telecopy No. (000) 000-0000, Attention: Xxx X. Xxxxxx, Xx., Esq.; and
45
(b) if to DIMAC Holdings or DIMAC Operating, to DIMAC Holdings, Inc., 0000
Xxxxxxxxx Xxxxxxxx Xxxx, Xxxxx X-000, Xxxxxxx, XX, Telecopy No. (404)
705-9929, Attention: Chief Financial Officer, with a copy to XxXxxx De
Leeuw & Co., 000 X. 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, Telecopy No. (212)
355-6283, Attention: Xxxxx Xx, with a copy to White & Case LLP, 0000 Xxxxxx
xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Telecopy No. (000) 000-0000,
Attention: Xxxxx X. Xxxxxx, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back if telexed; when receipt acknowledged, if telecopied; and the next
business day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery. The parties may change the addresses to
which notices are to be given by giving five days' prior notice of such change
in accordance herewith.
6.3 Successors and Assigns
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties.
6.4 Counterparts
This Agreement may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
6.5 Headings
The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
46
6.6 Governing Law; Submission to Jurisdiction
THIS AGREEMENT AND ALL ISSUES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULES 327(b). TO
THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, EACH OF DIMAC
HOLDINGS AND DIMAC OPERATING HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND THE NOTES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. EACH OF DIMAC HOLDINGS AND DIMAC OPERATING IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PURCHASER OR ANY HOLDER OF A
NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEEDING AGAINST DIMAC HOLDINGS OR DIMAC OPERATING IN
ANY OTHER JURISDICTION.
6.7 Entire Agreement
This Agreement, together with the Securities, the Indenture, the Notes
Registration Rights Agreement, the Warrant Agreement, the Stockholders'
Agreement and the other Documents, is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein. This Agreement, together with
the Securities, the Indenture, the Notes Registration Rights Agreement, the
Warrant Agreement, the Stockholders' Agreement and the other Documents
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
6.8 Severability
In the event that any one or more of the provisions contained herein, or
the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected, it being
intended that each Purchaser's rights and privileges shall be enforceable to the
fullest extent permitted by law.
47
6.9 Further Assurances
DIMAC Holdings and DIMAC Operating shall, and shall cause each of
their Subsidiaries to, at its cost and expense, upon request of any Purchaser or
Holder, duly execute and deliver, or cause to be duly executed and delivered, to
such Purchaser or Holder such further instruments and do or cause to be done
such further acts as may be necessary or proper in the reasonable opinion of
such Purchaser or Holder to carry out more effectually the provisions and
purposes of this Agreement and the other Documents.
6.10 Disclosure of Financial Information
Each Holder is hereby authorized to deliver a copy of any financial
statement or any other information relating to the business, operations or
financial condition of DIMAC Holdings and each of its Subsidiaries which may be
furnished to it hereunder or otherwise, to any other Holder, any court,
governmental body having jurisdiction over such Holder, to the National
Association of Insurance Commissioners or similar organizations, as may be
required or appropriate in response to any summons or subpoena in connection
with any litigation, to the extent necessary to comply with any law, order,
regulation or ruling applicable to such Holder, to any rating agency, in order
to protect its investment hereunder, or to any Person which shall, or shall have
any right or obligation to, succeed to all or any part of such Xxxxxx's interest
in any of the Securities and this Agreement or to any actual or prospective
purchaser or assignee thereof.
[Signature pages follow]
48
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
set forth below as of the date first written above.
DIMAC HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------
Name: Xxxxxx X. Xxxxx
--------------------------
Title: Chief Executive Officer
-------------------------
DIMAC CORPORATION
By: /s/ Xxxxxx X. Xxxxx
----------------------------
Name: Xxxxxx X. Xxxxx
--------------------------
Title: Chief Executive Officer
-------------------------
TCW/CRESCENT MEZZANINE PARTNERS, L.P.
TCW/CRESCENT MEZZANINE TRUST
TCW/CRESCENT MEZZANINE INVESTMENT PARTNERS, L.P.
By: TCW/XXXXXXXX XXXXXXXXX, L.L.C.,
its general partner or managing owner
By: /s/ Xxxx-Xxxx Xxxxxx
------------------------------
Name: Xxxx-Xxxx Xxxxxx
----------------------------
Title: Managing Director
---------------------------
By: /s/ Xxxx X. Xxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxx
----------------------------
Title: Managing Director
---------------------------
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW ADVISORS (BERMUDA), LIMITED,
as General Partner
By: /s/ Xxxx-Xxxx Xxxxxx
------------------------------
Name: Xxxx-Xxxx Xxxxxx
----------------------------
Title: Managing Director
---------------------------
By: TCW INVESTMENT MANAGEMENT
COMPANY, as Investment Advisor
By: /s/ Xxxx X. Xxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxx
----------------------------
Title: Managing Director
---------------------------
TCW SHARED OPPORTUNITY FUND II, L.P.
By: TCW INVESTMENT MANAGEMENT
COMPANY, its investment advisor
By: /s/ Xxxx-Xxxx Xxxxxx
-------------------------------
Name: Xxxx-Xxxx Xxxxxx
-----------------------------
Title: Managing Director
----------------------------
By: /s/ Xxxx X. Xxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxx
-----------------------------
Title: Managing Director
----------------------------
Annex A
DIMAC HOLDINGS, INC.
WARRANT AGREEMENT
This Warrant Agreement dated as of October 22, 1998 (this "Agreement") is
entered into by and among DIMAC Holdings, Inc., a Delaware corporation ("DIMAC
Holdings"), and the purchasers party hereto (each, a "Purchaser" and
collectively, the "Purchasers"). All capitalized terms used but not defined
herein shall have the respective meanings ascribed to such terms in the
Securities Purchase Agreement (as hereinafter defined).
WHEREAS, pursuant to a Securities Purchase Agreement dated as of the date
hereof (the "Securities Purchase Agreement") by and among DIMAC Holdings, DIMAC
Corporation, a Delaware corporation, and the Purchasers, DIMAC Holdings proposes
to issue to the Purchasers certain Warrants, as hereinafter described (the
"Warrants"), to purchase an aggregate of 28,205 shares (subject to adjustment)
of Common Stock (the "Common Stock"), $0.001 par value, of DIMAC Holdings (the
shares of Common Stock and other securities issuable upon exercise of the
Warrants being referred to herein as the "Warrant Shares");
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
Section 1. Warrant Certificates. DIMAC Holdings will issue and deliver a
certificate or certificates evidencing the Warrants (the "Warrant Certificates")
pursuant to the terms of the Securities Purchase Agreement. Such Warrant
Certificates shall be substantially in the form set forth as Exhibit A attached
hereto. Warrant Certificates shall be dated the date of issuance by DIMAC
Holdings.
Section 2. Execution of Warrant Certificates. Warrant Certificates shall
be signed on behalf of DIMAC Holdings by its Chairman of the Board, Chief
Executive Officer, President or a Vice President. Each such signature upon
the Warrant Certificates may be in the form of a facsimile signature of the
present or any future Chairman of the Board, Chief Executive Officer,
President or Vice President, and may be imprinted or otherwise reproduced on
the Warrant Certificates and for that purpose DIMAC Holdings may adopt and
use the facsimile signature of any person who shall have been Chairman of the
Board, Chief Executive Officer, President or Vice President, notwithstanding
the fact that at the time the Warrant Certificates shall be delivered or
disposed of he shall have ceased to hold such office. Each Warrant
Certificate shall also be signed on behalf of DIMAC Holdings by a manual or
facsimile signature of its Secretary or an Assistant Secretary.
Section 3. Registration. DIMAC Holdings shall number and register the
Warrant Certificates and the Warrant Shares in registers (the "Warrant Register"
and the "Warrant Shares Register," respectively) as they are issued. DIMAC
Holdings may deem and treat the registered holder(s) from time to time of the
Warrant Certificates (the "Holders") as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone) for all purposes and shall not be affected by any notice to the
contrary. The Warrants shall be registered initially in such name or names as
the Purchasers shall designate.
Section 4. Restrictions on Transfer; Registration of Transfers. Prior to any
proposed transfer of the Warrants or the Warrant Shares, unless such transfer is
made pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"), the transferring Holder will, if
requested by DIMAC Holdings, deliver to DIMAC Holdings an opinion of counsel,
reasonably satisfactory in form and substance to DIMAC Holdings, to the effect
that the Warrants or Warrant Shares, as applicable, may be sold or otherwise
transferred without registration
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under the Securities Act; provided, however, that with respect to transfers by a
Holder to its Affiliate or Affiliates, no such opinion shall be required. A
transfer made by a Holder which is a state-sponsored employee benefit plan to a
successor trust or fiduciary pursuant to a statutory reconstitution shall be
expressly permitted and no opinions of counsel shall be required in connection
therewith. Upon original issuance thereof, and until such time as the same shall
have been registered under the Securities Act or sold pursuant to Rule 144
promulgated thereunder (or any similar rule or regulation), each Warrant
Certificate shall bear the legend included on the first page of Exhibit A,
unless in the opinion of such counsel, such legend is no longer required by the
Securities Act or by the Stockholders Agreement, as applicable.
Subject to the conditions to transfer contained in the Stockholders
Agreement, DIMAC Holdings shall from time to time register the transfer of any
outstanding Warrant Certificates in the Warrant Register to be maintained by
DIMAC Holdings upon surrender thereof accompanied by a written instrument or
instruments of transfer in form reasonably satisfactory to DIMAC Holdings, duly
executed by the registered Holder or Holders thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee Holder(s) and the surrendered Warrant Certificate shall be canceled
and disposed of by DIMAC Holdings. Any attempted transfer in violation of the
Stockholders Agreement shall be null and void ab initio.
Notwithstanding any contrary provision of Section 5 of the Securities
Purchase Agreement, so long as any Warrants remain outstanding and so long as
DIMAC Holdings shall not have registered any of its securities pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended, or filed a
registration statement pursuant to the requirements of the Securities Act, upon
written request, DIMAC Holdings will deliver to each Holder the financial
statements, reports and compliance certificates specified by Sections 5.2 and
5.3 of the Securities Purchase Agreement, regardless of whether any Notes (as
defined in the Securities Purchase Agreement) remain unpaid and outstanding.
Section 5. Warrants; Exercise of Warrants.
(a) Subject to the terms of this Agreement, each Holder shall have the
right, which may be exercised commencing on the date of issuance of the
Warrants and until 5:00 p.m., New York time, on October 22, 2009 (the
"Expiration Date"), to receive from DIMAC Holdings the number of fully paid
and nonassessable Warrant Shares (and such other consideration) which the
Holder may at the time be entitled to receive on exercise of such Warrants
and payment of the Exercise Price then in effect for such Warrant Shares.
Each Warrant not exercised prior to 5:00 p.m., New York time, on the
Expiration Date shall become void and all rights thereunder and all rights
in respect thereof under this Agreement shall cease as of such time. No
adjustments as to dividends will be made upon exercise of the Warrants,
except as otherwise expressly provided herein.
(b) In the event that Holders would have any obligation to sell their
Warrant Shares under the terms of the Stockholders Agreement if they were
holders of Common Stock, the Warrants shall be deemed exercised and the
Holders shall sell their Warrant Shares as required by the terms of the
Stockholders Agreement. If a Holder shall fail to comply with the terms of
this Agreement or the Stockholders Agreement in connection with the
surrender of Warrants or the sale of Warrant Shares as contemplated by the
Stockholders Agreement such Holder shall receive only the consideration
(without interest) which such Holder would have received had such Holder
complied with such terms and the Warrants shall cease to have any other
rights.
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(c) The price at which each Warrant shall be exercisable (the "Exercise
Price") shall initially be $0.01 per share, subject to adjustment pursuant
to the terms hereof.
(d) A Warrant may be exercised upon surrender to DIMAC Holdings at its
office designated for such purpose (as provided for in Section hereof) of
the Warrant Certificate or Certificates to be exercised with the form of
election to purchase attached thereto duly filled in and signed, and upon
payment to DIMAC Holdings of the Exercise Price for the number of Warrant
Shares in respect of which such Warrants are then exercised. Payment of the
aggregate Exercise Price shall be made in cash or by certified or official
bank check payable to the order of DIMAC Holdings.
(e) Subject to the provisions of Section hereof, upon such surrender of
Warrant Certificates and payment of the Exercise Price, DIMAC Holdings
shall issue and cause to be delivered, as promptly as practicable, to or
upon the written order of the Holder and in such name or names as such
Holder may designate a certificate or certificates for the number of full
Warrant Shares issuable upon the exercise of such Warrants (and such other
consideration as may be deliverable upon exercise of such Warrants)
together with cash for fractional Warrant Shares as provided in Section
hereof. The certificate or certificates for such Warrant Shares shall be
deemed to have been issued and the person so named therein shall be deemed
to have become a holder of record of such Warrant Shares as of the date of
the surrender of such Warrants and payment of the Exercise Price,
irrespective of the date of delivery of such certificate or certificates
for Warrant Shares. DIMAC Holdings shall register the Warrant Shares in the
Warrant Shares Register, as provided in Section hereof, and shall from time
to time register the transfer of any outstanding Warrant Shares in the
Warrant Shares Register.
(f) Subject to the subsection (b) of this Section , each Warrant shall be
exercisable, at the election of the Holder thereof, either in full or from
time to time in part and, in the event that a Warrant Certificate is
exercised in respect of fewer than all of the Warrant Shares issuable on
such exercise at any time prior to the date of expiration of the Warrants,
a new certificate evidencing the remaining Warrant or Warrants will be
issued and delivered pursuant to the provisions of this Section and of
Section hereof.
(g) All Warrant Certificates surrendered upon exercise of Warrants shall
be cancelled and disposed of by DIMAC Holdings. DIMAC Holdings shall keep
copies of this Agreement and any notices given or received hereunder
available for inspection by the Holders during normal business hours at its
office.
(h) In addition to and without limiting the rights of the Holder under the
terms hereof, at a Holder's option, a Warrant Certificate may be exercised
by being exchanged in whole or in part at any time or from time to time
prior to the Expiration Date for a number of shares of Common Stock having
an aggregate Specified Value (as defined in subsection (g) of Section
hereof) on the date of such exercise equal to the difference between (x)
the Specified Value of the number of Warrant Shares in respect of which
such Warrant Certificate is then exercised and (y) the aggregate Exercise
Price for such shares in effect at such time. The following equation
illustrates how many Warrant Shares would then be issued upon exercise
pursuant to this subsection:
X = {(SV)(N) - (PSP)(N)} OVER {SV}
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where:
SV = Specified Value per Warrant Share at date of exercise.
PSP = Per share Exercise Price at date of exercise.
N = Number of Warrant Shares in respect of which the Warrant
Certificate is being exercised by exchange.
X = Number of Warrant Shares issued upon exercise by exchange.
Upon any such exercise, the number of Warrant Shares purchasable upon
exercise of such Warrant Certificate shall be reduced by the number of
Warrant Shares so exchanged and, if a balance of purchasable Warrant Shares
remain after such exercise, DIMAC Holdings shall execute and deliver to the
holder hereof a new Warrant for such balance of Warrant Shares.
No payment of any cash or other consideration to DIMAC Holdings shall
be required from the Holder of a Warrant in connection with any exercise of
thereof by exchange pursuant to this subsection. Such exchange shall be
effective upon the date of receipt by DIMAC Holdings of the original
Warrant surrendered for cancellation and a written request from the Holder
thereof that the exchange pursuant to this subsection be made, or at such
later date as may be specified in such request. No fractional shares
arising out of the above formula for determining the number of Warrant
Shares issuable in such exchange shall be issued, and DIMAC Holdings shall
in lieu thereof make payment to the Holder of cash in the amount of such
fraction multiplied by the Specified Value of a Warrant Share on the date
of the exchange.
Section 6. Payment of Taxes. DIMAC Holdings will pay all documentary stamp
taxes and other governmental charges (excluding all foreign, federal or state
income, franchise, property, estate, inheritance, gift or similar taxes) in
connection with the issuance or delivery of the Warrants hereunder, as well as
all such taxes attributable to the initial issuance or delivery of Warrant
Shares upon the exercise of Warrants and payment of the Exercise Price. DIMAC
Holdings shall not, however, be required to pay any tax that may be payable in
respect of any subsequent transfer of the Warrants or any transfer involved in
the issuance and delivery of Warrant Shares in a name other than that in which
the Warrants to which such issuance relates were registered, and, if any such
tax would otherwise be payable by DIMAC Holdings, no such issuance or delivery
shall be made unless and until the person requesting such issuance has paid to
DIMAC Holdings the amount of any such tax, or it is established to the
reasonable satisfaction of DIMAC Holdings that any such tax has been paid.
Section 7. Mutilated or Missing Warrant Certificates. If a mutilated Warrant
Certificate is surrendered to DIMAC Holdings, or if the Holder of a Warrant
Certificate claims and submits an affidavit or other evidence satisfactory to
DIMAC Holdings to the effect that the Warrant Certificate has been lost,
destroyed or wrongfully taken, DIMAC Holdings shall issue a replacement Warrant
Certificate. If required by DIMAC Holdings such Holder must provide an indemnity
bond, or other form of indemnity, sufficient in the judgment of DIMAC Holdings
to protect DIMAC Holdings from any loss which it may suffer if a Warrant
Certificate is replaced. If any Purchaser or any other institutional Holder (or
nominee thereof) is the owner of any such lost, stolen or destroyed Warrant
Certificate, then the affidavit of an authorized officer of such owner, setting
forth the fact of loss, theft or destruction and of its ownership of the Warrant
Certificate at the time of such loss, theft or destruction shall be accepted as
satisfactory evidence thereof and no further indemnity shall be required as a
condition to the execution and delivery of a new Warrant Certificate other than
the unsecured written agreement of such owner to indemnify DIMAC Holdings or, at
the option of such Purchaser or other institutional Holder, an indemnity bond in
the amount of the Specified Value of
A-4
the Warrant Shares for which such Warrant Certificate was exercisable.
Section 8. Reservation of Warrant Shares. DIMAC Holdings shall at all times
reserve and keep available, free from preemptive rights (except as otherwise
provided herein), out of the aggregate of its authorized but unissued Common
Stock or its authorized and issued Common Stock held in its treasury, for the
purpose of enabling it to satisfy any obligation to issue Warrant Shares upon
exercise of Warrants, the maximum number of shares of Common Stock which may
then be deliverable upon the exercise of all outstanding Warrants, but such
shares of Common Stock shall be subject to the terms and conditions of the
Stockholders Agreement.
DIMAC Holdings or, if appointed, the transfer agent for the Common Stock
and each transfer agent for any shares of DIMAC Holdings' capital stock issuable
upon the exercise of any of the Warrants (collectively, the "Transfer Agent")
will be irrevocably authorized and directed at all times to reserve such number
of authorized shares as shall be required for such purpose. DIMAC Holdings shall
keep a copy of this Agreement on file with any such Transfer Agent. DIMAC
Holdings will supply any such Transfer Agent with duly executed certificates for
such purposes and will provide or otherwise make available all other
consideration that may be deliverable upon exercise of the Warrants. DIMAC
Holdings will furnish any such Transfer Agent a copy of all notices of
adjustments and certificates related thereto, transmitted to each Holder
pursuant to Section hereof.
Before taking any action which would cause an adjustment pursuant to
Section hereof to reduce the Exercise Price below the then par value (if any) of
the Warrant Shares, DIMAC Holdings shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that DIMAC Holdings may
validly and legally issue fully paid and nonassessable Warrant Shares at the
Exercise Price as so adjusted.
DIMAC Holdings covenants that all Warrant Shares and other capital stock
issued upon exercise of Warrants will, upon payment of the Exercise Price
therefor and issue thereof, be validly authorized and issued, fully paid,
nonassessable, free of preemptive rights (except as may be granted by this
Agreement) and free, subject to Section hereof, from all taxes, liens, charges
and security interests with respect to the issue thereof, but such Warrant
Shares shall be subject to the terms and conditions of the Stockholders
Agreement.
Section 9. Adjustment of Exercise Price and Warrant Number. The number of
shares of Common Stock issuable upon the exercise of each Warrant (the "Warrant
Number") is initially one. The Warrant Number is subject to adjustment from time
to time upon the occurrence of the events enumerated in, or as otherwise
provided in, this Section .
(a) Adjustment for Change in Capital Stock. If DIMAC Holdings:
(i) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
(ii) subdivides or reclassifies its outstanding shares of Common Stock
into a greater number of shares;
(iii) combines or reclassifies its outstanding shares of Common Stock
into a smaller number of shares;
(iv) makes a distribution on Common Stock in shares of its capital
stock other
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than Common Stock; or
(v) issues by reclassification of its Common Stock any shares of its
capital stock (other than reclassifications arising solely as a result
of a change in the par value or no par value of the Common Stock);
then the Warrant Number in effect immediately prior to such action shall be
proportionately adjusted so that the Holder of any Warrant thereafter
exercised may receive the aggregate number and kind of shares of capital
stock of DIMAC Holdings which it would have owned immediately following
such action if such Warrant had been exercised immediately prior to such
action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or
reclassification.
Such adjustment shall be made successively whenever any event listed
above shall occur. If the occurrence of any event listed above results in
an adjustment under subsection (b) or (c) of this Section , no further
adjustment shall be made under this subsection (a).
DIMAC Holdings shall not issue shares of Common Stock as a dividend or
distribution on any class of capital stock other than Common Stock, unless
the Holders also receive such dividend or distribution on a ratable basis
or the appropriate adjustment to the Warrant Number is made under this
Section .
(b) Adjustment for Rights Issue. If DIMAC Holdings distributes (and
receives no consideration therefor) any rights, options or warrants
(whether or not immediately exercisable) to all holders of any class of its
Common Stock entitling them to purchase shares of Common Stock at a price
per share less than the Specified Value per share on the record date
relating to such distribution, the Warrant Number shall be adjusted in
accordance with the following formula:
W'=~W `TIMES` {O `+` N} OVER {O `+ `{{N `TIMES` P} OVER M}}
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to the record date
for any such distribution.
O = the number of shares of Common Stock outstanding on the
record date for any such distribution.
N = the number of additional shares of Common Stock issuable
upon exercise of such rights, options or warrants.
P = the exercise price per share of such rights, options or
warrants.
M = the Specified Value per share of Common Stock on the record
date for any such distribution.
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The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after
the record date for the determination of stockholders entitled to receive
the rights, options or warrants. If at the end of the period during which
such rights, options or warrants are exercisable, not all rights, options
or warrants shall have been exercised, the adjusted Warrant Number shall be
immediately readjusted to what it would have been if "N" in the above
formula had been the number of shares actually issued.
(c) Adjustment for Other Distributions. If DIMAC Holdings distributes to
all holders of any class of its Common Stock (i) any evidences of
indebtedness of DIMAC Holdings or any of its subsidiaries, (ii) any assets
of DIMAC Holdings or any of its subsidiaries, or (iii) any rights, options
or warrants to acquire any of the foregoing or to acquire any other
securities of DIMAC Holdings, the Warrant Number shall be adjusted in
accordance with the following formula:
W'=~W `TIMES` {M OVER {M`-`F}}
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to the record date
mentioned below.
M = the Specified Value per share of Common Stock on the record
date mentioned below.
F = the fair market value on the record date mentioned below of
the shares, the indebtedness, assets, rights, options or
warrants distributable to the holder of one share of Common
Stock.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
distribution. If an adjustment is made pursuant to this subsection (c) as a
result of the issuance of rights, options or warrants and at the end of the
period during which any such rights, options or warrants are exercisable,
not all such rights, options or warrants shall have been exercised, the
adjusted Warrant Number shall be immediately readjusted as if "F" in the
above formula was the fair market value on the record date of the
indebtedness or assets actually distributed upon exercise of such rights,
options or warrants divided by the number of shares of Common Stock
outstanding on the record date.
This subsection does not apply to any transaction described in
subsection (a) of this Section or to rights, options or warrants referred
to in subsection (b) of this Section .
(d) Adjustment for Common Stock Issue. If DIMAC Holdings issues shares of
Common Stock for a consideration per share less than the Specified Value
per share on the date DIMAC Holdings fixes the offering price of such
additional shares, the Warrant Number shall be adjusted in accordance with
the following formula:
A-7
W'=~W `TIMES` {A OVER {O `+ `{P OVER M}}}
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to any such issuance.
O = the number of shares of Common Stock outstanding immediately
prior to the issuance of such additional shares of Common
Stock.
P = the aggregate consideration received for the issuance of
such additional shares of Common Stock.
M = the Specified Value per share of Common Stock on the date of
issuance of such additional shares.
A = the number of shares of Common Stock outstanding immediately
after the issuance of such additional shares of Common
Stock.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to any of the transactions
described in subsection (a) of this Section or the issuances described
below:
(i) The issuance of Common Stock upon the conversion, exercise or
exchange of any Convertible Securities (as defined below), including
the Warrants, outstanding on the date hereof or for which an
adjustment has been made pursuant to this Section ; or
(ii) (A) The grant of rights to purchase shares of Common Stock
representing, in the aggregate (taking into account all such grants
since October 22, 1998), up to 5% of the outstanding shares of Common
Stock, and the issuance of such shares of Common Stock upon exercise
of such rights, to directors or members of management of DIMAC
Holdings and its subsidiaries pursuant to management incentive plans,
stock option and stock purchase plans or agreements adopted by the
board of directors of DIMAC Holdings and (B) following the acquisition
by DIMAC Holdings of any of the rights or shares referred to in clause
(A) the reissuance of any such acquired rights and the issuance of
shares of Common Stock upon exercise thereof.
(e) Adjustment for Convertible Securities Issue. If DIMAC Holdings issues
any options, warrants or other securities convertible into or exchangeable
or exercisable for Common Stock ("Convertible Securities") (other than
securities issued in transactions described in subsection (b) or (c) of
this Section ) for a consideration per share of Common Stock initially
deliverable upon conversion, exchange or exercise of such securities less
than the Specified Value per share on the date of issuance of such
securities, the Warrant Number shall be adjusted in accordance with the
following formula:
W'=~W `TIMES` {O `+` D} OVER {O `+ `{P OVER M}}
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where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to any such issuance.
O = the number of shares of Common Stock outstanding immediately
prior to the issuance of such securities.
P = the sum of the aggregate consideration received for the
issuance of such securities and the aggregate minimum
consideration receivable by DIMAC Holdings for issuance of
Common Stock upon conversion or in exchange for, or upon
exercise of, such securities.
M = the Specified Value per share of Common Stock on the date
of issuance of such securities.
D = the maximum number of shares of Common Stock deliverable
upon conversion or in exchange for or upon exercise of such
securities at the initial conversion, exchange or exercise
rate.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion, exchange or
exercise of such securities has not been issued when the conversion,
exchange or exercise rights of such securities have expired or been
terminated, then the adjusted Warrant Number shall promptly be readjusted
to the adjusted Warrant Number which would then be in effect had the
adjustment upon the issuance of such securities been made on the basis of
the actual number of shares of Common Stock issued upon conversion,
exchange or exercise of such securities. If the aggregate minimum
consideration receivable by DIMAC Holdings for issuance of Common Stock
upon conversion or in exchange for, or upon exercise of, such securities
shall be increased by virtue of provisions therein contained or upon the
arrival of a specified date or the happening of a specified event, then the
Warrant Number shall promptly be readjusted to the Warrant Number which
would then be in effect had the adjustment upon the issuance of such
securities been made on the basis of such increased minimum consideration.
This subsection (e) does not apply to the issuance of the Warrants or
to any of the transactions described in paragraph (b) of this Section or
excluded from the provisions of paragraph (d) of this Section .
(f) Adjustment for Tender Offer. If DIMAC Holdings or any subsidiary of
DIMAC Holdings consummates a tender offer for any Common Stock and
purchases shares pursuant to such tender offer for an aggregate
consideration having a fair market value (as determined reasonably and in
good faith by the board of directors of DIMAC Holdings and described in a
board resolution) as of the last time (the "Expiration Time") that tenders
may be made pursuant to such tender offer (as it shall have been amended)
that, together with (i) the aggregate of the cash plus the fair market
value (as determined reasonably and in good faith by the board of directors
of DIMAC Holdings and described in a board resolution) of the consideration
paid in respect of any other tender offer by DIMAC Holdings or any
subsidiaries of DIMAC Holdings for any Common Stock consummated within the
12 months
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preceding the Expiration Time and in respect of which no adjustment
pursuant to this subsection (f) has been made previously and (ii) the
aggregate amount of any distributions to all holders of Common Stock made
exclusively in cash within 12 months preceding the Expiration Time exceeds
5.0% of the product of the Specified Value per share immediately prior to
the Expiration Time times the number of shares of Common Stock outstanding
(including any tendered shares) at the Expiration Time, the Warrant Number
shall be adjusted in accordance with the following formula:
W'=~W `TIMES` {M `TIMES` (O `-` N)} OVER {(M `TIMES`O)`-F}
where:
W' = the adjusted Warrant Number.
W = the Warrant Number immediately prior to the Expiration Time.
M = the Specified Value per share of Common Stock immediately
prior to the Expiration Time.
O = the number of shares of Common Stock outstanding (including
any tendered shares) at the Expiration Time.
F = the fair market value of the aggregate consideration paid
for all shares of Common Stock purchased pursuant to the
tender offer.
N = the number of shares of Common Stock accepted for payment
in such tender offer.
If the number of shares accepted for payment in such tender offer or
the aggregate consideration payable therefor have not been finally
determined by the opening of business on the day following the Expiration
Time, the adjustment required by this subsection (f) shall, pending such
final determination, be made based upon the preliminary announced results
of such tender offer, and, after such final determination shall have been
made, the adjustment required by this subsection (f) shall be based upon
the number of shares accepted for payment in such tender offer and the
aggregate consideration payable therefor as so finally determined.
(g) "Specified Value" per share of Common Stock or of any other security
(herein collectively referred to as a "Security") at any date shall be:
(i) if the Security is not registered under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), (1) the value of the
Security determined in good faith by the board of directors of DIMAC
Holdings and certified in a board resolution, based on the most
recently completed arm's-length transaction between DIMAC Holdings and
a person other than an Affiliate of DIMAC Holdings in which such
determination is necessary and the closing of which occurs on such
date or shall
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have occurred within the six months preceding such date, (2) if no
such transaction shall have occurred on such date or within such
six-month period, the value of the Security most recently determined
as of a date within the six months preceding such date by an
Independent Financial Expert or (3) if neither clause (1) nor (2) is
applicable, the value of the Security as mutually agreed by DIMAC
Holdings and Holders of at least a majority of the Warrants
outstanding; provided, however, that if DIMAC Holdings and such
Holders are unable to mutually agree upon such value, DIMAC Holdings
shall select an Independent Financial Expert who shall determine the
value of such Security;
(ii) if the Security is registered under the Exchange Act, the average
of the daily market prices for each business day during the period
commencing 10 business days before such date and ending on the date
one day prior to such date or, if the Security has been registered
under the Exchange Act for less than 30 consecutive business days
before such date, then the average of the daily market prices (as
hereinafter defined) for all of the business days before such date for
which daily market prices are available. If the market price is not
determinable for at least 15 business days in such period, the
Specified Value of the Security shall be determined as if the Security
was not registered under the Exchange Act; or
(iii) if the Security is registered under the Exchange Act and is
being sold in a firm commitment underwritten public offering
registered under the Securities Act, the public offering price of
such Security set forth on the cover page of the prospectus relating
to such offering.
The "market price" for any Security on each business day means: (A) if
such Security is listed or admitted to trading on any securities exchange,
the closing price, regular way, on such day on the principal exchange on
which such Security is traded, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day or (B) if such
Security is not then listed or admitted to trading on any securities
exchange, the last reported sale price on such day, or if there is no such
last reported sale price on such day, the average of the closing bid and
the asked prices on such day, as reported by a reputable quotation source
designated by DIMAC Holdings. If there are no such prices on a business
day, then the market price shall not be determinable for such business day.
In the case of Common Stock, if more than one class of Common Stock is
outstanding, the "Specified Value" shall be the highest of the Specified
Values per share of such classes of Common Stock.
"Independent Financial Expert" shall mean a nationally recognized
investment banking firm selected by DIMAC Holdings (i) that does not (and
whose directors, officers, employees and Affiliates do not) have a direct
or indirect financial interest in DIMAC Holdings or any of its Affiliates,
(ii) that has not been, and, at the time it is called upon to serve as an
Independent Financial Expert under this Agreement is not (and none of whose
directors, officers, employees or Affiliates is) a promoter, director or
officer of DIMAC Holdings, (iii) that has not been retained by DIMAC
Holdings or any of its Affiliates for any purpose, other than to perform an
equity valuation, within the preceding twelve months, and (iv) that, in the
reasonable judgment of the board of directors of DIMAC Holdings, is
otherwise qualified to serve as an independent financial advisor. Any such
person may receive customary compensation and indemnification by DIMAC
Holdings for opinions or services it provides as an Independent Financial
Expert.
A-11
(h) Consideration Received. For purposes of any computation respecting
consideration received pursuant to subsections (d) and (e) of this
Section , the following shall apply:
(1) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash (without any
deduction being made for any commissions, discounts or other expenses
incurred by DIMAC Holdings for any underwriting of the issue or
otherwise in connection therewith);
(2) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof
(irrespective of the accounting treatment thereof) as determined in
good faith by the board of directors of DIMAC Holdings; and
(3) in the case of the issuance of options, warrants or other
securities convertible into or exchangeable or exercisable for shares
of Common Stock, the aggregate consideration received therefor shall
be deemed to be the consideration received by DIMAC Holdings for the
issuance of such securities plus the additional minimum consideration,
if any, to be received by DIMAC Holdings upon the conversion, exchange
or exercise thereof (the consideration in each case to be determined
in the same manner as provided in clauses (1) and (2) of this
subsection).
(i) When De Minimis Adjustment May Be Deferred. No adjustment in the
Warrant Number need be made unless the adjustment would require an increase
or decrease of at least 0.5% in the Warrant Number. Any adjustment that is
not made shall be carried forward and taken into account in any subsequent
adjustment, provided that no such adjustment shall be deferred beyond the
date on which a Warrant is exercised.
All calculations under this Section shall be made to the nearest
1/100th of a share.
(j) Adjustment to Exercise Price. Upon each adjustment to the Warrant
Number pursuant to this Section , the Exercise Price shall be adjusted so
that it is equal to the Exercise Price in effect immediately prior to such
adjustment multiplied by a fraction, the numerator of which is the Warrant
Number in effect immediately prior to such adjustment, and the denominator
of which is the Warrant Number in effect immediately after such adjustment.
(k) When No Adjustment Required. If an adjustment is made upon the
establishment of a record date for a distribution subject to subsection
(a), (b) or (c) of this Section and such distribution is subsequently
cancelled, the Warrant Number and Exercise Price then in effect shall be
readjusted, effective as of the date when the board of directors of DIMAC
Holdings determines to cancel such distribution, to that which would have
been in effect if such record date had not been fixed.
To the extent the Warrants become convertible into cash, no adjustment
need be made thereafter as to the amount of cash into which such Warrants
are exercisable. Interest will not accrue on the cash.
(l) Notice of Adjustment. Whenever the Warrant Number or Exercise Price is
adjusted,
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DIMAC Holdings shall provide the notices required by Section hereof.
(m) Voluntary Reduction. DIMAC Holdings from time to time may reduce the
Exercise Price by any amount for any period of time (including, without
limitation, permanently) if the period is at least 20 days and if the
reduction is irrevocable during the period.
Whenever the Exercise Price is reduced, DIMAC Holdings shall mail to
the Holders a notice of the reduction. DIMAC Holdings shall mail the notice
at least 15 days before the date the reduced Exercise Price takes effect.
The notice shall state the reduced Exercise Price and the period it will be
in effect.
A reduction of the Exercise Price under this subsection (m) (other
than a permanent reduction) does not change or adjust the Exercise Price
otherwise in effect for purposes of subsections (a), (b), (c), (d), (e), or
(f) of this Section .
(n) Reorganizations. In case of any capital reorganization, other than in
the cases referred to in subsections (a), (b), (c), (d), (e) or (f) of this
Section , or the consolidation or merger of DIMAC Holdings with or into
another corporation (other than a merger or consolidation in which DIMAC
Holdings is the continuing corporation and which does not result in any
reclassification of the outstanding shares of Common Stock into shares of
other stock or other securities or property), or the sale of the property
of DIMAC Holdings as an entirety or substantially as an entirety
(collectively, such actions being hereinafter referred to as
"Reorganizations"), there shall thereafter be deliverable upon exercise of
any Warrant (in lieu of the number of shares of Common Stock theretofore
deliverable) the number of shares of stock or other securities or property
to which a holder of the number of shares of Common Stock that would
otherwise have been deliverable upon the exercise of such Warrant would
have been entitled upon such Reorganization if such Warrant had been
exercised in full immediately prior to such Reorganization. In case of any
Reorganization, appropriate adjustment, as determined in good faith by the
board of directors of DIMAC Holdings, whose determination shall be
described in a duly adopted resolution certified by DIMAC Holdings'
Secretary or Assistant Secretary, shall be made in the application of the
provisions herein set forth with respect to the rights and interests of
Holders so that the provisions set forth herein shall thereafter be
applicable, as nearly as possible, in relation to any shares or other
property thereafter deliverable upon exercise of Warrants.
DIMAC Holdings shall not effect any such Reorganization unless prior
to or simultaneously with the consummation thereof the successor
corporation (if other than DIMAC Holdings) resulting from such
Reorganization or the corporation purchasing or leasing such assets or
other appropriate corporation or entity shall expressly assume, by a
supplemental Warrant Agreement or other acknowledgment executed and
delivered to the Holder(s), the obligation to deliver to each such Holder
such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such Holder may be entitled to purchase, and all
other obligations and liabilities under this Agreement.
A-13
(o) Form of Warrants. Irrespective of any adjustments in the Exercise
Price or the number or kind of shares purchasable upon the exercise of the
Warrants, Warrants theretofore or thereafter issued may continue to express
the same price and number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement.
(p) Other Dilutive Events. In case any event shall occur as to which the
provisions of this Section are not strictly applicable but the failure to
make any adjustment would not fairly protect the purchase rights
represented by the Warrants in accordance with the essential intent and
principles of such sections, then, in each such case, DIMAC Holdings shall
make a good faith adjustment to the Exercise Price and Warrant Number into
which each Warrant is exercisable in accordance with the intent of this
Section and, upon the written request of the Holders of a majority of the
Warrants, shall appoint a firm of independent certified public accountants
of recognized national standing (which may be the regular auditors of DIMAC
Holdings), which shall give their opinion upon the adjustment, if any, on a
basis consistent with the essential intent and principles established in
this Section , necessary to preserve, without dilution, the purchase rights
represented by these Warrants. Upon receipt of such opinion, DIMAC Holdings
shall promptly mail a copy thereof to the Holder of each Warrant and shall
make the adjustments described therein.
(q) Miscellaneous. For purpose of this Section the term "shares of Common
Stock" shall mean (i) shares of any class of stock designated as Common
Stock of DIMAC Holdings as of the date of this Agreement, (ii) shares of
any other class of stock resulting from successive changes or
reclassification of such shares consisting solely of changes in par value,
or from par value to no par value, or from no par value to par value and
(iii) shares of Common Stock of DIMAC Holdings or options, warrants or
rights to purchase Common Stock of DIMAC Holdings or securities convertible
into or exchangeable for shares of Common Stock of DIMAC Holdings
outstanding on the date hereof and shares of Common Stock of DIMAC Holdings
issued upon exercise, conversion or exchange of such securities. In the
event that at any time, as a result of an adjustment made pursuant to this
Section , the Holders of Warrants shall become entitled to purchase any
securities of DIMAC Holdings other than, or in addition to, shares of
Common Stock, thereafter the number or amount of such other securities so
purchasable upon exercise of each Warrant shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained
in subsections (a) through (p) of this Section , inclusive, and the
provisions of Sections , , and hereof with respect to the Warrant Shares or
the Common Stock shall apply on like terms to any such other securities.
Section 10. Fractional Interests. DIMAC Holdings shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section ,
be issuable on the exercise of any Warrants (or specified portion thereof),
DIMAC Holdings shall, pay an amount in cash equal to the fair market value of
the Warrant Share so issuable (as determined in good faith by the board of
directors of DIMAC Holdings), multiplied by such fraction.
Section 11. Notices to Holders. Upon any adjustment pursuant to Section
hereof, DIMAC Holdings shall promptly thereafter (i) cause to be filed with
DIMAC Holdings a certificate of an officer of DIMAC Holdings setting forth the
Warrant Number and Exercise Price after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which
A-14
such calculations are based, and (ii) cause to be given to each of the Holders
at its address appearing on the Warrant Register written notice of such
adjustments. Where appropriate, such notice may be given in advance and included
as a part of the notice required to be mailed under the other provisions of this
Section.
In case:
(a) DIMAC Holdings shall authorize the issuance to all holders of shares
of Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants;
(b) DIMAC Holdings shall authorize the distribution to all holders of
shares of Common Stock of assets, including cash, evidences of its
indebtedness, or other securities;
(c) of any consolidation or merger to which DIMAC Holdings is a party and
for which approval of any stockholders of DIMAC Holdings is required, or of
the conveyance or transfer of the properties and assets of DIMAC Holdings
substantially as an entirety, or of any reclassification or change of
Common Stock issuable upon exercise of the Warrants (other than a change in
par value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or a tender offer
or exchange offer for shares of Common Stock;
(d) of the voluntary or involuntary dissolution, liquidation or winding up
of DIMAC Holdings;
(e) DIMAC Holdings proposes to take any action that would require an
adjustment to the Warrant Number or the Exercise Price pursuant to Section
hereof; or
(f) DIMAC Holdings proposes to take any action that would give rise to the
Holders' preemptive rights as specified in the Stockholders Agreement or
elsewhere.
then DIMAC Holdings shall cause to be given to each of the Holders at its
address appearing on the Warrant Register, at least 20 days prior to the
applicable record date hereinafter specified, or the date of the event in the
case of events for which there is no record date, in accordance with the
provisions of Section hereof, a written notice stating (i) the date as of which
the holders of record of shares of Common Stock to be entitled to receive any
such rights, options, warrants or distribution are to be determined, or (ii) the
initial expiration date set forth in any tender offer or exchange offer for
shares of Common Stock, or (iii) the date on which any such consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding up is expected
to become effective or consummated, and the date as of which it is expected that
holders of record of shares of Common Stock shall be entitled to exchange such
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up. The failure to give the notice required by this
Section or any defect therein shall not affect the legality or validity of any
distribution, right, option, warrant, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any Warrant Certificate shall be
construed as conferring upon the Holders (prior to the exercise of such
Warrants) the right to vote or to consent or to receive notice as stockholder in
respect of the meetings of stockholders or the election of members of the board
of directors of DIMAC Holdings or any other matter, or any rights whatsoever
A-15
as stockholders of DIMAC Holdings; provided, however, that nothing in the
foregoing provision is intended to detract from any rights explicitly granted to
any Holder hereunder.
Section 12. Notices to DIMAC Holdings and Holders. All notices and other
communications provided for or permitted hereunder shall be made by
hand-delivery, first-class mail, telex, telecopier, or overnight air courier
guaranteeing next day delivery:
(a) if to Purchasers, TCW/Crescent Mezzanine, L.L.C., 00000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000, Telecopy No.: 000-000-0000,
Attention: Xxxx X. Xxxxxxx, with a copy to Skadden, Arps, Slate, Xxxxxxx &
Xxxx, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
Telecopy number (000) 000-0000, Attention: Xxxxxxx X. Xxxxxx, Xx., Esq.;
and
(b) if to DIMAC Holdings, 0000 Xxxxxxxxx Xxxxxxxx Xxxx, Xxxxx X000,
Xxxxxxx, XX 00000, Telecopy No. 000-000-0000, Attention: Chief Financial
Officer, with a copy to XxXxxx De Leeuw & Co., 00 X. 00xx Xxxxxx., Xxx
Xxxx, Xxx Xxxx 00000, Telecopy No. (000) 000-0000, Attention: Xxxxx X. Xx,
with a copy to White & Case LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Telecopy No. (000) 000-0000, Attention: Xxxxx X. Xxxxxx, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed (so long as a
fax copy is sent and receipt acknowledged within two business days after
mailing); when answered back if telexed; when receipt acknowledged, if
telecopied; and the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery. The parties may
change the addresses to which notices are to be given by giving five days' prior
written notice of such change in accordance herewith.
Section 13. Certain Supplements and Amendments. DIMAC Holdings may from time
to time supplement or amend this Agreement without the approval of any Holders
in order to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions in regard to matters or questions
arising hereunder which DIMAC Holdings may deem necessary or desirable; provided
that any such supplement or amendment shall not in any way adversely affect the
interests of the Holders.
Section 14. Successors. All the covenants and provisions of this Agreement by
or for the benefit of DIMAC Holdings shall bind and inure to the benefit of its
respective successors and assigns hereunder.
Section 15. Termination. This Agreement shall terminate if all Warrants have
been exercised pursuant to this Agreement.
Section 16. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT AND
ALL ISSUES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO PRINCIPLES
OF CONFLICTS OF LAW EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW); PROVIDED THAT DETERMINATIONS RELATING TO CORPORATE LAW SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, DIMAC HOLDINGS
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT
A-16
SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT
SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE
WARRANTS, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. DIMAC
HOLDINGS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER OF A
WARRANT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST DIMAC HOLDINGS IN ANY OTHER
JURISDICTION.
Section 17. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than DIMAC Holdings and the
Holders any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of DIMAC Holdings and
the Holders.
Section 18. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 19. Amendments and Waivers. Subject to Section hereof, DIMAC
Holdings agrees it will not solicit, request or negotiate for or with respect
to any proposed waiver or amendment of any of the provisions of this
Agreement or any Warrant unless each Holder (irrespective of the amount of
Warrants then owned by it) shall substantially concurrently be informed
thereof by DIMAC Holdings and shall be afforded the opportunity of
considering the same and shall be supplied by DIMAC Holdings with sufficient
information (including any offer of remuneration) to enable it to make an
informed decision with respect thereto which information shall be the same as
that supplied to each other Holder. DIMAC Holdings will not directly or
indirectly, pay or cause to be paid any remuneration whether by way of
supplement or additional interest fee or otherwise, to any Holder as
consideration for or as an inducement to the entering into by any Holder of
any waiver or amendment of any of the terms and provisions of this Agreement
or any Warrant unless such remunerations is concurrently paid on the same
terms, ratably to each Holder whether or not such Holder signs such waiver or
consent, provided that the foregoing is not intended to preclude the adoption
of any amendment or the giving of any waiver by the Holders of a majority of
the Warrants to the extent permitted by the other provisions of this Section.
A-17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
DIMAC HOLDINGS, INC.
By:
----------------------------------
Name:
Title:
----------------------------------
A-18
Purchasers:
TCW/CRESCENT MEZZANINE PARTNERS, L.P.
TCW/CRESCENT MEZZANINE TRUST
TCW/CRESCENT MEZZANINE INVESTMENT PARTNERS, L.P.
By: TCW/XXXXXXXX XXXXXXXXX, L.L.C.,
its general partner or managing owner
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Initial Bank Account and Wire Instructions:
-------------------------------------------
Bank of New York
000 Xxxxx Xxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxx, XX 00000
ABA: 000-000-000
BNF: IOC 565
BBI: A/C#355-744
Account Name: Mezzanine Master Wire Account
Attention: Xxxxxxx Xxxx (000) 000-0000
Address for Notices:
--------------------
TCW/Crescent Mezzanine, LLC
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Telecopy No.: (310) 235-596
A-19
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW ADVISORS (BERMUDA), LIMITED,
as General Partner
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
By: TCW INVESTMENT MANAGEMENT COMPANY,
as Investment Advisor
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Initial Bank Account and Wire Instructions:
-------------------------------------------
Bank of New York
000 Xxxxx Xxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxx, XX 00000
ABA: 000-000-000
BNF: IOC 565
BBI: A/C#355-744
Account Name: Mezzanine Master Wire Account
Attention: Xxxxxxx Xxxx (000) 000-0000
Address for Notices:
--------------------
TCW/Crescent Mezzanine, LLC
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
A-20
TCW SHARED OPPORTUNITY FUND II, L.P.
By: TCW INVESTMENT MANAGEMENT COMPANY,
its investment advisor
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Initial Bank Account and Wire Instructions:
-------------------------------------------
Bank of New York
000 Xxxxx Xxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxx, XX 00000
ABA: 000-000-000
BNF: IOC 565
BBI: A/C#355-744
Account Name: Mezzanine Master Wire Account
Attention: Xxxxxxx Xxxx (000) 000-0000
Address for Notices:
--------------------
TCW/Crescent Mezzanine, LLC
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
A-21
EXHIBIT A [Form of Warrant Certificate]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON OCTOBER
22, 1998, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR
SALE OR OTHERWISE DISTRIBUTED EXCEPT IN CONJUNCTION WITH AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT, OR IN
COMPLIANCE WITH RULE 144 OR PURSUANT TO ANOTHER EXEMPTION THEREFROM. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A WARRANT AGREEMENT,
THE STOCKHOLDERS AGREEMENT (AS DEFINED BELOW) AND A SECURITIES PURCHASE
AGREEMENT, EACH DATED AS OF OCTOBER 22, 1998, AMONG THE ISSUER OF SUCH
SECURITIES ("DIMAC HOLDINGS"), THE PURCHASERS REFERRED TO THEREIN AND THE OTHER
PARTIES THERETO. THE TRANSFER OF THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS
SPECIFIED IN SUCH AGREEMENTS AND DIMAC HOLDINGS RESERVES THE RIGHT TO REFUSE THE
TRANSFER OF THIS CERTIFICATE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH
RESPECT TO SUCH TRANSFER. A COPY OF SUCH AGREEMENTS WILL BE FURNISHED WITHOUT
CHARGE BY DIMAC HOLDINGS TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
THE SHARES ISSUABLE UPON EXERCISE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE PREFERENCES, POWERS, QUALIFICATIONS AND RIGHTS OF
EACH CLASS AND SERIES AS SET FORTH IN DIMAC HOLDINGS' CERTIFICATE OF
INCORPORATION. DIMAC HOLDINGS WILL FURNISH A COPY OF THE CERTIFICATE OF
INCORPORATION TO THE HOLDER OF THIS CERTIFICATE UPON WRITTEN REQUEST.
No. _____ ______ Warrants
Warrant Certificate
DIMAC HOLDINGS, INC.
This Warrant Certificate certifies that ___________________________, or
registered assigns, is the registered holder of the number of Warrants (the
"Warrants") set forth above to purchase Common Stock, $0.001 par value (the
"Common Stock"), of DIMAC Holdings, Inc., a Delaware corporation ("DIMAC
Holdings"). Each Warrant entitles the holder upon exercise to receive from DIMAC
Holdings one fully paid and nonassessable share of Common Stock (a "Warrant
Share"), at the initial exercise price (the "Exercise Price") of $.01, payable
in lawful money of the United States of America, upon surrender of this Warrant
Certificate and payment of the Exercise Price at the office of DIMAC Holdings
designated for such purpose, but only subject to the conditions set forth herein
and in the Warrant Agreement referred to hereinafter. The Exercise Price and
number of Warrant Shares issuable upon exercise of the Warrants are subject to
adjustment upon the occurrence of certain events, as set forth in the Warrant
Agreement. Each Warrant is exercisable at any time prior to 5:00 p.m., New York
time, on October 22, 2209.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants, and are issued or to be issued pursuant to a
Warrant Agreement dated as of October 22, 1998 (the "Warrant Agreement"), duly
executed and delivered by DIMAC Holdings, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of DIMAC Holdings and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to DIMAC Holdings. Capitalized terms used and not
defined herein shall have the meaning ascribed thereto in the Warrant Agreement.
The holder hereof may exercise the Warrants evidenced hereby under and
pursuant to the terms and conditions of the Warrant Agreement by surrendering
this Warrant Certificate, with the form of election to purchase
A-22
set forth hereon (and by this reference made a part hereof) properly completed
and executed, and, to the extent the Warrants are not being exchanged pursuant
to the Warrant exchange provisions of Section 5 of the Warrant Agreement,
together with payment of the Exercise Price in cash or by certified or bank
check at the office of DIMAC Holdings designated for such purpose. In the event
that upon any exercise of Warrants evidenced hereby the number of Warrants
exercised shall be less than the total number of Warrants evidenced hereby,
there shall be issued by DIMAC Holdings to the holder hereof or its registered
assignee a new Warrant Certificate evidencing the number of Warrants not
exercised.
The Warrant Agreement provides that upon the occurrence of certain events
the number of Warrant Shares issuable upon exercise of a Warrant and the
Exercise Price set forth on the face hereof may, subject to certain conditions,
be adjusted.
The holder hereof will have certain registration rights and other rights
and obligations with respect to the Warrant Shares as provided in the Amended
and Restated Stockholders Agreement dated as of October 22, 1998 by and among
DIMAC Holdings and the persons party thereto, as supplemented and modified
pursuant to the letter dated October 22, 1998 from DIMAC Holdings, XxXxxx De
Leeuw & Co. XX, L.P. and XxXxxx De Leeuw & Co. IV Associates, L.P. to the
Purchasers (such Amended and Restated Stockholders Agreement as so supplemented
and modified, being referred to herein as the "Stockholders Agreement"). Copies
of the Stockholders Agreement may be obtained by the holder hereof upon written
request to DIMAC Holdings.
Warrant Certificates, when surrendered at the office of DIMAC Holdings by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Subject to the terms and conditions of the Warrant Agreement, upon due
presentation for registration of transfer of this Warrant Certificate at the
office of DIMAC Holdings a new Warrant Certificate or Warrant Certificates of
like tenor and evidencing in the aggregate a like number of Warrants shall be
issued to the transferee(s) in exchange for this Warrant Certificate, subject to
the limitations provided in the Warrant Agreement, without charge except for any
tax or other governmental charge imposed in connection therewith.
DIMAC Holdings may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and DIMAC Holdings shall not be affected by any notice to the
contrary. Neither the Warrants nor this Warrant Certificate entitles any holder
hereof to any rights of a stockholder of DIMAC Holdings.
IN WITNESS WHEREOF, DIMAC Holdings has caused this Warrant Certificate to
be signed by its Chairman of the Board, Chief Executive Officer, President or
Vice President and by its Secretary or Assistant Secretary.
Dated: October 22, 1998
DIMAC HOLDINGS, INC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
A-23
FORM OF ELECTION TO PURCHASE
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to:
(Check Applicable Box)
- receive shares of Common Stock and herewith tenders
--------------
payment for such shares to the order of DIMAC Holdings, Inc. in the
amount of $ in accordance with the terms hereof.
------------
- exchange Warrants for shares of Common Stock and herewith tenders
Warrants to purchase shares of Common Stock as payment
---------------
for such number of shares of Common Stock as determined in accordance
with the Warrant exchange procedures of Section 5 of the Warrant
Agreement.
The undersigned requests that a certificate for such shares be registered
in the name of , whose address is
-----------------------------------
and that such shares be delivered to
-------------------------------
, whose address is
----------------------------
If said number of shares is less than all of the shares of Common Stock
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
, whose address is ,
---------------------------- -------------------------------
and that such Warrant Certificate be delivered to ,
----------------------------
whose address is
Signature(s):
------------------------
NOTE: The above signature(s) must correspond with
the name written upon the face of this
Warrant Certificate in every particular,
without alteration or enlargement or any
change whatever. If this Warrant is held of
record by two or more joint owners, all such
owners must sign.
Date:
--------------------
A-24
FORM OF ASSIGNMENT
(To be signed only upon assignment of Warrant Certificate)
FOR VALUE RECEIVED, hereby sells, assigns and
----------------------------
transfers unto whose address is
----------------------------
and whose social security number or other
---------------------------------
identifying number is , the within Warrant Certificate,
-------------------------
together with all right, title and interest therein and to the Warrants
represented thereby, and does hereby irrevocably constitute and appoint
, attorney, to transfer said Warrant Certificate on
----------------------------
the books of the within-named corporation, with full power of substitution in
the premises.
Signature(s):
------------------------
NOTE: The above signature(s) must correspond with
the name written upon the face of this
Warrant Certificate in every particular,
without alteration or enlargement or any
change whatever. If this Warrant is held of
record by two or more joint owners, all such
owners must sign.
Date:
--------------------
A-25
Annex B
DIMAC Holdings, Inc.
as issuer
151/2% Senior Notes due October 22, 2009
______________________________________________
INDENTURE
Dated as of October 22, 1998
______________________________________________
Wilmington Trust Company,
Trustee
CROSS-REFERENCE TABLE*
Trust Indenture Indenture
Act Section Section
--------------- ---------
310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
310(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
310(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
310(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
310(a)(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8; 7.10
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3
312(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
313(b)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
313(b)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
313(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
313(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3; 4.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
314(c)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4
314(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4
314(c)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
315(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence). . . . . . . . . . . . . . . . . . . . . . . . . 2.9
316(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
316(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
316(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4
317(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
317(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1
318(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
318(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . . . . .1
Section 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.2 Other Definitions. . . . . . . . . . . . . . . . . . . . 12
Section 1.3 Incorporation by Reference of Trust Indenture Act. . . . 13
Section 1.4 Rules of Construction. . . . . . . . . . . . . . . . . . 13
ARTICLE II THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.1 Form and Dating. . . . . . . . . . . . . . . . . . . . . 14
Section 2.2 Execution and Authentication . . . . . . . . . . . . . . 14
Section 2.3 Registrar, Paying Agent and Depository . . . . . . . . . 15
Section 2.4 Paying Agent to Hold Money in Trust. . . . . . . . . . . 16
Section 2.5 Holder Lists . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.6 Transfer and Exchange. . . . . . . . . . . . . . . . . . 16
Section 2.7 Replacement Notes. . . . . . . . . . . . . . . . . . . . 19
Section 2.8 Outstanding Notes. . . . . . . . . . . . . . . . . . . . 19
Section 2.9 Treasury Notes . . . . . . . . . . . . . . . . . . . . . 20
Section 2.10 Temporary Notes. . . . . . . . . . . . . . . . . . . . . 20
Section 2.11 Cancellation . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.12 Defaulted Interest . . . . . . . . . . . . . . . . . . . 21
Section 2.13 Legends. . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.14 Deposit of Moneys. . . . . . . . . . . . . . . . . . . . 22
ARTICLE III REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.1 Notices to Trustee . . . . . . . . . . . . . . . . . . . 22
Section 3.2 Selection of Notes to Be Redeemed. . . . . . . . . . . . 22
Section 3.3 Notice of Redemption . . . . . . . . . . . . . . . . . . 22
Section 3.4 Effect of Notice of Redemption.. . . . . . . . . . . . . 23
Section 3.5 Deposit of Redemption Price. . . . . . . . . . . . . . . 23
Section 3.6 Notes Redeemed in Part.. . . . . . . . . . . . . . . . . 24
Section 3.7 Optional Redemption. . . . . . . . . . . . . . . . . . . 24
ARTICLE IV COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.1 Payment of Notes.. . . . . . . . . . . . . . . . . . . . 24
Section 4.2 Maintenance of Office or Agency. . . . . . . . . . . . . 24
Section 4.3 Reports. . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.4 Compliance Certificate . . . . . . . . . . . . . . . . . 26
Section 4.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.6 Stay, Extension and Usury Laws . . . . . . . . . . . . . 27
Section 4.7 Limitation on Restricted Payments. . . . . . . . . . . . 27
Section 4.8 Limitation on Restrictions on Dividends
from Restricted Subsidiaries . . . . . . . . . . . . . . 28
Section 4.9 Limitation on Additional Indebtedness and
Issuance of Disqualified Capital Stock . . . . . . . . . 29
Section 4.10 Limitation on Asset Sales. . . . . . . . . . . . . . . . 29
Section 4.11 Limitation on Transactions With Affiliates . . . . . . . 31
Section 4.12 Limitation on Liens. . . . . . . . . . . . . . . . . . . 32
Section 4.13 Corporate Existence. . . . . . . . . . . . . . . . . . . 32
Section 4.14 Repurchase Upon a Change of Control. . . . . . . . . . . 32
Section 4.15 Maintenance of Properties. . . . . . . . . . . . . . . . 34
Section 4.16 Maintenance of Insurance . . . . . . . . . . . . . . . . 34
-i-
Section 4.17 Investment Company Act . . . . . . . . . . . . . . . . . 34
Section 4.18 Ownership of Subsidiaries. . . . . . . . . . . . . . . . 34
Section 4.19 Limitation on Business . . . . . . . . . . . . . . . . . 34
Section 4.20 Employee Plans . . . . . . . . . . . . . . . . . . . . . 35
Section 4.21 Compliance with Laws; Maintenance of Licenses. . . . . . 35
Section 4.22 Available Cash . . . . . . . . . . . . . . . . . . . . . 35
Section 4.23 Fiscal Years . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.24 Limitation on Acquisitions . . . . . . . . . . . . . . . 35
Section 4.25 Limitation on Capital Expenditures . . . . . . . . . . . 36
Section 4.26 Inspection of Properties and Records.. . . . . . . . . . 36
ARTICLE V SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.1 When DIMAC Holdings May Merge, etc.. . . . . . . . . . . 36
Section 5.2 Successor Substituted. . . . . . . . . . . . . . . . . . 37
ARTICLE VI DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . 37
Section 6.1 Events of Default. . . . . . . . . . . . . . . . . . . . 37
Section 6.2 Acceleration . . . . . . . . . . . . . . . . . . . . . . 39
Section 6.3 Other Remedies . . . . . . . . . . . . . . . . . . . . . 40
Section 6.4 Waiver of Past Defaults. . . . . . . . . . . . . . . . . 40
Section 6.5 Control by Majority. . . . . . . . . . . . . . . . . . . 40
Section 6.6 Limitation on Suits. . . . . . . . . . . . . . . . . . . 40
Section 6.7 Rights of Holders to Receive Payment . . . . . . . . . . 41
Section 6.8 Collection Suit by Trustee . . . . . . . . . . . . . . . 41
Section 6.9 Trustee May File Proofs of Claim . . . . . . . . . . . . 41
Section 6.10 Priorities . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.11 Undertaking for Costs. . . . . . . . . . . . . . . . . . 42
Section 6.12 Premium on Acceleration. . . . . . . . . . . . . . . . . 42
ARTICLE VII TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 7.1 Duties of Trustee. . . . . . . . . . . . . . . . . . . . 43
Section 7.2 Rights of Trustee. . . . . . . . . . . . . . . . . . . . 44
Section 7.3 Individual Rights of Trustee . . . . . . . . . . . . . . 44
Section 7.4 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . 44
Section 7.5 Notice of Defaults . . . . . . . . . . . . . . . . . . . 45
Section 7.6 Reports by Trustee to Holders. . . . . . . . . . . . . . 45
Section 7.7 Compensation and Indemnity . . . . . . . . . . . . . . . 45
Section 7.8 Replacement of Trustee . . . . . . . . . . . . . . . . . 46
Section 7.9 Successor Trustee by Xxxxxx, etc.. . . . . . . . . . . . 47
Section 7.10 Eligibility; Disqualification. . . . . . . . . . . . . . 47
Section 7.11 Preferential Collection of Claims Against DIMAC
Holdings . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VIII DISCHARGE; LEGAL DEFEASANCE AND COVENANT DEFEASANCE . . . . . . 47
Section 8.1 Discharge; Option to Effect Legal or Covenant
Defeasance . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.2 Legal Defeasance and Discharge . . . . . . . . . . . . . 47
Section 8.3 Covenant Defeasance. . . . . . . . . . . . . . . . . . . 48
Section 8.4 Conditions to Legal or Covenant Defeasance . . . . . . . 48
Section 8.5 Deposits to be Held in Trust; Other Miscellaneous
Provisions.. . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.6 Repayment to DIMAC Holdings. . . . . . . . . . . . . . . 50
Section 8.7 Reinstatement. . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE IX AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 9.1 Without Consent of Holders . . . . . . . . . . . . . . . 50
Section 9.2 With Consent of Holders. . . . . . . . . . . . . . . . . 51
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Section 9.3 Compliance with Trust Indenture Act. . . . . . . . . . . 52
Section 9.4 Revocation and Effect of Consents. . . . . . . . . . . . 52
Section 9.5 Notation on or Exchange of Notes . . . . . . . . . . . . 52
Section 9.6 Trustee to Sign Amendments, etc. . . . . . . . . . . . . 53
ARTICLE X MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.1 Trust Indenture Act Controls . . . . . . . . . . . . . . 53
Section 10.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.3 Communication by Holders with Other Holders. . . . . . . 54
Section 10.4 Certificate and Opinion as to Conditions Precedent . . . 54
Section 10.5 Statements Required in Certificate or Opinion. . . . . . 54
Section 10.6 Rules by Trustee and Agents. . . . . . . . . . . . . . . 55
Section 10.7 Legal Holidays . . . . . . . . . . . . . . . . . . . . . 55
Section 10.8 No Recourse Against Others . . . . . . . . . . . . . . . 55
Section 10.9 Governing Law. . . . . . . . . . . . . . . . . . . . . . 55
Section 10.10 No Adverse Interpretation of Other Agreements. . . . . . 56
Section 10.11 Successors . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.12 Severability . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.13 Counterpart Originals. . . . . . . . . . . . . . . . . . 56
Section 10.14 Table of Contents, Headings, etc.. . . . . . . . . . . . 56
EXHIBIT A - Form of Note . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B - Certificate to Be Delivered upon Exchange or Registration of
Transfer of Notes. . . . . . . . . . . . . . . . . . . . . . . . B-1
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This Indenture, dated as of October 22, 1998, is entered into by and
between DIMAC Holdings, Inc., a Delaware corporation ("DIMAC Holdings"), and
Wilmington Trust Company, a Delaware banking corporation, as trustee (the
"TRUSTEE").
DIMAC Holdings and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders (as defined below) of
DIMAC Holdings's 151/2% Senior Notes due October 22, 2009.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 DEFINITIONS.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person or any of its
Restricted Subsidiaries existing at the time such Person becomes a Restricted
Subsidiary of DIMAC Holdings or any of its Restricted Subsidiaries or assumed in
connection with the acquisition by DIMAC Holdings or any of its Restricted
Subsidiaries of assets from such Person, which Indebtedness was not incurred in
connection with or in anticipation of such acquisition.
"ACQUISITION" means the acquisition (including by way of a merger or
consolidation or in a series of related transactions) of all or substantially
all of the assets or property of another Person or of Voting Securities of such
Person representing a majority (more than 50%) of the aggregate Voting Power of
the outstanding Voting Securities of such Person by purchase in cash, exchange
of property or securities, or by any other method.
"ADVISORY SERVICES AGREEMENT" means the Advisory Services Agreement dated
as of June 26, 1998 by and between DIMAC Operating and MDC Management Company
IV, LLC, as in effect on the date thereof.
"AFFILIATE" means, with respect to any referenced Person, a Person (i)
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such referenced Person, (ii)
which directly or indirectly through one or more intermediaries beneficially
owns or holds 5% or more of the combined voting power of the total Voting
Securities of such referenced Person or (iii) of which 5% or more of the
combined voting power of the total Voting Securities directly or indirectly
through one or more intermediaries is beneficially owned or held by such
referenced Person or a Subsidiary of such referenced Person. When used herein
without reference to any Person, Affiliate means an Affiliate of DIMAC Holdings.
For all purposes of this Indenture, XxXxxx De Leeuw & Co., Inc. and its
Affiliates shall be considered an Affiliate of DIMAC Holdings. For purposes of
this definition, "control" when used with respect to any person means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of Voting Securities, by agreement or otherwise; and the terms
"affiliated," "controlling" and "controlled" have meanings correlative to the
foregoing. Notwithstanding the foregoing, for purposes of this Indenture, Trust
Company of the West and its Affiliates and any other Initial Purchaser and its
Affiliates shall not be considered Affiliates of DIMAC Holdings or any of its
Subsidiaries.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"ASSET ACQUISITION" means (a) an Investment by DIMAC Holdings or any of its
Subsidiaries in any other Person pursuant to which such Person shall become a
Subsidiary of DIMAC Holdings, or shall be merged with or into DIMAC Holdings or
any of its Subsidiaries, or (b) the acquisition by DIMAC Holdings or any of its
Subsidiaries of the assets of any Person (other than a Subsidiary of DIMAC
Holdings) which
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constitute all or substantially all of the assets of such Person or comprise any
division or line of business of such Person or any other properties or assets of
such Person other than in the ordinary course of business.
"ASSET SALE" means any sale, lease, transfer, issuance or other disposition
(or series of related sales, leases, transfers, issuances or dispositions that
are part of a common plan) of shares of Capital Stock of a Restricted Subsidiary
(other than directors' qualifying shares), property or other assets (each
referred to for the purposes of this definition as a "disposition") by DIMAC
Holdings or any Restricted Subsidiary (including any disposition by means of a
merger, consolidation or similar transaction) other than (i) a disposition by a
Restricted Subsidiary to DIMAC Holdings or by DIMAC Holdings or a Restricted
Subsidiary to a Wholly Owned Subsidiary, (ii) a disposition of inventory or
Temporary Cash Investments in the ordinary course of business, (iii) a
disposition of obsolete equipment or equipment that is no longer useful in the
conduct of the business of DIMAC Holdings or the applicable Restricted
Subsidiary and that is disposed of in each case in the ordinary course of
business, (iv) the sale of other assets so long as the fair market value of the
assets disposed of pursuant to this clause (iv) does not exceed $1,000,000 in
the aggregate in any fiscal year and $5,000,000 in the aggregate prior to the
maturity date of the Notes, (v) for the purposes of Section 4.10 only, a
disposition subject to the covenant described under Section 4.7 and (vi) the
disposition of all or substantially all of the assets of DIMAC Holdings in the
manner permitted pursuant to the provisions described under Section 5.1, or any
disposition that constitutes a Change of Control pursuant to this Indenture.
"BANKRUPTCY LAW" means title 11, U.S. Code, or any similar Federal, state
or foreign law for the relief of debtors.
"BOARD OF DIRECTORS" means the board of directors or any duly constituted
committee thereof of any corporation or of a corporate general partner of a
partnership and any similar body empowered to direct the affairs of any other
entity.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL EXPENDITURES" means, without duplication, for any Person for any
period, the aggregate of all expenditures including deposits (whether paid in
cash or property or accrued as liabilities and including the aggregate amount of
all principal payments due for the entire term of all Capital Leases that are
required to be capitalized on the balance sheet) made by such Person that, in
conformity with GAAP, are required to be included in the property, plant,
equipment, or similar fixed asset account.
"CAPITAL LEASE" means any lease of any property (whether real, personal or
mixed) that, in conformity with GAAP, should be accounted for as a capital
lease.
"CAPITAL STOCK" means any and all shares, interests, participations or
other equivalents (however designated) of corporate stock, including without
limitation all common stock and preferred stock.
"CAPITALIZED LEASE OBLIGATION" means, with respect to any Person for any
period, any obligation of such Person to pay rent or other amounts under a
Capital Lease; the amount of such obligation shall be the capitalized amount
thereof determined in accordance with GAAP.
"CASH EQUIVALENTS" means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (b)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Xxxxx'x
Investors Service, Inc. ("XXXXX'X"); (c) commercial paper maturing no
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more than one year from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-2 from S&P or at least P-2 from
Moody's; (d) certificates of deposit or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by any bank organized under
the laws of the United States of America or any state thereof or the District of
Columbia or any United States branch of a foreign bank having at the date of
acquisition thereof combined capital and surplus of not less than $250,000,000;
(e) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (a) above entered into
with any bank meeting the qualifications specified in clause (d) above; and (f)
investments in money market funds which invest substantially all their assets in
securities of the types described in clauses (a) through (e) of this definition.
"CHANGE OF CONTROL" means:
(i) prior to the first Qualified Public Equity Offering of the
DIMAC Holdings or DIMAC Operating, as the case may be, the Permitted
Holders cease to be the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act), directly or indirectly, of majority Voting
Power of the Voting Securities of DIMAC Holdings and DIMAC Operating,
whether as a result of issuance of securities of DIMAC Holdings or DIMAC
Operating, as the case may be, any merger, consolidation, liquidation or
dissolution of DIMAC Holdings or DIMAC Operating, as the case may be, any
direct or indirect transfer of securities by any Permitted Holder or
otherwise (for purposes of this clause (i) and clause (ii) below, the
Permitted Holders will be deemed to beneficially own any Voting Securities
of a Person (the "specified corporation") held by any other Person (the
"parent corporation") so long as the Permitted Holders beneficially own (as
so defined), directly or indirectly, a majority of the Voting Power of the
Voting Securities of the parent corporation);
(ii) following the first Qualified Public Equity Offering of
DIMAC Holdings or DIMAC Operating, as the case may be, any "person" (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act), other
than one or more Permitted Holders, is or becomes the beneficial owner (as
defined in clause (i) above, except that a Person shall be deemed to have
"beneficial ownership" of all shares that any such Person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 35% of the total
Voting Power of the Voting Securities of DIMAC Holdings or DIMAC Operating,
as the case may be; PROVIDED, HOWEVER, that the Permitted Holders
beneficially own (as defined in clause (i) above), directly or indirectly,
in the aggregate a lesser percentage of the total Voting Power of the
Voting Securities of DIMAC Holdings or DIMAC Operating, as the case may be,
than such other person and do not have the right or ability by Voting
Power, contract or otherwise to elect or designate for election a majority
of the Board of Directors of DIMAC Holdings or DIMAC Operating, as the case
may be (for purposes of this clause (ii), such other person shall be deemed
to beneficially own any Voting Securities of a specified corporation held
by a parent corporation, if such other person "beneficially owns" (as
defined in this clause (ii)), directly or indirectly, more than 35% of the
Voting Power of the Voting Securities of such parent corporation and the
Permitted Holders "beneficially own" (as defined in clause (i) above),
directly or indirectly, in the aggregate a lesser percentage of the Voting
Power of the Voting Securities of such parent corporation and do not have
the right or ability by Voting Power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of such parent
corporation);
(iii) individuals who on the Initial Issue Date constituted the
Board of Directors of DIMAC Holdings or the Board of Directors of DIMAC
Operating (together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of DIMAC
Holdings or DIMAC Operating, as the case may be, was approved by a vote of
a majority of the members of the Board of Directors of DIMAC Holdings or
DIMAC Operating, as the case may be, then still in office who were either
members of such Board of Directors on the Initial Issue Date or whose
election or nomination for election was previously so approved) cease for
any reason
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to constitute a majority of the Board of Directors of DIMAC Holdings or
DIMAC Operating, as the case may be, then in office;
(iv) the merger or consolidation of DIMAC Holdings or DIMAC
Operating with or into another Person or the merger of another Person with
or into DIMAC Holdings or DIMAC Operating, or the sale of all or
substantially all the assets of DIMAC Holdings or DIMAC Operating to
another Person (other than a Person that is controlled by the Permitted
Holders), and, in the case of any such merger or consolidation, the
securities of DIMAC Holdings or DIMAC Operating that are outstanding
immediately prior to such transaction and which represent 100% of the
aggregate Voting Power of the Voting Securities of DIMAC Holdings or DIMAC
Operating, as the case may be, are changed into or exchanged for cash,
securities or property, unless pursuant to such transaction such securities
are changed into or exchanged for, in addition to any other consideration,
securities of the surviving corporation that represent immediately after
such transaction, at least a majority of the aggregate Voting Power of the
Voting Securities of the surviving corporation;
(v) any transaction, as the result of which DIMAC Holdings owns
(or has the exclusive power to vote with respect to), directly or
indirectly, less than 100% of the Capital Stock of DIMAC Operating; or
(vi) at any time after the Initial Issue Date, DIMAC Operating
(or any successor in interest) no longer continues, for Federal income tax
purposes, to be a member of the affiliated group of corporations that
includes DIMAC Holdings as the parent corporation of such affiliated group.
"CHARTER DOCUMENTS" of any Person means the articles of incorporation or
certificate of incorporation and bylaws (or any similar organizational
documents), as amended or restated (or both) to date, of such Person.
"COMMISSION" means the United States Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Exchange Act, the Securities
Act or the TIA, as the case may be, then the body performing such duties at such
time.
"CONSOLIDATED" or "CONSOLIDATED," when used with reference to any
accounting term, means the amount described by such accounting term, determined
on a consolidated basis in accordance with GAAP, after elimination of
intercompany items.
"CONSOLIDATED NET WORTH" with respect to any Person, means, as at any date
of determination, the sum of (i) the consolidated equity of the common
stockholders of such referent Person and its consolidated Restricted
Subsidiaries determined in accordance with GAAP plus (ii) the respective amounts
reported on such referent Person's most recent balance sheet with respect to any
series of preferred stock (other than Disqualified Capital Stock) that by its
terms is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
referent Person upon issuance of such preferred stock, PROVIDED that the
consolidated net worth of any Person shall exclude the effect of any non-cash
charges relating to the acceleration of stock options or similar securities of
such referent Person or another Person with which such referent Person is merged
or consolidated.
"CORPORATE TRUST OFFICE" shall be at the address of the Trustee specified
in Section 10.2 or such other address as the Trustee may specify by notice to
DIMAC Holdings.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
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"DEFAULT" means any event that is, or after notice or the passage of time
or both would be, an Event of Default.
"DEPOSITORY" means the Person specified in Section 2.3 as the Depository
with respect to the Notes issuable in global form, until a successor shall have
been appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"DIMAC HOLDINGS" means DIMAC Holdings, Inc., a Delaware corporation.
"DIMAC OPERATING" means DIMAC Corporation, a Delaware corporation.
"DIMAC OPERATING INDENTURE" means that certain Indenture, dated as of
October 22, 1998, by and between DIMAC Operating and Wilmington Trust Company,
as Trustee, together with all related documents, including security documents,
as such Indenture and such related documents are in effect on the Initial Issue
Date, without regard to any subsequent amendments, supplements or other
modifications thereto.
"DIMAC OPERATING NOTES" means the 121/2% Senior Subordinated Notes due 2008
of DIMAC Operating, issued pursuant to the DIMAC Operating Indenture.
"DISQUALIFIED CAPITAL STOCK" means any Capital Stock which, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the sole option of the holder thereof, in whole or in part, on or prior to
the maturity date of the Notes.
"DTC" means The Depository Trust Company.
"EQUITY INVESTORS" means the holders of Capital Stock of DIMAC Holdings on
the Initial Issue Date, other than any such holders who, at any time, are
employees of DIMAC Holdings or any of its Subsidiaries.
"EQUITY INTEREST" means (i) with respect to a corporation, any and all
Capital Stock or warrants, options or other rights to acquire Capital Stock (but
excluding any debt security which is convertible into, or exchangeable or
exercisable for, Capital Stock) and (ii) with respect to a partnership, limited
liability company or similar Person, any and all units, interests, rights to
purchase, warrants, options or other equivalents of, or other ownership
interests in any such Person.
"ERISA" means The Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute or law thereto.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE OFFER" means the offer that may be made by DIMAC Holdings
pursuant to the Registration Rights Agreement to exchange Series B Notes for
Series A Notes.
"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 approved by a significant segment of the accounting profession,
and in the rules and regulations of the Commission.
"GAAP" means gaap as in effect on the Initial Issue Date.
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"GUARANTY" means, with respect to any Person, any contract, agreement or
understanding of such Person pursuant to which such Person guarantees, or in
effect guarantees, any Indebtedness of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including without limitation:
(a) agreements to purchase such Indebtedness or any property
constituting security therefor;
(b) agreements to advance or supply funds (i) for the purchase
or payment of such Indebtedness, or (ii) to maintain working capital,
equity capital or other balance sheet conditions;
(c) agreements to purchase property, securities or services
primarily for the purpose of assuring the holder of such Indebtedness of
the ability of the primary obligor to make payment of the Indebtedness;
(d) letters or agreements commonly known as "comfort" or
"keepwell" letters or agreements; or
(e) any other agreements to assure the holder of the
Indebtedness of the primary obligor against loss in respect thereof;
PROVIDED, HOWEVER, that "guaranty" shall not include (i) the endorsement by a
Person in the ordinary course of business of negotiable instruments or documents
for deposit or collection, or (ii) indemnities given by DIMAC Holdings or its
Subsidiaries in brokerage, management and other agreements in the ordinary
course of business substantially consistent with past practices.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person under (a) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (b) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"HOLDER" means the Person in whose name a Note is registered in the
register of the Notes.
"INDEBTEDNESS" means, with respect to any Person, the aggregate amount of,
without duplication, the following:
(a) all obligations for borrowed money;
(b) all obligations evidenced by bonds, debentures, notes or
other similar instruments;
(c) all obligations to pay the deferred purchase price of
property or services (except Trade Payables, accrued commissions and other
similar accrued current liabilities in respect of such obligations, in any
case, not overdue, arising in the ordinary course of business);
(d) all Capitalized Lease Obligations;
(e) all obligations or liabilities of others secured by a lien
on any asset owned by such Person or Persons regardless of whether such
obligation or liability is assumed;
(f) all obligations of such Person or Persons, contingent or
otherwise, in respect of any letters of credit or bankers' acceptances;
(g) all Hedging Obligations; and
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(h) all guaranties.
"INDENTURE" means this Indenture as amended or supplemented from time to
time.
"INITIAL ISSUE DATE" means the date upon which the Series A Notes are first
issued.
"INITIAL PURCHASERS" has the meaning given to the term "Purchasers" in the
Securities Purchase Agreement.
"INTEREST SWAP OBLIGATIONS" means the obligations of any Person pursuant to
any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount and
shall include, without limitation, interest rate swaps, caps, floors, collars
and similar agreements.
"INVESTMENT" means, with respect to any Person, any direct, indirect or
beneficial investment by such Person, whether by means of share purchase, loan,
advance, extension of credit (other than accounts receivable and trade credits
arising in the ordinary course of business), capital contribution or otherwise,
in or to any other Person, the guaranty by such Person of any Indebtedness of
any other Person or the subordination of any claim against any other Person to
other Indebtedness of such other Person.
"ISSUER ORDER" means a written request or order signed in the name of DIMAC
Holdings by its Chairman of the Board, President, Chief Executive Officer or
Senior or Executive Vice President, and by its Chairman of the Board, President,
Chief Executive Officer, Senior or Executive Vice President Treasurer,
Secretary or an Assistant Treasurer or an Assistant Secretary and delivered to
the Trustee.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, Wilmington, Delaware or at a place of
payment are authorized by law, regulation or executive order to remain closed.
"LIEN" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, regardless of whether filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).
"LIQUIDATED DAMAGES" has the meaning given to such term in the Registration
Rights Agreement.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of DIMAC Holdings and its Restricted Subsidiaries taken as a whole or
(b) a material adverse effect on the ability of DIMAC Holdings to perform its
obligations under this Indenture or of any Holder of the Notes to enforce or
collect any of the obligations hereunder or under the Notes. In determining
whether any individual event could reasonably be expected to result in a
Material Adverse Effect, notwithstanding that such event does not of itself have
such effect, a Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then existing events could
reasonably be expected to result in a Material Adverse Effect.
"NET CASH PROCEEDS" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents, including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents (other
than the portion of any such deferred payment constituting interest) received by
DIMAC Holdings or any of its Restricted Subsidiaries from such Asset Sale, net
of (a) reasonable
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out-of-pocket expenses and fees relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees and sales
commissions), (b) taxes paid or payable after taking into account any reduction
in consolidated tax liability due to available tax credits or deductions and any
tax sharing arrangements, (c) repayment of Indebtedness that is required to be
repaid in connection with such Asset Sale and (d) appropriate amounts to be
provided by DIMAC Holdings or any of its Restricted Subsidiaries, as the case
may be, as a reserve, in accordance with GAAP, against any post closing
adjustments or liabilities associated with such Asset Sale and retained by DIMAC
Holdings or any of its Restricted Subsidiaries, as the case may be, after such
Asset Sale, including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Sale.
"NOTES" means, collectively, the Series A Notes and the Series B Notes.
"OBLIGATION" means any principal, premium, interest, penalty, fee,
indemnification, reimbursement, damage and other obligation and liability
payable under the documentation governing any liability.
"OFFICER" means the Chairman of the Board, the President, the Chief
Financial Officer, the Chief Operating Officer, the Treasurer, any Assistant
Treasurer, the Controller, the Secretary, any Assistant Secretary or Senior Vice
President of DIMAC Holdings.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of DIMAC
Holdings by two Officers of DIMAC Holdings, one of whom must be the Chairman of
the Board, President, Chief Executive Officer, Chief Financial Officer,
Treasurer, Controller or a Senior or Executive Vice President of DIMAC Holdings.
"OPINION OF COUNSEL" means an opinion from legal counsel who is reasonably
acceptable to the Trustee. Such counsel may be an employee of or counsel to
DIMAC Holdings, any Subsidiary of DIMAC Holdings or the Trustee.
"PERMITTED HOLDER" means the Equity Investors and their respective
Affiliates.
"PERMITTED LIENS" means with respect to any Person:
(i) Liens incurred or deposits made by such Person under worker's
compensation laws, unemployment insurance laws or similar legislation, or
Liens incurred or good faith deposits made in connection with bids,
tenders, contracts (other than for the payment of Indebtedness) or leases
to which such Person is a party, or Liens incurred or deposits made to
secure public or statutory obligations of such Person or deposits of cash
or United States government bonds made to secure the performance of
statutory obligations, surety, stay, customs and appeal bonds to which such
Person is a party, or deposits made as security for contested taxes or
import duties or for the payment of rent, in each case in the ordinary
course of business;
(ii) Liens imposed by law, such as carriers, warehousemen's,
materialmen's and mechanics' Liens or Liens arising out of judgments or
awards against such Person with respect to which such Person shall then be
prosecuting appeal or other proceedings for review; PROVIDED that, in each
case, such appeal or other proceeding is being made in good faith and with
respect to which reserves or other appropriate provisions are being made in
accordance with GAAP;
(iii) Liens securing the payment of Taxes which are not yet subject to
penalties for non-payment or which are being contested in good faith and by
appropriate proceedings, with respect to which reserves or other
appropriate provisions are being maintained in accordance with GAAP;
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(iv) Liens in favor of issuers of surety bonds or letters of credit
issued pursuant to the request of and for the account of such Person in the
ordinary course of its business;
(v) minor survey exceptions, encumbrances, easements or reservations
of, or rights of others for, rights of way, sewers, electric lines,
telegraph and telephone lines and other similar purposes, or zoning or
other restrictions as to the use of real properties or Liens incidental to
the conduct of the business of such Person or to the ownership of its
properties which were not incurred in connection with Indebtedness or other
extensions of credit and which do not in the aggregate materially adversely
affect the value of said properties or materially impair their use in the
operation of the business of such Person; and
(v) Liens on shares of Capital Stock of DIMAC Operating or on assets
of DIMAC Operating or any of its Restricted Subsidiaries, in any such case,
securing Indebtedness that was permitted under the terms of this Indenture
to be incurred under the Senior Credit Agreement.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof, or any other entity.
"PIK INTEREST PAYMENT" means the payment of all or a portion of a payment
of interest on the Notes by the issuance of additional Notes in accordance with
the provisions of Section 1 of the Notes.
"PIK NOTE" means any Note issued by DIMAC Holdings in order to make a PIK
Interest Payment.
"PLAN OF LIQUIDATION" means, with respect to any Person, a plan that
provides for, contemplates or the effectuation of which is preceded or
accompanied by (regardless of whether substantially contemporaneously, in phases
or otherwise) (i) the sale, lease, conveyance or other disposition of all or
substantially all of the assets of such person otherwise than as an entirety or
substantially as an entirety and (ii) the distribution of all or substantially
all of the proceeds of such sale, lease, conveyance or other disposition and all
or substantially all of the remaining assets of such person to holders of
Capital Stock of such person.
"PREFERRED STOCK" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"PRO FORMA" means, with respect to any calculation made or required to be
made pursuant to the terms of this Agreement, a calculation reflecting events
that are directly attributable to a specific transaction, are factually
supportable and are expected to have a continuing effect, in each case as
determined on a basis consistent with the procedures outlined in Article 11 of
Regulation S-X of the Securities Act and as interpreted by the Staff of the
Securities and Exchange Commission prior to December 1996 which would include
cost savings resulting from headcount reductions, closure of facilities and
similar restructuring charges.
"PRODUCTIVE ASSETS" means assets or properties used in the same type of
business engaged in by DIMAC Operating and its Restricted Subsidiaries
immediately prior to the date hereof or in a business reasonably related
thereto.
"PUBLIC EQUITY OFFERING" of any Person, means a sale by such Person of
Equity Interests of such Person in an underwritten (firm commitment) public
offering registered under the Securities Act.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
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"QUALIFIED CAPITAL STOCK" means any Capital Stock that is not Disqualified
Capital Stock.
"QUALIFIED PUBLIC EQUITY OFFERING" of any Person, means a Public Equity
Offering of such Person resulting in the listing of such Equity Interest on a
nationally recognized stock exchange or the NASDAQ National Market System,
pursuant to which such Person receives net proceeds of at least $30,000,000.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement,
dated as of the Initial Issue Date, by and among DIMAC Holdings and the Initial
Purchasers as such agreement may be amended, modified or supplemented from time
to time.
"RELATED BUSINESS" means the business engaged in by DIMAC Operating and its
Subsidiaries on the Initial Issue Date and such other business activities which
are incidental or related thereto.
"RESPONSIBLE OFFICER" when used with respect to the Trustee, means any
officer within the corporate trust department of the Trustee located at the
Corporate Trust Office (or any successor group of the Trustee) or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the designated officers, and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"RESTRICTED SECURITIES" means Notes that bear or are required to bear the
legends set forth in Exhibit A hereto.
"RESTRICTED SUBSIDIARY" means DIMAC Operating and any other Subsidiary of
DIMAC Holdings that is not an Unrestricted Subsidiary.
"RULE 144A" means Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or under any similar rule or regulation hereafter
adopted by the Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES PURCHASE AGREEMENT" means the Securities Purchase Agreement
dated as of October 22, 1998 by and among DIMAC Holdings, DIMAC Operating and
the purchasers named on the signature pages thereof.
"SENIOR CREDIT AGREEMENT" means that certain Amended and Restated Credit
Agreement dated as of October 22, 1998 by and among DIMAC Operating, DIMAC
Holdings, the financial institutions listed on the signature pages thereof,
Credit Suisse First Boston, as administrative agent and arranger, UBS AG,
Stamford Branch, as syndication agent and First Union National Bank, as
documentation agent, as, unless the context in which such term is used requires
otherwise, amended, replaced, refinanced, modified or supplemented from time to
time, and all related documents, including guaranties and security documents,
as, unless the context in which such term is used requires otherwise, amended,
replaced, refinanced, modified or supplemented from time to time.
"SERIES A NOTES" means DIMAC Holdings's 15 1/2% Series A Senior Notes due
October 22, 2009, as authenticated and issued under this Indenture.
"SERIES B NOTES" means DIMAC Holdings's 15 1/2% Series B Senior Notes due
October 22, 2009, as authenticated and issued under this Indenture.
"STOCKHOLDERS' AGREEMENT" means the Amended and Restated Stockholders
Agreement dated as of October 22, 1998 by and among DIMAC Holdings and the
stockholders listed on the signature pages thereof, as in effect on the Initial
Issue Date and as supplemented and modified pursuant to the letter dated October
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22, 1998 from DIMAC Holdings, XxXxxx De Leeuw & Co. XX, L.P. and XxXxxx De Leeuw
& Co. IV Associates, L.P. to the Initial Purchasers.
"SUBSIDIARY" means, with respect to any Person, (i) a corporation a
majority of whose Capital Stock with voting power, under ordinary circumstances,
to elect directors is, at the date of determination, directly or indirectly,
owned by such Person, by one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries of such Person or (ii) a partnership in
which such Person or a Subsidiary of such Person is, at the date of
determination, a general or limited partner of such partnership, but, in the
case of a limited partner, only if such Person or its Subsidiary is entitled to
receive more than 50% of the assets of such partnership upon its dissolution, or
(iii) any limited liability company or any other Person (other than a
corporation or a partnership) in which such Person, a Subsidiary of such Person
or such Person and one or more Subsidiaries of such Person, directly or
indirectly, at the date of determination, has (a) at least a majority ownership
interest or (b) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.
"TAXES" means all Federal, state, local and foreign taxes, and other
assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties applicable
thereto.
"TAX RETURNS" means all Federal, state, local and foreign tax returns,
declarations, statements, reports, schedules, forms and information returns and
any amended Tax Return relating to Taxes.
"TAX SHARING AGREEMENT" means the existing agreement among DIMAC Operating
and DIMAC Holdings and any other tax allocation agreement among DIMAC Operating,
any of its Subsidiaries or any direct or indirect stockholder of DIMAC Operating
with respect to consolidated or combined tax returns including DIMAC Operating
or any of its Subsidiaries.
"TEMPORARY CASH INVESTMENTS" means any of the following: (i) any Investment
in direct obligations of the United States of America or any agency thereof or
obligations guaranteed by the United States of America or any agency thereof,
(ii) Investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America having capital, surplus and undivided profits
aggregating in excess of $250,000,000 (or the foreign currency equivalent
thereof) and whose long-term debt, or whose parent holding company's long-term
debt, is rated "A" (or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in Rule 436
under the Securities Act), (iii) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clause
(i) above entered into with a bank meeting the qualifications described in
clause (ii) above, (iv) Investments in commercial paper, maturing not more than
180 days after the date of acquisition, issued by a corporation (other than an
Affiliate of DIMAC Holdings) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United States
of America with a rating at the time as of which any investment therein is made
of "A-1" (or higher) according to Xxxxx'x Investors Service, Inc. or "P-1" (or
higher) according to Standard and Poor's Ratings Group.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb), as amended, as in effect on the date hereof until such time as
this Indenture is qualified under the TIA, and thereafter as in effect on the
date on which this Indenture is qualified under the TIA, unless the context
requires reference thereto as in effect from time to time.
"TRADE PAYABLES" means, with respect to any Person, accounts payable and
other similar accrued current liabilities in respect of obligations or
indebtedness to trade creditors created, assumed or guaranteed
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by such Person or any of its Subsidiaries in the ordinary course of business in
connection with the obtaining of property or services.
"TRUSTEE" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary (other than DIMAC
Operating) of DIMAC Holdings that at the time of determination shall be
designated an Unrestricted Subsidiary by the Board of Directors of DIMAC
Holdings in the manner provided below and (ii) any Subsidiary of an Unrestricted
Subsidiary. The Board of Directors of DIMAC Holdings may designate any
Subsidiary of DIMAC Holdings (including any newly acquired or new formed
Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of
its Subsidiaries owns any Capital Stock or Indebtedness of, or holds any Lien on
any property of, DIMAC Holdings or any Restricted Subsidiary of DIMAC Holdings
that is not a Subsidiary of the Subsidiary to be so designated; PROVIDED,
HOWEVER, that either (A) the Subsidiary to be so designated has total assets of
$1,000 or less or (B) if such Subsidiary has assets greater than $1,000, such
designation would be permitted under Section 4.7. The Board of Directors of
DIMAC Holdings may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; PROVIDED, HOWEVER, that immediately after giving effect to such
designation (x) DIMAC Operating could incur $1.00 of additional Indebtedness
under paragraph (b) of Section 4.9 and (y) no Default or Event of Default shall
have occurred and be continuing. Any such designation by the Board of Directors
of DIMAC Holdings shall be evidenced to the Trustee by promptly filing with the
Trustee a copy of the resolution of the Board of Directors giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"U.S. GOVERNMENT OBLIGATIONS" means direct obligations of the United States
of America, or any agency or instrumentality thereof for the payment of which
the full faith and credit of the United States of America is pledged.
"VOTING SECURITIES" means any class of Equity Interests of a Person
pursuant to which the holders thereof have, at the time of determination, the
general voting power ("VOTING POWER") under ordinary circumstances to vote for
the election of directors, managers, trustees or general partners of such Person
(regardless of whether at the time any other class or classes will have or might
have voting power by reason of the happening of any contingency).
"WARRANT AGREEMENT" means the Warrant Agreement dated as of October 22,
1998 by and among DIMAC Holdings and the Initial Purchasers.
"WHOLLY-OWNED SUBSIDIARY" means, with respect to any Person, at any time, a
Restricted Subsidiary of such Person, all of the Equity Interests of which
(except director's qualifying shares) are at the time owned directly or
indirectly by such Person.
Section 1.2 OTHER DEFINITIONS.
Defined
Term in Section
---- ----------
"AFFILIATE TRANSACTION. . . . . . . . . . . . . . . . . . . 4.11
"ASSET SALE DATE. . . . . . . . . . . . . . . . . . . . . . 4.10
"ASSET SALE OFFER . . . . . . . . . . . . . . . . . . . . . 4.10
"ASSET SALE OFFER PRICE . . . . . . . . . . . . . . . . . . 4.10
"CHANGE OF CONTROL OFFER. . . . . . . . . . . . . . . . . . 4.14
"CHANGE OF CONTROL PAYMENT. . . . . . . . . . . . . . . . . 4.14
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"CHANGE OF CONTROL PAYMENT DATE . . . . . . . . . . . . . . 4.14
"COVENANT DEFEASANCE. . . . . . . . . . . . . . . . . . . . 8.3
"DEFINITIVE NOTES . . . . . . . . . . . . . . . . . . . . . 2.1
"EVENT OF DEFAULT . . . . . . . . . . . . . . . . . . . . . 6.1
"EXCESS NET CASH PROCEEDS . . . . . . . . . . . . . . . . . 4.10
"GLOBAL NOTES . . . . . . . . . . . . . . . . . . . . . . . 2.1
"LEGAL DEFEASANCE . . . . . . . . . . . . . . . . . . . . . 8.2
"PAYING AGENT . . . . . . . . . . . . . . . . . . . . . . . 2.3
"PURCHASE AMOUNT. . . . . . . . . . . . . . . . . . . . . . 4.10
"REGISTRAR. . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"RESTRICTED PAYMENTS. . . . . . . . . . . . . . . . . . . . 4.7
Section 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"INDENTURE SECURITIES" means the Notes;
"INDENTURE SECURITY HOLDER" means a Holder of a Note;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
"OBLIGOR" on the Notes means DIMAC Holdings and any successor obligor upon
the Notes.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute, or defined by Commission rule under the TIA
have the meanings so assigned to them.
Section 1.4 RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural
include the singular;
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(e) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section or
other subdivision, and the terms "Article," "Section," "Exhibit" and
"Schedule," unless otherwise specified or indicated by the context in which
used, mean the corresponding Article or Section of, or the corresponding
Exhibit or Schedule to, this Indenture; and
(f) references to agreements and other instruments include
subsequent amendments, supplements and waivers to such agreements or
instruments but only to the extent not prohibited by this Indenture.
(g) provisions apply to successive events and transactions.
ARTICLE II
THE NOTES
Section 2.1 FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A attached hereto, the terms of which are
incorporated in and made a part of this Indenture. The Notes may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which DIMAC Holdings is subject or usage. Each Note shall be
dated the date of its authentication. The Notes shall be issued in
denominations of $1,000 and integral multiples thereof; PROVIDED, HOWEVER, that
PIK Notes may be issued in any denomination.
The Notes will be issued (i) in global form (the "GLOBAL NOTES"),
substantially in the form of Exhibit A attached hereto (including the text
referred to in footnotes 1 and 2 thereto) and (ii) under certain circumstances,
in definitive form (the "DEFINITIVE NOTES"), substantially in the form of
Exhibit A attached hereto (excluding the text referred to in footnotes 1 and 2
thereto). Each Global Note shall represent the aggregate amount of outstanding
Notes from time to time endorsed thereon; PROVIDED, that the aggregate amount of
outstanding Notes represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and redemptions. Any
endorsement of a Global Note to reflect the amount of any increase or decrease
in the amount of outstanding Notes represented thereby shall be made by the
Trustee, in accordance with instructions given by the Holder thereof, as
required by Section 2.6.
Section 2.2 EXECUTION AND AUTHENTICATION.
The Notes shall be executed on behalf of DIMAC Holdings, by manual or
facsimile signature, by its Chairman of the Board, its President or one of its
Vice Presidents and attested by another Officer by manual or facsimile
signature. If an Officer whose signature is on a Note no longer holds that
office at the time the Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature of the Trustee shall be conclusive evidence that the
Note has been authenticated under this Indenture. The form of Trustee's
certificate of authentication to be borne by the Notes shall be substantially as
set forth in Exhibit A attached hereto.
The Trustee shall authenticate Notes for original issue up to $30,000,000
aggregate principal amount. In addition, the Trustee shall authenticate PIK
Notes from time upon an Issuer Order. The aggregate principal amount of Notes
outstanding at any time may not exceed $30,000,000 plus the aggregate principal
amount of PIK Notes issued pursuant to Section 1 of the Notes, except as
provided in Section 2.7.
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The Trustee may appoint an authenticating agent acceptable to DIMAC
Holdings to authenticate Notes. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Notes whenever the Trustee
may do so. Each reference in this Indenture to authenticating by the Trustee
includes authenticating by such agent. An authenticating agent has the same
rights as an Agent to deal with DIMAC Holdings or an Affiliate of DIMAC
Holdings.
Unless otherwise required by applicable law, DIMAC Holdings, the Trustee
and any agent of DIMAC Holdings or the Trustee shall treat the Person in whose
name any Note is registered as the owner of such Note for the purpose of
receiving payment of principal of and (subject to the provisions of this
Indenture and the Notes with respect to record dates) interest on such Note and
for all other purposes whatsoever, regardless of whether such Note is overdue,
and neither DIMAC Holdings, the Trustee nor any agent of DIMAC Holdings or the
Trustee shall be affected by notice to the contrary.
Section 2.3 REGISTRAR, PAYING AGENT AND DEPOSITORY.
DIMAC Holdings shall maintain (i) an office or agency where Notes may be
presented for registration of transfer or for exchange ("REGISTRAR") and (ii) an
office or agency where Notes may be presented for payment ("PAYING AGENT").
DIMAC Holdings initially appoints the Trustee as Registrar and Paying Agent.
The Registrar shall keep a register of the Notes and of their transfer and
exchange. DIMAC Holdings may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and
the term "Paying Agent" includes any additional paying agent. DIMAC Holdings
may change any Paying Agent or Registrar without notice to any Holder. DIMAC
Holdings shall notify the Trustee of the name and address of any Agent not a
party to this Indenture. If DIMAC Holdings fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. DIMAC
Holdings or any of its Subsidiaries may act as Paying Agent or Registrar, except
that for purposes of Articles III and VIII and Sections 4.1, 4.10 and 4.14,
neither DIMAC Holdings nor any of its Subsidiaries shall act as Paying Agent.
The Paying Agent shall comply with all withholding tax, information
reporting and backup withholding tax requirements under the United States
Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury
Regulations issued thereunder in respect of any payment on, or in respect of, a
Note (including, without limitation, the collection of Internal Revenue Service
("IRS") Forms 1001, 4224, W-8 or W-9 (or any successor form), as the case may
be, and the filing of IRS Forms 1042 and 1042-S with respect thereto).
DIMAC Holdings shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which shall incorporate the provisions of
the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent.
To the extent DIMAC Holdings makes such payments directly to the Holders of
the Notes, DIMAC Holdings shall simultaneously notify the Trustee thereof in
writing.
The Paying Agent shall comply with all applicable backup withholding tax
and information reporting requirements under U.S. Internal Revenue Code of 1986,
as amended, and the Treasury regulations issued thereunder in respect of any
payment on, or in respect of, a Note.
DIMAC Holdings initially appoints DTC to act as Depository with respect to
the Global Notes. The Trustee shall act as custodian for the Depository with
respect to the Global Notes.
Section 2.4 PAYING AGENT TO HOLD MONEY IN TRUST.
DIMAC Holdings shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all money held by the Paying
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Agent for the payment of principal, premium, if any, or interest on the Notes
and shall notify the Trustee in writing of any default by DIMAC Holdings in
making any such payment. While any such default continues, the Trustee may
require a Paying Agent (if other than DIMAC Holdings or a Subsidiary thereof) to
pay all money held by it to the Trustee and account for such disbursed money.
DIMAC Holdings at any time may require a Paying Agent to pay all money held by
it to the Trustee and account for such disbursed money. Upon payment over to
the Trustee, the Paying Agent (if other than DIMAC Holdings or a Subsidiary of
DIMAC Holdings) shall have no further liability for the money delivered to the
Trustee. If DIMAC Holdings or a Subsidiary of DIMAC Holdings acts as Paying
Agent (subject to Section 2.3), it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent.
Section 2.5 HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, DIMAC Holdings shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders,
including the aggregate principal amount of Notes held by each such Holder, and
DIMAC Holdings shall otherwise comply with TIA Section 312(a).
Section 2.6 TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES. When Definitive
Notes are presented by a Holder to the Registrar with a request (1) to
register the transfer of the Definitive Notes or (2) to exchange such
Definitive Notes for an equal principal amount of Definitive Notes of other
authorized denominations, the Registrar shall register the transfer or make
the exchange as requested if its requirements for such transactions are
met; PROVIDED, that the Definitive Notes so presented (A) have been duly
endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Registrar duly executed by such Holder or by his
attorney, duly authorized in writing; and (B) in the case of a Restricted
Security, such request shall be accompanied by the following additional
documents:
(i) if such Restricted Security is being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification to that effect (in substantially the
form of Exhibit B attached hereto); or
(ii) if such Restricted Security is being transferred to a
QIB in accordance with Rule 144A or pursuant to an effective
registration statement under the Securities Act, a certification to
that effect (in substantially the form of Exhibit B attached hereto);
or
(iii) if such Restricted Security is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act, a certification to that effect (in substantially
the form of Exhibit B attached hereto) and an opinion of counsel
reasonably acceptable to DIMAC Holdings and the Registrar to the
effect that such transfer is in compliance with the Securities Act.
(b) TRANSFER OF A DEFINITIVE NOTE FOR A BENEFICIAL INTEREST IN A
GLOBAL NOTE. A Definitive Note may be exchanged for a beneficial interest
in a Global Note only upon receipt by the Trustee of a Definitive Note,
duly endorsed or accompanied by appropriate instruments of transfer, in
form satisfactory to the Trustee, together with:
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(i) written instructions directing the Trustee to make an
endorsement on the appropriate Global Note to reflect an increase in
the aggregate principal amount of the Notes represented by such Global
Note, and
(ii) if such Definitive Note is a Restricted Security, a
certification (in substantially the form of Exhibit B attached hereto)
and, if applicable, a legal opinion, in each case similar to that
required pursuant to clauses (i), (ii) or (iii) of Section 2.6(a), as
applicable;
in which case the Trustee shall cancel such Definitive Note and cause the
aggregate principal amount of Notes represented by the appropriate Global
Note to be increased accordingly. If no Global Note is then outstanding,
DIMAC Holdings shall issue and the Trustee shall authenticate a new Global
Note in the appropriate principal amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL NOTES. The transfer and
exchange of Global Notes or beneficial interests therein shall be effected
through the Depository in accordance with this Indenture and the procedures
of the Depository therefor, which shall include restrictions on transfer
comparable to those set forth herein to the extent required by the
Securities Act.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL NOTE FOR A
DEFINITIVE NOTE. Upon receipt by the Trustee of written transfer
instructions (or such other form of instructions as is customary for the
Depository), from the Depository (or its nominee) on behalf of any Person
having a beneficial interest in a Global Note, the Trustee shall, in
accordance with the standing instructions and procedures existing between
the Depository and the Trustee, cause the aggregate principal amount of
Global Notes to be reduced accordingly and, following such reduction, DIMAC
Holdings shall execute and the Trustee shall authenticate and deliver to
the transferee a Definitive Note in the appropriate principal amount;
PROVIDED, that in the case of a Restricted Security, such instructions
shall be accompanied by the following additional documents:
(i) if such beneficial interest is being transferred to the
Person designated by the Depository as being the beneficial owner, a
certification to that effect (in substantially the form of Exhibit B
attached hereto); or
(ii) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A or pursuant to an effective
registration statement under the Securities Act, a certification to
that effect (in substantially the form of Exhibit B attached hereto);
or
(iii) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act, a certification to that effect (in substantially
the form of Exhibit B attached hereto) and an opinion of counsel
reasonably acceptable to DIMAC Holdings and to the Registrar to the
effect that such transfer is in compliance with the Securities Act.
Definitive Notes issued in exchange for a beneficial interest in a Global
Note shall be registered in such names and in such authorized denominations
as the Depository shall instruct the Trustee.
(e) TRANSFER AND EXCHANGE OF GLOBAL NOTES. Notwithstanding any
other provision of this Indenture, the Global Note may not be transferred
as a whole except by the Depository to a nominee of the Depository or by a
nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor
Depository or a nominee of such successor Depository; PROVIDED, that if:
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(i) the Depository notifies DIMAC Holdings that the
Depository is unwilling or unable to continue as Depository and a
successor Xxxxxxxxxx is not appointed by DIMAC Holdings within 90 days
after delivery of such notice; or
(ii) DIMAC Holdings, at its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Definitive
Notes under this Indenture,
then DIMAC Holdings shall execute and the Trustee shall authenticate and
deliver, Definitive Notes in an aggregate principal amount equal to the
aggregate principal amount of the Global Note in exchange for such Global
Note.
(f) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such
time as all beneficial interests in the Global Note have either been
exchanged for Definitive Notes, redeemed, repurchased or cancelled, the
Global Note shall be returned to (or retained by) and cancelled by the
Trustee. At any time prior to such cancellation, if any beneficial
interest in the Global Note is exchanged for Definitive Notes, redeemed,
repurchased or cancelled, the aggregate principal amount of Notes
represented by such Global Note shall be reduced accordingly and an
endorsement shall be made on such Global Note by the Trustee to reflect
such reduction.
(g) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES. To
permit registrations of transfers and exchanges, DIMAC Holdings shall
execute and the Trustee shall authenticate Definitive Notes and Global
Notes at the Registrar's request. All Definitive Notes and Global Notes
issued upon any registration of transfer or exchange of Definitive Notes or
Global Notes shall be legal, valid and binding obligations of DIMAC
Holdings, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Definitive Notes or Global Notes surrendered upon
such registration of transfer or exchange.
No service charge shall be made to a Holder for any registration of
transfer or exchange, but DIMAC Holdings may require payment of a sum
sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange (without transfer to another
person) pursuant to Sections 2.10, 3.7, 4.10, 4.14 and 9.5).
DIMAC Holdings shall not be required to (i) issue, register the
transfer of or exchange Notes during a period beginning at the opening of
business 15 days before the day of any selection of Notes for redemption
under Section 3.2 and ending at the close of business on the day of
selection; or (ii) register the transfer of or exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion
of any Note being redeemed in part; or (iii) register the transfer of or
exchange a Note between a record date and the next succeeding interest
payment date.
Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and DIMAC Holdings may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for all purposes, and neither the Trustee, any Agent nor DIMAC
Holdings shall be affected by notice to the contrary.
Any Holder of a Global Note shall, by acceptance of such Global Note,
agree that transfers of beneficial interests in such Global Note may be
effected only through a book-entry system maintained by the Depository (or
its agent), and that ownership of a beneficial interest in such Global Note
shall be required to be reflected in a book entry.
(h) EXCHANGE OF SERIES A NOTES FOR SERIES B NOTES. The Series A
Notes may be exchanged for Series B Notes pursuant to the terms of the
Exchange Offer. The Trustee and Registrar shall make the exchange as
follows:
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DIMAC Holdings shall present the Trustee with an Officers' Certificate
certifying the following:
(i) upon issuance of the Series B Notes, the transactions
contemplated by the Exchange Offer have been consummated; and
(ii) the principal amount of Series A Notes properly
tendered in the Exchange Offer that are represented by a Global Note
and the principal amount of Series A Notes properly tendered in the
Exchange Offer that are represented by Definitive Notes; the name of
each Holder of such Definitive Notes; the principal amount properly
tendered in the Exchange Offer by each such Holder; and the name and
address to which Definitive Notes for Series B Notes shall be
registered and sent for each such Holder.
The Trustee, upon receipt of (i) such Officers' Certificate, (ii) an
Opinion of Counsel (x) to the effect that the Series B Notes have been
registered under Section 5 of the Securities Act and this Indenture has
been qualified under the TIA and (y) with respect to the matters set forth
in Section 5(p) of the Registration Rights Agreement and (iii) an Issuer
Order, shall authenticate (A) a Global Note for Series B Notes in aggregate
principal amount equal to the aggregate principal amount of Series A Notes
represented by a Global Note indicated in such Officers' Certificate as
having been properly tendered and (B) Definitive Notes representing Series
B Notes registered in the names of, and in the principal amounts indicated
in such Officers' Certificate.
The Trustee shall make available for delivery such Definitive Notes
for Series B Notes to the Holders thereof as indicated in such Officers'
Certificate.
Section 2.7 REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or DIMAC Holdings and
the Trustee receive evidence to their satisfaction of the destruction, loss or
theft of any Note, DIMAC Holdings shall issue and the Trustee shall authenticate
a replacement Note if the Trustee's requirements for replacements of Notes are
met. If required by the Trustee or DIMAC Holdings, an indemnity bond must be
supplied by the Holder that is sufficient in the judgment of the Trustee and
DIMAC Holdings to protect DIMAC Holdings, the Trustee, any Agent or any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. DIMAC Holdings or the Trustee may charge for its expenses in
replacing a Note.
Every replacement Note is an obligation of DIMAC Holdings and shall be
entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
Section 2.8 OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section 2.8 as not outstanding.
If a Note is replaced pursuant to Section 2.7, the replaced Note ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.1,
it ceases to be outstanding and interest on it ceases to accrue.
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Subject to Section 2.9, a Note does not cease to be outstanding because
DIMAC Holdings or an Affiliate of DIMAC Holdings holds the Note.
If on a redemption date or the date of maturity of a Note, the Paying Agent
holds cash, U.S. Government Obligations, or a combination thereof, sufficient to
pay all of the principal, premium, if any, and interest due on the Notes payable
on that date, then on and after that date, such Notes shall cease to be
outstanding, and interest on such Notes shall cease to accrue.
Section 2.9 TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by DIMAC
Holdings or any Affiliate of DIMAC Holdings shall be considered as though not
outstanding, except that for purposes of determining whether the Trustee shall
be protected in relying on any such direction, waiver or consent, only Notes
that a Responsible Officer of the Trustee knows to be so owned shall be
considered as not outstanding.
Section 2.10 TEMPORARY NOTES.
Pending the preparation of Definitive Notes, DIMAC Holdings may execute,
and upon an Issuer Order the Trustee shall authenticate and deliver, temporary
Notes that are printed, lithographed, typewritten, mimeographed or otherwise
reproduced, in any authorized denomination, substantially of the tenor of the
Definitive Notes in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Notes may determine, as conclusively evidenced by their execution
of such Notes.
If temporary Notes are issued, DIMAC Holdings shall cause Definitive Notes
to be prepared without unreasonable delay. The Definitive Notes shall be
printed, lithographed or engraved, or provided by any combination thereof, or in
any other manner permitted by the rules and regulations of any principal
national securities exchange, if any, on which the Notes are listed, all as
determined by the Officers executing such Definitive Notes. After the
preparation of Definitive Notes, the temporary Notes shall be exchangeable for
Definitive Notes upon surrender of the temporary Notes at the office or agency
maintained by DIMAC Holdings for such purpose pursuant to Section 4.2, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Notes, DIMAC Holdings shall execute, and the Trustee shall
authenticate and make available for delivery, in exchange therefor the same
aggregate principal amount of Definitive Notes of authorized denominations.
Until so exchanged, the temporary Notes shall in all respects be entitled to the
same benefits under this Indenture as Definitive Notes.
Section 2.11 CANCELLATION.
DIMAC Holdings at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment and
not previously received by the Trustee. The Trustee and no one else shall
cancel all Notes surrendered for registration of transfer, exchange, payment,
replacement or cancellation and shall retain or destroy cancelled Notes in
accordance with its normal practices (subject to the record retention
requirement of the Exchange Act) unless DIMAC Holdings directs them to be
returned to it. DIMAC Holdings may not issue new Notes to replace Notes that
have been redeemed or paid or that have been delivered to the Trustee for
cancellation. All such Notes shall be cancelled by the Trustee and returned to
DIMAC Holdings pursuant to a written order signed by one Officer of DIMAC
Holdings.
Section 2.12 DEFAULTED INTEREST.
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If DIMAC Holdings defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, which date shall be at the earliest practicable
date but in all events at least ten Business Days prior to the payment date, in
each case at the rate provided in the Notes and in Section 4.1. DIMAC Holdings
shall, with the consent of the Trustee, fix or cause to be fixed each such
special record date and payment date. At least 30 days before the special
record date, DIMAC Holdings (or the Trustee, in the name of and at the expense
of DIMAC Holdings, upon 15 days written notice to the Trustee) shall mail to the
Holders a notice that states the special record date, the related payment date
and the amount of such interest to be paid.
Section 2.13 LEGENDS.
(a) Except as permitted by subsections (b) or (c) of this
Section 2.13, each Note shall bear legends relating to restrictions on
transfer pursuant to the securities laws in substantially the form set
forth on Exhibit A attached hereto.
(b) Upon any sale or transfer of a Restricted Security
(including any Restricted Security represented by a Global Note) pursuant
to Rule 144 under the Securities Act or pursuant to an effective
registration statement under the Securities Act:
(i) in the case of any Restricted Security that is a
Definitive Note, the Registrar shall permit the Holder thereof to
exchange such Restricted Security for a Definitive Note that does not
bear the legends required by subsection (a) above; and
(ii) in the case of any Restricted Security represented by
a Global Note, such Restricted Security shall not be required to bear
the legends required by subsection (a) above, but shall continue to be
subject to the provisions of Section 2.6(c); PROVIDED, that with
respect to any request for an exchange of a Restricted Security that
is represented by a Global Note for a Definitive Note that does not
bear the legends required by subsection (a) above, which request is
made in reliance upon Rule 144, the Holder thereof shall certify in
writing to the Registrar that such request is being made pursuant to
Rule 144.
(c) DIMAC Holdings shall issue and the Trustee shall
authenticate Series B Notes in exchange for Series A Notes accepted for
exchange in the Exchange Offer. The Series B Notes shall not bear the
legends required by subsection (a) above unless the Holder of such Series A
Notes is either:
(i) a broker-dealer who purchased such Series A Notes
directly from DIMAC Holdings to resell pursuant to Rule 144A or any
other available exemption under the Securities Act,
(ii) a Person participating in the distribution of the
Series A Notes, or
(iii) a Person who is an affiliate (as defined in Rule
144A) of DIMAC Holdings.
(d) DIMAC Holdings will cause each Note to bear on its face a
legend that satisfies the requirements of U.S. Treasury Regulations Section
1.1275-3(b) stating that such Note was issued with original issue discount
("OID") and detailing (i) the issue price, (ii) the amount of OID per
$1,000 of principal amount, (iii) the issue date and (iv) the yield to
maturity, or, alternatively, detailing the name and either the address or
telephone number of a representative of DIMAC
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Holdings who will, beginning no later than ten days after the issue date,
be able to promptly supply the appropriate information in response to a
Holder's request.
Section 2.14 DEPOSIT OF MONEYS.
Subject to Section 3.5, prior to 10:00 a.m. New York City time on each date
on which the principal of, premium, if any, and interest on the Notes are due,
DIMAC Holdings shall deposit with the Trustee or Paying Agent in immediately
available funds money sufficient to make cash payments, if any, due on such date
in a timely manner which permits the Trustee or such Paying Agent to remit
payment to the Holders on such date.
ARTICLE III
REDEMPTION
Section 3.1 NOTICES TO TRUSTEE.
If DIMAC Holdings elects to redeem Notes pursuant to Section 3.7, it shall
furnish to the Trustee, at least 30 days but not more than 60 days before a
redemption date, an Officers' Certificate setting forth (i) the paragraph of the
Notes and/or the section of this Indenture pursuant to which the redemption
shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be
redeemed and (iv) the redemption price.
Section 3.2 SELECTION OF NOTES TO BE REDEEMED.
If less than all the Notes are to be redeemed pursuant to Section 3.7, the
Trustee shall select the Notes to be redeemed in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, PRO RATA, by lot or by
such method as the Trustee deems to be fair and reasonable.
The Trustee shall promptly notify DIMAC Holdings in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.3 NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date, DIMAC
Holdings shall mail a notice of redemption by first class mail to each Holder
whose Notes are to be redeemed at such Holder's registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part only, the portion of
the principal amount of such Note to be redeemed and that, after the
redemption date, upon cancellation of the original Note, a new Note or
Notes in principal amount equal to the unredeemed portion shall be issued;
(d) the name and address of the Paying Agent;
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(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless DIMAC Holdings defaults in making such
redemption payment, interest on Notes or portions of Notes called for
redemption ceases to accrue on and after the redemption date;
(g) the paragraph of the Notes and/or the section of this
Indenture pursuant to which the Notes called for redemption are being
redeemed; and
(h) the CUSIP number of the Notes to be redeemed.
At DIMAC Holdings's request, the Trustee shall give the notice of
redemption in the name of DIMAC Holdings and at DIMAC Holdings's expense;
PROVIDED that DIMAC Holdings shall deliver to the Trustee, at least 45 days
(unless a shorter period is acceptable to the Trustee) prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.
Section 3.4 EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption has been mailed to the Holders in accordance with
Section 3.3, Notes called for redemption become due and payable on the
redemption date at the redemption price. At any time prior to the mailing of a
notice of redemption to the Holders pursuant to Section 3.3, DIMAC Holdings may
withdraw, revoke or rescind any notice of redemption delivered to the Trustee
without any continuing obligation to redeem the Notes as contemplated by such
notice of redemption.
Section 3.5 DEPOSIT OF REDEMPTION PRICE.
At or before 12:00 p.m. New York City time immediately prior to the
redemption date, DIMAC Holdings shall deposit with the Trustee (to the extent
not already held by the Trustee) or with the Paying Agent money in immediately
available funds sufficient to pay the redemption price of and accrued interest
on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall
return to DIMAC Holdings any money deposited with the Trustee or the Paying
Agent by DIMAC Holdings in excess of the amounts necessary to pay the redemption
price of, and accrued interest on, all Notes to be redeemed.
Interest on the Notes to be redeemed shall cease to accrue on the
applicable redemption date, regardless of whether such Notes are presented for
payment, if DIMAC Holdings makes or deposits the redemption payment in
accordance with this Section 3.5. If any Note called for redemption shall not
be paid upon surrender for redemption because of the failure of DIMAC Holdings
to comply with the preceding paragraph, interest shall be paid on the unpaid
principal, from the redemption date until such principal is paid, and to the
extent lawful on any interest not paid on such unpaid principal, in each case at
the rate provided in the Notes.
Section 3.6 NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, DIMAC Holdings shall
issue and the Trustee shall authenticate for the Holder at the expense of DIMAC
Holdings a new Note equal in principal amount to the unredeemed portion of the
Note surrendered.
Section 3.7 OPTIONAL REDEMPTION.
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(a) If, on or before October 22, 2002, there is a Qualified
Public Equity Offering of DIMAC Holdings, DIMAC Holdings may, within thirty
(30) days of the consummation of such Qualified Public Equity Offering,
redeem all or any of the Notes, in whole or in part, at a redemption price
equal to 107.75% of the aggregate principal amount of Notes being redeemed
plus accrued and unpaid interest thereon to the redemption date.
(b) Except as provided in Section 3.7(a), the Notes are not
redeemable at DIMAC Holdings's option prior to October 22, 2002.
Thereafter, DIMAC Holdings may redeem the Notes, or a portion thereof, in
accordance with the terms and conditions provided herein and in the Notes.
ARTICLE IV
COVENANTS
Section 4.1 PAYMENT OF NOTES.
DIMAC Holdings shall pay the principal and premium, if any, of, and
interest on, the Notes on the dates and in the manner provided in the Notes.
Principal, premium, if any, and interest shall be considered paid on the date
due if the Paying Agent, other than DIMAC Holdings or a Subsidiary of DIMAC
Holdings, holds on or before that date money deposited by DIMAC Holdings in
immediately available funds (or PIK Notes, in the case of a PIK Interest
Payment) and designated for and sufficient to pay all principal, premium, if
any, and interest then due. Such Paying Agent shall return to DIMAC Holdings,
no later than three Business Days following the date of payment, any money that
exceeds such amount of principal, premium, if any, and interest then due and
payable on the Notes. DIMAC Holdings shall pay any and all amounts, including,
without limitation, Liquidated Damages, if any, on the dates and in the manner
required under the Registration Rights Agreement.
To the extent lawful, DIMAC Holdings shall pay interest (including interest
accruing after the commencement of any proceeding under any Bankruptcy Law) on
all due and unpaid amounts outstanding under the Notes (including overdue
installments of principal or interest) at a rate equal to 161/2% per annum,
compounded quarterly. PIK Notes issued pursuant to Section 1 of the Notes shall
not constitute due and unpaid amounts outstanding under the Notes.
Section 4.2 MAINTENANCE OF OFFICE OR AGENCY.
DIMAC Holdings shall maintain an office or agency (which may be an office
of the Trustee, Registrar or co-registrar) in the Borough of Manhattan, the City
of New York, where Notes may be surrendered for registration of transfer or
exchange and where notices and demands to or upon DIMAC Holdings in respect of
the Notes and this Indenture may be served. DIMAC Holdings shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time DIMAC Holdings shall fail to maintain
any such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee.
DIMAC Holdings may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations;
PROVIDED, that no such designation or rescission shall in any manner relieve
DIMAC Holdings of its obligation to maintain an office or agency for such
purposes. DIMAC Holdings shall give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
DIMAC Holdings hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of DIMAC Holdings in accordance with Section 2.3.
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Section 4.3 REPORTS.
(a) DIMAC Holdings shall file with the Trustee copies of the
reports, information and other documents (or copies of such portions of any
of the foregoing as the Commission may by rules and regulations prescribe)
that DIMAC Holdings is required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act, within 15 days after filing such
reports, information and other documents with the Commission. If DIMAC
Holdings is not subject to the requirements of Section 13 or 15(d) of the
Exchange Act, DIMAC Holdings shall file with the Trustee all such reports,
information and other documents as it would be required to file if it were
subject to the requirements of Section 13 or 15(d) of the Exchange Act,
within the period applicable to such report, information or other document
pursuant to the Exchange Act. From and after the time DIMAC Holdings files
a registration statement with the Commission with respect to the Notes,
DIMAC Holdings shall file such information with the Commission; PROVIDED,
that DIMAC Holdings shall not be in default of the provisions of this
Section 4.3 for any failure to file reports with the Commission solely by
refusal by the Commission to accept the same for filing. DIMAC Holdings
shall deliver (or cause the Trustee to deliver) copies of all reports,
information and documents required to be filed with the Trustee pursuant to
this Section 4.3 to the Holders at their addresses appearing in the
register of Notes maintained by the Registrar. DIMAC Holdings shall also
comply with the provisions of TIA Section 314(a).
(b) If DIMAC Holdings is required to furnish annual, quarterly
or current reports to its stockholders pursuant to the Exchange Act, DIMAC
Holdings shall cause any annual, quarterly, current or other financial
report furnished by it generally to its stockholders to be filed with the
Trustee and mailed to the Holders by DIMAC Holdings at their addresses
appearing in the register of Notes maintained by the Registrar within 15
days after such reports are furnished to stockholders. If DIMAC Holdings
is not required to furnish annual, quarterly or current reports to its
stockholders pursuant to the Exchange Act, DIMAC Holdings shall cause the
financial statements of DIMAC Holdings and its consolidated Subsidiaries,
including any notes thereto (and, with respect to annual reports, an
auditors' report by an accounting firm of established national reputation),
and a "Management's Discussion and Analysis of Financial Condition and
Results of Operations," comparable to that which would have been required
to appear in annual or quarterly reports filed under Section 13 or 15(d) of
the Exchange Act to be so filed with the Trustee and mailed to the Holders
by DIMAC Holdings promptly, but in any event, within 105 days after the end
of each of the fiscal years of DIMAC Holdings and within 60 days after the
end of each of the first three quarters of each such fiscal year.
(c) So long as is required for an offer or sale of the Notes to
qualify for an exemption under Rule 144A, DIMAC Holdings shall, upon
request, provide the information required by clause (d)(4) thereunder to
each Holder and to each beneficial owner and prospective purchaser of Notes
identified by any Holder of Restricted Securities.
Section 4.4 COMPLIANCE CERTIFICATE.
(a) DIMAC Holdings shall deliver to the Trustee, within
forty-five (45) days after the end of each fiscal quarter and within ninety
(90) days after the end of each fiscal year, an Officers' Certificate
(provided that one of the signatories to such Officers' Certificate shall
be DIMAC Holdings's principal executive officer, principal financial
officer or principal accounting officer) stating that a review of the
activities of DIMAC Holdings and its Subsidiaries during the preceding
fiscal quarter or fiscal year, as the case may be, has been made under the
supervision of the signing Officers with a view to determine whether each
has kept, observed, performed and fulfilled its obligations under this
Indenture and the Notes, and further stating, as to each such Officer
signing
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such certificate, that to his knowledge, each of DIMAC Holdings and its
Subsidiaries has kept, observed, performed and fulfilled each and every
covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions
hereof or thereof (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which he may
have knowledge and what action each is taking or proposes to take with
respect thereto) and that to his knowledge, no event has occurred and
remains in existence by reason of which payments of interest, principal or
premium on the Notes are prohibited or if such event has occurred, a
description of the event. The Officers' Certificate shall set forth all
financial calculations for such fiscal quarter or fiscal year necessary to
demonstrate compliance with the covenants contained in this Section IV.
(b) The year-end financial statements delivered pursuant to
Section 4.3 shall be accompanied by a written statement of the independent
public accountants of DIMAC Holdings (which shall be a firm of established
national reputation reasonably satisfactory to the Trustee) that in making
the examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that
either DIMAC Holdings or any of its Subsidiaries has violated any
provisions of this Indenture or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood
that such accountants shall not be liable directly or indirectly to any
Person for any failure to obtain knowledge of any such violation.
(c) So long as any of the Notes are outstanding, DIMAC Holdings
shall deliver to the Trustee forthwith upon any Officer becoming aware of
(i) any Default or Event of Default or (ii) any event of default under any
mortgage, indenture or instrument referred to in Section 6.1(a)(v), an
Officers' Certificate specifying such Default, Event of Default or other
event of default and what action DIMAC Holdings is taking or proposes to
take with respect thereto.
Section 4.5 TAXES.
DIMAC Holdings shall, and shall cause each of its Subsidiaries to, (a) file
timely all material Tax Returns required to be filed by DIMAC Holdings and each
of its Subsidiaries, respectively and (b) pay or discharge or cause to be paid
or discharged, before the same shall become delinquent, (i) all material Taxes
levied or imposed upon DIMAC Holdings and each of its Subsidiaries or upon the
income, profits or property of DIMAC Holdings and each of its Subsidiaries and
(ii) all lawful material claims, whether for labor, materials, supplies,
services or anything else, which, if unpaid, would or may by law become a Lien,
upon the property of DIMAC Holdings or any of its Subsidiaries; PROVIDED,
HOWEVER, that none of DIMAC Holdings and its Subsidiaries shall be required to
pay or discharge or cause to be paid or discharged any such Tax, the
applicability or validity of which is being contested in good faith by
appropriate proceedings which will prevent the forfeiture or sale of any
property of DIMAC Holdings or any of its Subsidiaries and for which disputed
amounts reserves have been established in accordance with GAAP, in an amount
which DIMAC Holdings believes in good faith is adequate.
Section 4.6 STAY, EXTENSION AND USURY LAWS.
DIMAC Holdings covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension, usury or other law,
wherever enacted, now or at any time hereafter in force, that would prohibit or
forgive the payment of all or any portion of the principal of or interest on the
Notes, or that may affect the covenants or the performance of this Indenture,
and DIMAC Holdings (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law and covenants that it shall not,
by resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee but shall suffer and permit the execution of every
such power as though no such law has been enacted.
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Section 4.7 LIMITATION ON RESTRICTED PAYMENTS.
(a) DIMAC Holdings shall not,
(i) declare or pay any dividends, either in cash or
property, on, or make any distribution to the holders (as such) in
respect of, any class of Equity Interest in DIMAC Holdings (other than
dividends or distributions payable in Equity Interests (other than
Disqualified Capital Stock) of DIMAC Holdings);
(ii) except as provided in clause (iv) below, purchase,
repurchase, redeem or otherwise acquire or retire for value any Equity
Interests of DIMAC Holdings or any of its Subsidiaries or any other
Affiliate of DIMAC Holdings; PROVIDED that, during any one fiscal
year, as long as no Default or Event of Default has occurred and is
continuing, DIMAC Holdings may purchase Equity Interests in DIMAC
Holdings beneficially owned by directors, officers and employees of
DIMAC Holdings or any of its Subsidiaries pursuant to the terms of
employment contracts or employee benefit plans of DIMAC Holdings or
any of its Subsidiaries in an aggregate amount that, when added to all
amounts expended by any Restricted Subsidiaries of DIMAC Holdings to
purchase, repurchase, redeem or otherwise acquire or retire for value
any Equity Interests of DIMAC Holdings or any of its Subsidiaries or
any other Affiliate of DIMAC Holdings, does not exceed $2,500,000;
PROVIDED, FURTHER, that the aggregate amount expended by DIMAC
Holdings and its Restricted Subsidiaries on or after the Initial Issue
Date to so purchase Equity Interests in DIMAC Holdings beneficially
owned by directors, officers and employees of DIMAC Holdings or any of
its Subsidiaries, shall not exceed $10,000,000.
(iii) purchase, repurchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness of DIMAC Holdings (other
than the Notes); or
(iv) make any Investment other than (A) any guarantee of
Indebtedness by DIMAC Holdings permitted pursuant to the provisions of
Section 4.9(a), (B) any Investment of cash by DIMAC Holdings in a
Wholly-Owned Subsidiary of DIMAC Holdings solely to fund an
Acquisition made by DIMAC Operating or any of its Subsidiaries, which
Acquisition is not prohibited pursuant to the provisions of Section
4.24(b), (C) any Investments in Cash Equivalents and (D) an Investment
in DIMAC Operating on the Initial Issue Date of up to $40,000,000 in
connection with refinancing transactions occurring on such date and
any further Investment in DIMAC Operating after the Initial Issue Date
but only to the extent that the amount of such Investment shall have
been received through the issuance of new Equity Interests (other than
Disqualified Capital Stock) of DIMAC Holdings or a new capital
contribution to DIMAC Holdings from its stockholders.
(b) DIMAC Holdings shall cause each of its Restricted
Subsidiaries to not fail to comply with the provisions of Section 4.04 of
the DIMAC Operating Indenture (as in effect on the Initial Issue Date). In
addition, and without limiting the foregoing provisions of this Section
4.7(b), DIMAC Holdings shall cause DIMAC Operating and each of its
Restricted Subsidiaries to not purchase, repurchase, redeem or otherwise
acquire or retire for value any Equity Interests of DIMAC Holdings or any
of its Subsidiaries or any other Affiliate of DIMAC Holdings; PROVIDED
that, during any one fiscal year, as long as no Default or Event of Default
has occurred and is continuing, DIMAC Operating may purchase Equity
Interests in DIMAC Holdings beneficially owned by directors, officers and
employees of DIMAC Holdings or any of its Subsidiaries pursuant to the
terms of employment contracts or employee benefit plans of DIMAC Holdings
or any of its Subsidiaries in an aggregate amount that, when added to all
amounts expended by any Restricted
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Subsidiaries of DIMAC Holdings to purchase, repurchase, redeem or otherwise
acquire or retire for value any Equity Interests of DIMAC Holdings or any
of its Subsidiaries or any other Affiliate of DIMAC Holdings, does not
exceed $2,500,000; PROVIDED, FURTHER, that the aggregate amount expended by
DIMAC Holdings and its Restricted Subsidiaries on or after the Initial
Issue Date to so purchase Equity Interests in DIMAC Holdings beneficially
owned by directors, officers and employees of DIMAC Holdings or any of its
Subsidiaries, shall not exceed $10,000,000.
Not later than the date on which DIMAC Holdings or any of its
Restricted Subsidiaries takes any action expressly permitted pursuant to
this Section 4.7 or Section 4.04 of the DIMAC Operating Indenture (as in
effect on the Initial Issue Date), DIMAC Holdings shall deliver to the
Trustee an Officers' Certificate stating that such action is permitted and
setting forth the basis upon which the calculations required by this
Section 4.7 or Section 4.04 of the DIMAC Operating Indenture were computed,
which calculations may be based upon DIMAC Holdings's latest available
financial statements.
Section 4.8 LIMITATION ON RESTRICTIONS ON DIVIDENDS FROM RESTRICTED
SUBSIDIARIES.
DIMAC Holdings shall not, and shall cause each of its Restricted
Subsidiaries to not, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary of DIMAC Holdings to (a) pay dividends or
make any other distributions on its Capital Stock or any other interest or
participation in, or measured by, its profits owned by, or pay any Indebtedness
owed to, DIMAC Holdings or DIMAC Operating, (b) make loans or advances to DIMAC
Holdings or DIMAC Operating, (c) transfer any of its properties or assets to
DIMAC Holdings or DIMAC Operating, except for (i) any restrictions existing
under or contemplated by this Indenture, the DIMAC Operating Indenture (as in
effect on the Initial Issue Date) and the Senior Credit Agreement (as in effect
on the Initial Issue Date); (ii) any restrictions, with respect to a Restricted
Subsidiary of DIMAC Holdings that is not a Restricted Subsidiary of DIMAC
Holdings on the date hereof, in existence at the time such Person becomes a
Restricted Subsidiary of DIMAC Holdings (so long as such restrictions are not
created in anticipation of such Person becoming a Restricted Subsidiary of DIMAC
Holdings); (iii) with respect to clause (c) above only, any restrictions
existing under Capitalized Lease Obligations or other Indebtedness secured by
Permitted Liens (PROVIDED that, in each case, such prohibition shall only relate
to the assets which are subject to such Capitalized Lease Obligations or which
secure such Indebtedness and the proceeds therefrom); (iv) any restrictions
existing under any new agreement evidencing Indebtedness or any agreement that
refinances or replaces the agreements containing the restrictions in the
foregoing clauses (i), (ii) and (iii); PROVIDED, that the terms and conditions
of any such restrictions are no more restrictive than those under or pursuant to
the agreements containing the restrictions referenced in the foregoing clauses
(i), (ii) or (iii); or (v) any encumbrance or restriction permitted pursuant to
Section 4.05 of the DIMAC Operating Indenture (as in effect on the Initial Issue
Date).
Section 4.9 LIMITATION ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF
DISQUALIFIED CAPITAL STOCK.
(a) DIMAC Holdings shall not, directly or indirectly, create,
incur, issue, assume, guarantee or otherwise become directly or indirectly
liable with respect to (collectively, "INCUR") any Indebtedness (other than
PIK Notes) or issue any Disqualified Capital Stock; PROVIDED that DIMAC
Holdings may guarantee Indebtedness of any of its Restricted Subsidiaries
to the extent that the incurrence of such Indebtedness by such Restricted
Subsidiary or such guarantee by DIMAC Holdings (without duplication) does
not violate the provisions of Section 4.9(b) at the time of such
incurrence.
(b) DIMAC Holdings shall cause each of its Restricted
Subsidiaries (including without limitation, upon the creation or
acquisition of such Restricted Subsidiary) to not fail to comply with the
provisions of Section 4.03 of the DIMAC Operating Indenture (as in effect
on the Initial Issue
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Date); PROVIDED, HOWEVER, that for purposes of this Section 4.9(b), the
Consolidated Coverage Ratio test described in Section 4.03(a) of the DIMAC
Operating Indenture shall be deemed to be 1.90 to 1.00.
Section 4.10 LIMITATION ON ASSET SALES.
(a) DIMAC Holdings shall not make any Asset Sale. In addition,
DIMAC Holdings shall cause each of its Restricted Subsidiaries to not, make
any Asset Sale, unless no Default or Event of Default exists and is
continuing or is created by such Asset Sale and:
(i) such Restricted Subsidiary receives consideration at
the time of such Asset Sale at least equal to the fair market value of
such assets (as determined in good faith by the Board of Directors of
DIMAC Holdings and evidenced by a resolution set forth in an Officers'
Certificate, including as to the value of all noncash consideration);
(ii) at least 80% of the consideration therefor received
by such Restricted Subsidiary shall be in the form of cash or Cash
Equivalents; PROVIDED, HOWEVER, that for the purposes of this
subsection (a)(ii), the following are deemed to be cash: (x) any
liabilities of such Restricted Subsidiary (as shown on the most recent
balance sheet or in the notes thereto of such Restricted Subsidiary)
that are assumed by the transferee in connection with the Asset Sale
(other than liabilities that are incurred in connection with or in
anticipation of such Asset Sale); and (y) securities received by such
Restricted Subsidiary from such transferee that are immediately
converted into cash at the face amount or fair market value thereof by
such Restricted Subsidiary; and
(iii) the Net Cash Proceeds of such Asset Sale shall be
applied within 360 days of the consummation of such Asset Sale: (x) to
prepay, purchase, defease or otherwise retire any Indebtedness of
DIMAC Operating or its Restricted Subsidiaries (including without
limitation, the DIMAC Operating Notes and any Indebtedness under the
Senior Credit Agreement), in each case, with a permanent reduction in
amounts available to be borrowed or the Indebtedness that may be
incurred under the instrument evidencing such Indebtedness and/or (y)
to reinvest in Productive Assets. Any Net Cash Proceeds from any
Asset Sale consummated by any Restricted Subsidiary that are not
applied or reinvested as provided in this subsection (a)(iii) of this
Section 4.10 shall constitute excess proceeds ("EXCESS NET CASH
PROCEEDS") and shall be held in cash or Cash Equivalents.
(b) When the aggregate amount of Excess Net Cash Proceeds
exceeds $5,000,000, DIMAC Holdings shall promptly make an offer (the "ASSET
SALE OFFER") to all Holders of the Notes to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Net Cash Proceeds,
at an offer price in cash in an amount (the "ASSET SALE OFFER PRICE") equal
to 100% of the principal amount of such Notes, plus accrued and unpaid
interest thereon to the Asset Sale Date.
If the aggregate principal amount of Notes surrendered by Holders
thereof exceeds the amount of Excess Net Cash Proceeds, DIMAC Holdings
shall select the Notes to be purchased on a pro rata basis, in such manner
as complies with applicable legal requirements, if any. Upon completion of
such Asset Sale Offer, the amount of Excess Net Cash Proceeds shall be
reset at zero.
Simultaneously with the making of such Asset Sale Offer, DIMAC
Holdings shall provide the Trustee and the Holders with an Officers'
Certificate setting forth the Asset Sale Offer Price, the Asset Sale Date
and the calculations used in determining the amount of Excess Net Cash
Proceeds to be applied to the repurchase of the Notes.
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If the date on which the Asset Sale Offer closes (the "ASSET SALE
DATE") is on or after an interest payment record date and on or before the
related interest payment date, any accrued interest will be paid to the
person in whose name a Note is registered at the close of business on such
record date, and no additional interest will be payable to holders who
tender Notes pursuant to the Asset Sale Offer.
Each Asset Sale Offer shall be conducted in compliance with all
applicable laws, including without limitation, Regulation 14E of the
Exchange Act and the rules thereunder and all other applicable Federal and
state securities laws. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of this Section 4.10,
DIMAC Holdings shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under
this Section 4.10 by virtue thereof. Except as provided in the DIMAC
Operating Indenture (as in effect on the Initial Issue Date) or the Senior
Credit Agreement (as in effect on the Initial Issue Date) or as permitted
pursuant to Section 4.8, DIMAC Holdings shall not, and shall not permit any
of its Restricted Subsidiaries to, create or suffer to exist or become
effective any restriction that would impair the ability of DIMAC Holdings
to make an Asset Sale Offer upon an Asset Sale or, if such Asset Sale Offer
is made, to pay for the Notes tendered for purchase.
(c) Notice of any Asset Sale Offer shall be mailed by DIMAC
Holdings to the Trustee and each Holder at its last registered address.
The Asset Sale Offer shall remain open from the time of mailing until
twenty (20) Business Days thereafter, and no longer, unless a longer period
is required by law. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Notes pursuant to the
Asset Sale Offer. The notice, which shall govern the terms of the Asset
Sale Offer, shall state:
(i) that the Asset Sale Offer is being made pursuant to
this Section 4.10 and that Notes will be accepted for payment either
(A) in whole or (B) in part in integral multiples of $1,000;
(ii) the Asset Sale Offer Price and the Asset Sale Date;
(iii) that any Note not tendered will continue to accrue
interest;
(iv) that any Note accepted for payment pursuant to the
Asset Sale Offer shall cease to accrue interest from and after the
Asset Sale Date (so long as DIMAC Holdings does not default in its
obligation to promptly pay the Asset Sale Offer Price);
(v) that Holders electing to have a Note purchased pursuant
to the Asset Sale Offer will be required to surrender the Note, with
the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Note completed, at the address specified in the notice prior to
the close of business on the Business Day preceding the Asset Sale
Date;
(vi) that Holders will be entitled to withdraw their
election on the terms and subject to the conditions set forth in the
notice;
(vii) that Holders whose Notes are purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered; PROVIDED, HOWEVER, that any portion
of a Note repurchased by DIMAC Holdings and any new Note issued to the
Holder in respect of the unpurchased portion thereof shall be in the
principal amount of $1,000 or an integral multiple thereof.
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(d) On the Asset Sale Date, DIMAC Holdings shall (i) accept for
payment the Notes or portions thereof (or an allocable amount thereof)
tendered pursuant to the Asset Sale Offer, (ii) deposit with the Paying
Agent money sufficient to pay the purchase price of all Notes or portions
thereof so accepted and (iii) deliver to the Trustee the Notes so accepted,
together with an Officers' Certificate stating that the Notes or portions
thereof (or an allocable amount thereof) tendered to DIMAC Holdings are
accepted for payment. The Paying Agent shall promptly mail to each Holder
of Notes so accepted payment in an amount equal to the purchase price of
such Notes, and the Trustee shall promptly authenticate and mail to such
Holders new Notes equal in principal amount to any unpurchased portion of
the Notes surrendered. After payment to the Holders of the purchase price
of all Notes or portions thereof so accepted, the Paying Agent shall
deliver promptly to DIMAC Holdings the balance, if any, of any money so
deposited by DIMAC Holdings with the Paying Agent remaining after such
payment to the Holders.
DIMAC Holdings shall make a public announcement of the results of the
Asset Sale Offer as soon as practicable after the Excess Proceeds Payment
Date. For the purposes of this Section 4.10, the Trustee shall act as the
Paying Agent.
Notwithstanding any of the foregoing provisions of this Section 4.10
to the contrary, DIMAC Holdings shall not be required to comply with the
provisions of this Section 4.10 to the extent and only to the extent that
such compliance would be prohibited by the terms of the DIMAC Operating
Indenture, as amended, replaced, refinanced, modified or supplemented from
time to time, or the Senior Credit Agreement.
Section 4.11 LIMITATION ON TRANSACTIONS WITH AFFILIATES.
(a) DIMAC Holdings shall not, and shall cause each of its
Restricted Subsidiaries to not, directly or indirectly, enter into or
permit to exist any transaction or series of related transactions that are
similar or part of a common plan (including, without limitation, the
purchase, sale, lease or exchange of any property or the rendering of any
service) with, or for the benefit of, any of their respective Affiliates
(each an "AFFILIATE TRANSACTION"), unless (i) the terms of such Affiliate
Transaction are no less favorable to DIMAC Holdings or the applicable
Restricted Subsidiary, as the case may be, than those that could be
obtained at the time of such transaction in arm's-length dealings with a
Person who is not such an Affiliate, (ii) in the event such Affiliate
Transaction involves an aggregate amount in excess of $1,000,000, the terms
of such Affiliate Transaction have been approved by a majority of the
members of the Board of Directors of DIMAC Holdings and by a majority of
the disinterested members of such Board of Directors, if any (and such
majority or majorities, as the case may be, determines pursuant to a
resolution of such Board of Directors that such Affiliate Transaction
satisfies the criterion in clause (i) of this paragraph (a)); and (iii) in
the event such Affiliate Transaction involves an aggregate amount in excess
of $5,000,000, DIMAC Holdings has received a written opinion from an
independent investment banking firm of nationally recognized standing that
such Affiliate Transaction is fair to DIMAC Holdings or such Restricted
Subsidiary, as the case may be, from a financial point of view.
(b) The provisions of paragraph (a) of this Section 4.11 will
not prohibit (i) any Restricted Payment (as defined in the DIMAC Operating
Indenture as in effect on the Initial Issue Date) permitted to be paid
pursuant to Section 4.7 (and in the case of Permitted Investments (as
defined in the DIMAC Operating Indenture as in effect on the Initial Issue
Date), only those described in clauses (v), (vi) and (ix) of the definition
of Permitted Investments (as set forth in the DIMAC Operating Indenture as
in effect on the Initial Issue Date)), (ii) the performance of the
obligations of DIMAC Holdings or any of its Restricted Subsidiaries under
any employment contract, collective bargaining agreement, employee benefit
plan, related trust agreement or any other similar arrangement heretofore
or hereafter entered into in the ordinary course of business, (iii) payment
of
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compensation to, and indemnity provided on behalf of, employees, officers,
directors or consultants (excluding under the Advisory Services Agreement)
in the ordinary course of business, (iv) maintenance in the ordinary course
of business of benefit programs or arrangements for employees, officers or
directors, including vacation plans, health and life insurance plans,
deferred compensation plans, and retirement or savings plans and similar
plans, (v) any transaction between DIMAC Holdings or any of its
Wholly-Owned Subsidiaries, (vi) the payment of fees and expenses under the
Advisory Services Agreement as in effect on the Initial Issue Date or
(vii) payments by DIMAC Operating and any of its Restricted Subsidiaries
pursuant to the Tax Sharing Agreement (viii) the issuance or sale of any
Capital Stock (other than Disqualified Capital Stock) of DIMAC Operating.
Section 4.12 LIMITATION ON LIENS.
DIMAC Holdings shall not create or suffer to exist any Liens other than
Permitted Liens upon any assets of DIMAC Holdings (including without limitation,
any shares of Capital Stock of DIMAC Operating).
Section 4.13 CORPORATE EXISTENCE.
Subject to Article V, DIMAC Holdings shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of its
Restricted Subsidiaries, in accordance with their respective organizational
documents (as the same may be amended from time to time) and (ii) its (and its
Restricted Subsidiaries') rights (charter and statutory), licenses and
franchises; PROVIDED, that DIMAC Holdings shall not be required to preserve any
such right, license or franchise, or the corporate, partnership or other
existence of any Restricted Subsidiary, if the Board of Directors of DIMAC
Holdings on behalf of DIMAC Holdings shall determine in good faith that the
preservation thereof is no longer desirable in the conduct of the business of
DIMAC Holdings and its Restricted Subsidiaries taken as a whole and that the
loss thereof is not adverse in any material respect to the Holders.
Section 4.14 REPURCHASE UPON A CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, DIMAC Holdings
shall notify the Trustee in writing thereof and shall make an offer to
purchase all of the Notes then outstanding as described below (the "Change
of Control Offer") at a purchase price equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest, if any, to the
date of repurchase (the "Change of Control Payment").
(b) The Change of Control Offer shall be made in compliance with
all applicable laws, including without limitation, Regulation 14E of the
Exchange Act and the rules thereunder and all other applicable Federal and
state securities laws. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of this Section 4.14,
DIMAC Holdings shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under
this Section 4.14 by virtue thereof.
(c) Within 30 days following any Change of Control, DIMAC
Holdings shall commence the Change of Control Offer by mailing to the
Trustee and each Holder a notice, which shall govern the terms of the
Change of Control Offer, and shall state that:
(i) the Change of Control Offer is being made pursuant to
this Section 4.14 and that all Notes tendered will be accepted for
payment;
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(ii) the purchase price and the purchase date, which shall
be a Business Day no earlier than 30 days nor later than 60 days from
the date such notice is mailed (the "Change of Control Payment Date");
(iii) that any Note not tendered for payment pursuant to
the Change of Control Offer shall continue to accrue interest in
accordance with the terms thereof;
(iv) that, unless DIMAC Holdings defaults in the payment of
the Change of Control Payment, all Notes accepted for payment pursuant
to the Change of Control Offer shall cease to accrue interest on the
Change of Control Payment Date;
(v) that any Holder electing to have Notes purchased
pursuant to a Change of Control Offer shall be required to surrender
such Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes completed, to the Paying Agent
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;
(vi) that any Holder shall be entitled to withdraw such
election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes
such Xxxxxx delivered for purchase, and a statement that such Xxxxxx
is withdrawing his election to have such Notes purchased;
(vii) that a Holder whose Notes are being purchased only
in part shall 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;
(viii) the instructions that Holders must follow in order
to tender their Notes; and
(ix) the circumstances and relevant facts regarding such
Change of Control.
(d) On the Change of Control Payment Date, DIMAC Holdings shall,
to the extent lawful, (i) accept for payment the Notes or portions thereof
tendered pursuant to the Change of Control Offer, (ii) deposit with the
Paying Agent an amount equal to the Change of Control Payment in respect of
all Notes or portions thereof so tendered and not withdrawn, and (iii)
deliver or cause to be delivered to the Trustee the Notes so accepted
together with an Officers' Certificate stating that the Notes or portions
thereof tendered to DIMAC Holdings are accepted for payment. The Paying
Agent shall promptly mail to each Holder of Notes so accepted payment in an
amount equal to the purchase price for such Notes, and the Trustee shall
authenticate and mail to each Holder a new Note equal in principal amount
to any unpurchased portion of the Notes surrendered, if any, PROVIDED, that
each such new Note will be in principal amount of $1,000 or an integral
multiple thereof.
(e) DIMAC Holdings shall make a public announcement of the
results of the Change of Control Offer on or as soon as practicable after
the Change of Control Payment Date. For the purposes of this Section 4.14,
the Trustee shall act as the Paying Agent.
(f) DIMAC Holdings shall not be required to make a Change of
Control Offer upon a Change of Control if a third party makes the Change of
Control Offer in the manner, at the times and otherwise in compliance with
the requirements set forth in this Section 4.14 and purchases all Notes
validly tendered and not withdrawn under such Change of Control Offer.
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Section 4.15 MAINTENANCE OF PROPERTIES.
DIMAC Holdings shall, and shall cause each of its Restricted Subsidiaries
to maintain its properties and assets in normal working order and condition as
on the date of this Indenture (reasonable wear and tear excepted) and make all
necessary repairs, renewals, replacements, additions, betterments and
improvements thereto, as shall be reasonably necessary for the proper conduct of
the business of DIMAC Holdings and its Restricted Subsidiaries taken as a whole;
PROVIDED, that nothing herein shall prevent DIMAC Holdings or any of its
Restricted Subsidiaries from discontinuing any maintenance of any such
properties if DIMAC Holdings determines that such discontinuance is desirable in
the conduct of the business of DIMAC Holdings and its Restricted Subsidiaries
taken as a whole.
Section 4.16 MAINTENANCE OF INSURANCE.
DIMAC Holdings shall, and shall cause each of its Restricted Subsidiaries
to, maintain liability, casualty and other insurance with a reputable insurer or
insurers in such amounts and against such risks as is carried by responsible
companies engaged in similar businesses and owning similar assets.
Section 4.17 INVESTMENT COMPANY ACT.
DIMAC Holdings shall not, and shall cause each of its Subsidiaries to not,
become an investment company subject to registration under the Investment
Company Act of 1940, as amended.
Section 4.18 OWNERSHIP OF SUBSIDIARIES.
DIMAC Holdings shall at all times own, directly or indirectly, 100% of the
Equity Interests of DIMAC Operating.
Section 4.19 LIMITATION ON BUSINESS.
DIMAC Holdings shall not conduct or operate any business, perform any
obligations, incur any Indebtedness (other than as permitted under Section
4.9(a)) or hold any assets; PROVIDED, HOWEVER, that DIMAC Holdings may own 100%
of the Equity Interests of DIMAC Operating, may hold cash or Cash Equivalents,
may perform its obligations pursuant to the Securities Purchase Agreement, this
Indenture, the Notes, the Registration Rights Agreement, the Warrant Agreement
and the Stockholders' Agreement, may issue new shares of common stock, may pay
its Taxes and may maintain its corporate existence. DIMAC Holdings shall cause
each of its Restricted Subsidiaries to not engage in any business other than a
Related Business.
Section 4.20 EMPLOYEE PLANS.
DIMAC Holdings shall not, and shall cause each of its Subsidiaries to not,
directly or indirectly, (i) terminate any employee pension benefit plan subject
to Title IV of ERISA if as a result of such termination DIMAC Holdings and its
Subsidiaries, collectively, would incur a liability with respect to such plan in
excess of $5,000,000 in the aggregate, or (ii) make a complete or partial
withdrawal (within the meaning of Section 4201 of ERISA) from any multiemployer
plan if as a result of such withdrawal (within the meaning of Section 4201 of
ERISA), DIMAC Holdings and its Subsidiaries, collectively, would incur a
liability with respect to such plan in excess of $5,000,000 in the aggregate.
As used in this Section 4.20, the terms "employee pension benefit plan" and
"multiemployer plan" shall have the meanings assigned to such terms in Section 3
of ERISA.
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Section 4.21 COMPLIANCE WITH LAWS; MAINTENANCE OF LICENSES.
DIMAC Holdings shall, and shall cause each of its Subsidiaries to, comply
with all statutes, ordinances, governmental rules and regulations, judgments,
orders and decrees (including all Environmental Laws) to which any of them is
subject, and maintain, obtain and keep in effect all licenses, permits,
franchises and other governmental authorizations necessary to the ownership or
operation of their respective properties or the conduct of their respective
businesses, except to the extent that the failure to so comply or maintain,
obtain and keep in effect could not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Section 4.22 AVAILABLE CASH.
DIMAC Holdings shall not expend any cash, except for (i) the payment of the
principal of (and premium, if any, on) the Notes, installments of interest on
the Notes and any other amount required by the terms hereof or of the Notes to
be paid in respect of the Notes, whether upon redemption, repurchase or
otherwise, (ii) the payment of Taxes in compliance with the provisions of
Section 4.5, (iii) Capital Expenditures in compliance with the provisions of
Section 4.25, (iv) the payment of fees and expenses relating to filing of a
registration statement with respect to the Notes pursuant to the Registration
Rights Agreement and complying with the provisions of Section 4.3, (v) the
payment of expenses incurred in the ordinary course of business, not to exceed
an aggregate of $500,000 in any one fiscal year and (vi) the making of any
payments expressly permitted pursuant to Section 4.7(a).
Section 4.23 FISCAL YEARS.
At all times, DIMAC Holdings shall maintain, and shall cause each of its
Restricted Subsidiaries to maintain, its fiscal year ending on December 31st.
Section 4.24 LIMITATION ON ACQUISITIONS.
(a) DIMAC Holdings shall not make any Acquisition.
(b) DIMAC Holdings shall cause each of its Restricted
Subsidiaries to not make an Acquisition, unless:
(i) no Default or Event of Default shall have occurred and
be continuing at the time of, or would occur after giving effect, on a
pro forma basis, to, the consummation of such Acquisition; and
(ii) the Acquisition (A) is effected by way of (1) merger
or consolidation of DIMAC Operating or any of its Restricted
Subsidiaries so long as all of the Capital Stock of such other Person
is acquired, (2) acquisition by DIMAC Operating or any of its
Restricted Subsidiaries of assets or property that constitute all or
substantially all of a business operating unit of another Person, or
(3) acquisition by DIMAC Operating or any of its Restricted
Subsidiaries of all of the Capital Stock in such other Person and (B)
relates only to acquisitions of Productive Assets and is approved by
the Board of Directors of the acquired Person (if applicable).
Section 4.25 LIMITATION ON CAPITAL EXPENDITURES.
DIMAC Holdings shall not make or incur Capital Expenditures in any fiscal
year in an aggregate amount in excess of $250,000.
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Section 4.26 INSPECTION OF PROPERTIES AND RECORDS.
DIMAC Holdings shall allow, and shall cause each of its Subsidiaries to
allow, each Initial Purchaser and each Holder of at least $20,000,000 aggregate
principal amount of Notes (or such Persons as any of them may designate)
(individually and collectively, "INSPECTORS"), subject to appropriate agreements
as to confidentiality, (i) to visit and inspect any of the properties of DIMAC
Holdings or any of its Subsidiaries, (ii) to examine all their books of account,
records, reports and other papers and to make copies and extracts therefrom,
(iii) to discuss their respective affairs, finances and accounts with their
respective officers and employees, and (iv) to discuss the financial condition
of DIMAC Holdings and its Subsidiaries with their independent accountants upon
reasonable notice to DIMAC Holdings of its intention to do so and so long as
DIMAC Holdings shall be given the reasonable opportunity to participate in such
discussions (and by this provision DIMAC Holdings authorizes said accountants to
have such discussions with the Inspectors). All such visits, examinations and
discussions set forth in the preceding sentence shall be upon prior notice at
such reasonable times and as often as may be reasonably requested. If a Default
of an Event of Default shall have occurred and be continuing, DIMAC Holdings
shall pay or reimburse all Inspectors for expenses which such Inspectors may
reasonably incur in connection with any such visitations or inspections.
ARTICLE V
SUCCESSORS
Section 5.1 WHEN DIMAC HOLDINGS MAY MERGE, ETC.
DIMAC Holdings shall not consolidate or merge with or into (regardless of
whether DIMAC Holdings is the surviving corporation), or transfer all or
substantially all of its properties or assets (determined on a consolidated
basis for DIMAC Holdings and its Subsidiaries) in one or more related
transactions to, any other Person unless:
(a) DIMAC Holdings is the surviving Person or the Person formed
by or surviving any such consolidation or merger (if other than DIMAC
Holdings) or to which such transfer has been made is a corporation
organized and existing under the laws of the United States, any state
thereof or the District of Columbia,
(b) the Person formed by or surviving any such consolidation or
merger (if other than DIMAC Holdings) or the Person to which such transfer
has been made assumes all the Obligations of DIMAC Holdings, pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee,
under the Notes, this Indenture and the Registration Rights Agreement,
(c) immediately after giving effect to such transaction on a PRO
FORMA basis, no Default or Event of Default exists or would occur and
(d) immediately after giving effect to such transaction on a PRO
FORMA basis, the Consolidated Net Worth of such surviving entity must be
equal to or greater than that of DIMAC Holdings immediately prior to giving
effect to such transaction.
DIMAC Holdings shall deliver to the Trustee prior to the consummation of
any proposed transaction an Officers' Certificate to the foregoing effect, an
Opinion of Counsel, stating that all conditions precedent to the proposed
transaction provided for in this Indenture have been complied with, and a
written statement from a firm of independent public accountants of established
national reputation reasonably satisfactory to the Trustee stating that the
proposed transaction complies with clause (d) of this Section 5.1.
For purposes of this Section 5.1, the transfer of all or substantially all
of the properties and assets of one or more Restricted Subsidiaries of DIMAC
Holdings, which properties and assets, if held by DIMAC
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Holdings instead of such Restricted Subsidiaries, would constitute all or
substantially all of the properties and assets of DIMAC Holdings on a
consolidated basis, shall be deemed to be the transfer of all or substantially
all of the properties and assets of DIMAC Holdings.
Section 5.2 SUCCESSOR SUBSTITUTED.
In the event of any transaction (other than a lease) contemplated by
Section 5.1 in which DIMAC Holdings is not the surviving Person, the successor
formed by such consolidation or into or with which DIMAC Holdings is merged or
to which such transfer is made, or formed by such reorganization, as the case
may be, shall succeed to, and be substituted for, and may exercise every right
and power of, DIMAC Holdings and DIMAC Holdings shall be discharged from its
Obligations under this Indenture, the Notes and the Registration Rights
Agreement, with the same effect as if such successor Person had been named as
DIMAC Holdings herein or therein.
Section 5.3 PLAN OF LIQUIDATION.
DIMAC Holdings shall not in a single transaction or through a series of
related transactions, adopt a Plan of Liquidation.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 EVENTS OF DEFAULT.
(a) "EVENT OF DEFAULT" occurs if:
(i) DIMAC Holdings defaults in the payment of interest on
any Note or any other amount payable hereunder when the same becomes
due and payable and the Default continues for a period of five (5)
days (it being understood that the issuance of PIK Notes in accordance
with the provisions of Section 1 of the Notes shall not constitute any
Event of Default under this clause (i));
(ii) DIMAC Holdings defaults in the payment of the principal
of or premium, if any, on any Note when the same becomes due and
payable at maturity, upon redemption or otherwise (including, without
limitation, the failure to make a payment to purchase Notes tendered
pursuant to a Change of Control Offer or an Asset Sale Offer);
(iii) DIMAC Holdings defaults in the performance of or
breaches the provisions of Sections 4.7, 4.8, 4.9, 4.10, 4.11, 4.12,
4.14, 4.18, 4.20, 4.22, 4.23, 4.24, 4.25, 4.26, or Article V or the
provisions of Section 1.14 of the Securities Purchase Agreement;
(iv) if (i) DIMAC Holdings or DIMAC Operating fails to
comply with any of its other agreements or covenants in, or provisions
of, the Notes or this Indenture or with any of its agreements or
covenants in the Securities Purchase Agreement and (ii) the Default
continues for 30 days after written notice thereof has been given to
DIMAC Holdings by the Trustee or to DIMAC Holdings and the Trustee by
the Holders of at least 25% in aggregate principal amount of the then
outstanding Notes, such notice to state that it is a "Notice of
Default;"
(v) if (i) DIMAC Holdings or any of its Restricted
Subsidiaries defaults in the payment of principal or interest payments
under the DIMAC Operating Notes or the DIMAC Operating Indenture or
the Senior Credit Agreement, regardless of the principal amount of
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the Indebtedness outstanding thereunder, (ii) DIMAC Holdings or any of
its Restricted Subsidiaries defaults in the payment of principal or
interest payments under any loan agreement, note, mortgage, indenture
or instrument (including without limitation the DIMAC Operating
Indenture and the Senior Credit Agreement) under which there may be
issued or by which there may be secured or evidenced any other
Indebtedness of DIMAC Holdings or any of its Restricted Subsidiaries
for borrowed money (or the payment of which is guaranteed by DIMAC
Holdings or any of its Restricted Subsidiaries), whether such
indebtedness or guarantee now exists or shall be created hereafter,
and the principal amount of such indebtedness, together with the
principal amount of any other such indebtedness for which there is a
default in the payment of interest, premium, if any, or principal,
aggregates $3,000,000 or more or (iii) an event of default occurs
under any loan agreement, note, mortgage, indenture or instrument
which shall represent a default in payment upon final maturity or
otherwise results in the acceleration of such indebtedness prior to
its expressed maturity and the principal amount of such indebtedness,
together with the principal amount of any other such indebtedness with
respect to which there has been a default in payment upon final
maturity or the maturity of which has been so accelerated and has not
been paid, aggregates $3,000,000 or more;
(vi) a final judgment or final judgments for the payment of
money are entered by a court or courts of competent jurisdiction
against DIMAC Holdings, DIMAC Operating or any Subsidiary of DIMAC
Holdings or DIMAC Operating and such remains undischarged for a period
(during which execution shall not be effectively stayed) of thirty
(30) days, PROVIDED that the aggregate of all such judgments (which
are not adequately covered by insurance as to which a solvent and
unaffiliated insurance company has acknowledged coverage) exceeds
$3,000,000;
(vii) repudiation by DIMAC Holdings of its obligations
under this Indenture or the Notes, or the unenforceability of this
Indenture or the Notes against DIMAC Holdings for any reason;
(viii) the filing by DIMAC Holdings or any of its
Subsidiaries (any such Person, a "DEBTOR") of a petition commencing a
voluntary case under Section 301 of Title 11 of the United States
Code, or the commencement by a Debtor of a case or proceeding under
any other Bankruptcy Law seeking the adjustment, restructuring, or
discharge of the debts of such Debtor, or the liquidation of such
Debtor, including without limitation the making by a Debtor of an
assignment for the benefit of creditors; or the taking of any
corporate action by a Debtor in furtherance of or to facilitate,
conditionally or otherwise, any of the foregoing;
(ix) the filing against a Debtor of a petition commencing
an involuntary case under Section 303 of Title 11 of the United States
Code, with respect to which case (a) such Debtor consents or fails to
timely object to the entry of, or fails to seek the stay and dismissal
of, an order of relief, (b) an order for relief is entered and is
pending and unstayed on the 60th day after the filing of the petition
commencing such case, or if stayed, such stay is subsequently lifted
so that such order for relief is given full force and effect, or (c)
no order for relief is entered, but the court in which such petition
was filed has not entered an order dismissing such petition by the
60th day after the filing thereof; or the commencement under any other
Bankruptcy Law of a case or proceeding against a Debtor seeking the
adjustment, restructuring, or discharge of the debts of such Debtor,
or the liquidation of such Debtor, which case or proceeding is pending
without having been dismissed on the 60th day after the commencement
thereof; or
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(x) the entry by a court of competent jurisdiction of a
judgment, decree or order appointing a receiver, liquidator, trustee,
custodian or assignee of a Debtor or of the property of a Debtor, or
directing the winding up or liquidation of the affairs or property of
a Debtor, and (a) such Debtor consents or fails to timely object to
the entry of, or fails to seek the stay and dismissal of, such
judgment, decree, or order, or (b) such judgment, decree or order is
in full force and effect and is not stayed on the 60th day after the
entry thereof, or, if stayed, such stay is thereafter lifted so that
such judgment, decree or order is given full force and effect.
(b) DIMAC Holdings shall, upon becoming aware that a Default or
Event of Default has occurred, deliver to the Trustee a statement
specifying such Default or Event of Default and what action DIMAC Holdings
is taking or proposes to take with respect thereto.
Section 6.2 ACCELERATION.
If an Event of Default (other than an Event of Default specified in clause
(viii), (ix) or (x) of Section 6.1(a)) occurs and is continuing, the Trustee by
written notice to DIMAC Holdings, or the Holders of at least 25% in principal
amount of the then outstanding Notes by written notice to DIMAC Holdings and the
Trustee, may declare the unpaid principal of and any accrued interest on all the
Notes to be due and payable. Upon such declaration the principal and interest
shall be due and payable immediately. If an Event of Default specified in
clause (viii), (ix) or (x) of Section 6.1(a) occurs, all outstanding Notes shall
IPSO FACTO become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder. At any time after a
declaration of acceleration, but before a judgment or decree for payment of the
money due has been obtained by the Trustee, the Holders of a majority in
aggregate principal amount of the Notes outstanding, by written notice to DIMAC
Holdings and the Trustee, may rescind and annul such declaration and its
consequences if (a) DIMAC Holdings has paid or deposited with the Trustee a sum
sufficient to pay (i) all sums paid or advanced by the Trustee and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, (ii) all overdue interest (including any interest
accrued subsequent to an Event of Default specified in clause (viii), (ix) or
(x) of Section 6.1(a)) on all Notes, (iii) the principal of and premium, if any,
on any Notes that have become due otherwise than by such declaration or
occurrence of acceleration and interest thereon at the rate borne by the Notes,
and (iv) to the extent that payment of such interest is lawful, interest upon
overdue interest at the rate borne by the Notes; (b) all Events of Default,
other than the non-payment of principal of and interest on the Notes that have
become due solely by such declaration or occurrence of acceleration, have been
cured or waived; and (c) the rescission would not conflict with any judgment,
order or decree of any court of competent jurisdiction.
Section 6.3 OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy (under this Indenture or otherwise) to collect the payment of
principal or interest on the Notes to enforce the performance of any provision
of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies are cumulative
to the extent permitted by law.
Section 6.4 WAIVER OF PAST DEFAULTS.
Holders of a majority of the aggregate principal amount of the then
outstanding Notes by written notice to the Trustee may on behalf of the Holders
of all of the Notes (a) waive any existing Default or Event
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of Default and its consequences under this Indenture except a continuing Default
or Event of Default in the payment of the principal of, or interest on, any Note
or a Default or an Event of Default with respect to any covenant or provision
which cannot be modified or amended without the consent of the Holder of each
outstanding Note affected, and/or (b) rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal or
interest that has become due solely because of the acceleration) have been cured
or waived. Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 6.5 CONTROL BY MAJORITY.
The Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
it. However, the Trustee may refuse to follow any direction that conflicts with
law or this Indenture, that the Trustee determines may be unduly prejudicial to
the rights of other Holders, or that may involve the Trustee in personal
liability.
Section 6.6 LIMITATION ON SUITS.
A Holder may pursue a remedy with respect to this Indenture or the Notes
only if:
(a) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder or Holders offer and, if requested, provide to
the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 30 days
after receipt of the request and the offer and, if requested, the provision
of indemnity; and
(e) during such 30-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
Section 6.7 RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal and interest on the Note, on or
after the respective due dates expressed in the Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder.
Section 6.8 COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.1(a)(i) or 6.1(a)(ii) occurs
and is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against DIMAC Holdings for the whole amount
of principal and interest remaining unpaid on the Notes and interest on overdue
principal (and premium, if any) and, to the extent lawful, interest or overdue
interest and such further amount
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as shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
Section 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to DIMAC Holdings, its
creditors or its property and shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable on any
such claims and any custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7. To the
extent that the payment of any such compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.7 out of the estate in any such proceeding, shall be
denied for any reason, payment of the same shall be secured by a Lien on, and
shall be paid out of, any and all distributions, dividends, money, securities
and other properties that the Holders of the Notes may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10 PRIORITIES.
If the Trustee collects any money pursuant to this Article VI, it shall pay
out the money in the following order:
FIRST: to the Trustee, its agents and attorneys for amounts due under
Section 7.7, including payment of all compensation, expense and liabilities
incurred, and all advances made, by the Trustee and the costs and expenses
of collection;
SECOND: to Holders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal
and interest, respectively;
THIRD: without duplication, to Holders for any other Obligations
owing to the Holders under the Notes, this Indenture or the Registration
Rights Agreement; and
FOURTH: to DIMAC Holdings or to such party as a court of competent
jurisdiction shall direct.
The Trustee, upon written notice to DIMAC Holdings, may fix a record date
and payment date for any payment to Holders.
Section 6.11 UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may
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assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 6.11 does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.6, or a suit
by Holders of more than 10% in principal amount of the then outstanding Notes.
Section 6.12 PREMIUM ON ACCELERATION.
In the event of an acceleration of the Notes upon an Event of Default
occurring by reason of any willful action (or deliberate inaction) taken (or not
taken) by or on behalf of DIMAC Holdings with the intention of avoiding payment
of the premium that DIMAC Holdings would have had to pay if DIMAC Holdings had
elected to redeem the Notes and such acceleration is not rescinded or annulled,
the Holders shall be entitled to receive, in addition to any other payments to
which they may be entitled, a premium equal to the percentages of principal set
forth below if the declaration date of the acceleration occurs during the twelve
month period commencing on October 22 of the year set forth below:
Year % of Principal Amount
---- ---------------------
1998 115.500
1999 113.950
2000 112.400
2001 110.850
2002 109.300
2003 107.750
2004 106.200
2005 104.650
2006 103.100
2007 101.550
2008 100.000
ARTICLE VII
TRUSTEE
Section 7.1 DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct
of his or her own affairs.
(b) Except during the continuance of an Event of Default:
(i) The duties of the Trustee shall be determined solely by
the express provisions of this Indenture, and the Trustee need perform
only those duties that are specifically set forth in this Indenture,
and no others, and no implied covenants or obligations shall be read
into this Indenture against the Trustee.
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(ii) In the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether they conform to the
requirements of this Indenture (but need not confirm the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) This paragraph does not limit the effect of paragraph
(d) of this Section 7.1.
(ii) The Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts.
(iii) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5.
(d) Regardless of whether therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is
subject to paragraphs (a), (b), (c) and (e) of this Section 7.1.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee may
refuse to perform any duty or exercise any right or power unless it
receives security and indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with DIMAC
Holdings. Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
Section 7.2 RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any document believed by it to be
genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action it takes or omits to take in
good faith in reliance on such Officers' Certificate or Opinion of Counsel.
The Trustee may consult with counsel of its selection and the advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within
its rights or powers conferred upon it by this Indenture.
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(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from DIMAC Holdings shall be
sufficient if signed by an Officer of DIMAC Holdings, on behalf of DIMAC
Holdings.
(f) Except with respect to Section 4.1, the Trustee shall have
no duty to inquire as to the performance of DIMAC Holdings's covenants in
Article IV. In addition, the Trustee shall not be deemed to have knowledge
of any Default or Event of Default except (i) any Event of Default
occurring pursuant to Sections 6.1(a)(i), 6.1(a)(ii) and 4.1, or (ii) any
Default or Event of Default of which the Trustee shall have received
written notification or a Responsible Officer of the Trustee shall have
obtained actual knowledge.
Section 7.3 INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with DIMAC Holdings or an Affiliate of
DIMAC Holdings with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. However, the Trustee is subject to
Sections 7.10 and 7.11.
Section 7.4 TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for DIMAC Holdings's use of the proceeds from the Notes or any money
paid to DIMAC Holdings or upon DIMAC Holdings's direction under any provision
hereof, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.5 NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if the
Trustee has actual knowledge thereof (within the meaning of Section 7.2(f)), the
Trustee shall mail to the Holders a notice of the Default or Event of Default
within 90 days after it occurs. Except in the case of a Default or Event of
Default in the payment of principal of, premium, if any, or interest on any
Note, the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interest of the Holders of the Notes.
Section 7.6 REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, the Trustee shall mail to the Holders a brief report
dated as of such reporting date that complies with TIA Section 313(a) (but if
no event described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b). The Trustee shall also transmit by mail
all reports as required by TIA Section 313(c).
Commencing at the time this Indenture is qualified under the TIA, a copy of
each report at the time of its mailing to the Holders shall be filed with the
Commission and each stock exchange on which the Notes are listed. DIMAC
Holdings shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
Section 7.7 COMPENSATION AND INDEMNITY.
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DIMAC Holdings shall pay to the Trustee from time to time such compensation
as shall be agreed to in writing by DIMAC Holdings and the Trustee for its
acceptance of this Indenture and services hereunder. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. DIMAC Holdings shall reimburse the Trustee promptly upon request for all
reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel, except such disbursements, advances and expenses as may be attributable
to its negligence or bad faith.
DIMAC Holdings shall indemnify the Trustee and any predecessor against any
and all losses, liabilities, damages, claims or expenses incurred by the Trustee
without negligence or bad faith on its part arising out of or in connection with
the acceptance or administration of its duties under this Indenture (including
the costs and expenses of enforcing this Indenture against DIMAC Holdings and
defending itself against any claim (regardless of whether asserted by DIMAC
Holdings or any Holder or any other person) or liability in connection with the
exercise or performance of any of its powers or duties hereunder), except as set
forth below. The Trustee shall notify DIMAC Holdings promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify DIMAC Holdings
shall not relieve DIMAC Holdings of its obligations hereunder. DIMAC Holdings
shall defend the claim and the Trustee shall cooperate in the defense. In the
event that a conflict of interest or conflicting defenses would arise in
connection with the representation of DIMAC Holdings and the Trustee by the same
counsel, the Trustee may have separate counsel and DIMAC Holdings shall pay the
reasonable fees and expenses of such counsel. DIMAC Holdings need not pay for
any settlement made without its consent, which consent shall not be unreasonably
withheld.
The obligations of DIMAC Holdings under this Section 7.7 shall survive the
satisfaction and discharge of this Indenture.
DIMAC Holdings need not reimburse any expense or indemnify against any loss
or liability incurred by the Trustee through its own negligence or bad faith.
To secure DIMAC Holdings's payment obligations in this Section 7.7, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal of (and
premium, if any) and interest on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(a)(viii), (ix) or (x) occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section 7.7 shall survive the termination of this
Indenture.
Section 7.8 REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.8 and upon DIMAC Holdings's receipt of
notice from the successor Trustee of such appointment.
The Trustee may resign at any time and be discharged from the trust hereby
created by so notifying DIMAC Holdings. The Holders of a majority in principal
amount of the then outstanding Notes may remove the Trustee by so notifying the
Trustee and DIMAC Holdings. DIMAC Holdings may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
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(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, DIMAC Holdings shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by DIMAC Holdings.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, DIMAC Holdings or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee after written request by any Holder who has been a Holder
for at least six months fails to comply with Section 7.10, such Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to DIMAC Holdings. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to the
Holders. The retiring Trustee shall promptly transfer all property held by it
as Trustee to the successor Trustee, PROVIDED that all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.7. Notwithstanding replacement of the Trustee pursuant to this Section 7.8,
DIMAC Holdings's obligations under Section 7.7 shall continue for the benefit of
the retiring Trustee, and DIMAC Holdings shall pay to any such replaced or
removed Trustee all amounts owed under Section 7.7 upon such replacement or
removal.
Section 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation or
banking association, the successor corporation without any further act shall be
the successor Trustee.
Section 7.10 ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that shall (a) be a
corporation organized and doing business under the laws of the United States of
America or of any state thereof or of the District of Columbia authorized under
such laws to exercise corporate trustee power, (b) be subject to supervision or
examination by Federal or state or the District of Columbia authority, and (c)
have a combined capital and surplus of at least $100,000,000 as set forth in its
most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA Sections 310(a)(1), 310(a)(2) and 310(a)(5). The Trustee is subject to
TIA Section 310(b); PROVIDED, HOWEVER, that there shall be excluded from the
operations of TIA Section 310(b)(1) any indenture or indentures under which
other securities, or certificates of interest or participation in other
securities, of DIMAC Holdings are outstanding, if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.
Section 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST DIMAC HOLDINGS.
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The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
The provisions of TIA Section 311 shall apply to DIMAC Holdings, as obligor on
the Notes.
ARTICLE VIII
DISCHARGE; LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1 DISCHARGE; OPTION TO EFFECT LEGAL OR COVENANT DEFEASANCE.
This Indenture shall cease to be of further effect (except that DIMAC
Holdings's obligations under Section 7.7 and the Trustee's and the Paying
Agent's obligations under Sections 8.6 and 8.7 shall survive) when all
outstanding Notes theretofore authenticated and issued have been delivered
(other than destroyed, lost or stolen Notes that have been replaced or paid) to
the Trustee for cancellation and DIMAC Holdings has paid all sums payable
hereunder. In addition, DIMAC Holdings may elect at any time to have Section
8.2 or Section 8.3, at DIMAC Holdings's option, of this Indenture applied to all
outstanding Notes upon compliance with the conditions set forth below in this
Article VIII.
Section 8.2 LEGAL DEFEASANCE AND DISCHARGE.
Upon DIMAC Holdings's exercise under Section 8.1 of the option applicable
to this Section 8.2, except as set forth below, DIMAC Holdings shall be deemed
to have been discharged from its obligations with respect to all outstanding
Notes on the date the conditions set forth below are satisfied (hereinafter,
"Legal Defeasance"). Following such Legal Defeasance, (a) DIMAC Holdings shall
be deemed to have paid and discharged the entire indebtedness outstanding
hereunder, and this Indenture shall cease to be of further effect as to all
outstanding Notes, and (b) DIMAC Holdings shall be deemed to have satisfied all
other of its obligations under the Notes and this Indenture (and the Trustee, on
demand of and at the expense of DIMAC Holdings, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder:
(a) the rights of Holders to receive payments in respect of the
principal of, premium, if any, and interest (and Liquidated Damages, if
any) on such Notes when such payments are due from the trust described in
Section 8.5;
(b) DIMAC Holdings's obligations under Sections 2.4, 2.6, 2.7,
2.10, 4.2, 8.5, 8.6 and 8.7; and
(c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and DIMAC Holdings's obligations in connection therewith.
Section 8.3 COVENANT DEFEASANCE.
Upon DIMAC Holdings's exercise under Section 8.1 of the option applicable
to this Section 8.3, DIMAC Holdings shall be released from its obligations under
the covenants contained in Sections 4.3, 4.4, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12,
4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20, 4.21, 4.22, 4.23, 4.24, 4.25, 4.26 and
Article V on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed
not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder. Following such Covenant Defeasance, (a) DIMAC
Holdings need not comply with, and shall not have any liability in respect of,
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such
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covenant to any other provision herein or in any other document, but, except as
specified above, the remainder of this Indenture and the Notes shall be
unaffected thereby, and (b) Sections 6.1(a)(iii) through 6.1(a)(vii) shall not
constitute Events of Default with respect to the Notes.
Section 8.4 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either Section
8.2 or 8.3 to the outstanding Notes:
(a) DIMAC Holdings shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfying the
requirements of Section 7.10 who shall agree to comply with the provisions
of this Article VIII applicable to it), in trust, for the benefit of the
Holders, cash, U.S. Government Obligations, or a combination thereof, in
such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal of,
premium, if any, and interest (and Liquidated Damages, if any) on such
outstanding Notes on the stated date for payment thereof or on the
redemption date of such principal or installment of principal of, premium,
if any, or interest on such Notes, and the holders of Notes must have a
valid, perfected, exclusive security interest in such trust;
(b) in the case of Legal Defeasance, DIMAC Holdings shall have
delivered to the Trustee an Opinion of Counsel confirming that (i) DIMAC
Holdings has received from, or there has been published by, the Internal
Revenue Service a ruling or (ii) since the date of this Indenture, there
has been a change in the applicable Federal income tax law, in either case
to the effect that, and based thereon such opinion of counsel shall confirm
that, the Holders will not recognize income, gain or loss for Federal
income tax purposes as a result of such Legal Defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Legal Defeasance had
not occurred;
(c) in the case of Covenant Defeasance, DIMAC Holdings shall
have delivered to the Trustee an Opinion of Counsel confirming that the
Holders will not recognize income, gain or loss for Federal income tax
purposes as a result of such Covenant Defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit;
(e) such Legal Defeasance or Covenant Defeasance will not result
in a breach or violation of, or constitute a default under any material
agreement or instrument to which DIMAC Holdings or any of its Subsidiaries
is a party or by which DIMAC Holdings or any of its Subsidiaries is bound;
(f) DIMAC Holdings shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by DIMAC
Holdings with the intent of preferring the Holders over the other creditors
of DIMAC Holdings with the intent of defeating, hindering, delaying or
defrauding other creditors of DIMAC Holdings; and
(g) DIMAC Holdings shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that the
conditions precedent provided for in, in the case of the Officers'
Certificate, (a) through (f) and, in the case of the Opinion of Counsel,
clauses (a) (with respect to the validity and perfection of the security
interest), (b), (c) and (e) of this Section 8.4, have been complied with.
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(h) In the event all or any portion of the Notes are to be
redeemed through such irrevocable trust, DIMAC Holdings must make
arrangements satisfactory to the Trustee, at the time of such deposit, for
the giving of notice of such redemption or redemptions by the Trustee in
the name and at the expense of DIMAC Holdings.
Section 8.5 DEPOSITS TO BE HELD IN TRUST; OTHER MISCELLANEOUS
PROVISIONS.
Subject to Section 8.6, all cash and U.S. Government Obligations (including
the proceeds thereof) deposited with the Trustee (or other qualifying trustee,
collectively for purposes of this Section 8.5, the "Paying Agent") pursuant to
Section 8.4 in respect of the outstanding Notes shall be held in trust and
applied by the Paying Agent, in accordance with the provisions of such Notes and
this Indenture, to the payment, either directly or through any other Paying
Agent as the Trustee may determine, to the Holders of such Notes of all sums due
and to become due thereon in respect of principal, premium, if any, and interest
(and Liquidated Damages, if any).
DIMAC Holdings shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 8.4 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of outstanding Notes.
Section 8.6 REPAYMENT TO DIMAC HOLDINGS.
(a) The Trustee or the Paying Agent shall deliver or pay to
DIMAC Holdings from time to time upon the request of DIMAC Holdings any
cash or U.S. Government Obligations held by it as provided in Section 8.4
which in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee (which may be the opinion delivered under Section 8.4(a)), are in
excess of the amount thereof that would then be required to be deposited to
effect an equivalent Legal Defeasance or Covenant Defeasance.
(b) Any cash and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee or any Paying Agent, or then
held by DIMAC Holdings, in trust for the payment of the principal of,
premium, if any, or interest (and Liquidated Damages, if any) on any Note
and remaining unclaimed for two years after such principal, and premium, if
any, or interest has become due and payable shall be paid to DIMAC Holdings
on its request; and the Holder of such Note shall thereafter look only to
DIMAC Holdings for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money shall thereupon cease;
PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being
required to make any such repayment, shall at the expense of DIMAC Holdings
cause to be published once, in the NEW YORK TIMES and THE WALL STREET
JOURNAL (national edition), notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of
such money then remaining will be repaid to DIMAC Holdings.
Section 8.7 REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any cash or U.S.
Government Obligations in accordance with Section 8.2 or 8.3, as the case may
be, of this Indenture by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, or if any event occurs at any time in the period ending on the 91st
day after the date of deposit pursuant to Section 8.2 or 8.3 which event would
constitute an Event of Default under Section 6.1(a)(viii), (ix) or (x) had Legal
Defeasance or Covenant Defeasance, as the case may be, not occurred, then DIMAC
Holdings's
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obligations under this Indenture and the Notes shall be revived and reinstated
as though no deposit had occurred pursuant to Section 8.2 or 8.3 until such time
as the Trustee or Paying Agent is permitted to apply such money in accordance
with Section 8.2 or 8.3, as the case may be; PROVIDED, HOWEVER, that, if DIMAC
Holdings makes any payment of principal of, premium, if any, or interest (and
Liquidated Damages, if any) on any Note following the reinstatement of its
obligations, DIMAC Holdings shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the cash or U.S. Government Obligations
held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS
Section 9.1 WITHOUT CONSENT OF HOLDERS.
(a) DIMAC Holdings and the Trustee may amend or supplement this
Indenture and the Notes without the consent of any Holder:
(i) to cure any ambiguity, defect or inconsistency;
(ii) to provide for uncertificated Notes in addition to or
in place of certificated Notes;
(iii) to comply with Article V;
(iv) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights hereunder or thereunder of any
Holder; or
(v) to comply with requirements of the Commission in order
to effect or maintain the qualification of this Indenture under the
TIA.
Upon the request of DIMAC Holdings, accompanied by a resolution of the
Board of Directors of DIMAC Holdings authorizing the execution of any such
supplemental indenture or amendment, and upon receipt by the Trustee of the
documents described in Section 9.6 required or requested by the Trustee, the
Trustee shall join with DIMAC Holdings in the execution of any supplemental
indenture or amendment authorized or permitted by the terms of this Indenture
and shall make any further appropriate agreements and stipulations which may be
therein contained, but the Trustee shall not be obligated to enter into such
supplemental indenture or amendment that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.2 WITH CONSENT OF HOLDERS.
(a) Subject to Sections 6.4 and 6.7, DIMAC Holdings and the
Trustee, as applicable, may amend, or waive any provision of, this
Indenture or the Notes, with the written consent of the Holders of at least
a majority of the principal amount of the then outstanding Notes (including
consents obtained in connection with a tender offer or exchange offer for
Notes).
(b) Upon the request of DIMAC Holdings, accompanied by a
resolution of the Board of Directors of DIMAC Holdings authorizing the
execution of any such supplemental indenture or amendment, and upon filing
with the Trustee of evidence satisfactory to the Trustee of the consent of
the Holders as aforesaid, and upon receipt by the Trustee of the documents
described in Section 9.6, the Trustee shall join with DIMAC Holdings in the
execution of such supplemental indenture or amendment unless such
supplemental indenture or amendment affects the Trustee's own rights,
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duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into
such supplemental indenture.
(c) It shall not be necessary for the consent of the Holders
under this Section 9.2 to approve the particular form of any proposed
supplemental indenture or amendment, but it shall be sufficient if such
consent approves the substance thereof.
(d) After a supplemental indenture or amendment under this
Section 9.2 becomes effective, DIMAC Holdings shall mail to the Holders of
each Note affected thereby a notice briefly describing the amendment or
waiver. Any failure of DIMAC Holdings to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture, amendment or waiver.
(e) Notwithstanding any other provision hereof, without the
consent of each Holder affected, an amendment or waiver under this Section
9.2 may not (with respect to any Notes held by a non-consenting Holder):
(i) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(ii) reduce the rate of or change the time for payment of
interest, including default interest, on any Note;
(iii) reduce the principal of, or the premium (including,
without limitation, redemption premium) on, or change the fixed
maturity of any Note or alter the provisions with respect to payment
on redemption of the Notes or the price at which DIMAC Holdings shall
offer to purchase such Notes pursuant to Section 4.10 or 4.14;
(iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on, or redemption payment
with respect to, any Note (other than a Default in the payment of an
amount due as a result of an acceleration if the Holder rescinds such
acceleration pursuant to Section 6.2);
(v) make any Note payable in money other than that stated
in the Notes;
(vi) make any change in Section 6.4 or 6.7 or in this
Section 9.2 with respect to the requirement for the consent of any
affected Holder; or
(vii) make any change adversely affecting the contractual
ranking of the Obligations of DIMAC Holdings under the Notes, this
Indenture and the Registration Rights Agreement.
Section 9.3 COMPLIANCE WITH TRUST INDENTURE ACT.
If, at the time of an amendment to this Indenture or the Notes, this
Indenture shall be qualified under the TIA, every amendment to this Indenture or
the Notes shall be set forth in a supplemental indenture that complies with the
TIA as then in effect.
Section 9.4 REVOCATION AND EFFECT OF CONSENTS.
Until a supplemental indenture, an amendment or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder and
every subsequent Holder of a Note or portion of
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a Note that evidences the same debt as the consenting Xxxxxx's Note, even if
notation of the consent is not made on any Note. A supplemental indenture,
amendment or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.
DIMAC Holdings may, but shall not be obligated to, fix a record date for
determining which Holders must consent to such supplemental indenture, amendment
or waiver. If DIMAC Holdings fixes a record date, the record date shall be
fixed at (i) the later of 30 days prior to the first solicitation of such
consent or the date of the most recent list of Holders furnished to the Trustee
prior to such solicitation pursuant to Section 2.5, or (ii) such other date as
DIMAC Holdings shall designate.
Section 9.5 NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about a supplemental
indenture, amendment or waiver on any Note thereafter authenticated. DIMAC
Holdings in exchange for all Notes may issue and the Trustee shall authenticate
new Notes that reflect the amendment or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment or waiver.
Section 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment or supplemental indenture authorized
pursuant to this Article IX if the amendment does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, but need not, sign it. In signing or refusing to sign such
amendment or supplemental indenture, the Trustee shall be entitled to receive,
if requested, an indemnity reasonably satisfactory to it and to receive and,
subject to Section 7.1, shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that such amendment
or supplemental indenture is authorized or permitted by this Indenture, that it
is not inconsistent herewith, and that it shall be valid and binding upon DIMAC
Holdings in accordance with its terms. DIMAC Holdings may not sign an amendment
or supplemental indenture until the Board of Directors of DIMAC Holdings
approves it.
ARTICLE X
MISCELLANEOUS
Section 10.1 TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA Section 318(c), the imposed duties shall control.
Section 10.2 NOTICES.
Any notice or communication by DIMAC Holdings or the Trustee to the others
is duly given if in writing and delivered in Person or mailed by first-class
mail (registered or certified, return receipt requested), telecopier or
overnight air courier guaranteeing next day delivery, to the others' addresses:
If to DIMAC Holdings:
DIMAC Holdings, Inc.
0000 Xxxxxxxxx Xxxxxxxx Xxxx, Xxxxx X-000
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
Telecopier No.: (000) 000-0000
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If to the Trustee:
Wilmington Trust Company
0000 Xxxxx Xxxxxx Xxxxxx
Attention: Corporate Trust Administration
Telecopier No.: (000) 000-0000
DIMAC Holdings or the Trustee by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; upon receipt, if deposited in the mail, postage prepaid; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
All notices and communications to the Trustee shall be deemed to have been duly
given only if actually received by the Trustee.
Any notice or communication to a Holder shall be mailed by first-class
mail, to his address shown on the register kept by the Registrar. Failure to
mail a notice or communication to a Holder or any defect in it shall not affect
its sufficiency with respect to other Holders.
If a notice communication is mailed in the manner provided above within the
time prescribed, it is duly given, regardless of whether the addressee receives
it.
If DIMAC Holdings mails a notice or communication to Holders, it shall mail
a copy to the Trustee and each Agent at the same time.
Section 10.3 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to TIA Section 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. DIMAC Holdings,
the Trustee, the Registrar and any other person shall have the protection of TIA
Section 312(c).
Section 10.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by DIMAC Holdings to the Trustee to take
any action under this Indenture, DIMAC Holdings shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 10.5) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 10.5) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been complied with.
Section 10.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall include:
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(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to regardless of whether such covenant or condition
has been complied with; and
(d) a statement as to regardless of whether, in the opinion of
such Person, such condition or covenant has been complied with,
PROVIDED that with respect to matters of fact, an Opinion of Counsel may rely
upon an Officers' Certificate or a certificate of a public official.
Section 10.6 RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 10.7 LEGAL HOLIDAYS.
If a payment date is a Legal Holiday at a place of payment, payment may be
made at that place on the next succeeding day that is not a Legal Holiday, and
no interest shall accrue for the intervening period.
Section 10.8 NO RECOURSE AGAINST OTHERS.
No director, officer, employee, incorporator, stockholder or controlling
person of DIMAC Holdings, as such, shall have any liability for any obligations
of DIMAC Holdings under the Notes, this Indenture or the Registration Rights
Agreement or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release shall be part of the
consideration for the issuance of the Notes. Notwithstanding the foregoing,
nothing in this provision shall be construed as a waiver or release of any
claims under the Federal securities laws.
Section 10.9 GOVERNING LAW.
THIS INDENTURE SHALL BE CONSTRUED, INTERPRETED AND THE RIGHTS OF THE
PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW EXCEPT SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW. DIMAC HOLDINGS HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS INDENTURE, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. DIMAC HOLDINGS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING
B-54
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. DIMAC
HOLDINGS IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO DIMAC HOLDINGS AT ITS ADDRESS
SET FORTH HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST DIMAC HOLDINGS IN ANY OTHER JURISDICTION.
Section 10.10 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of DIMAC Holdings or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
Section 10.11 SUCCESSORS.
All agreements of DIMAC Holdings in this Indenture and the Notes shall bind
their respective successors. All agreements of the Trustee in this Indenture
shall bind its successor.
Section 10.12 SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 10.13 COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 10.14 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof and shall in no way modify or
restrict any of the terms or provisions hereof.
(SIGNATURE PAGES FOLLOW.)
B-55
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Indenture as of the date first written above.
DIMAC HOLDINGS, INC.
By: /s/
----------------------------------
Name:
Title:
Attest:
-----------------------
Name:
Title:
TRUSTEE:
WILMINGTON TRUST COMPANY,
as Trustee
By:
------------------------------------
Name:
Title:
B-56
EXHIBIT A
(Face of Security)
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST
COMPANY (THE "DEPOSITORY") TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TO DIMAC HOLDINGS OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DEPOSITORY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR
SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.(1)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE WHICH IS TWO YEARS (OR SUCH
SHORTER PERIOD THAT MAY HEREAFTER BE PROVIDED UNDER RULE 144(K) AS PERMITTING
RESALES BY NON-AFFILIATES OF RESTRICTED SECURITIES WITHOUT RESTRICTION) AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH DIMAC
HOLDINGS OR ANY AFFILIATE OF DIMAC HOLDINGS WAS THE OWNER OF THIS NOTE (OR ANY
PREDECESSOR OF SUCH NOTE) ONLY (A) TO DIMAC HOLDINGS, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT THAT IS PURCHASING THE NOTE FOR ITS OWN ACCOUNT, OR FOR
THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO DIMAC HOLDINGS'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN
THE FORM APPEARING ON THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO
THE TRUSTEE.
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID") FOR PURPOSES OF
SECTIONS 1271 ET. SEQ. OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE
ISSUE DATE OF THIS NOTE IS OCTOBER 22, 1998. FOR INFORMATION REGARDING THE
ISSUE PRICE, AMOUNT OF OID PER $1,000 OF PRINCIPAL AMOUNT AND YIELD TO MATURITY
FOR PURPOSES OF THE OID RULES, PLEASE CONTACT THE CHIEF FINANCIAL OFFICER OF THE
ISSUER AT 0000 XXXXXXXXX XXXXXXXX XXXX, XXXXX X-000, XXXXXXX, XX, XXXXXXXX NO.
(000) 000-0000.
DIMAC HOLDINGS, INC.
151/2% Senior Note due October 22, 2009
No. $ __________________
CUSIP NO.
DIMAC Holdings, Inc., a Delaware corporation ("DIMAC Holdings"), as
obligor, for value received promises to pay to __________________ or registered
assigns, the principal sum of ___________________ Dollars on October 22, 2009.
Interest Payment Dates: March 31, June 30, September 30 and December 31 and
on the maturity date.
Record Dates: March 15, June 15, September 15 and December 15 (regardless
of whether a Business Day).
Reference is hereby made to the further provisions hereof set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
IN WITNESS WHEREOF, DIMAC Holdings has caused this 151/2% Senior Note due
October 22, 2009 to be signed manually or by facsimile by its duly authorized
officers.
DIMAC HOLDINGS, INC.
Dated:
Attest: By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Trustee's Certificate of Authentication:
This is one of the 151/2% Senior Notes due October 22, 2009 referred to in the
within-mentioned Indenture.
WILMINGTON TRUST COMPANY, as Trustee
By:
--------------------------
AUTHORIZED SIGNATORY
______________________________
(1) This paragraph should be included only if the Note is issued in global
form.
B-57
(Back of Security)
DIMAC HOLDINGS, INC.
151/2% Senior Note due October 22, 2009
1. INTEREST. DIMAC Holdings, Inc., a Delaware corporation ("DIMAC
HOLDINGS"), promises to pay interest in cash on the principal amount of this
151/2% Senior Note due October 22, 2009 (this "Note") at 151/2% per annum from
October 22, 1998 until maturity. DIMAC Holdings will pay interest on this Note
quarterly on March 31, June 30, September 30 and December 31 of each year, or if
any such day is not a Business Day, on the next succeeding Business Day (each an
"INTEREST PAYMENT DATE") to the registered Holder of hereof at the close of
business on the March 15, June 15, September 15 or December 15, next preceding
the Interest Payment Date, even if this Note is cancelled after such record date
and on or before such Interest Payment Date; PROVIDED, that the first Interest
Payment Date shall be December 31, 1998. Notwithstanding the foregoing, with
respect to any installment of interest on this Note due on an Interest Payment
Date that occurs on or prior to September 30, 2003, in lieu of paying all of
such installment of interest in cash, DIMAC Holdings may pay all of such
installment (or a portion thereof) by issuing to each such Holder of record an
additional Note in an aggregate principal amount equal to the amount of interest
due to such Holder on the applicable Interest Payment Date and not paid in cash.
Interest on this Note will accrue from the most recent date on which interest
has been paid or, if no interest has been paid, from the date of issuance
hereof. DIMAC Holdings shall pay interest (including post-petition interest in
any proceeding under Bankruptcy Law) on all due and unpaid amounts outstanding
under the Notes (including overdue installments of principal, premium, if any,
or interest), from time to time on demand at a rate equal to 161/2% per annum,
compounded quarterly, to the extent lawful. PIK Notes issued in accordance with
the terms hereof shall not constitute unpaid amounts hereunder. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Holder hereof must surrender this Note to a
Paying Agent to collect principal payments. Except as provided in Section 1
hereof, DIMAC Holdings shall pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. This Note is payable, as to principal and interest, at the
offices of a Paying Agent. DIMAC Holdings, however, may pay interest by mailing
a check and/or an additional Note on or before the applicable due date to the
Holder at the Holder's registered address.
3. PAYING AGENT AND REGISTRAR. Initially, the Trustee shall act as
Paying Agent and Registrar. DIMAC Holdings may change any Paying Agent,
Registrar or co-registrar without notice to any Holder. Subject to certain
exceptions, DIMAC Holdings or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. DIMAC Holdings has issued this Note under an Indenture
dated as of October 22, 1998 (the "INDENTURE") between DIMAC Holdings and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (the
"TIA") (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the date of the
Indenture until such time as the Indenture is qualified under the TIA and
thereafter as in effect on the date the Indenture is so qualified. The Notes
are subject to all such terms, and the Holder hereof is referred to the
Indenture and such Act for a statement of such terms. The terms of the
Indenture shall govern any inconsistencies between the Indenture and the Notes.
Terms not otherwise defined herein shall have the meanings assigned in the
Indenture. The Notes are general senior obligations of DIMAC Holdings. The
Notes are limited to $30,000,000 in aggregate principal amount plus the
aggregate principal amount of any additional Notes issued in accordance with
Section 1 hereof in lieu of a portion of any cash interest payments.
5. REDEMPTION.
(a) The Notes are not redeemable at DIMAC Holdings's option prior to
October 22, 2002. DIMAC Holdings may redeem all or any of the Notes, in whole
or in part, at any time on or after October 22, 2002, at a redemption price
equal to the percentages of the principal amount thereof set forth below, plus
accrued and unpaid interest to the redemption date, if redeemed during the
12-month period beginning October 22 of the years indicated below.
Year Redemption Price
---- ----------------
2002 109.300%
2003 107.750%
2004 106.200%
2005 104.650%
2006 103.10%
B-58
Year Redemption Price
---- ----------------
2007 101.550%
2008 100.0%
(b) If, on or before October 22, 2002, there is a Qualified Public Equity
Offering of DIMAC Holdings, DIMAC Holdings may, within thirty (30) days of the
consummation of such Qualified Public Equity Offering, redeem all or any of the
Notes, in whole or in part, at a redemption price equal to 107.75% of the
aggregate principal amount of Notes being redeemed plus accrued and unpaid
interest thereon to the redemption date.
(c) There shall be no mandatory redemption of the Notes.
6. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least
thirty (30) days but not more than sixty (60) days before a Redemption Date by
first class mail to each Holder whose Notes are to be redeemed at such Holder's
registered address; PROVIDED, HOWEVER, that notice of redemption pursuant to
Section 5(b) hereof shall be mailed within ten (10) days after the consummation
of the Qualified Public Equity Offering referenced therein. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. If, on or prior to the Redemption Date, DIMAC Holdings deposits in a
segregated account or otherwise sets aside funds sufficient to pay the
Redemption Price of the Notes called for redemption, then, on and after the
Redemption Date, interest ceases to accrue on Notes or portions thereof called
for redemption, unless DIMAC Holdings defaults in paying the redemption price.
7. OFFERS TO REPURCHASE. Following the occurrence of any Change of
Control, DIMAC Holdings will be required to offer to purchase all outstanding
Notes upon the terms set forth in the Indenture. Following the occurrence of an
Asset Sale, DIMAC Holdings will be required to apply the Excess Net Cash
Proceeds therefrom to an offer to purchase outstanding Notes upon the terms set
forth in the Indenture.
8. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and
DIMAC Holdings may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Registrar and DIMAC Holdings need not exchange
or register the transfer (i) of any Note or portion of a Note selected for
redemption or (ii) of any Notes for a period of 15 days before a selection of
Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
9. PERSONS DEEMED OWNERS. Unless otherwise required by applicable law,
the registered Holder of a Note shall be treated as its owner for all purposes,
subject to the provisions of the Indenture with respect to the record dates for
the payment of interest.
10. AMENDMENTS AND WAIVERS. Subject to certain exceptions, the Indenture
or the Notes may be amended with the written consent of the Holders of at least
a majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes), and any
existing Default or Event of Default (except certain payment defaults) may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Notes (including consents obtained in connection with a tender
offer or exchange offer for Notes). Without the consent of any Holders, the
Indenture and the Notes may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for assumption of DIMAC Holdings's
obligations to the Holders in the case of a merger or consolidation, to provide
for uncertificated Notes in addition to or in place of certificated Notes, to
make any change that would provide any additional rights or benefits to the
Holders of the Notes, or that does not adversely affect the legal rights under
the Indenture of any Holder or to comply with requirements of the Commission in
order to effect or maintain the qualification of the Indenture under the TIA.
11. DEFAULTS AND REMEDIES. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare by written notice to DIMAC Holdings and
the Trustee all the Notes to be due and payable immediately, except that in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes become due and payable immediately without
further action or notice. Holders may not enforce the Indenture or the Notes
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
DIMAC Holdings must furnish an annual compliance certificate to the Trustee.
B-59
12. TRUSTEE DEALINGS WITH DIMAC HOLDINGS. The Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for DIMAC Holdings or its Affiliates, and
may otherwise deal with DIMAC Holdings or its Affiliates, as if it were not the
Trustee.
13. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator, stockholder or controlling person of DIMAC Holdings, as such,
shall have any liability for any obligations of DIMAC Holdings under the Notes,
the Indenture or the Registration Rights Agreement or for any claim based on, in
respect of, or by reason of such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes. Notwithstanding
the foregoing, nothing in this provision shall be construed as a waiver or
release of any claims under the Federal securities laws.
14. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
15. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
16. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, DIMAC Holdings has
caused CUSIP numbers to be printed on the Notes and has directed the Trustee to
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
17. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW EXCEPT SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATION LAW. TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, DIMAC HOLDINGS HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE NOTES, AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. DIMAC HOLDINGS
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEEDING AGAINST DIMAC HOLDINGS IN ANY
OTHER JURISDICTION.
[18. HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT. Each Holder
of a Note, by his acceptance thereof, acknowledges and agrees to the provisions
of the Registration Rights Agreement, dated as of October 22, 1998, among DIMAC
Holdings and the parties named on the signature page thereof (the "REGISTRATION
RIGHTS AGREEMENT"), including but not limited to the obligations of the Holders
with respect to a registration and the indemnification of DIMAC Holdings and the
Purchasers (as defined therein) to the extent provided therein.](2)
DIMAC Holdings shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to: DIMAC Holdings, Inc., 0000 Xxxxxxxxx Xxxxxxxx Xxxx,
Xxxxx X-000, Xxxxxxx, Xxxxxxx 00000 Attention: Chief Financial Officer.
_________________________
(2) This paragraph should only be included in the Series A Notes.
B-60
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to:
--------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ______________________________ as agent to transfer this
Note on the books of DIMAC Holdings. The agent may substitute another to act
for him.
--------------------------------------------------------------------------------
Date:
-------------------
Your Signature:
---------------------------------------
(Sign exactly as your name appears on
the face of this Note)
Tax Identification Number:
----------------------------
Signature Guaranty*
_______________
* NOTICE: The signature must be guaranteed by an institution which is
a member of one of the following recognized signature
guarantee programs:
(1) The Securities Transfer Agent Medallian Program
(STAMP);
(2) The New York Stock Exchange Medallian Program (MSP);
(3) The Stock Exchange Medallian Program (SEMP).
B-61
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note purchased by
DIMAC Holdings pursuant to Section 4.10 or Section 4.14 of the Indenture, as the
case may be, state the amount you elect to have purchased (if all, write "ALL"):
$___________________
Date:
--------------
Your Signature:
---------------------------------------
(Sign exactly as your name appears on
the face of this Note)
Signature Guaranty*
_______________
* NOTICE: The signature must be guaranteed by an institution which is
a member of one of the following recognized signature
guarantee programs:
(1) The Securities Transfer Agent Medallian Program
(STAMP);
(2) The New York Stock Exchange Medallian Program (MSP);
(3) The Stock Exchange Medallian Program (SEMP).
B-62
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES (3)
The following exchanges of a part of this Global Note for Definitive
Notes have been made:
Principal Amount of this Global
Amount of decrease in Principal Amount of increase in Principal Note following such decrease
Date of Exchange Amount of this Global Note Amount of this Global Note (or increase)
-------------------------------------------------------------------------------------------------------------------
Signature of authorized
officer of Trustee
-----------------------
_______________
(3) This should only be included if the Note is issued in global form.
B-63
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF NOTES
Re: [Series A] [Series B] 151/2% Senior Notes due October 22, 2009 (the
"NOTES") of DIMAC Holdings, Inc.
This Certificate relates to $_________________________ principal amount of
Notes held in */ / book-entry or */ / definitive form by _______________________
(the "TRANSFEROR").
The Transferor, by written order, has requested the Trustee:
/ / to deliver in exchange for its beneficial interest in the Global Note held
by the depository, a Note or Notes in definitive, registered form of
authorized denominations and an aggregate principal amount equal to its
beneficial interest in such Global Note (or the portion thereof indicated
above); or
/ / to exchange or register the transfer of a Note or Notes. In connection
with such request and in respect of each such Note, the Transferor does
hereby certify that Transferor is familiar with the Indenture relating to
the above captioned Notes and, the transfer of this Note does not require
registration under the Securities Act of 1933, as amended (the "SECURITIES
ACT") because such Note:
/ / is being acquired for the Transferor's own account, without transfer;
/ / is being transferred pursuant to an effective registration statement;
/ / is being transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act), in reliance on such Rule 144A;
/ / is being transferred pursuant to an exemption from registration in
accordance with Rule 904 under the Securities Act;**
/ / is being transferred pursuant to Rule 144 under the Securities Act;**
or
/ / is being transferred pursuant to another exemption from the
registration requirements of the Securities Act (explain: ____________
_________________________________________________________________).**
[INSERT NAME OF TRANSFEROR]
By:
-------------------------------
Date:
------------------------
* Check applicable box.
** If this box is checked, this certificate must be accompanied by an
opinion of counsel to the effect that such transfer is in compliance
with the Securities Act.
B-64
Annex C
DIMAC HOLDINGS, INC.
$30,000,000 15 1/2% Senior Notes due October 22, 2009
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made
and entered into as of October 22, 1998, by and among DIMAC Holdings, Inc., a
Delaware corporation (the "Issuer"), and each of the purchasers listed on the
signature pages hereto (each a "Purchaser," and collectively, the "Purchasers").
This Agreement is made pursuant to the Securities Purchase
Agreement (as defined below), pursuant to which the Issuer is issuing and
selling to the Purchasers $30,000,000 aggregate principal amount of its 15 1/2%
Senior Notes due October 22, 2009, Series A (the "Notes"). As an inducement to
the Purchasers to enter into the Securities Purchase Agreement, the Issuer
agrees with the Purchasers, for the benefit of the holders of the Securities (as
defined below) (including, without limitation, the Purchasers), as follows:
Section 1. Definitions. Capitalized terms used but not defined herein
have the respective meanings given to such terms in the Securities Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
"Advice" has the meaning given to such term in Section 5 hereof.
"Agreement" means this Registration Rights Agreement.
"Applicable Period" has the meaning given to such term in Section 2(f)
hereof.
"Business Day" means any day other than (i) Saturday or Sunday, or (ii)
a day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to be closed.
"Demand Date" means the date on which the any Holder provides a written
notice to the Issuer demanding the filing of an Exchange Offer Registration
Statement or a Shelf Registration.
"DIMAC Operating" means DIMAC Corporation, a Delaware corporation.
"Effectiveness Date" means the 180th day following the Demand Date.
"Effectiveness Period" has the meaning given to such term in Section
3(a) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Exchange Offer" has the meaning given to such term in Section 2(a)
hereof.
"Exchange Offer Registration Statement" has the meaning given to such
term in Section 2(a) hereof.
"Exchange Securities" means 15 1/2% Senior Notes due October 22, 2009,
Series B, of the Issuer, identical in all respects to the Notes, except for
references to series, registration rights and restrictive legends.
"Filing Date" means the 90th day following the Demand Date.
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"Holder" means each holder of Registrable Securities.
"Indemnified Party" has the meaning given to such term in Section 7(c)
hereof.
"Indemnifying Party" has the meaning given to such term in Section 7(c)
hereof.
"Indenture" means the Indenture, dated the date hereof, between the
Issuer and Wilmington Trust Company, a Delaware banking corporation, as trustee,
pursuant to which the Notes are being issued, as amended or supplemented from
time to time, in accordance with the terms thereof.
"Initial Shelf Registration" has the meaning given to such term in
Section 3(a) hereof.
"Issuer" has the meaning given to such term in the introductory
paragraph hereof.
"Losses" means all losses, claims, damages, liabilities, costs
(including, without limitation, costs of preparation and reasonable attorneys'
fees) and expenses (including, without limitation, costs and expenses incurred
in connection with investigating, preparing, pursuing or defending against any
of the foregoing).
"NASD" means the National Association of Securities Dealers, Inc.
"Notes" has the meaning given to such term in the introductory
paragraph hereof.
"Participating Broker-Dealer" has the meaning given to such term in
Section 2(f) hereof.
"Person" means an individual, trustee, corporation, partnership, joint
stock company, joint venture, trust, unincorporated organization or government
or any agency or political subdivision thereof, union, business association,
firm or other entity.
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Securities covered by
such Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
"Purchasers" has the meaning given to such term in the introductory
paragraph hereof.
"Registrable Securities" means (i) Notes and (ii) Exchange Securities
received in the Exchange Offer that may not be sold without restriction under
federal or state securities law.
"Registration Default" has the meaning given to such term in Section
4(a) hereof.
"Registration Default Date" has the meaning given to such term in
Section 4(a) hereof.
"Registration Statement" means any registration statement of the Issuer
that covers any of the Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all
material incorporated by reference or deemed to be incorporated by reference in
such registration statement.
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"Rule 144" means Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC.
"Rule 144A" means Rule 144A under the Securities Act, as such Rule may
be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
"Rule 415" means Rule 415 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Notes and the Exchange Securities, collectively.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Securities Purchase Agreement" means the Securities Purchase Agreement
dated as of October 22, 1998 by and among the Issuer, DIMAC Operating and the
Purchasers, as amended or supplemented from time to time.
"Shelf Notice" has the meaning given to such term in Section 2(h)
hereof.
"Shelf Registration" means the Initial Shelf Registration and any
Subsequent Shelf Registration.
"Special Counsel" means counsel chosen by the holders of a majority in
aggregate principal amount of Securities.
"Subsequent Shelf Registration" has the meaning given to such term in
Section 3(b) hereof.
"TIA" means the Trust Indenture Act of 1939, as amended.
"Trustee" means the trustee under the Indenture and, if any, the
trustee under any indenture governing the Exchange Securities.
"Underwritten Registration" or "Underwritten Offering" means a
registration in which securities of the Issuer are sold to an underwriter for
reoffering to the public.
"Weekly Liquidated Damages Amount"means, with respect to any
Registration Default, an amount per week per $1,000 principal amount of
Registrable Securities equal to (i) $0.05 for the first 90-day period
immediately following the applicable Registration Default Date, (ii) $0.10 for
the second 90-day period immediately following the applicable Registration
Default Date, (iii) $0.15 for the third 90-day period immediately following the
applicable Registration Default Date, and (iv) $0.20 thereafter.
Section 2. Exchange Offer.
(a) The Issuer shall (i) prepare and file with the SEC
promptly after the Demand Date, but in no event later than the Filing
Date, a registration statement (the "Exchange Offer Registration
Statement") on an appropriate form under the Securities Act with
respect to a proposed offer (the "Exchange Offer") to the Holders to
issue and deliver to such Holders, in exchange for the Notes, a like
aggregate principal amount of Exchange Securities, (ii) use its
reasonable best efforts to cause the Exchange Offer Registration
Statement to become effective as
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promptly as practicable after the filing thereof, but in
no event later than the Effectiveness Date, (iii) keep the Exchange
Offer Registration Statement effective until the consummation of the
Exchange Offer pursuant to its terms, and (iv) unless the Exchange
Offer would not be permitted by a policy of the SEC, commence the
Exchange Offer and use its reasonable best efforts to issue, on or
prior to 30 days after the date on which the Exchange Offer
Registration Statement is declared effective, Exchange Securities in
exchange for all Notes tendered prior thereto in the Exchange Offer.
The Exchange Offer shall not be subject to any conditions, other than
that the Exchange Offer does not violate any applicable law or any
applicable interpretation of the staff of the SEC.
(b) The Exchange Securities shall be issued under, and
entitled to the benefits of, the Indenture or a trust indenture that is
identical to the Indenture (other than such changes as are necessary to
comply with any requirements of the SEC to effect or maintain the
qualification thereof under the TIA).
(c) In connection with the Exchange Offer, the Issuer shall:
(i) mail to each Holder a copy of the Prospectus
forming part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal that is an
exhibit to the Exchange Offer Registration Statement and any
related documents;
(ii) keep the Exchange Offer open for not less than
30 days after the date notice thereof is mailed to the Holders
(or longer if required by Applicable Law);
(iii) utilize the services of a depository for the
Exchange Offer with an address in the Borough of Manhattan,
The City of New York;
(iv) permit Holders to withdraw tendered Notes at any
time prior to the close of business, New York time, on the
last Business Day on which the Exchange Offer shall remain
open; and
(v) otherwise comply with all laws applicable to the
Exchange Offer.
(d) As soon as practicable after the close of the Exchange
Offer, the Issuer shall:
(i) accept for exchange all Notes validly
tendered and not validly withdrawn
pursuant to the Exchange Offer;
(ii) deliver to the Trustee for cancellation all
Notes so accepted for exchange;
and
(iii) cause the Trustee promptly to authenticate and
deliver to each Holder of Notes, Exchange Securities equal in
aggregate principal amount to the Notes of such Holder so
accepted for exchange.
(e) Interest on each Exchange Security will accrue from the
last interest payment date on which interest was paid on the Notes
surrendered in exchange therefor or, if no interest has been paid on
the Notes, from the date of original issue of the Notes. Each Exchange
Security shall bear interest at the rate set forth thereon; provided,
that interest with respect to the period prior to the issuance thereof
shall accrue at the rate or rates borne by the Notes from time to time
during such period.
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(f) The Issuer shall include within the Prospectus contained
in the Exchange Offer Registration Statement a section entitled "Plan
of Distribution," containing a summary statement of the positions taken
or policies made by the staff of the SEC with respect to the potential
"underwriter" status of any broker-dealer that is the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act) of Exchange
Securities received by such broker-dealer in the Exchange Offer (a
"Participating Broker-Dealer"). Such "Plan of Distribution" section
shall also allow the use of the Prospectus by all Persons subject to
the prospectus delivery requirements of the Securities Act, including
(without limitation) all Participating Brokers-Dealers, and include a
statement describing the means by which Participating Broker-Dealers
may resell the Exchange Securities. The Issuer shall use its reasonable
best efforts to keep the Exchange Offer Registration Statement
effective and to amend and supplement the Prospectus to be lawfully
delivered by all Persons subject to the prospectus delivery requirement
of the Securities Act for such period of time as such Persons must
comply with such requirements in order to resell the Exchange
Securities (the "Applicable Period")).
(g) The Issuer may require each Holder participating in the
Exchange Offer to represent to the Issuer that at the time of the
consummation of the Exchange Offer (i) any Exchange Securities received
by such Holder in the Exchange Offer will be acquired in the ordinary
course of its business, (ii) such Holder will have no arrangement or
understanding with any Person to participate in the distribution of the
Exchange Securities within the meaning of the Securities Act or resale
of the Exchange Securities in violation of the Securities Act, (iii) if
such Holder is not a broker-dealer, that it is not engaged in and does
not intend to engage in, the distribution of the Exchange Securities,
(iv) if such Holder is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Notes that were acquired
as a result of market-making or other trading activities, that it will
deliver a prospectus, as required by law, in connection with any resale
of such Exchange Securities and (v) if such Holder is an affiliate of
the Issuer, that it will comply with the registration and prospectus
delivery requirements of the Securities Act applicable to it.
(h) If (i) prior to the consummation of the Exchange Offer,
either the Issuer or the Holders of a majority in aggregate principal
amount of Registrable Securities determines in its or their reasonable
judgment that (A) the Exchange Securities would not, upon receipt, be
tradeable by the Holders thereof without restriction under the
Securities Act and the Exchange Act and without material restrictions
under applicable Blue Sky or state securities laws, or (B) the
interests of the Holders under this Agreement, taken as a whole, would
be materially adversely affected by the consummation of the Exchange
Offer, (ii) applicable interpretations of the staff of the SEC would
not permit the consummation of the Exchange Offer prior to the
Effectiveness Date, (iii) the Exchange Offer is not consummated within
210 days of the Demand Date for any reason or (iv) in the case of any
Holder not permitted to participate in the Exchange Offer or of any
Holder participating in the Exchange Offer that receives Exchange
Securities that may not be sold without restriction under state and
federal securities laws and, in either case contemplated by this clause
(iv), such Holder notifies the Issuer within six months of consummation
of the Exchange Offer, then the Issuer shall promptly deliver to the
Holders (or in the case of any occurrence of the event described in
clause (iv) of this Section 2(h), to any such Holder) and the Trustee
notice thereof (the "Shelf Notice") and shall as promptly as possible
thereafter file an Initial Shelf Registration pursuant to Section 3
hereof.
Section 3. Shelf Registration. If a Shelf Notice is required to be
delivered pursuant to Section 2(h)(i), (ii) or (iii) hereof, then this Section 3
shall apply to all Registrable Securities. Otherwise, upon consummation of the
Exchange Offer in accordance with Section 2 hereof, the provisions of this
Section 3 shall apply solely with respect to (i) Notes held by any Holder
thereof not permitted to participate in the Exchange Offer and (ii) Exchange
Securities that are not freely tradeable as contemplated by Section
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2(h)(iv) hereof; provided, in each case, that such Holder has notified the
Issuer within six months of the Exchange Offer as required by Section 2(h)(iv)
hereof.
(a) Initial Shelf Registration. The Issuer shall use its
reasonable best efforts to prepare and file with the SEC a Registration
Statement for an offering to be made on a continuous basis pursuant to
Rule 415 covering all of the Registrable Securities (the "Initial Shelf
Registration"). If the Issuer has not yet filed an Exchange Offer
Registration Statement, the Issuer shall file with the SEC the Initial
Shelf Registration on or prior to the Filing Date. Otherwise, the
Issuer shall use its reasonable best efforts to file the Initial Shelf
Registration within 20 days of the delivery of the Shelf Notice. The
Initial Shelf Registration shall be on Form S-1 or another appropriate
form permitting registration of such Registrable Securities for resale
by such Holders in the manner or manners designated by them (including,
without limitation, one or more underwritten offerings). The Issuer
shall (i) not permit any securities other than the Registrable
Securities to be included in any Shelf Registration, and (ii) use its
reasonable best efforts to cause the Initial Shelf Registration to be
declared effective under the Securities Act as promptly as practicable
after the filing thereof and to keep the Initial Shelf Registration
continuously effective under the Securities Act until the date that is
24 months from the Effectiveness Date (subject to extension pursuant to
the last paragraph of Section 5 hereof) (the "Effectiveness Period"),
or such shorter period ending when (i) all Registrable Securities
covered by the Initial Shelf Registration have been sold or (ii) a
Subsequent Shelf Registration covering all of the Registrable
Securities has been declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If any Shelf Registration
ceases to be effective for any reason at any time during the
Effectiveness Period (other than because of the sale of all of the
Registrable Securities registered thereunder), the Issuer shall use its
reasonable best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof, and in any event shall within 30
days of such cessation of effectiveness amend the Shelf Registration in
a manner reasonably expected to obtain the withdrawal of the order
suspending the effectiveness thereof, or file an additional "shelf"
Registration Statement pursuant to Rule 415 covering all of the
Registrable Securities (a "Subsequent Shelf Registration"). If a
Subsequent Shelf Registration is filed, the Issuer shall use its
reasonable best efforts to cause the Subsequent Shelf Registration to
be declared effective as soon as practicable after such filing and to
keep such Subsequent Shelf Registration continuously effective for a
period equal to the number of days in the Effectiveness Period less the
aggregate number of days during which the Initial Shelf Registration,
and any Subsequent Shelf Registration, was previously effective.
Section 4. Liquidated Damages.
(a) The Issuer acknowledges and agrees that the Holders will
suffer damages, and that it would not be feasible to ascertain the
extent of such damages with precision, if the Issuer fails to fulfill
its obligations hereunder. Accordingly, in the event of such failure,
the Issuer agrees to pay liquidated damages to each Holder under the
circumstances and to the extent set forth below:
(i) if neither the Exchange Offer Registration
Statement nor the Initial Shelf Registration has been filed
with the SEC on or prior to the Filing Date; or
(ii) if neither the Exchange Offer Registration
Statement nor the Initial Shelf Registration is declared
effective by the SEC on or prior to the Effectiveness Date; or
(iii) if the Issuer has not exchanged Exchange
Securities for all Notes validly tendered and not validly
withdrawn in accordance with the terms of the Exchange Offer
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within 30 days after the date on which an Exchange Offer
Registration Statement is declared effective by the SEC; or
(iv) if a Shelf Registration is filed and declared
effective by the SEC but thereafter ceases to be effective
during the Effectiveness Period without subsequently being
succeeded by a Subsequent Shelf Registration filed and
declared effective within 30 days;
(each of the foregoing a "Registration Default," and the date on which
the Registration Default occurs being referred to herein as a
"Registration Default Date").
Upon the occurrence of any Registration Default, the Issuer
shall pay, or cause to be paid, in addition to amounts otherwise due
under the Indenture and the Registrable Securities, as liquidated
damages, and not as a penalty, to each Holder for each weekly period
beginning on the Registration Default Date an amount equal to the
Weekly Liquidated Damages Amount per $1,000 principal amount of
Registrable Securities held by such Holder; provided, that such
liquidated damages will, in each case, cease to accrue (subject to the
occurrence of another Registration Default) on the date on which all
Registration Defaults have been cured. A Registration Default under
clause (i) above shall be cured on the date that either the Exchange
Offer Registration Statement or the Initial Shelf Registration is filed
with the SEC; a Registration Default under clause (ii) above shall be
cured on the date that either the Exchange Offer Registration Statement
or the Initial Shelf Registration is declared effective by the SEC; a
Registration Default under clause (iii) above shall be cured on the
earlier of the date (A) the Exchange Offer is consummated with respect
to all Notes validly tendered and not validly withdrawn or (B) the
Issuer delivers a Shelf Notice to the Holders; and a Registration
Default under clause (iv) above shall be cured on the date on which the
Subsequent Shelf Registration is declared effective.
(b) The Issuer shall notify the Trustee within five Business
Days after each Registration Default Date. The Issuer shall pay the
liquidated damages due on the Registrable Securities by either (i)
depositing with the Trustee, in trust, for the benefit of the Holders
thereof, by 12:00 noon, New York City time, on or before the applicable
semi-annual interest payment date for the Registrable Securities,
immediately available funds in sums sufficient to pay the liquidated
damages then due or (ii) issuing PIK Notes in the amount of the
liquidated damages due on the Registrable Securities. The liquidated
damages amount due shall be payable on each interest payment date to
the Holder entitled to receive the interest payment to be made on such
date as set forth in the Indenture.
Section 5. Registration Procedures. In connection with the registration
of any Securities pursuant to Section 2 or Section 3 hereof, the Issuer shall
effect such registrations to permit the sale of such Securities in accordance
with the intended method or methods of disposition thereof, and pursuant thereto
the Issuer shall:
(a) Prepare and file with the SEC, as soon as practicable
after the Demand Date but in any event on or prior to the Filing Date,
a Registration Statement or Registration Statements as prescribed by
Section 2 or Section 3 hereof, and use its best efforts to cause each
such Registration Statement to become effective and remain effective
as provided herein; provided, that, if (i) such filing is pursuant to
Section 3 hereof or (ii) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, before filing any Registration Statement or
Prospectus or any amendments or supplements thereto, the Issuer shall,
if requested, furnish to and afford the Holders of the Registrable
Securities covered by such Registration Statement, their Special
Counsel, each Participating Broker-Dealer, the managing underwriters,
if any, and their counsel, a reasonable
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opportunity to review and make available for inspection by such Persons
copies of all such documents (including copies of any documents to be
incorporated by reference therein and all exhibits thereto) proposed to
be filed, such financial and other information and books and records of
the Issuer and its Subsidiaries, and use its reasonable best efforts to
cause the officers, directors and employees of the Issuer and its
Subsidiaries and counsel and independent certified public accountants
of the the Issuer and its Subsidiaries, to respond to such inquiries,
as shall be reasonably necessary, in the opinion of respective counsel
to such Holders, Participating Broker- Dealer and underwriters, to
conduct a reasonable investigation within the meaning of the Securities
Act. The Issuer may require each Holder to agree to keep confidential
any non-public information relating to the Issuer received by such
Xxxxxx and not disclose such information (other than to an Affiliate or
prospective purchaser who agrees to respect the confidentiality
provisions of this Section 5(a)) until such information has been made
generally available to the public unless the release of such
information is required by law or necessary to respond to inquiries of
regulatory authorities (including the National Association of Insurance
Commissioners, or similar organizations or their successors). The
Issuer shall not file any Registration Statement or Prospectus or any
amendments or supplements thereto in respect of which the Holders must
be afforded an opportunity to review prior to the filing of such
document, if the Holders of a majority in aggregate principal amount of
the Registrable Securities covered by such Registration Statement,
their Special Counsel, any Participating Broker-Dealer or the managing
underwriters, if any, or their counsel shall reasonably object.
(b) Provide an indenture trustee for the Registrable
Securities or the Exchange Securities, as the case may be, and use its
reasonable best efforts to cause the Indenture (or other indenture
relating to the Registrable Securities) to be qualified under the TIA
not later than the effective date of the first Registration Statement;
and in connection therewith, to effect such changes to such indenture
as may be required for such indenture to be so qualified in accordance
with the terms of the TIA; and execute, and use its reasonable best
efforts to cause such trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents
required to be filed with the SEC to enable such indenture to be so
qualified in a timely manner.
(c) Prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep such Registration Statement continuously effective
for the time periods required hereby; cause the related Prospectus to
be supplemented by any Prospectus supplement required by Applicable
Law, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) under the Securities Act; and comply
in all material respects with the provisions of the Securities Act and
the Exchange Act applicable thereto with respect to the disposition of
all securities covered by such Registration Statement, as so amended,
or in such Prospectus, as so supplemented, in accordance with the
intended methods of distribution set forth in such Registration
Statement or Prospectus as so amended.
(d) Furnish to such selling Holders and Participating
Broker-Dealers who so request (i) upon the Issuer's receipt, a copy of
the order of the SEC declaring such Registration Statement
and any post-effective amendment thereto effective, (ii) such
reasonable number of copies of such Registration Statement and of each
amendment and supplement thereto (in each case including any documents
incorporated therein by reference and all exhibits), (iii) such
reasonable number of copies of the Prospectus included in such
Registration Statement (including each preliminary Prospectus), and
such reasonable number of copies of the final Prospectus as filed by
the Issuer pursuant to Rule 424(b) under the Securities Act, in
conformity with the requirements of the Securities Act, and (iv) such
other documents (including any amendments required to be filed pursuant
to clause (c) of this Section 5), as any such Person may reasonably
request. The Issuer hereby consents to the use of the Prospectus by
each of the selling Holders of Registrable Securities
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or each such Participating Broker-Dealer, as the case may be, and the
underwriters or agents, if any, and dealers (if any), in connection
with the offering and sale of the Registrable Securities covered by,
or the sale by Participating Broker-Dealers of the Exchange Securities
pursuant to, such Prospectus and any amendment thereto.
(e) If (A) a Shelf Registration is filed pursuant to Section 3
hereof or (B) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Securities during the Applicable Period,
notify the selling Holders of Registrable Securities, their Special
Counsel, each Participating Broker-Dealer and the managing
underwriters, if any, promptly (but in any event within two Business
Days), and confirm such notice in writing, (i) when a Prospectus has
been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective under the
Securities Act, (ii) of the issuance by the SEC of any stop order
suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of any Prospectus or the
initiation of any proceedings for that purpose, (iii) if, at any time
when a Prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Securities, the
representations and warranties of the Issuer contained in any agreement
(including any underwriting agreement) contemplated by Section 5(n)
below cease to be true and correct in any material respect, (iv) of the
receipt by the Issuer of any notification with respect to the
suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Securities or the
Exchange Securities to be sold by any Participating Broker-Dealer for
offer or sale in any jurisdiction, or the contemplation, initiation or
threatening of any proceeding for such purpose, (v) of the happening of
any event that makes any statement made in such Registration Statement
or related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or
that requires the making of any changes in such Registration Statement,
Prospectus or documents so that it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (vi) of the Issuer's reasonable determination that a
post-effective amendment to a Registration Statement would be
appropriate.
(f) Use its reasonable best efforts to register or qualify,
and, if applicable, to cooperate with the selling Holders of
Registrable Securities, the underwriters, if any, and their respective
counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of, Securities to be
included in a Registration Statement for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United
States as any selling Holder, Participating Broker-Dealer or the
managing underwriters reasonably request in writing; and, if Securities
are offered other than through an Underwritten Offering, the Issuer
shall cause its counsel to perform Blue Sky investigations and file
registrations and qualifications required to be filed pursuant to this
Section 5(f) at the expense of the Issuer; keep each such registration
or qualification (or exemption therefrom) effective during the period
such Registration Statement is required to be kept effective and do any
and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Securities covered by the
applicable Registration Statement, provided, however, that the Issuer
shall not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified, (ii) to take action
that would subject it to general service of process in any
jurisdiction where it is not so subject or (iii) subject it to
taxation in respect of doing business in any such jurisdiction where
it is not then subject.
(g) Use its reasonable best efforts to prevent the issuance of
any order suspending the effectiveness of a Registration Statement or
of any order preventing or suspending the use of a
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Prospectus or suspending the qualification (or exemption from
qualification) of any of the Securities for sale in any jurisdiction,
and, if any such order is issued, to use its reasonable best efforts
to obtain the withdrawal of any such order at the earliest possible
time.
(h) If (A) a Shelf Registration is filed pursuant to Section 3
hereof or (B) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Securities during the Applicable Period, and
if requested by the managing underwriters, if any, or the Holders of a
majority in aggregate principal amount of the Registrable Securities,
(i) promptly incorporate in a Prospectus or post-effective amendment
such information as the managing underwriters, if any, or such Holders
reasonably request to be included therein required to comply with any
Applicable Law and (ii) make all required filings of such Prospectus or
such post-effective amendment as soon as practicable after the Issuer
has received notification of such matters required by Applicable Law to
be incorporated in such Prospectus or post-effective amendment.
(i) If (A) a Shelf Registration is filed pursuant to Section 3
hereof or (B) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Securities during the Applicable Period,
cooperate with the selling Holders and the managing underwriters, if
any, to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which certificates
shall not bear any restrictive legends and shall be in a form eligible
for deposit with The Depository Trust Company ("DTC"); and enable such
Registrable Securities to be in such denominations and registered in
such names as the managing underwriters, if any, or Holders may
request.
(j) If (i) a Shelf Registration is filed pursuant to
Section 3 hereof or (ii) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is
required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities
during the Applicable Period, upon the occurrence of any event
contemplated by paragraph 6(e)(v) or 6(e)(vi) above, as promptly as
practicable prepare a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or
any document incorporated or deemed to be incorporated therein by
reference, or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder or to the purchasers of the Exchange
Securities to whom such Prospectus will be delivered by a
Participating Broker-Dealer, such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading.
(k) Use its reasonable best efforts to cause the Securities
covered by a Registration Statement to be rated with the appropriate
rating agencies, if appropriate, if so requested by the Holders of a
majority in aggregate principal amount of Securities covered by such
Registration Statement or the managing underwriters, if any.
(l) Prior to the effective date of the first Registration
Statement relating to the Securities, (i) provide the applicable
trustee with printed certificates for the Securities in a form eligible
for deposit with DTC and (ii) provide a CUSIP number for each of the
Securities.
(m) Use its reasonable best efforts to cause all Securities
covered by such Registration Statement to be listed on each securities
exchange, if any, on which similar debt securities issued by the Issuer
are then listed.
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(n) If a Shelf Registration is filed pursuant to Section 3
hereof, enter into such agreements (including an underwriting agreement
in form, scope and substance as is customary in underwritten offerings
of debt securities similar to the Notes) and take all such other
actions in connection therewith (including those reasonably requested
by the managing underwriters, if any, or the Holders of a majority in
aggregate principal amount of the Registrable Securities being sold) in
order to expedite or facilitate the registration or the disposition of
such Registrable Securities, and in such connection, regardless of
whether an underwriting agreement is entered into and regardless of
whether the registration is an Underwritten Registration, (i) make such
representations and warranties to the Holders and the underwriters, if
any, with respect to the business of the Issuer and its subsidiaries,
and the Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each
case, in form, substance and scope as are customarily made by issuers
to underwriters in underwritten offerings of debt securities similar to
the Notes, and confirm the same if and when reasonably requested; (ii)
obtain opinions of counsel to the Issuer and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, and the Holders of a
majority in aggregate principal amount of the Registrable Securities
being sold), addressed to each selling Holder and each of the
underwriters, if any, covering the matters customarily covered in
opinions requested in underwritten offerings of debt securities similar
to the Notes; (iii) obtain "cold comfort" letters and updates thereof
(which letters and updates (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters) from the
independent certified public accountants of the Issuer (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Issuer or of any business acquired by the Issuer for
which financial statements and financial data are, or are required to
be, included in the Registration Statement), addressed to each of the
underwriters and each selling Holder, such letters to be in customary
form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings of debt
securities similar to the Notes, and such other matters as reasonably
requested by underwriters; and (iv) deliver such documents and
certificates as may be reasonably requested by the Holders of a
majority in principal amount of the Registrable Securities being sold
and the managing underwriters, if any, to evidence the continued
validity of the representations and warranties of the Issuer and its
subsidiaries made pursuant to clause (i) above and to evidence
compliance with any conditions contained in the underwriting agreement
or other similar agreement entered into by the Issuer.
(o) Comply with all applicable rules and regulations of the
SEC and make generally available to its security holders earnings
statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days after the
end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing on the first
day of the fiscal quarter following each fiscal quarter in which
Registrable Securities are sold to underwriters in a firm commitment
or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the
first fiscal quarter of the Issuer after the effective date of a
Registration Statement, which statements shall cover said 12-month
periods.
(p) Upon consummation of an Exchange Offer, obtain an opinion
of counsel to the Issuer (in form, scope and substance reasonably
satisfactory to the Purchasers), addressed to all Holders participating
in the Exchange Offer to the effect that (i) the Issuer has duly
authorized, executed and delivered the Exchange Securities and the
Indenture and (ii) the Exchange Securities and the Indenture constitute
legal, valid and binding obligations of the Issuer, enforceable against
the Issuer in accordance with their respective terms, except as such
enforcement may be subject to (x) applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting
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creditors' rights and remedies generally and (y) general principles of
equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law).
(q) If an Exchange Offer is to be consummated, upon delivery
of the Registrable Securities by such Holders to the Issuer (or to such
other Person as directed by the Issuer) in exchange for the Exchange
Securities, the Issuer shall mark, or caused to be marked, on such
Registrable Securities that such Registrable Securities are being
cancelled in exchange for the Exchange Securities; in no event shall
such Registrable Securities be marked as paid or otherwise satisfied.
(r) Cooperate with each seller of Registrable Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be
made with the NASD.
(s) Use its reasonable best efforts to take all other steps
necessary to effect the registration of the Registrable Securities
covered by a Registration Statement contemplated hereby.
The Issuer may require each seller of Registrable
Securities or Participating Broker-Dealer as to which any registration
is being effected to furnish to the Issuer such information regarding
such seller or Participating Broker-Dealer and the distribution of such
Registrable Securities or Exchange Securities as the Issuer may, from
time to time, reasonably request in writing. The Issuer may exclude
from such registration the Registrable Securities of any seller or
Exchange Securities of any Participating Broker-Dealer who unreasonably
fails to furnish such information.
Each Holder and each Participating Broker-Dealer
agrees by acquisition of such Registrable Securities or Exchange
Securities of any Participating Broker-Dealer that, upon receipt of
written notice from the Issuer of the happening of any event of the
kind described in Section 5(e)(ii), 5(e)(iv), 5(e)(v) or 5(e)(vi)
hereof, such Holder will forthwith discontinue disposition (in the
jurisdictions specified in a notice of a 5(e)(iv) event, and elsewhere
in a notice of a 5(e)(ii), 5(e)(v) or 5(e)(vi) event) of such
Securities covered by such Registration Statement or Prospectus until
such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 5(j) hereof, or until it is advised
in writing (the "Advice") by the Issuer that offers or sales in a
particular jurisdiction may be resumed or that the use of the
applicable Prospectus may be resumed, as the case may be, and has
received copies of any amendments or supplements thereto. If the Issuer
shall give such notice, each of the Effectiveness Period and the
Applicable Period shall be extended by the number of days during such
periods from and including the date of the giving of such notice to
and including the date when each seller of such Securities covered by
such Registration Statement shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 5(j) hereof
or (y) the Advice.
Section 6. Registration Expenses.
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Issuer shall be borne by the
Issuer, regardless of whether the Exchange Offer or a Shelf
Registration is filed or becomes effective, including, without
limitation:
(i) all registration and filing fees (including,
without limitation, (A) fees with respect to filings required
to be made with the NASD and (B) fees and expenses of
compliance with state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of
counsel in connection with Blue Sky qualifications of the
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Registrable Securities or Exchange Securities and
determination of the eligibility of the Registrable Securities
or Exchange Securities for investment under the laws of such
jurisdictions (x) where the Holders are located, in the case
of the Exchange Securities, or (y) as provided in Section 5(f)
hereof, in the case of Registrable Securities or Exchange
Securities to be sold by a Participating Broker-Dealer during
the Applicable Period);
(ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable
Securities or Exchange Securities in a form eligible for
deposit with DTC and of printing Prospectuses if the printing
of Prospectuses is requested by the managing underwriters, if
any, or, in respect of Registrable Securities or Exchange
Securities to be sold by a Participating Broker-Dealer during
the Applicable Period, by the Holders of a majority in
aggregate principal amount of the Registrable Securities
included in any Registration Statement or of such Exchange
Securities, as the case may be);
(iii) messenger, telephone, duplication, word
processing and delivery expenses incurred by the Issuer in the
performance of its obligations hereunder;
(iv) fees and disbursements of counsel for the
Issuer;
(v) fees and disbursements of all independent
certified public accountants referred to in Section 5(n)(iii)
hereof (including, without limitation, the expenses of any
special audit and "cold comfort" letters required by or
incident to such performance);
(vi) fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in
an offering pursuant to Rule 2720(c) of the NASD Conduct
Rules, but only where the need for such a "qualified
independent underwriter" arises due to a relationship with the
Issuer;
(vii) Securities Act liability insurance, if the
Issuer so desires such insurance;
(viii) fees and expenses of all other Persons
retained by the Issuer; internal expenses of the Issuer
(including, without limitation, all salaries and expenses of
officers and employees of the Issuer performing legal or
accounting duties); and the expense of any annual audit; and
(ix) rating agency fees and the fees and expenses
incurred in connection with the listing of the Securities to
be registered on any securities exchange.
(b) The Issuer shall reimburse the Holders for the reasonable
fees and disbursements of not more than one counsel (in addition to
appropriate local counsel) chosen by the Holders of a majority in
aggregate principal amount of the Registrable Securities to be included
in any Registration Statement and other reasonable and necessary
out-of-pocket expenses of the Holders incurred in connection with the
registration of the Registrable Securities. The Issuer shall pay all
documentary, stamp, transfer or other transactional taxes attributable
to the issuance or delivery of the Exchange Securities in exchange for
the Notes.
Section 7. Indemnification.
(a) Indemnification by the Issuer. The Issuer shall, without
limitation as to time, indemnify and hold harmless each Holder and each
Participating Broker-Dealer, each Person who controls each such Holder
(within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act) and the officers, directors, partners,
employees, representatives and
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agents of each such Holder, Participating Broker-Dealer and
controlling person, to the fullest extent lawful, from and against any
and all Losses, as incurred, directly or indirectly caused by, related
to, based upon, arising out of or in connection with any untrue or
alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or form of prospectus, or in any
amendment or supplement thereto, or in any preliminary prospectus, or
any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, except insofar as such Losses are based upon
information relating to such Holder or Participating Broker-Dealer and
furnished in writing to the Issuer by such Holder or Participating
Broker-Dealer expressly for use therein. The Issuer shall also
indemnify underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution,
their officers, directors, agents and employees and each Person who
controls such Persons (within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act) to the same
extent as provided above with respect to the indemnification of the
Holders or the Participating Broker-Dealer.
(b) Indemnification by Holder of Registrable Securities. In
connection with any Registration Statement, Prospectus or form of
prospectus, any amendment or supplement thereto, or any preliminary
prospectus in which a Holder is participating, such Holder shall
furnish to the Issuer in writing such information as the Issuer
reasonably requests for use in connection with any Registration
Statement, Prospectus or form of prospectus, any amendment or
supplement thereto, or any preliminary prospectus and shall, without
limitation as to time, indemnify and hold harmless the Issuer, its
directors, officers, agents and employees, each Person, if any, who
controls the Issuer (within the meaning of Section 15 of the Securities
Act and Section 20(a) of the Exchange Act), and the directors,
officers, agents or employees of such controlling persons, to the
fullest extent lawful, from and against all Losses arising out of or
based upon any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or form of
prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading to the extent, but only to the
extent, that such untrue statement or alleged untrue statement of a
material fact or omission or alleged omission of a material fact is
contained in or omitted from any information so furnished in writing by
such Holder to the Issuer expressly for use therein. In no event shall
the liability of any selling Holder be greater in amount than the
dollar amount of the proceeds (net of payment of all expenses)
received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any action or
proceeding (including a governmental investigation) (a "Proceeding")
shall be brought or asserted against any Person entitled to indemnity
hereunder (an "Indemnified Party"), such Indemnified Party shall
promptly notify the party or parties from which such indemnity is
sought (the "Indemnifying Parties") in writing; provided, that the
failure to so notify the Indemnifying Parties shall not relieve the
Indemnifying Parties from any obligation or liability except to the
extent (but only to the extent) that it shall be finally determined by
a court of competent jurisdiction (which determination is not subject
to appeal) that the Indemnifying Parties have been prejudiced
materially by such failure.
The Indemnifying Party shall have the right,
exercisable by giving written notice to an Indemnified Party, within 20
Business Days after receipt of written notice from such Indemnified
Party of such Proceeding, to assume, at its expense, the defense of any
such Proceeding, provided, that an Indemnified Party shall have the
right to employ separate counsel in any such Proceeding and to
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party or parties
unless: (1) the Indemnifying
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Party has agreed to pay such fees and expenses; or (2) the
Indemnifying Party shall have failed promptly to assume the defense of
such Proceeding or shall have failed to employ counsel reasonably
satisfactory to such Indemnified Party; or (3) the named parties to
any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party or any of its
affiliates or controlling persons, and such Indemnified Party shall
have been advised by counsel that there may be one or more defenses
available to such Indemnified Party that are in addition to, or in
conflict with, those defenses available to the Indemnifying Party or
such affiliate or controlling person (in which case, if such
Indemnified Party notifies the Indemnifying Parties in writing that it
elects to employ separate counsel at the expense of the Indemnifying
Parties, the Indemnifying Parties shall not have the right to assume
the defense thereof and the reasonable fees and expenses of such
counsel shall be at the expense of the Indemnifying Party; it being
understood, however, that, the Indemnifying Party shall not, in
connection with any one such Proceeding or separate but substantially
similar or related Proceedings in the same jurisdiction, arising out
of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such
Indemnified Party).
No Indemnifying Party shall be liable for any
settlement of any such Proceeding effected without its written consent,
but if settled with its written consent, or if there be a final
judgment for the plaintiff in any such Proceeding, each Indemnifying
Party jointly and severally agrees, subject to the exceptions and
limitations set forth above, to indemnify and hold harmless each
Indemnified Party from and against any and all Losses by reason of such
settlement or judgment. The Indemnifying Party shall not consent to the
entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to each Indemnified Party of a release, in form and substance
reasonably satisfactory to the Indemnified Party, from all liability in
respect of such Proceeding for which such Indemnified Party would be
entitled to indemnification hereunder (regardless of whether any
Indemnified Party is a party thereto).
(d) Contribution. If the indemnification provided for in this
Section 7 is unavailable to an Indemnified Party or is insufficient to
hold such Indemnified Party harmless for any Losses in respect of which
this Section 7 would otherwise apply by its terms (other than by reason
of exceptions provided in this Section 7), then each applicable
Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall have a joint and several obligation to contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses,
in such proportion as is appropriate to reflect the relative benefits
received by the Indemnifying Party, on the one hand, and such
Indemnified Party, on the other hand, from the offering of the Notes,
or (ii) if the allocation provided by clause (i) above is not permitted
by Applicable Law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the
relative fault of the Indemnifying Party, on the one hand, and such
Indemnified Party, on the other hand, in connection with the actions,
statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such
Indemnifying Party, on the one hand, and Indemnified Party, on the
other hand, shall be determined by reference to, among other things,
whether any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by such Indemnifying Party or Indemnified Party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent any such statement or omission. The
amount paid or payable by an Indemnified Party as a result of any
Losses shall be deemed to include any legal or other fees or expenses
incurred by such party in connection with any Proceeding, to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in Section 7(a) or 7(b) hereof was
available to such party.
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The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined
by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this
Section 7(d), an Indemnifying Party that is a selling Holder shall not
be required to contribute, in the aggregate, any amount in excess of
such Holder's Maximum Contribution Amount. A selling Holder's "Maximum
Contribution Amount" shall equal the excess of (i) the aggregate
proceeds received by such Holder pursuant to the sale of such
Registrable Securities over (ii) the aggregate amount of damages that
such Holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Section 7 are in addition to any liability that the Indemnifying Parties may
have to the Indemnified Parties.
Section 8. Rule 144 and Rule 144A. The Issuer covenants that it shall
(a) file the reports required to be filed by it (if so required) under the
Securities Act and the Exchange Act in a timely manner and, if at any time any
the Issuer is not required to file such reports, it will, upon the request of
any Holder, make publicly available other information necessary to permit sales
pursuant to Rule 144 and Rule 144A and (b) take such further action as any
Holder may reasonably request, all to the extent required from time to time to
enable such Holder to sell Registrable Securities without registration under the
Securities Act pursuant to the exemptions provided by Rule 144 and Rule 144A.
Upon the request of any Holder, the Issuer shall deliver to such Holder a
written statement as to whether it has complied with such information and
requirements.
Section 9. Underwritten Registrations. If any of the Registrable
Securities covered by any Shelf Registration are to be sold in an Underwritten
Offering, the investment banker or investment bankers and manager or managers
that will manage the offering will be selected by the Holders of a majority in
aggregate principal amount of such Registrable Securities included in such
offering, subject to the consent of the Issuer (which shall not be withheld or
delayed unreasonably), and Holders participating in such offering shall be
responsible for all underwriting commission and discounts in connection
therewith. No Holder may participate in any Underwritten Registration hereunder
unless such Xxxxxx (a) agrees to sell such Xxxxxx's Registrable Securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all questionnaires, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
Section 10. Miscellaneous.
(a) Remedies. In the event of a breach by the Issuer of any of
its obligations under this Agreement, each Holder, in addition to being
entitled to exercise all rights provided herein, in the Indenture or,
in the case of the Purchasers, in the Securities Purchase Agreement, or
granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Issuer
agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall
waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Issuer has not entered
into, as of the date hereof, and shall not enter into, after the date
of this Agreement, any agreement with respect to
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any of its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the
provisions hereof.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified
or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Issuer has obtained the
written consent of Holders of at least a majority of the then
outstanding aggregate principal amount of Registrable Securities;
provided, that Section 5(a) and Section 7 hereof shall not be amended,
modified or supplemented, and waivers or consents to departures from
this proviso may not be given, unless the Issuer has obtained the
written consent of each Holder affected thereby. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof
with respect to a matter that relates exclusively to the rights of
Holders whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the rights of
other Holders may be given by Holders of at least a majority in
aggregate principal amount of the Registrable Securities being sold by
such Holders pursuant to such Registration Statement, provided that the
provisions of this sentence may not be amended, modified or
supplemented except in accordance with the provisions of the
immediately preceding sentence.
(d) Notices. All notices and other communications (including,
without limitation, any notices or other communications to the Trustee)
provided for or permitted hereunder shall be made in writing by
hand-delivery, certified first-class mail, return receipt requested,
next-day air courier or facsimile:
(i) if to a Holder, at the most current address given
by such Holder to the Issuer in accordance with the provisions
of this Section 10(d), which address initially is, with
respect to each Holder, the address of such Holder maintained
by the Registrar under the Indenture, with a copy to Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, telecopy number (000) 000-0000,
Attention: Xxx X. Xxxxxx, Esq.; and
(ii) if to the Issuer, to DIMAC Holdings, 0000
Xxxxxxxxx Xxxxxxxx Xxxx, Xxxxx X-000, Xxxxxxx, Xxxxxxx 00000,
Telecopy No. (000) 000-0000, Attention: Chief Financial
Officer, with a copy to XxXxxx De Leeuw & Co., 00 X. 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Xxxxxxxx No. (000) 000-0000,
Attention: Xxxxx Xxxx, with a copy to White & Case LLP, 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Telecopy No.
(000) 000-0000, Attention: Xxxxx X. Xxxxxx, Esq.
and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 10(d).
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if
mailed; one Business Day after being timely delivered to a next-day air
courier; and when receipt is acknowledged by the addressee, if
telecopied. Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the
Trustee under the Indenture at the address specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of
the parties, including, without limitation and without the need for an
express assignment, subsequent Holders.
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(f) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and
all of which taken together shall constitute one and the same
agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(h) Governing Law; Submission to Jurisdiction; etc. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW. THE ISSUER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE
BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
THE ISSUER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY
DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. THE ISSUER IRREVOCABLY CONSENTS, TO
THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO
THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE ISSUER AT ITS ADDRESS SET FORTH
HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEED AGAINST THE ISSUER IN ANY OTHER JURISDICTION.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set
forth herein shall remain in full force and effect and shall in no way
be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid,
illegal, void or unenforceable.
(j) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement, and is intended to be
a complete and exclusive statement of the agreement and understanding
of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein, with
respect to the registration rights granted by the Issuer in respect of
securities sold pursuant to the Securities Purchase Agreement. This
Agreement supersedes all prior agreements and understandings between
the parties with respect to such subject matter.
C-18
(k) Attorneys' Fees. In any Proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the
courts, shall be entitled to recover reasonable attorneys' fees in
addition to its costs and expenses and any other available remedy.
(l) Securities Held by the Issuer or its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities
held by the Issuer or its affiliates (as such term is defined in Rule
405 under the Securities Act) (other than Holders deemed to be such
affiliates solely by reason of their holdings of such Registrable
Securities) shall not be counted in determining whether such consent or
approval was given by the holders of such required percentage.
(Signature Page Follows)
C-19
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
Very truly yours,
DIMAC HOLDINGS, INC.
By:
--------------------------
Name:
-------------------------
Title:
------------------------
C-20
Accepted and Agreed to:
TCW/CRESCENT MEZZANINE PARTNERS, L.P.
TCW/CRESCENT MEZZANINE TRUST
TCW/CRESCENT MEZZANINE INVESTMENT PARTNERS, L.P.
By: TCW/XXXXXXXX XXXXXXXXX, L.L.C.,
its general partner or managing owner
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW ADVISORS (BERMUDA), LIMITED,
as General Partner
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
By: TCW INVESTMENT MANAGEMENT
COMPANY, as Investment Advisor
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
TCW SHARED OPPORTUNITY FUND II, L.P.
By: TCW INVESTMENT MANAGEMENT
COMPANY, its investment advisor
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
C-21
Annex D
================================================================================
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
Dated as of October 22, 1998
By and Among
THE MDC ENTITIES,
DIMAC HOLDINGS, INC.,
THE MANAGEMENT STOCKHOLDERS
and
THE NON-MANAGEMENT STOCKHOLDERS
================================================================================
TABLE OF CONTENTS
PAGE
ARTICLE I
CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
TRANSFER OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.1 RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.2 PERMITTED TRANSFERS. . . . . . . . . . . . . . . . . . . . 5
Section 2.3 SALES BY MDC SUBJECT TO TAG-ALONG RIGHTS . . . . . . . . . 6
Section 2.4 GRANT TO MDC OF BRING-ALONG RIGHTS . . . . . . . . . . . . 8
Section 2.5 CALL UPON TERMINATION OF MANAGEMENT STOCKHOLDER'S EMPLOYMENT 9
Section 2.6 REGISTRATION RIGHTS AND RELATED MATTERS. . . . . . . . . . 11
ARTICLE III
BOARD OF DIRECTORS OF THE COMPANY . . . . . . . . . . . . . . . . . . . 15
Section 3.1 BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. . . . . . . . . . . 15
Section 4.1 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS . . . . 15
ARTICLE V
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.1 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . 17
Section 5.2 CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.3 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.4 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.5 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . 18
Section 5.6 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.7 SUBMISSION TO JURISDICTION . . . . . . . . . . . . . . . . 18
Section 5.8 BENEFITS ONLY TO PARTIES . . . . . . . . . . . . . . . . . 19
Section 5.9 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.10 PUBLICITY . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.11 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . 20
(i)
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "AGREEMENT"), dated as of
October 22, 1998, by and among DIMAC Holdings, Inc., a Delaware corporation (the
"COMPANY"), XxXxxx De Leeuw & Co. IV, L.P., a California limited partnership,
Delta Fund LLC, a California limited liability company, and XxXxxx De Leeuw &
Co. IV Associates, L.P., a California limited partnership (each individually, an
"MDC ENTITY", collectively the "MDC ENTITIES" and collectively with their
Related Persons (as defined below), "MDC"), the individuals listed on Schedule A
attached hereto under the heading "MANAGEMENT STOCKHOLDERS" (each individually,
a "MANAGEMENT STOCKHOLDER" and, collectively, the "MANAGEMENT STOCKHOLDERS," it
being understood that any other member of the management of the Company or its
Subsidiaries who becomes a stockholder of the Company through the receipt of
Call Shares (as defined below) shall be a Management Stockholder and each of the
Persons listed on Schedule A hereto under the heading "NON-MANAGEMENT
STOCKHOLDERS" (each, individually a "NON-MANAGEMENT STOCKHOLDER" and,
collectively, the "NON-MANAGEMENT STOCKHOLDERS") (each of the Management
Stockholders, MDC and the Non-Management Stockholders is hereinafter referred to
as a "STOCKHOLDER," it being understood and agreed that any holder of Common
Stock of the Company (including through the exercise of any option or warrant)
during the term of this Agreement shall become a party to this Agreement and
shall be referred to within the term "STOCKHOLDER").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, MDC, the Management Stockholders and the Non-Management
Stockholders own shares of voting and non-voting common stock, $0.001 par value,
of the Company (the "COMMON STOCK"); and
WHEREAS, the Stockholders each desire to grant to the others certain rights
in connection with the shares of Common Stock now or hereafter owned by them
(collectively, with any shares of Common Stock hereafter issued by the Company
during the term of this Agreement, including pursuant to the exercise of
warrants, the "SHARES") as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein set forth
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:
D-1
(a) "AFFILIATE" shall mean, with respect to any Person, (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person, (ii) directly or indirectly
through one or more intermediaries beneficially owning or holding 10% or more of
the combined voting power of the total Voting Securities of such referenced
Person or (iii) of which 10% or more of the combined voting power of the total
Voting Securities directly or indirectly through one or more intermediaries is
beneficially owned or held by such referenced Person or a Subsidiary of such
referenced Person. For all purposes of this Agreement, MDC and its Affiliates
shall be considered an Affiliate of the Company. For purposes of this
definition, "CONTROL" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of Voting Securities, by agreement or
otherwise; and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing. Notwithstanding the foregoing, for
purposes of this Agreement, none of the TCW Entities nor the Michigan Fund shall
be considered Affiliates of the Company or any of its Subsidiaries.
(b) "BUSINESS DAY" shall mean any day except a Saturday, a Sunday or other
day on which commercial banks are required or authorized to close in New York,
New York.
(c) "CALL SHARES" shall mean shares of the Common Stock received upon the
exercise of class A options granted to employees of the Company (or the
Company's Subsidiaries) pursuant to the Management Equity Incentive Plan.
(d) "GRANT DATE" shall mean (i) with respect to any Vested Stock Option,
the date upon which such Vested Stock Option was granted to the Management
Stockholder and (ii) with respect to any Call Share, the date upon which the
Vested Stock Option in respect of such Call Share was granted to the Management
Stockholder.
(e) "IPO" shall mean an initial public offering of the Common Stock.
(f) "MANAGEMENT EQUITY INCENTIVE PLAN" shall mean the Company's 1998 Stock
Option Plan or like stock incentive plan as amended from time to time.
(g) "NON-MDC STOCKHOLDERS" shall mean all Stockholders other than MDC.
(h) "PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust, an unincorporated
organization or a government or agency or political subdivision thereof.
(i) "PURCHASERS" has the meaning given to such term in the Securities
Purchase Agreement dated as of October 22, 1998 by and among the Company, DIMAC
Corporation, a Delaware corporation, and the purchasers listed on the signature
pages thereto.
D-2
(j) "RELATED PERSONS" shall mean with respect to any MDC Entity, any
partnership with the same controlling general partner as such MDC Entity and any
of the partners of such MDC Entity or the general partner of such MDC Entity
which receive Shares upon a distribution to any such partners by any such MDC
Entity.
(k) "SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, or any similar Federal statute, and the rules and regulations of
the Securities and Exchange Commission promulgated thereunder, all as the same
shall be in effect at the time.
(l) "SUBSIDIARY" shall mean, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock or other equity interests entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors or other managing authority thereof is at the time owned or
controlled, directly or indirectly, by such Person and its Subsidiaries.
(m) "TCW ENTITIES" means Trust Company of the West and its Affiliates and
any of the Purchasers and their Affiliates and any Person to whom any shares of
Common Stock or Warrants that were held by any of the Purchasers may be
transferred in accordance with the terms of the Stockholders Agreement.
(n) "TRANSACTION VALUE" means the sum of (a) the cash purchase price
(including any installment payments), (b) the value of any equity securities
issued by the purchaser in connection with such transaction, (c) the face value
of any promissory note or other debt instrument issued by the purchaser in
connection with such transaction and (d) the amount of any liabilities assumed
by the purchaser in connection with such transaction (other than ordinary course
of business trade payables).
(o) "VESTED STOCK OPTIONS" shall mean vested class A stock options for the
Common Stock granted to certain key employees of the Company (or the Company's
Subsidiaries) pursuant to the Management Equity Incentive Plan.
(p) "VOTING SECURITIES" means any class of equity interests of a Person
pursuant to which the holders thereof have, at the time of determination, the
general voting power under ordinary circumstances to vote for the election of
directors, managers, trustees or general partners of such Person (regardless of
whether at the time any other class or classes will have or might have voting
power by reason of the happening of any contingency).
D-3
ARTICLE II
TRANSFER OF SHARES
Section 2.1 RESTRICTIONS. (a) No Stockholder shall sell, assign, pledge,
or in any manner, transfer any of the Shares or any right or interest therein,
to any Person (each such action, a "TRANSFER") except as permitted by this
Agreement.
(b) From and after the date hereof, all share certificates representing
Shares held by any of the Stockholders shall bear a legend which shall state as
follows:
The shares represented by this certificate are subject to certain
restrictions against transfer set forth in an Amended and Restated
Stockholders Agreement dated as of October 22, 1998, as may be amended from
time to time. A copy of such Stockholders Agreement has been filed in the
registered office of the Company in the State of Delaware, where the same
may be inspected daily during business hours.
(c) In addition to the legend required by Section 2.1(b) above, all share
certificates representing Shares held by any of the Stockholders shall bear a
legend which shall state as follows:
The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), and such
shares may not be offered, sold, pledged or otherwise transferred except
(1) pursuant to an exemption from, or in a transaction not subject to, the
registration requirements under the Securities Act or (2) pursuant to an
effective registration statement under the Securities Act, in each case in
accordance with any applicable securities laws of any State of the United
States.
(d) In addition to the legends required by Sections 2.1(b) and (c) above,
all share certificates representing Call Shares shall bear a legend which shall
state as follows:
The shares represented by this certificate are also subject to the
Management Call as described in Section 2.5 of the Stockholders Agreement
referred to above.
Any Call Shares transferred by a Management Stockholder in a Permitted Transfer
described in Section 2.2(a)(i) or (ii) shall remain Call Shares of the
transferee and certificates representing such shares shall bear the legend
required by this Section 2.1(d). Any Call Shares transferred by a Management
Stockholder in a Permitted Transfer described in any other clause of Section 2.2
shall not remain Call Shares of the transferee and certificates representing
such shares shall not bear the legend required by this Section 2.1(d).
(e) Promptly upon execution and delivery of this Agreement, each
Stockholder shall deliver to the Secretary of the Company all certificates then
held by such
D-4
Stockholder representing Shares which do not have such legends affixed thereto
as are required by Section 2.1 above. The Company shall cause such legends to
be affixed promptly to each of such certificates and such certificates to be
returned promptly to the registered holder thereof. The Company agrees that it
will not cause or permit the Transfer of any Shares to be made on its books
unless the Transfer is permitted by this Agreement and has been made in
accordance with the terms hereof.
(f) No Transfer of Shares permitted or not otherwise prohibited by the
terms and conditions of this Agreement shall be valid unless the transferee
thereof enters into a written agreement, in form and substance reasonably
satisfactory to the Company, to the effect that said assignee agrees to be bound
by all of the terms and conditions set forth in this Agreement, including those
regarding Shares and the purchase options with respect thereto; PROVIDED,
HOWEVER, that the conditions set forth in this Section 2.1 shall not apply to
any sale of Shares pursuant to an effective registration statement under the
Securities Act or, provided such sale is not to an Affiliate of the selling
Stockholder, pursuant to Rule 144 promulgated under the Securities Act.
Section 2.2 PERMITTED TRANSFERS. (a) Notwithstanding anything to the
contrary contained herein, a Stockholder may at any time effect any of the
following Transfers (each a "PERMITTED TRANSFER" and each transferee, a
"PERMITTED TRANSFEREE"):
(i) A Stockholder's Transfer of any or all Shares owned by such
Stockholder following such Stockholder's death by will or intestacy to such
Stockholder's legal representative, heir or legatee.
(ii) A Stockholder's Transfer of any or all Shares owned by such
Stockholder as a gift or gifts during such Stockholder's lifetime to such
Stockholder's spouse, children, step-children, grandchildren, parents or a
trust or other legal entity for the benefit of any Stockholder or any of
the foregoing.
(iii) With respect to the MDC Entities, a Transfer of any or all
Shares owned by them to any of their Related Persons.
(iv) A Transfer by a Stockholder which is made pursuant to Section
2.3 hereof.
(v) A Transfer by a Stockholder which is made pursuant to Section
2.4, 2.5 or 2.6 hereof.
(vi) A Transfer by a Stockholder to the Company.
(vii) A Transfer by MDC to any Person on or before October 31, 1998;
PROVIDED that after giving effect to such Transfer, MDC owns at least 60%
of the issued and outstanding Common Stock.
(viii) Following an IPO, a Transfer by a Stockholder holding Call
Shares as follows: (a) during the period from the date of the IPO until
the first anniversary thereof a number
D-5
of Call Shares equal to one-third (33.33%) of the aggregate number of Call
Shares and Vested Stock Options held by such Stockholder at the date of the
IPO and (b) during the period from the date of the IPO until the second
anniversary of the IPO, a number of Call Shares equal to two-thirds
(66.67%) of the aggregate number of Call Shares and Vested Stock Options
held by such Stockholder at the date of the IPO.
(ix) The transfer by the State Treasurer of the State of Michigan,
Custodian of the Michigan Public School Employees' Retirement System; State
Employees' Retirement System; Michigan State Police Retirement System; and
Michigan Judges Retirement System (the "MICHIGAN FUND") to any successor or
additional trustee or custodian of the assets of the Michigan Fund as may
be appointed, and qualified under the applicable laws of the State of
Michigan.
(x) With respect to any Stockholder which is an entity, a Transfer
of any or all Shares owned by it to any of its Affiliates so long as such
Affiliate is an entity.
(xi) A Transfer by the TCW Entities to any Person of any Shares
issued to such TCW Entities pursuant to the exercise of warrants.
(b) In any such Transfer referred to above in Section 2.2(a) (other than
events in which this Agreement shall terminate in accordance with the provisions
of Section 5.9 hereof), the Permitted Transferee shall receive and hold such
Shares subject to the provisions of this Agreement as if such Permitted
Transferee were an original signatory hereto and shall be deemed to be a party
to this Agreement.
Section 2.3 SALES BY MDC SUBJECT TO TAG-ALONG RIGHTS. (a) In the event
that MDC proposes to effect a Transfer (other than a Permitted Transfer
described in Section 2.2(a) (iii), (v) or (vii) above) of any of the Common
Stock owned by it (the "MDC STOCK"), then MDC shall promptly give written notice
(the "MDC NOTICE") to the Company and the other Stockholders at least twenty
days prior to the closing of such Transfer. The MDC Notice shall be accompanied
by a copy of any agreement or term sheet relating to the Transfer (if available)
and describe in reasonable detail the proposed Transfer including, without
limitation, the name of, and the number of shares of MDC Stock to be purchased
by, the transferee, the purchase price of each share of MDC Stock to be sold,
any additional consideration, the terms and conditions of payment offered by the
transferee, any other significant terms of such sale and the date such proposed
sale is expected to be consummated (the "TAG-ALONG SALE DATE"), the aggregate
number of Shares of Common Stock held of record by MDC as of the close of
business on the day immediately preceding the date of the MDC Notice, the
Participant's (as defined below) pro-rata portion (as defined below) and
confirmation that the transferee has been informed of the "Tag-Along Rights"
provided for herein and has agreed to purchase shares from any Participant in
accordance with the terms hereof, it being understood that if such proposed
Transfer by MDC is in (i) an IPO or (ii) a public offering pursuant to a
registration statement filed under Section 2.6, the subsequent provisions of
this Section 2.3 shall not apply.
D-6
(b) Each Stockholder shall have the right, exercisable upon irrevocable
written notice to MDC (the "TAG-ALONG NOTICE") no less than ten days prior to
the proposed Transfer, to participate in such sale of MDC Stock on the same
terms and conditions as set forth in the MDC Notice, including, without
limitation, the making of all representations, warranties, indemnifications
(including participating in any escrow arrangements) and similar agreements on a
ratable basis (based upon the number of Shares participating in such Transfer)
which obligations will be limited to the net proceeds received by such
Stockholder in such sale, and to sell all or any portion of the number of the
Shares owned by it as determined in accordance with the calculation set forth
below. Each Stockholder other than MDC electing to participate in the sale
described in the MDC Notice (each a "PARTICIPANT") shall indicate in its
Tag-Along Notice to MDC the maximum number of its Shares it desires to sell in
such sale (which number may be in excess of the number of shares set forth in
the MDC Notice). Each such Participant shall be entitled to sell a "PRO RATA
PORTION" (as such term is hereinafter defined) of such maximum number. To the
extent one or more of the Stockholders exercise such right of participation in
accordance with the terms and conditions set forth in this Section 2.3, the
number of shares of MDC Stock that MDC may sell in the transaction shall be
correspondingly reduced. For purposes of this Section 2.3, "PRO RATA PORTION"
shall mean for each Participant a fraction the numerator of which is the number
of Shares of MDC Stock proposed to be sold in the MDC Notice and the denominator
of which is the sum of (A) the total number of Shares owned by MDC immediately
prior to the sale proposed in the MDC Notice and (B) the total number of Shares
desired to be sold by all of the Participants electing to participate in the
sale (including any Shares that may be issued pursuant to any warrant or other
right). Not later than five days prior to the date scheduled for such sale, MDC
shall provide notice to each Participant of the "PRO RATA PORTION" of Shares to
be sold by such Participant in such sale.
(c) The Tag-Along Notice given by any Participant shall constitute such
Participant's irrevocable agreement to sell the Shares specified in the
Tag-Along Notice on the terms and conditions applicable to the proposed
Transfer; PROVIDED, HOWEVER, that in the event that there is any material change
in the material terms and conditions of such proposed Transfer applicable to the
Participant (including, but not limited to, any decrease in the purchase price
that occurs other than pursuant to an adjustment mechanism set forth in the
agreement relating to the proposed Transfer) after such Participant gives its
Tag-Along Notice, then, notwithstanding anything herein to the contrary, the
Participant shall have the right to withdraw from participation in the proposed
Transfer with respect to all of its Shares affected thereby. If the transferee
does not consummate the purchase of all of the Shares requested to be included
in the proposed Transfer by any Participant on the same terms and conditions
applicable to MDC (except as otherwise provided herein), then MDC shall not
consummate the proposed Transfer of any of its shares of Common Stock to such
transferee, unless the shares of MDC and the Participants are reduced or limited
PRO RATA in proportion to the respective number of shares of Common Stock
actually sold in any such proposed Transfer and all other terms and conditions
of the proposed Transfer are the same for MDC and the Participant, subject to
the provisos set forth in Section 2.4(b).
(d) If a Tag-Along Notice from any Participant is not received by MDC
prior to the ten day period specified above, MDC shall have the right to
consummate the proposed
D-7
Transfer without the participation of such Participant, but only on terms and
conditions which are no more favorable in any material respect to MDC (and in
any event, at no greater a purchase price, except as the purchase price may be
adjusted pursuant to the agreement regarding the relevant sale or other
disposition) than as stated in the MDC Notice and only if such proposed Transfer
occurs on a date within ninety (90) days of the Tag-Along Sale Date. If such
proposed Transfer does not occur within such ninety (90) day period, the shares
of Common Stock that were to be subject to such proposed Transfer thereafter
shall continue to be subject to all of the restrictions contained in this
Agreement.
(e) Any Participant shall effect its participation in the sale by
delivering on the date scheduled for such sale to MDC for delivery to the
prospective transferee one or more certificates, in proper form for transfer,
which represent the number of Shares which such Participant is entitled to sell
in accordance with this Section 2.3. Such certificate or certificates that any
Participant delivers to MDC shall be delivered on such date to such transferee
in consummation of the sale of the Shares pursuant to the terms and conditions
specified in the MDC Notice, and MDC shall concurrently therewith remit to each
such Participant that portion of the sale proceeds to which such Participant is
entitled by reason of its participation in such sale. MDC's sale of Shares in
any sale proposed in an MDC Notice shall be effected on substantially the terms
and conditions set forth in such MDC Notice.
(f) The exercise or non-exercise of the rights of the Stockholders
hereunder to participate in one or more sales of Shares made by MDC shall not
adversely affect their rights to participate in subsequent sales of Shares
subject to this Section 2.3.
(g) In no event shall MDC receive special consideration or a control
premium in connection with any sale contemplated by this Section 2.3; PROVIDED,
HOWEVER, that it is understood that MDC shall be entitled to receive a
reasonable transaction fee, not to exceed 2% of Transaction Value, payable upon
the closing of any sale contemplated by this Section 2.3 if MDC provides
services in connection with such sale that would customarily be provided by a
third party financial advisor.
Section 2.4 GRANT TO MDC OF BRING-ALONG RIGHTS. (a) Each time the
stockholders of the Company meet, or act by written consent in lieu of meeting,
for the purpose of approving a "Sale of the Business" (as such term is
hereinafter defined), each Stockholder agrees to vote all of its Shares, and to
sell all of its Shares, as directed by MDC. In order to effect the foregoing
covenant, each Stockholder (other than the Michigan Fund and the TCW Entities)
hereby grants to MDC with respect to all of such Stockholder's Shares an
irrevocable proxy (which is deemed to be coupled with an interest) for the term
of this Agreement with respect to any stockholder vote or action by written
consent to effect the Sale of the Business. As used herein, "SALE OF THE
BUSINESS" shall mean any transaction or series of transactions (whether
structured as a stock sale, merger, consolidation, reorganization, asset sale or
otherwise) negotiated on an arm's-length basis, which results in the sale or
transfer of all or substantially all of the assets or all of the shares of
capital stock of the Company to an unaffiliated bona fide third party in which
all consideration payable to holders of the Common Stock is distributed pro rata
pursuant to share ownership.
D-8
(b) In furtherance of its covenants in Section 2.4(a), each Stockholder
hereby agrees to cooperate fully with MDC and the purchaser in any such Sale of
the Business and, to execute and deliver all documents (including purchase
agreements) and instruments as MDC and the purchaser request to effect such Sale
of the Business, including, without limitation, the making of all
representations, warranties and indemnifications (including participating in any
escrow arrangements) and similar arrangements on a ratable basis (based upon the
number of Shares owned by the Stockholders as if all such Shares and options or
warrants to purchase Shares were converted into Common Stock) which obligations
will be limited to the net proceeds received by such Stockholder in such Sale of
the Business, but excluding employment agreements and covenants not to compete
(the determination of whether or not to enter into any such agreements being in
the sole and absolute discretion of each Stockholder). MDC agrees that upon
such Sale of the Business each Stockholder will receive its PRO RATA share of
the consideration (including consideration for non-competes, consulting
agreements or similar arrangements) paid by the purchaser determined on the
basis of such Stockholder's Share ownership.
(c) Prior to any Sale of the Business, if MDC elects to exercise the
rights afforded under this Section 2.4, MDC shall provide the Stockholders with
written notice (the "DRAG-ALONG NOTICE") not less than ten days prior to the
proposed date of the Sale of the Business. The Drag-Along Notice shall set
forth: (i) the name and address of the third party; (ii) the proposed amount and
form of consideration to be paid per share and the terms and conditions of
payment offered by the third party; (iii) the aggregate number of Shares held of
record by MDC as of the date of the Drag-Along Notice; (iv) the proposed date of
the Sale of the Business; and (v) confirmation that the proposed third party has
agreed to purchase each Stockholder's Shares in accordance with the terms
hereof.
(d) Each Stockholder shall effect its participation in the Sale of the
Business by delivering to MDC on the date of the Sale of the Business for
delivery to the third party one or more certificates, in proper form for
transfer, which represent the number of Shares which such Stockholder is
required to sell in accordance with this Section 2.4. Such certificate or
certificates that any Stockholder delivers to MDC shall be delivered on such
date to such third party in consummation of the Sale of the Business pursuant to
the terms and conditions specified in the Drag Along Notice, and MDC shall
concurrently therewith remit to each Stockholder that portion of the sale
proceeds to which such Stockholder is entitled by reason of its participation in
such Sale of the Business.
(e) In no event shall MDC receive special consideration or a control
premium in connection with a sale contemplated by this Section 2.4; PROVIDED,
HOWEVER, that it is understood that MDC shall be entitled to receive a
reasonable transaction fee, not to exceed 2% of Transaction Value, payable upon
the closing of any such sale contemplated by this Section 2.4 if MDC provides
services in connection with such sale that would customarily be provided by a
third party financial advisor.
Section 2.5 CALL UPON TERMINATION OF MANAGEMENT STOCKHOLDER'S EMPLOYMENT.
(a) If a Management Stockholder's active employment with the Company (and/or,
if applicable, its
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Subsidiaries) is voluntarily or involuntarily terminated for any reason
whatsoever (including, without limitation, termination by the Company and/or its
Subsidiaries with or without cause) at any time on or before the date which is
five years from the Grant Date of any Vested Stock Options or Call Shares, the
Company shall, on the terms and conditions of this Section 2.5, have the right
(the "MANAGEMENT CALL"), at the option of the Company, to purchase, at the Call
Share Repurchase Price or Vested Option Repurchase Price (each as defined
below), as the case may be, determined in accordance with Section 2.5(b) hereof,
all, or any portion, of such Call Shares and/or such Vested Stock Options then
held by such Management Stockholder (including, if applicable, such Shares held
by any Permitted Transferee of such Management Stockholder). Notwithstanding
the foregoing, the Company shall not have such option if (i) the termination of
employment results from the death or permanent disability of the Management
Stockholder or (ii) the termination of employment results from the retirement of
the Management Stockholder from the Company or any of its Subsidiaries at age 65
or over; PROVIDED that, in the case of any such termination resulting from
permanent disability or retirement, the Management Stockholder enters into an
agreement, in form and substance satisfactory to the Company, within 15 days of
the date of such termination, not to compete, directly or indirectly, with the
Company and/or any of its Subsidiaries for a period of five (5) years from the
date of such termination in any geographic area where the Company and/or its
Subsidiaries then or during such five-year period conducts business.
The Company shall have a period of 60 days from the date of such
termination in which to give notice in writing to the Management Stockholder of
the exercise of such option. The closing of the purchase shall take place at
the principal office of the Company on the tenth business day after the giving
of notice of the exercise of the option to purchase. The Call Share Repurchase
Price or the Vested Option Repurchase Price, as the case may be, shall be paid
by delivery to the Management Stockholder holding the Call Shares or Vested
Stock Options (including, if applicable, such Shares held by any Permitted
Transferee of such Management Stockholder) of a check or checks in the
appropriate amount payable to the order of such Management Stockholder or
Permitted Transferee, as the case may be, against delivery of certificates or
other instruments representing the Call Shares or Vested Stock Options, as the
case may be, so purchased, appropriately endorsed by such Management Stockholder
or Permitted Transferee, as the case may be, or his duly authorized
representative. For purposes of this Agreement, a Management Stockholder shall
be deemed to have a "permanent disability" when the Board of Directors of the
Company shall, in good faith, so determine. In connection with such closing,
such Management Stockholder (including, if applicable, such Shares held by any
Permitted Transferee of such Management Stockholder) shall warrant to the
Company good and marketable title to the purchased Call Shares or Vested Stock
Options, as the case may be, free and clear of all claims, liens, charges,
encumbrances and security interests of any nature whatsoever except those under
this Agreement.
(b) The offering price for each Call Share (the "CALL SHARE REPURCHASE
PRICE") shall be as follows:
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DATE OF NOTICE OF EXERCISE REPURCHASE PRICE
Grant Date through and including the first 105% multiplied by the
anniversary of the Grant Date exercise price of such
Call Share
From the first anniversary of the Grant (105%)2 multiplied by the
Date through and including the second exercise price of such
anniversary of the Grant Date Call Share
From the second anniversary of the Grant (105%)3 multiplied by the
Date through and including the third exercise price of such
anniversary of the Grant Date Call Share
From the third anniversary of the Grant (105%)4 multiplied by the
Date through and including the fourth exercise price of such
anniversary of the Grant Date Call Share
From the fourth anniversary of the Grant (105%)5 multiplied by the
Date through and including the fifth exercise price of such
anniversary of the Grant Date Call Share
The offering price for each Vested Stock Option (the "VESTED OPTION
REPURCHASE PRICE") shall be an amount equal to the Call Share Repurchase Price
determined pursuant to this Section 2.5(b) as if such Vested Stock Option was
exercised immediately prior to the giving of notice by the Company of the
exercise of the option to purchase LESS the exercise price of such Vested Stock
Option.
Section 2.6 REGISTRATION RIGHTS AND RELATED MATTERS. (a) If the Company
intends (other than in connection with an IPO) to register Shares on Form S-1,
Form S-2 or Form S-3 or any corresponding form applicable at the time under the
Securities Act as then in effect (or any similar statute then in effect), the
Company will give written notice to each Stockholder of its intention to do so,
at least 15 days prior to the time of the filing of any registration statement
or qualification papers, and at the written request of any Stockholder given
within 10 days after receipt of any such notice (which request shall specify the
number of Shares intended to be sold or disposed of by such Stockholder and
shall describe the nature of any proposed sale or other disposition thereof
which may include a distribution over a reasonable period of time), the Company
will use its reasonable best efforts to cause such Shares to be registered or
qualified to the extent required (in the opinion of the Company's counsel) to
permit the sale or other disposition thereof (in accordance with the methods
described by such Stockholder) (such right of each Stockholder to participate in
the proposed offering, a "PIGGY-BACK RIGHT"). The number of Shares that any
Stockholder intends to sell shall be subject to underwriters' cutbacks resulting
from the underwriters' conclusion that the inclusion of all of the Shares
requested to be included in the proposed offering would materially adversely
affect the distribution of Shares in such offering or the market price of Common
Stock if such Common Stock is publicly traded. Such underwriters' cutbacks
shall be made on a pro rata basis by multiplying the number of Shares
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that each Stockholder desires to sell in the proposed offering by a fraction the
numerator of which shall be the number of Stockholders' Shares that the
underwriters deem appropriate to sell in the proposed offering and the
denominator of which shall be the total number of Shares that all of the
Stockholders initially desire to sell in the proposed offering.
(b) Notwithstanding any other provisions hereof, the Company shall ensure
that (i) any registration statement relating to a Stockholder's exercise of its
piggy-back rights complies in all material respects with the Securities Act and
(ii) any such registration statement does not, when it becomes effective,
contain an untrue statement or omission.
(c) All out-of-pocket expenses, disbursements and fees in connection with
any action to be taken under this Section 2.6 shall be borne by the Company,
including the reasonable fees and expenses of one counsel for all participating
Stockholders, provided that the foregoing expenses shall in no event include the
underwriters' discount in connection with an offering.
(d) In the event of any registration under the provisions of this Section
2.6, the Company, to the extent permitted by law, will indemnify any Stockholder
participating in such registration, its respective officers and directors, if
any, and each Person, if any, who controls such Stockholder within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act,
against all losses, claims, damages and liabilities caused by any untrue
statement of a material fact contained in the registration statement or
prospectus (and as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading and will reimburse such Stockholder, its
officers and directors and any Person, if any, who controls such Stockholder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any legal or other expenses reasonably incurred by such
Stockholder, officer, director or Person in connection with investigating or
defending any such losses, claims, damages and liabilities, except insofar as
such losses, claims, damages or liabilities are caused by any untrue statement
or omission contained in information furnished in writing to the Company by such
Stockholder participating in such registration or by underwriters expressly for
use therein. The obligation of the Company under this Section 2.6 to register
securities for any of the Stockholders shall be subject to the condition that
each such Stockholder and the underwriters involved in the offering shall
furnish to the Company in writing such information as shall be reasonably
requested by the Company for use in connection with the preparation of any such
registration statement or prospectus and, to the extent permitted by law, shall
indemnify the Company, its directors and officers, any other underwriter, the
other Stockholders participating in such registration and each Person, if any,
who controls the Company, any other underwriter or such other Stockholders,
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against all losses, claims, damages and liabilities caused by any
untrue statement or omission contained in information so furnished in writing to
the Company by such Stockholder or such underwriter expressly for use therein;
provided that the liability of any such Stockholder for such losses, claims,
damages and liabilities shall not exceed the net proceeds received by such
Stockholder in any such offering.
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(e) In case any action, claim or proceeding shall be brought against any
Person entitled to indemnification hereunder, such indemnified party shall
promptly notify each indemnifying party in writing, and such indemnifying party
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses
incurred in connection with the defense thereof. The failure to so notify such
indemnifying party shall not affect any obligation it may have to any
indemnified party under this Agreement or otherwise except to the extent that
(as finally determined by a court of competent jurisdiction (which determination
is not subject to review or appeal)) such failure materially and adversely
prejudiced such indemnifying party. Each indemnified party shall have the right
to employ separate counsel in such action, claim or proceeding and participate
in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of each indemnified party unless (i) such indemnifying party has
agreed to pay such expenses; (ii) such indemnifying party has failed promptly to
assume the defense and employ counsel reasonably satisfactory to such
indemnified party, or (iii) the named parties to any such action, claim or
proceeding (including any impleaded parties) include both such indemnified party
and such indemnifying party or an affiliate or controlling person of such
indemnifying party, and such indemnified party shall have been advised in
writing by counsel that either (x) there may be one or more legal defenses
available to it which are different from or in addition to those available to
such indemnifying party or such affiliate or controlling person or (y) a
conflict of interest may exist if such counsel represents such indemnified party
and such indemnifying party or its affiliate or controlling person; PROVIDED,
HOWEVER, that such indemnifying party shall not, in connection with any one such
action or proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be responsible hereunder for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel), which
counsel shall be designated by such indemnified party.
No indemnified party shall be liable for any settlement effected without
its written consent. Each indemnifying party agrees, jointly and severally,
that it will not, without the indemnified party's prior written consent, consent
to entry of any judgment or settle or compromise any pending or threatened
claim, action or proceeding in respect of which indemnification or contribution
may be sought hereunder unless the foregoing contains an unconditional release,
in form and substance reasonably satisfactory to the indemnified parties, of the
indemnified parties from all liability and obligation arising therefrom.
(f) The indemnifying party's liability to any such indemnified party
hereunder shall not be extinguished solely because any other indemnified party
is not entitled to indemnify hereunder.
(g) The indemnification provided for under this Agreement will remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party, and will survive the transfer of securities.
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(h) If the indemnification provided for in this Section 2.6 from the
indemnifying party is unavailable, or insufficient to hold harmless, to any
indemnified party hereunder in respect of any losses, claims, damages or
liabilities referred to herein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party under this Section 2.6 as a
result of the losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with any investigation or legal or administrative
action or proceeding. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 2.6(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to herein. Notwithstanding the
provisions of this subsection (h), a Stockholder shall not be required to
contribute any amount in excess of the amount by which (i) the amount (net of
payment of all expenses) at which the securities that were sold by such
Stockholder and distributed to the public were offered to the public exceeds
(ii) the amount of any damages which such Stockholder has otherwise been
required to pay by reason of such untrue statement or omission.
No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 2.6 are
in addition to any liability that the indemnifying parties may have to the
indemnified parties.
(i) As expeditiously as possible after the effectiveness of any
registration statement pursuant to this Section 2.6 and prior to such date as
shall be certified to the Company as the date upon which the Transfer
contemplated by such registration statement will be effected by any
participating Stockholder, the Company will deliver in exchange for certificates
representing Shares so registered bearing the legends set forth in Section 2.1,
certificates therefor not bearing such legends as shall be required to effect
such Transfer. In the event that the proposed Transfer is not made as
contemplated by any such participating Stockholder, by acceptance thereof such
Stockholder shall be deemed to have agreed that it will deliver such
certificates not bearing such legends to the Company in exchange for new
certificates bearing the legends set forth in Section 2.1 if the Company shall
request and the Company agrees that it will make such exchange.
D-14
(j) The registration rights provided in this Section 2.6 shall terminate
after an IPO as to any Stockholder which can immediately sell all of its Shares
in a single sale pursuant to Rule 144 under the Securities Act.
(k) Each of the Stockholders agrees that in connection with any public
offering, such Stockholder will not, without the prior written consent of the
Company, directly or indirectly, offer to sell, sell, contract to sell
(including, without limitation, any short sale), grant any option for the sale
of, acquire any option to dispose of, or otherwise dispose of any Shares for a
period of 180 days following the date of the consummation of such public
offering.
(l) So long as the Company shall not have registered any of its securities
pursuant to Section 12 of the Securities Exchange Act of 1934 (the "EXCHANGE
ACT") or filed a registration statement pursuant to the requirements of the
Securities Act, the Company shall, at any time and from time to time, upon the
request of any holder of Shares and upon the request of any Person designated by
such holder as a prospective purchaser of any Shares, furnish in writing to such
holder or such prospective purchaser, as the case may be, a statement as of a
date not earlier than 12 months prior to the date of such request of the nature
of the business of the Company and the products and services it offers and
copies of the most recent balance sheet and profit and loss and retained
earnings statements of the Company, together with similar financial statements
for such part of the two preceding fiscal years as the Company shall have been
in operation, all such financial statements to be audited to the extent audited
statements are reasonably available, and all other information required by Rule
144A under the Securities Act; PROVIDED THAT, in any event the most recent
financial statements so furnished shall include a balance sheet as of a date
less than 16 months prior to the date of such request, statements of profit and
loss and retained earnings for the 12 months preceding the date of such balance
sheet, and, if such balance sheet is not as of a date less than 6 months prior
to the date of such request, additional statements of profit and loss and
retained earnings for the period from the date of such balance sheet to a date
less than 6 months prior to the date of such request. If the Company shall have
registered any of its securities pursuant to the requirements of Section 12 of
the Exchange Act or filed a registration statement pursuant to the requirements
of the Securities Act, the Company shall timely file the reports required to be
filed by it under the Securities Act and the Exchange Act (including but not
limited to the reports under Sections 13 and 15(d) of the Exchange Act referred
to in subparagraph (c) of Rule 144 adopted by the Commission under the
Securities Act) and the rules and regulations adopted by the Commission
thereunder (or, if the Company is not required to file such reports, it will,
upon the request of any holder of Shares, make publicly available other
information) and will take such further action as any holder of Shares may
reasonably request, all to the extent required from time to time to enable such
holder to sell Shares without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 and Rule 144A under the
Securities Act, as such Rules may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the Commission. Upon the
request of any holder of Shares, the Company will deliver to such holder a
written statement as to whether it has complied with the requirements of this
Section 2.6(h).
D-15
ARTICLE III
BOARD OF DIRECTORS OF THE COMPANY
Section 3.1 BOARD OF DIRECTORS. (a) As long as MDC controls the voting
power (through proxy or otherwise) of at least 50% of the Voting Stock, each
Stockholder agrees to vote all of the Shares held by such Stockholder so as to
elect and maintain a Board, a majority of which members consist of persons
designated by MDC and initially the board should be composed of the following:
Xxxxx X. Xx Xxxxx, Xxxxxx X. Xxxxx and Xxxxx X. Xx.
(b) As long as MDC controls the voting power (through proxy or otherwise)
of at least 50% of the Voting Stock, in the event that any director designated
by MDC for any reason ceases to serve as a director during his term of office,
the resulting vacancy on the Board shall be filled by a director designated by
MDC.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Section 4.1 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. (a) Each
Stockholder represents and warrants, severally and not jointly, that: (i) such
Stockholder is acquiring, or has acquired, the shares of Common Stock for
investment for such Stockholder's own account and not with a view to, or for the
resale in connection with, the distribution or other disposition thereof; (ii)
such Stockholder will not, during the term of this Agreement, directly or
indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of any shares of Common Stock except in accordance with this Agreement;
(iii) such Stockholder (A) has either (1) preexisting personal or business
relationships with the Company, or any of its respective officers, directors or
any of its respective Affiliates or (2) such knowledge and experience in
financial and business matters such that such Stockholder is capable of
evaluating the merits and risks relating to the purchase of shares of Common
Stock under this Agreement, or such Stockholder has been advised by a
representative possessing such knowledge and experience who is unaffiliated with
or who is not compensated, directly or indirectly, by the Company or any of its
Affiliates, or (B) is a Trust, the beneficiary of which is a Person meeting the
requirements of (1) and/or (2) of clause (iii)(A) above; (iv) such Stockholder
has been given an opportunity which such Stockholder deems adequate to obtain
information and documents relating to the Company and to ask questions of and
receive answers from representatives of the Company concerning such
Stockholder's investment in the Common Stock of the Company; (v) such
Stockholder's financial condition is such that such Stockholder can afford to
bear the economic risk of holding the Common Stock for an indefinite period of
time; such Stockholder has adequate means of providing for such Stockholder's
current needs and contingencies and has no need for such Stockholder's
investment in the Common Stock to be liquid; and (vi) such Stockholder can
afford to suffer a complete loss of such Stockholder's investment in the Common
Stock.
(b) Each Stockholder further acknowledges that such Stockholder has been
advised by the Company that: (i) the offer and sale of the Common Stock has not
been registered
D-16
under the Securities Act, but is intended to be exempt from registration
pursuant to Section 4(2) of the Securities Act and the rules promulgated
thereunder by the Securities and Exchange Commission, and that the Shares cannot
be sold, pledged, assigned or otherwise disposed of unless the same is
subsequently registered under the Securities Act or an exemption from such
registration is available; (ii) it is anticipated that there will not be any
public market for the Shares in the foreseeable future; (iii) a restrictive
legend in the form set forth in Section 2.1 shall be placed on the certificates
representing the Shares; and (iv) a notation shall be made in the appropriate
records of the Company indicating that the Shares are subject to restrictions on
transfer and if the Company should at some time in the future engage the
services of a stock transfer agent, appropriate stop transfer restrictions will
be issued to such transfer agent with respect to the Shares.
(c) Each Stockholder further represents and warrants that (i) such
Stockholder has full right, power and authority to execute, deliver and perform
this Agreement; (ii) all actions necessary or required to be taken by or on the
part of such Stockholder to execute, deliver and perform this Agreement and to
consummate the transactions contemplated by this Agreement have been duly
authorized and approved by all necessary or required action of such Stockholder
and have been validly taken; and (iii) this Agreement has been duly executed and
delivered by such Stockholder and is a valid and binding agreement of such
Stockholder enforceable in accordance with its terms, except to the extent that
its enforceability may be subject to applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity.
ARTICLE V
MISCELLANEOUS
Section 5.1 ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior arrangements or understandings (whether written or
oral) with respect thereto.
Section 5.2 CAPTIONS. The Article and Section captions used herein are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 5.3 COUNTERPARTS. For the convenience of the parties, any number
of counterparts of this Agreement may be executed by the parties hereto and each
such executed counterpart shall be deemed to be an original instrument.
Section 5.4 NOTICES. All notices, consents, requests, instructions,
approvals and other communications provided for herein and all legal process in
regard hereto shall be validly given, made or served, if in writing and
delivered by personal delivery, overnight courier, telecopier or registered or
certified mail, return-receipt requested and postage prepaid addressed as
follows:
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If to the Company, to:
DIMAC Holdings, Inc.
c/x XxXxxx De Leeuw & Co., Inc.
00 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xx Xxxxx
Tel.: (000) 000-0000
Fax: (000) 000-0000
with copies to:
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Tel.: (000) 000-0000
Fax: (000) 000-0000
If to the MDC Entities, to:
XxXxxx De Leeuw & Co., Inc.
00 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xx Xxxxx
Tel.: (000) 000-0000
Fax: (000) 000-0000
if to any of the Non-Management or Management Stockholders, to the
addresses set forth opposite each of their names on Schedule A attached
hereto,
or to such other address as any such party hereto may, from time to time,
designate in writing to all other parties hereto, and any such communication
shall be deemed to be given, made or served as of the date so delivered or, in
the case of any communication delivered by mail, as of the date so received.
Section 5.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the Company, the Stockholders and their respective
heirs, devisees, legal representatives, successors, permitted assigns and other
permitted transferees. The rights of a Stockholder under this Agreement may not
be assigned or otherwise conveyed by any Stockholder except in connection with a
Transfer of Shares which is in compliance with this Agreement; PROVIDED,
HOWEVER, the rights of MDC under Sections 2.3, 2.4 and 3.1 are not assignable
other than as a result of a Permitted Transfer described in Section 2.2(a)(iii).
D-18
Section 5.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO SUCH STATE'S CHOICE OF LAW PROVISIONS.
Section 5.7 SUBMISSION TO JURISDICTION. (a) Each of the parties hereto
(other than the Michigan Fund) hereby irrevocably acknowledges and consents that
any legal action or proceeding brought with respect to any of the obligations
arising under or relating to this Agreement may be brought in the courts of the
State of New York or in the United States District Court for the Southern
District of New York, as the party bringing such action or proceeding may elect,
and each of the parties hereto (other than the Michigan Fund) hereby irrevocably
submits to and accepts with regard to any such action or proceeding, for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts. Subject to Section 5.7(b), the foregoing shall not
limit the rights of any party to serve process in any other manner permitted by
law. The foregoing consents to jurisdiction shall not constitute general
consents to service of process in the State of New York for any purpose except
as provided above and shall not be deemed to confer rights on any Person other
than the respective parties to this Agreement.
(b) Each of the parties hereto (other than the Michigan Fund) hereby
waives any right it may have under the laws of any jurisdiction to commence by
publication any legal action or proceeding with respect to this Agreement. To
the fullest extent permitted by applicable law, each of the parties hereto
(other than the Michigan Fund) hereby irrevocably waives the objection which it
may now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Agreement in any of the courts
referred to in Section 5.7(a) and hereby further irrevocably waives any claim
that any such court is not a convenient forum for any such suit, action or
proceeding.
(c) The parties hereto agree that any judgment obtained by any party
hereto or its successors or assigns in any action, suit or proceeding referred
to above may, in the discretion of such party (or its successors or assigns), be
enforced in any jurisdiction, to the extent permitted by applicable law.
(d) The parties hereto agree that the remedy at law for any breach of this
Agreement may be inadequate and that should any dispute arise concerning the
sale or disposition of any Shares or the voting thereof or any other similar
matter hereunder, this Agreement shall be enforceable in a court of equity by an
injunction or a decree of specific performance. Such remedies shall, however, be
cumulative and nonexclusive, and shall be in addition to any other remedies
which the parties hereto may have.
Section 5.8 BENEFITS ONLY TO PARTIES. Nothing expressed by or mentioned
in this Agreement is intended or shall be construed to give any Person, other
than the parties hereto and their respective successors or permitted assigns,
any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
D-19
benefit of the parties hereto and their respective successors and permitted
assigns, and for the benefit of no other Person.
Section 5.9 TERMINATION. This Agreement shall terminate upon the
happening of any one of the following events:
(a) the voluntary or involuntary dissolution of the Company;
(b) the Sale of the Business as provided in Section 2.4; and
(c) the consummation of an IPO, except that (i) the rights of the
Stockholders under Section 2.6 shall survive such termination (ii) the rights of
the Management Stockholders and obligations of MDC under Section 2.3 shall
survive such termination, and (iii) the restrictions under Section 2.1 and
2.2(a)(viii) of this Agreement in respect of Stockholders transferring Call
Shares following an IPO and any rights of the Company to repurchase Call Shares
and/or Vested Stock Options pursuant to Section 2.5 shall survive such
termination for a period of two years following the IPO;
PROVIDED, HOWEVER, the provisions of Section 5.11 shall survive any termination
of this Agreement.
Section 5.10 PUBLICITY. Except as otherwise required by applicable laws
or regulations, none of the parties hereto shall issue or cause to be issued any
press release or make or cause to be made any other public statement in each
case relating to or connected with or arising out of this Agreement or the
matters contained herein, without obtaining the prior approval of the Company to
the contents and the manner of presentation and publication thereof.
Section 5.11 CONFIDENTIALITY. Each of the parties hereto hereby agrees
that it shall keep (and shall cause its directors, officers, employees,
representatives and outside advisors and its affiliates to keep) all non-public
information relating to the Company (including any such information received
prior to the date hereof) confidential except information which (i) becomes
known to such Stockholder from a source, other than the Company, its respective
directors, officers, employees, representatives or outside advisors, which
source is not obligated to the Company to keep such information confidential or
(ii) becomes generally available to the public through no breach of this
Agreement by any party hereto. Each of the parties hereto agrees that such
non-public information (a) shall be communicated only to those of its directors,
officers, employees, representatives, outside advisors and affiliates who need
to know such non-public information and (b) will not be used by such party or
its directors, officers, employees, representatives, outside advisors or
affiliates either to compete with the Company or to conduct itself in a manner
inconsistent with the antitrust laws of the United States or any state.
Notwithstanding the foregoing, a party hereto may disclose non-public
information if required to do so by law or a court of competent jurisdiction or
by any governmental agency; PROVIDED, HOWEVER, that prompt notice of such
required disclosure be given to the Company prior to the making of such
disclosure so that the Company may seek a protective order or other appropriate
remedy; PROVIDED FURTHER, that such party shall not be required to give such
disclosure to the Company if such disclosure is required by any regulatory
agency in the ordinary course of
D-20
business. In the event that such protective order or other remedy is not
obtained, the party hereto required to disclose the non-public information will
disclose only that portion which such party is advised by counsel is legally
required to be disclosed and will request that confidential treatment be
accorded such portion of the non-public information. In addition,
notwithstanding the foregoing, the TCW Entities may disclose any information
regarding the Company to any prospective purchasers of securities of the Company
so long as such prospective purchasers agree to maintain the confidentiality of
such information at least to the extent provided for in this paragraph.
Section 5.12 FEE; EXPENSES. The parties hereto acknowledge that MDC
Management Company IV, LLC, an Affiliate of MDC, or its respective successors or
assigns, (i) have received from the Company or its Subsidiaries an aggregate
transaction fee equal to $9,900,000 and (ii) shall receive an ongoing management
fee, adjusted annually, equal to the greater of $550,000 per annum and 1.06% of
pro forma EBITDA of the Company, for the preceding fiscal year, PROVIDED that in
no event shall such ongoing management fee exceed $1,000,000 in any year, in
each case plus reimbursement for its out-of-pocket expenses.
Section 5.13 AMENDMENTS; WAIVERS. No provision of this Agreement may be
amended, modified or waived without approval of the holders of 66-2/3% of the
then outstanding shares of Common Stock held by Persons party hereto; provided
that no amendment or waiver of a provision of this Agreement which adversely
affects the rights of any of the Non-MDC Stockholders may be made without such
Non-MDC Stockholders' consent with the Non-MDC Stockholders being considered as
a group with the determination by the holders of a majority of the outstanding
Shares and Vested Stock Options held by the Non-MDC Stockholders being binding
on all Non-MDC Stockholders; provided further that no amendment or waiver of a
provision of this Agreement which adversely and disproportionately affects the
rights of any of the Management Stockholders may be made without such Management
Stockholders' consent with the Management Stockholders being considered as a
group with the determination by the holders of a majority of the outstanding
Shares and Vested Stock Options held by the Management Stockholders being
binding on all Management Stockholders; provided further that no amendment of
Sections 2.2(a)(viii) and 2.5 which adversely affects the rights, or
obligations, of any of the Management Stockholders may be made without such
Management Stockholder's consent; provided further that (x) no amendment which
adversely and disproportionately affects the rights of the TCW Entities may be
made without the TCW Entities' consent with the TCW Entities being considered as
a group with the determination by the holders of a majority of the outstanding
Shares held by the TCW Entities being binding on all TCW Entities, and (y) no
amendment of Section 2.3 or 2.6 which adversely affects the rights of the TCW
Entities may be made without the TCW Entities' consent with the TCW Entities
being considered as a group with the determination by the holders of a majority
of the outstanding Shares held by the TCW Entities being binding on all TCW
Entities.
D-21
Section 5.14 SEVERABILITY. In case any of the provisions contained
herein shall, for any reason, be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision or provisions are not
contained herein.
[SIGNATURE PAGE FOLLOWS]
D-22
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
DIMAC HOLDINGS, INC.
By
--------------------------------------
Name:
Title:
XXXXXX DE LEEUW & CO. IV, L.P.,
By: MDC Management Co. IV, LLC,
its General Partner
By
--------------------------------------
Name:
Title:
DELTA FUND LLC
By
--------------------------------------
Name:
Title:
XXXXXX DE LEEUW & CO. IV ASSOCIATES, L.P.
By: MDC Management Co. IV, LLC,
its General Partner
By
--------------------------------------
Name:
Title:
D-23
TCW/CRESCENT MEZZANINE PARTNERS, L.P.
TCW/CRESCENT MEZZANINE TRUST
TCW/CRESCENT MEZZANINE INVESTMENT
PARTNERS, L.P.
By: TCW/Crescent Mezzanine, L.L.C.,
its general partner or managing owner
By
--------------------------------------
Name:
Title:
By
--------------------------------------
Name:
Title:
D-24
TCW SHARED OPPORTUNITY FUND II, L.P.
By: TCW Investment Management
Company, its investment advisor
By
--------------------------------------
Name:
Title:
By
--------------------------------------
Name:
Title:
D-25
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Advisors (Bermuda), Limited,
as general partner
By
--------------------------------------
Name:
Title:
By: TCW Investment Management
Company, as investment advisor
By
--------------------------------------
Name:
Title:
D-26
FIRST UNION INVESTORS, INC.
By
--------------------------------------
Name:
Title:
D-27
DIMAC EQUITY INVESTORS, L.L.C.
By: Merchant GP, Inc., as managing member
By
--------------------------------------
Name:
Title:
D-28
Form of Supplmental Letter to the
Amended and Restated Stockholders' Agreement
October 22, 1998
The Purchasers referenced in the
Securities Purchase Agreement
dated as of October 22, 1998
among DIMAC Holdings, Inc., DIMAC Corporation
and the purchasers named on the signature pages thereof
Reference is made to that certain Amended and Restated Stockholders
Agreement dated as October 22, 1998 (the "Stockholders Agreement"), by and
among DIMAC Holdings, Inc. (the "Company"), the MDC Entities (as defined
therein) and the other persons parties thereto. Capitalized terms used
herein which are not otherwise defined herein shall have the meanings
assigned therefor in the Stockholders Agreement.
Each of the undersigned hereby agree as follows:
(i) to the extent that in connection with, and by virtue of, any
sale contemplated by Section 2.3 or 2.4 of the Stockholders Agreement, any of
the TCW Entities would have become liable, but for this letter agreement, for
representations, warranties or covenants (other than representations,
warranties and covenants (the "Individual Representations, Warranties and
Covenants") with respect to its own ownership of the Shares to be sold by it
and its ability to convey title thereto free and clear of any liens,
encumbrances or adverse claims, its due organization, its due authorization,
execution and delivery of the definitive purchase agreement (if applicable),
enforceability of such purchase agreement against it and no conflicts of it
with such purchase agreement) which would survive the consummation of any
such sale transaction (other than to the extent such liability is covered by
an escrow arrangement as contemplated by Sections 2.3 and 2.4 of the
Stockholders Agreement), then to the extent of such liability, but only to
such extent, the MDC Entities will accept such liability on behalf of the TCW
Entities in the definitive purchase agreement so that such TCW Entity will be
liable post consummation of the sale transaction only for the Individual
Representations, Warranties and Covenants made by it and for its pro rata
portion of any escrow arrangement as contemplated by Section 2.3 and 2.4 of
the Stockholders Agreement;
(ii) the Company and the MDC Entities shall cause the TCW Entities
to be paid in immediately available funds in connection with any sale
contemplated by Section 2.3 or 2.4 of the Stockholders Agreement; and
(iii) notwithstanding Section 2.6 of the Stockholders Agreement, the
TCW Entities shall be entitled to the piggyback registration rights referred
to in Section 2.6 of the Stockholders Agreement in connection with an IPO in
which any other holder of Shares (including the MDC Entities) is offering to
sell Shares in the IPO.
D-29
DIMAC HOLDINGS, INC.
By
--------------------------------------
Name:
Title:
XxXXXX DE LEEUW & CO. IV, L.P.
By MDC Management Company IV, LLC,
its general partner
By
--------------------------------------
Name:
Title:
XxXXXX DE LEEUW & CO. IV ASSOCIATES, L.P.
By MDC Management Company IV, LLC,
its general partner
By
--------------------------------------
Name:
Title:
DELTA FUND LLC
By
--------------------------------------
Name:
Title:
D-30
Annex E
Opinion of Counsel to DIMAC Holdings and DIMAC Operating
October 22, 1998
To: The Purchasers named on the signature pages of the Securities Purchase
Agreement (as defined below) relating to the Notes (as defined below) and
the Warrants (as defined below) of DIMAC Holdings, Inc.
Ladies and Gentlemen:
We have acted as special counsel for DIMAC Holdings, Inc., a Delaware
corporation ("DIMAC Holdings"), and DIMAC Corporation, a Delaware corporation
("DIMAC Operating"), in connection with the sale to you by DIMAC Holdings of (i)
its 15% Senior Notes due 2009 (the "Notes"), (ii) 20,000 shares (the "Shares")
of its Common Stock, par value $.001 per share (the "Common Stock"), and (iii)
warrants (the "Warrants" and, together with the Notes and the Shares, the
"Securities") to purchase 28,205 shares of Common Stock, pursuant to the
Securities Purchase Agreement dated as of October 22, 1998 (the "Securities
Purchase Agreement") among DIMAC Holdings, DIMAC Operating and the purchasers
named on the signature pages thereof. Capitalized terms used but not defined
herein shall have the respective meanings assigned to them in the Securities
Purchase Agreement.
In so acting, we have examined such certificates of public officials and
certificates of officers of the Companies, and the originals (or copies thereof,
certified to our satisfaction) of such corporate documents and records of the
Companies, and such other documents, records and papers as we have deemed
relevant in order to give the opinions hereinafter set forth. In this
connection, we have assumed the genuineness of signatures, the authenticity of
all documents submitted to us as originals and the conformity to authentic
original documents of all documents submitted to us as certified, conformed,
facsimile or photostatic copies. In addition, we have relied, to the extent that
we deem such reliance proper, upon such certificates of public officials and of
officers of the Companies and on the representations and warranties of the
Companies contained in the Securities Purchase Agreement, with respect to the
accuracy of material factual matters contained therein which were not
independently established.
Based upon the foregoing, it is our opinion that:
1. Each of DIMAC Holdings and DIMAC Operating (a) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, (b) has all requisite corporate power and authority to own or
operate its properties and to transact the business in which it is engaged and
(c) is qualified or licensed to do business in the states listed on Schedule 1
attached hereto.
E-1
2. DIMAC Operating has the corporate power and authority and has taken all
actions necessary to authorize it (a) to execute, deliver and perform all of its
obligations under the Securities Purchase Agreement, the Indenture, the Senior
Credit Agreement, the DIMAC Operating Indenture, the DIMAC Operating Notes, the
DIMAC Operating Notes Purchase Agreement and the other Documents delivered at
the Closing to which it is a party and (b) to consummate the transactions
contemplated thereby. Each of the Securities Purchase Agreement, the Indenture,
the Senior Credit Agreement, the DIMAC Operating Indenture, the DIMAC Operating
Notes, the DIMAC Operating Notes Purchase Agreement and the other Documents to
which DIMAC Operating is a party is a valid and binding obligation of DIMAC
Operating, enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting enforcement of creditors' rights generally and
by general principles of equity (regardless of whether the issue of
enforceability is considered in a proceeding in equity or at law).
3. DIMAC Holdings has the corporate power and authority and has taken all
actions necessary to authorize it (a) to execute, deliver and perform all of its
obligations under the Securities Purchase Agreement, the Indenture, the
Securities, the Notes Registration Rights Agreement, the Warrant Agreement, the
Stockholders' Agreement, the Senior Credit Agreement and the other Documents
delivered at the Closing to which it is a party, (b) to issue, sell, deliver and
perform all of its obligations under the Notes and the Warrants, (c) to issue,
sell and deliver the Shares and (d) to consummate the transactions contemplated
by the Securities Purchase Agreement, the Indenture, the Securities, the Notes
Registration Rights Agreement, the Warrant Agreement, the Stockholders'
Agreement, the Senior Credit Agreement and the other Documents delivered at the
Closing to which it is a party. Each of the Securities Purchase Agreement, the
Indenture, the Notes, the Notes Registration Rights Agreement, the Warrant
Agreement, the Warrants, the Stockholders' Agreement, the Senior Credit
Agreement and the other Documents delivered at the Closing to which DIMAC
Holdings is a party is a valid and binding obligation of DIMAC Holdings,
enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting enforcement of creditors' rights generally and
by general principles of equity (regardless of whether the issue of
enforceability is considered in a proceeding in equity or at law).
4. The Series A Notes are in the form contemplated by the Indenture, have
been duly authorized by DIMAC Holdings and, when executed by DIMAC Holdings and
authenticated by the Trustee in the manner provided in the Indenture and
delivered against payment of the purchase price therefor will constitute valid
and binding obligations of DIMAC Holdings, enforceable against DIMAC Holdings in
accordance with their terms and will be entitled to the benefits of the
Indenture, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting enforcement of
creditors' rights generally and by general principles of equity (regardless of
whether the issue of enforceability is considered in a proceeding in equity or
at law). The Series B Notes have been duly authorized by DIMAC Holdings and,
when issued and executed by DIMAC Holdings and authenticated by the Trustee in
the manner provided in the Indenture (assuming the due authorization, execution
and delivery of the Indenture by the Trustee) and delivered in the registered
exchange offer contemplated by the Notes Registration Rights Agreement, will
constitute valid and binding obligations of DIMAC Holdings, enforceable against
DIMAC Holdings in accordance with
E-2
their terms, and will be entitled to the benefits of the Indenture, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting enforcement of creditors'
rights generally and by general principles of equity (regardless of whether
the issue of enforceability is considered in a proceeding in equity or at
law). DIMAC Holdings has authorized the issuance and delivery of PIK Notes in
an aggregate principal amount sufficient to pay up to all installments of
interest on the Notes that, pursuant to the terms of the Notes, may be paid
by issuing PIK Notes.
5. As of the date hereof, DIMAC Operating and the entities identified on
Schedule 3.1(a) to the Securities Purchase Agreement are the only direct or
indirect Subsidiaries of DIMAC Holdings. The total authorized Capital Stock of
DIMAC Holdings consists of 2,000,000 shares of Common Stock, of which
[____________] shares will be issued and outstanding upon consummation of the
transactions contemplated by the Securities Purchase Agreement. To our
knowledge, all outstanding options and other rights to acquire shares of Capital
Stock of DIMAC Holdings are as set forth on Schedule 3.1(b) to the Securities
Purchase Agreement. The total authorized Capital Stock of DIMAC Operating
consists of 100 shares of common stock, all of which were issued and outstanding
on the date hereof. DIMAC Holdings owns 100% of the outstanding Equity Interests
or other securities evidencing equity ownership of DIMAC Operating, to our
knowledge, free and clear of any Lien. To our knowledge, all of the outstanding
Equity Interests of each of the Companies and their Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable and were not
issued in violation of, and are not subject to, any preemptive or similar
rights, other than as set forth in the Securities Purchase Agreement. To our
knowledge, except for the shares of capital stock of DIMAC Operating, DIMAC
Holdings does not directly own any capital stock or any other securities of any
corporation, nor, to our knowledge, does it own any Equity Interest in any firm,
partnership, association or other entity. The 28,205 shares of Common Stock of
DIMAC Holdings issuable upon the exercise of the Warrants have been reserved for
such purpose and, if and when the Warrants are exercised in accordance with
their terms such shares of Common Stock of DIMAC Holdings, upon issuance in
accordance with the terms of the Warrants and the Warrant Agreement, will be
validly issued, fully paid and nonassessable.
6. The Shares have been duly authorized and validly issued, are fully paid
and nonassessable and have not been issued in violation of, and are not subject
to, any preemptive or similar rights. The certificates representing the Shares
comply in all material respect as to form with the sections of the Delaware
General Corporation law applicable to the form of securities.
7. To our knowledge, except as set forth in the Stockholders' Agreement, in
the Warrant Agreement and on Schedule 3.1(b) to the Securities Purchase
Agreement, there are no outstanding (i) securities convertible into or
exchangeable for any Equity Interests of any of the Companies, (ii) options
warrants or other rights to purchase or subscribe to Equity Interests of any of
the Companies or securities convertible into or exchangeable for Equity
Interests of any of the Companies, (iii) contracts, commitments, agreements,
understandings, arrangements, calls or claims of any kind relating to the
issuance of any Equity Interests of any of the Companies, any such convertible
or exchangeable securities or any such options, warrants or rights or (iv)
voting trusts, agreements, contracts, commitments, understandings or
arrangements with respect to the voting of any of the Equity Interests of any of
the Companies.
E-3
8. To our knowledge, except for the Stockholders' Agreement, DIMAC Holdings
has not entered into an agreement to register any of its capital stock under the
Securities Act. To our knowledge, except for the Notes Registration Rights
Agreement, DIMAC Holdings has not entered into an agreement to register any of
its other securities under the Securities Act. To our knowledge, (i) except for
the Securities Purchase Agreement, DIMAC Holdings has not entered into any
agreement to issue, purchase or sell any of its securities, and (ii) except for
the DIMAC Operating Notes Purchase Agreement, DIMAC Operating has not entered
into any agreement to issue, purchase or sell any of its securities.
9. There are no securities of DIMAC Holdings or DIMAC Operating registered
under the Exchange Act or listed on a national securities exchange registered
under Section 6 of the Exchange Act or quoted in a United States automated
inter-dealer quotation system.
10. Neither the execution, delivery or performance by any of the Companies
of the Securities Purchase Agreement, the Indenture, the Notes, the Warrant
Agreement, the Warrants, the Stockholders' Agreement, the Notes Registration
Rights Agreement, the Senior Credit Agreement, the DIMAC Operating Notes
Indenture, the DIMAC Operating Notes, the DIMAC Operating Notes Purchase
Agreement or any of the other Documents delivered at the Closing by any of the
Companies, nor the compliance with their respective obligations thereunder, nor
the consummation of the transactions contemplated thereby, nor the issuance,
sale or delivery of the Securities or the DIMAC Operating Notes will:
(i) violate any provision of the Charter Documents of any of the
Companies;
(ii) violate any statute, law, rule or regulation or any judgement,
decree, order, regulation or rule of any court or governmental authority or
body, in each case, known to us to be applicable to the Companies or any of
their respective properties;
(iii) permit or cause the acceleration of the maturity of any debt or
obligation of any of the Companies of which we are aware; or
(iv) violate, or be in conflict with, or constitute a default under,
or permit the termination of, or require the consent of, notice to, or
filing, registration or qualification with, any Person under, or result in
the creation or imposition of any Lien (other than Permitted Liens (as
defined in the Indenture)) upon any property of any of the Companies under,
any mortgage, indenture, loan agreement, note, debenture, agreement for
borrowed money or any other agreement of which we are aware to which any of
the Companies is a party or by which any of the Companies (or their
respective properties) may be bound, other than such violations, conflicts,
defaults, terminations and Liens, or such failure to obtain consents, which
would not result in a Material Adverse Effect.
11. None of the transactions contemplated by the Securities Purchase
Agreement (including, without limitation, the use of the proceeds from the sale
of the Securities) will violate or result in a violation of Regulations T, U and
X of the Board of Governors of the Federal Reserve System.
E-4
12. Assuming the representations and warranties of the Purchasers contained
in Section 4 of the Securities Purchase Agreement are true and correct, the
initial sale of the Securities under the Securities Purchase Agreement is exempt
from the registration and prospectus delivery requirements of the Securities
Act.
13. Neither DIMAC Holdings nor DIMAC Operating is an "investment company"
or a company controlled by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
14. To our knowledge, there is no Proceeding seeking to restrain, enjoin,
prevent the consummation of or otherwise challenge the Securities Purchase
Agreement or any of the other Documents to be delivered at the Closing or the
transactions contemplated thereby.
15. The Indenture is not required to be qualified under the Trust Indenture
Act of 1939, as amended.
In the course of preparation by DIMAC Operating of the Offering Circular,
we have participated in conferences with officers of the Companies,
representatives of the auditors of the Companies, at which conferences the
contents of the Offering Circular and related matters were discussed. We are not
passing upon and do not assume any responsibility for the accuracy, completeness
and fairness of the statements contained the Offering Circular and our judgments
as to materiality are, to the extent we deem appropriate, based in part upon the
view of appropriate officers and other representatives of the Companies. Based
on such participation in the preparation of the Offering Circular, we do not
believe that (a) the Offering Circular (other than the financial statements and
all other financial data included therein or omitted therefrom as to which we
express no opinion or belief), at the date thereof and at the date hereof,
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
The opinions expressed herein are limited to questions arising under the
Federal laws of the United States of America, the laws of the State of New York
and the General Corporation Law of the State of Delaware.
We express no opinion as to the enforceability of any indemnification or
contribution provision contemplated by the Securities Purchase Agreement or by
any document referred to therein to the extent the rights to indemnification or
contribution provided for therein are violative of any law, rule or regulation
(including any securities law, rule or regulation) or public policy relating
thereto.
This opinion is given pursuant to Section 2.1(b)(i) of the Securities
Purchase Agreement. This opinion may not be used or relied upon by or published
or communicated to any person or entity other than the addressees hereof for any
purpose whatsoever without our prior written consent in each instance.
Very truly yours,
E-5
