_____________________________________
_____________________________________
PUT/CALL AGREEMENT
Among
BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND L.P.,
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP II L.P.,
XXXXXXXXXX XXXX HILLS OFFSHORE
CAPITAL PARTNERS L.P.,
XXXXXX GROUP INTERNATIONAL, INC.
ROSES DELAWARE, INC.
THE XXXXXX GROUP INC.
And
RHI MANAGEMENT DIRECT L.P.
________________________________
Dated as of: November 19, 1996
________________________________
____________________________________
____________________________________
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS 2
1.1 Certain Defined Terms 2
ARTICLE II
CALL AND PUT OPTIONS 16
2.1 Call Option 16
2.2 Put Option 16
2.3 Call Option Exercise Price 17
2.4 Put Option Exercise Price 17
ARTICLE III
CALCULATION OF OPTION PRICE 18
3.1 Calculation of Creation Price and Acquisition Creation
Price 18
3.2 Calculation of Pro Forma EBITDA for the Entry Relevant
Period and Creation Multiple 19
3.3 Calculation of Pro Forma Acquisition EBITDA for the Entry
Relevant Period 20
3.4 Calculation of EBITDA for the Exit Relevant Period 20
3.5 Access to Information; Resolution of Disputes;
Miscellaneous 20
ARTICLE IV
DETERMINATION OF OPTION CONSIDERATION; CERTAIN CONDITIONS 21
4.1 Option Consideration 21
4.2 Conditions to Issuance of Xxxxxx Common Stock 23
ARTICLE V
REGISTRATION RIGHTS 24
5.1 Incidental Registration 24
5.2 Registration on Request 25
5.3 Registration Procedures 27
5.4 Indemnification 29
Page
ARTICLE VI
REPRESENTATIONS AND WARRANTIES 32
6.1 Representations and Warranties of All Parties 32
6.2 Representations and Warranties of LGII, RDI and LWN 32
6.3 Representations and Warranties of BCP and XXXX 33
ARTICLE VII
ADDITIONAL AGREEMENTS 34
7.1 Calculation of EBITDA 34
7.2 Further Assurances 35
7.3 LWN Guarantee 35
7.4 Drag-Along Rights 36
ARTICLE VIII
CLOSINGS 37
8.1 Payment of the Option Price in Cash or Xxxxxx Common
Stock 37
8.2 Exercise of the BCP Liquidity Right 37
8.3 Default By LGII or LWN 38
8.4 Time and Place of Closing 38
ARTICLE IX
MISCELLANEOUS 38
9.1 Notices 38
9.2 Severability; Mutuality of Options 39
9.3 Entire Agreement 39
9.4 Amendment and Waiver 39
9.5 Assignment; Binding on Transferees 39
9.6 Variations in Pronouns 40
9.7 Governing Law 40
9.8 Further Assurances 40
9.9 Headings 40
9.10 Counterparts 40
9.11 Submission to Jurisdiction; Waivers. 40
9.12 WAIVERS OF JURY TRIAL 40
PUT/CALL AGREEMENT
PUT/CALL AGREEMENT, dated as of November 19, 1996 (this
"Agreement"), among Blackstone Capital Partners II Merchant
Banking Fund L.P., a Delaware limited partnership ("BCPII"),
Xxxxxxxxxx Xxxx Hills Offshore Capital Partners L.P., a Delaware
limited partnership ("BROCP"), Blackstone Family Investment
Partnership II L.P., a Delaware limited partnership ("BFIP" and,
together with BCPII, BROCP and each of their respective permitted
assigns and transferees as provided herein, and together with any
Affiliate thereof that acquires shares of the capital stock of
Rose Hills Holdings Corp., a Delaware corporation formerly known
as Xxxxx Holding Company ("Holdings"), as contemplated by Section
5.4 of the Stockholders' Agreement referred to below, "BCP" or
the "BCP Entities"), Xxxxxx Group International Inc., a Delaware
corporation (together with its permitted assigns and transferees
as provided herein, "LGII"), Roses Delaware, Inc., a Delaware
corporation (together with its permitted assigns and transferees
as provided herein, "RDI"), The Xxxxxx Group Inc., a British
Columbia corporation ("LWN") and RHI Management Direct L.P., a
Delaware limited partnership ("XXXX"). BCP, LGII, RDI and XXXX
are herein collectively referred to as the "Stockholders" and
individually as a "Stockholder."
WHEREAS, Tudor Acquisition Corp., a Delaware corporation which
has been renamed Rose Hills Acquisition Corp. ("RHAC"), has
agreed to (i) merge into Roses, Inc., a California corporation
("RI"), pursuant to an Agreement and Plan of Merger dated
September 19, 1996 (the "Merger Agreement") among RI, the
stockholders of RI and RHAC (which is assigning its rights under
the Merger Agreement to its wholly owned subsidiary RH Mortuary
Corporation) and (ii) acquire substantially all of the cemetery
related assets and liabilities of Rose Hills Memorial Park
Association (the "Association") pursuant to an Asset Purchase
Agreement dated September 19, 1996 (the "Asset Purchase
Agreement", and together with the Merger Agreement, the
"Agreements") between the Association and RHAC (which is
assigning its rights under the Asset Purchase Agreement to its
wholly owned subsidiary Rose Hills, Inc.);
WHEREAS, such transactions are being consummated concurrently
with the execution and delivery of this Agreement;
WHEREAS, pursuant to a Subscription Agreement of even date
herewith among Holdings, LWN and the Stockholders (the
"Subscription Agreement"), RDI has transferred to Holdings all of
the issued and outstanding stock of certain of its subsidiaries
which own and operate funeral homes and cemeteries in California
(the "Satellite Properties") in exchange for shares of Preferred
Stock (as hereinafter defined);
WHEREAS, pursuant to the Subscription Agreement LGII, XXXX and
the BCP Entities have acquired shares of Common Stock (as
hereinafter defined) and Preferred Stock; and
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WHEREAS, the parties hereto desire to enter into this Agreement
for the purpose of setting forth certain agreements regarding the
rights and obligations of the Stockholders;
NOW, THEREFORE, in consideration of the mutual covenants and
conditions as hereinafter set forth, the parties hereto do hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. Capitalized terms
used herein and not otherwise defined herein shall have the
following meanings:
"Acquisition" means the direct or indirect acquisition by
Holdings during the term of this Agreement of all or part of one
or more funeral homes or cemeteries (other than the Rose Hills
Cemetery, the Mortuary and the Satellite Properties), whether
effected as an acquisition by RHC or as a contribution pursuant
to a Contribution Agreement.
"Acquisition Creation Multiple" means in respect of any
Acquisition consummated prior to the Exit Relevant Period, the
quotient of (i) the relevant Acquisition Creation Price divided
by (ii) the relevant Pro Forma Acquisition EBITDA for the Entry
Relevant Period.
"Acquisition Creation Price" means (i) with respect to an
Acquisition of Contributed Properties consummated prior to the
Exit Relevant Period, the product of (x) 7 times (y) Acquisition
EBITDA for such Contributed Properties for the twelve full
calendar months ending immediately prior to or coincident with
the date a Contribution Agreement is executed and delivered by
the relevant parties in respect of such Acquisition and (ii) with
respect to any other Acquisition consummated prior to the Exit
Relevant Period, the price mutually agreed by BCP and LGII at the
time of such Acquisition utilizing the same methodology utilized
in calculating the Creation Price.
"Acquisition EBITDA" means, with respect to a particular
Acquisition and for any period, the amount of Consolidated Cash
Flow for the business being acquired in such Acquisition, subject
to Section 7.1 of this Agreement.
"Additional BCP Contribution" means the amount in U.S. Dollars of
each additional purchase of Common Stock made by BCP or any of
its Affiliates pursuant to Section 5.4 of the Stockholders'
Agreement.
"Additional LGII Contribution" means the amount in U.S. Dollars
of each additional purchase of Common Stock or Preferred Stock
made by LGII or any of its Affiliates prior to the Exit Relevant
Period pursuant to Section 5.4 or 5.5 of the Stockholders'
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Agreement, but shall exclude any indemnity payments made pursuant
to Section 8.1 of the Subscription Agreement or Section 7.1(ii)
of any Contribution Agreement.
"Adjusted BCP Contribution" means the BCP Contribution less
$15,000,000.
"Adjusted Call Creation Multiple" means, as calculated in
connection with a particular Acquisition consummated prior to the
Exit Relevant Period, the sum of (a) the product of (i) the
relevant Acquisition Creation Multiple, times (ii) a fraction,
the numerator of which is the relevant Acquisition Creation Price
and the denominator of which is the sum of the relevant
Acquisition Creation Price and the Cumulative Creation Price, and
(b) the product of (i) the Adjusted Call Creation Multiple in
effect immediately prior to the relevant Acquisition times (ii) a
fraction, the numerator of which is the Cumulative Creation Price
and the denominator of which is the sum of such Cumulative
Creation Price plus the relevant Acquisition Creation Price. The
Adjusted Call Creation Multiple shall not be subject to any
further recalculation in respect of Acquisitions consummated
during or after the Exit Relevant Period.
"Adjusted Put Creation Multiple" means, as calculated in
connection with a particular Acquisition consummated prior to the
Exit Relevant Period:
(i) if such Acquisition involves Contributed Properties
acquired pursuant to a Contribution Agreement, the sum of
(x) the product of (a) the greater of the relevant
Minimum Put Multiple or 115% of the Adjusted Call Creation
Multiple in effect immediately prior to the relevant Acquisition
times (b) a fraction, the numerator of which is the Cumulative
Creation Price and the denominator of which is the sum of the
Cumulative Creation Price and the relevant Acquisition Creation
Price, and
(y) the product of (a) 115% of the greater of 7 or the
Acquisition Creation Multiple calculated for such Acquisition
times (b) a fraction, the numerator of which is the relevant
Acquisition Creation Price and the denominator of which is the
sum of the Cumulative Creation Price and the relevant Acquisition
Creation Price;
and (ii) if such Acquisition does not involve
Contributed Properties acquired pursuant to a Contribution
Agreement, the greater of (x) 115% of the Adjusted Call Creation
Multiple calculated in connection with such Acquisition and (y)
the relevant Minimum Put Multiple.
The Adjusted Put Creation Multiple shall not be subject to any
further recalculation in respect of Acquisitions consummated
during or after the Exit Relevant Period.
"Adjusted Total Equity Value means, as of the Exercise Date, the
sum of Total Equity Value, the Xxxxxx Preferred Contribution and
Xxxxxx Accrued Preferred Dividends.
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"Affiliate" of any Person means any other Person that directly or
indirectly controls, is controlled by, or is under common control
with, such Person.
"ASA" means the Administrative Services Agreement, dated as of
November 19, 1996 among RHAC, LGII and LWN.
"BCP Call Hurdle Profit" means the amount in excess of the BCP
Contribution necessary to provide a 22.5% compounded annual
return on the BCP Contribution from and including the Closing
Date (or, with respect to Additional BCP Contributions, measured
from and including the date on which each such Additional BCP
Contribution was made) to but excluding the Exercise Date.
"BCP Common Stock" means the shares of Common Stock held by the
BCP Entities.
"BCP Contribution" means the sum of $35,000,000 (which includes
the investment in Common Stock made by XXXX) and the aggregate
amount of any Additional BCP Contributions.
"BCP Liquidity Right" is defined in Section 4.1.
"BCP Put Hurdle Profit" means the amount in excess of the BCP
Contribution necessary to provide a compounded annual return on
the BCP Contribution from and including the Closing Date (or,
with respect to Additional BCP Contributions, measured from and
including the date on which each such Additional BCP Contribution
was made) to but excluding the Exercise Date equal to (i) in the
event there has been a Change of Control after the date of this
Agreement and prior to the Exercise Date, 27.5% or (ii) in the
event there has been no such Change of Control, 25%.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are
authorized or required by law to close.
"Call Creation Multiple" means the quotient of (i) the Creation
Price divided by (ii) Pro Forma EBITDA for the Entry Relevant
Period.
"Call Option" is defined in Section 2.1.
"Call Option Exercise Price" is defined in Section 2.3.
"Capitalized Liabilities' means the capitalized value as of the
date of determination, computed utilizing a 10% discount rate, of
Holdings' liabilities on a consolidated basis relating to
covenants not to compete, consulting agreements (including all
salary payable under agreements with Messrs. Xxxxx and Xxxxxxx)
and other former owners' expenses.
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"Change of Control" means an event or series of events by which
(i) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than any
person consisting entirely of one or more of the Permitted
Holders, is or becomes after the date of this Agreement the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act as in effect on the date hereof, except that for
such purpose such 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 all voting stock of LWN then
outstanding, whether as a result of issuance of securities of
LWN, any merger, consolidation, liquidation or dissolution of
LWN, any direct or indirect transfer of securities by a Permitted
Holder or otherwise, under circumstances where the Permitted
Holders (x) beneficially own (as so defined) in the aggregate a
lesser percentage of the voting stock of LWN than such other
person or group, and (y) 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 LWN;
(ii) (1) another corporation merges into LWN or LGII,
or LWN or LGII consolidates with or merges into any other
corporation or
(2) LWN conveys, transfers or leases all or
substantially all of its assets or a controlling interest in LGII
or all or substantially all the assets of LGII to any person or
group, in one transaction or a series of transactions other than
any conveyance, transfer or lease between LWN and a wholly owned
subsidiary of LWN,
in each case, in one transaction or a series of
related transactions with the effect that a person
or group, other than
(A) any person or group consisting of one or more
Permitted Holders or
(B) a person or group which is the beneficial
owner of more than 50% of the total voting power of all voting
stock of LWN immediately prior to such transaction
becomes the beneficial owner of more than 50% of the
total voting power of all voting stock of the surviving
or transferee corporation of such transaction or
series; or
(iii) individuals who currently constitute LWN's
Board of Directors (together with any new directors whose
election by LWN's Board of Directors, or whose nomination for
election by LWN's shareholders, was approved by a vote of a
majority of the Directors then still in office who were either
Directors at the date hereof or
6
whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the
Directors of LWN then in office.
"Closing" means the consummation of the transactions contemplated
by the Agreements.
"Closing Date" means the date on which the Closing occurs.
"Common Stock" means the common stock, par value $.01 per share,
of Holdings, including, where applicable non-voting common stock
of Holdings issued in connection with a Contribution.
"Consolidated Cash Flow" has the meaning ascribed to such term in
the Indenture as of the date of this Agreement, subject to
Section 7.1 of this Agreement.
"Contributed Properties" means any funeral home or cemetery or
group thereof conveyed to Holdings pursuant to a Contribution
Agreement.
"Contribution" means a contribution of Contributed Properties
pursuant to a Contribution Agreement.
"Contribution Agreement" means a Nearby Property Contribution
Agreement entered into pursuant to Section 5.5 of the
Stockholders' Agreement.
"Creation Price" means the sum of (a) the BCP Contribution, plus
(b) the Xxxxxx Contribution, plus (c) $155 million, plus (d) the
net amount of any interest accruing on the Notes from their date
of issuance through the Closing Date (net of interest earned by
the escrow agent on the net proceeds of the Note issuance), plus
(e) the amount as of the Closing Date of all Capitalized
Liabilities, plus (f) the cost of the Directors' and Officers'
liability insurance policy relating to acts occurring prior to
the Closing Date which RHAC is required to maintain pursuant to
Section 6.7 of the Merger Agreement, plus (g) all severance costs
incurred by RHC for all Mortuary, Association and other RHC
employees who were employees immediately prior to the Closing
Date and who are terminated within six months of the Closing
Date, plus (h) any liability under the Mortuary defined benefit
plan (calculated in accordance with the methodology used to
prepare the pro forma financial statements included in the
Offering Memorandum), including the cost, if any, of terminating
such plan, provided such termination occurs within six months of
the Closing Date plus (i) any liability under the Rose Hills
Mortuary, L.P. Supplemental Employee Retirement Plan (calculated
in accordance with the methodology used to prepare the pro forma
financial statements included in the Offering Memorandum), plus
(j) any liability (calculated in accordance with the methodology
used to prepare the pro forma financial statements included in
the Offering Memorandum) under the Mortuary's Deferred
Compensation Plan for Selected Executives of Rose Hills Mortuary,
L.P. (the "Phantom 401(k) Plan"), plus (k) any liability
(calculated in accordance with the methodology used to prepare
the pro forma financial statements included in the Offering
Memorandum) under the Association's Trustees' and Executives'
Pension Plans (as defined in the Asset Purchase Agreement), plus
(l) the present value as of the
7
Closing Date, computed utilizing a 10% discount rate, of amounts,
if any, paid to the Association in respect of California UBTI tax
pursuant to Section 10.4(b)(v) of the Asset Purchase Agreement,
plus (m) the present value as of the Closing Date, computed
utilizing a 10% discount rate, of any losses incurred by RHC in
respect of violations of the Employee Retirement Income Security
Act of 1974, as amended, and the regulations thereunder,
applicable to the Mortuary's 401(k) plan (including taxes to be
paid with respect thereto), plus (n) any other capitalization of
on- or off-balance sheet liabilities or obligations, plus (o) the
amount by which RHC's aggregate cash on hand as of the Closing
Date, after giving effect on a pro forma basis to the payment of
all Transaction Costs, regardless of whether such Transaction
Costs are paid at or subsequent to the Closing Date (but
excluding any cash received by RHC on the Closing Date from RI or
the Satellite Properties), is less than $1.0 million, plus (p)
the present value as of the Closing Date, computed utilizing a
10% discount rate, of any liabilities arising as a result of the
transactions contemplated by the Agreements, provided such
liabilities arise no later than six months after the Closing
Date, plus (q) any payments made to the owner of any mineral
rights on property owned by RHC in order to obtain a quitclaim of
such rights, less (r) the amount of any payment made by the
Association or the Mortuary to RHC in accordance with the post-
closing adjustment provisions of Section 4.1(b) of the Merger
Agreement and Section 2.4(b) of the Asset Purchase Agreement,
provided that any such items described in clauses (d) through (q)
that are funded on the Closing Date shall not require an
incremental increase in the Creation Price.
"Credit Agreement means the credit agreement dated as of November
19, 1996 among RHAC and the lenders thereunder.
"Cumulative Creation Price" means the sum of the Creation Price
and the aggregate Acquisition Creation Price in respect of all
Acquisitions prior to the Acquisition with respect to which such
Cumulative Creation Price is being calculated.
"Default Rate" has the meaning ascribed to such term in the
Credit Agreement as of the date of this Agreement (as calculated
with reference to an "AXEL" bearing interest at the "Base Rate",
as such terms are defined in the Credit Agreement).
"EBITDA" means, for any period, the amount of Consolidated Cash
Flow calculated for RHC on a consolidated basis for the relevant
period less any revenue recognized pursuant to the IBPS
Agreement, subject to Section 7.1 of this Agreement.
"EBITDA for the Exit Relevant Period" means EBITDA calculated for
the Exit Relevant period, provided, however, that in the event
that RHC has consummated an Acquisition during the Exit Relevant
Period, then EBITDA for the Exit Relevant Period shall be
restated to eliminate the Acquisition EBITDA attributable to such
Acquisition.
"Excess Value One" means the greater of (i) zero or (ii) Total
Equity Value minus Total Call Hurdle Value (if the calculation is
being made in connection with the Call Option) or Total Put
Hurdle Value (if the calculation is being made in connection with
the Put Option), up to a maximum amount which, when multiplied by
0.3 and added to the BCP Contribution plus the BCP Call Hurdle
Profit (if the calculation is being made in connection
8
with the Call Option) or the BCP Put Hurdle Profit (if the
calculation is being made in connection with the Put Option),
results in an Option Price that produces a twenty-five percent
(25%) compounded annual return on the BCP Contribution.
"Excess Value Two" means the greater of (i) zero or (ii) Total
Equity Value less Total Call Hurdle Value (if the calculation is
being made in connection with the Call Option) or Total Put
Hurdle Value (if the calculation is being made in connection with
the Put Option) less Excess Value One.
"Exercise Date" means the date specified for the closing of the
exercise of either of the Options, as set forth in a notice given
pursuant to Section 2.1(b) or 2.2(b), as applicable.
"Exercise Date Value" means the value per share of Xxxxxx Common
Stock determined in accordance with Section 4.1(b).
"Exit Relevant Period" means the period of twelve full calendar
months ending immediately prior to or coincident with the
Notification Date.
"GAAP" means generally accepted accounting principles, as in
effect in the United States of America on the date hereof and
applied on a basis consistent with the manner in which such
principles were applied in the preparation of the historical
financial statements of the Mortuary and the Association included
in the "Pro Forma Financial Information" section of the Offering
Memorandum.
"Guarantee" means the guarantee obligation of LWN set forth in
Section 7.3 hereof.
"Holder" shall mean any BCP Entity and any Permitted Transferee
who owns registrable securities.
"Holders' Portion" of the underwriters' discounts and commissions
means, with respect to particular Registrable Securities being
sold pursuant to a registration effected under Section 5.1 or
5.2, the excess, if any, of the underwriters' discount and
commissions charged in connection with such disposition over the
amount that such charge would have otherwise been if the
Registrable Securities being sold were sold at a public offering
price equal to the Exercise Date Value.
"IBPS Agreement" means the Buddhist Complex Development and Use
Agreement, dated March 1, 1994, between the Association and the
International Buddhist Progress Society.
"Indenture" means the Indenture, dated as of November 15, 1996,
between RHAC, as issuer, and United States Trust Company of New
York, as trustee.
9
"LGII Call Hurdle Profit" means the amount in excess of the LGII
Common Contribution necessary to provide a 22.5% compounded
annual return on the LGII Common Contribution from and including
the Closing Date (or, with respect to Additional LGII
Contributions made in respect of Common Stock, measured from and
including the date on which each such Additional LGII
Contribution was made) to but excluding the Exercise Date.
"LGII Common Contribution" means the sum of $9,000,000 and the
aggregate amount of any Additional LGII Contributions made in
respect of Common Stock.
"LGII Put Hurdle Profit" means the amount in excess of the LGII
Common Contribution necessary to provide a 25% compounded annual
return on the LGII Common Contribution from and including the
Closing Date (or, with respect to Additional LGII Contributions
made in respect of Common Stock, measured from and including the
date on which each such Additional LGII Contribution was made) to
but excluding the Exercise Date.
"Xxxxxx Accrued Preferred Dividends" means, as of the date of
determination, the aggregate liquidation preference of the Xxxxxx
Preferred less the Xxxxxx Preferred Contribution.
"Xxxxxx Common Stock" means the common stock, par value $.01 per
share, of The Xxxxxx Group Inc., a British Columbia corporation,
but excluding shares of Common Stock held as a consequence of any
Acquisition made during or after the Exit Relevant Period.
"Xxxxxx Contribution" means the sum of the LGII Common
Contribution and the Xxxxxx Preferred Contribution.
"Xxxxxx Preferred" means the shares of Preferred Stock held by
LGII, RDI and their respective Affiliates but excluding shares of
Preferred Stock (including additional liquidation preference
attributable to accrued but unpaid dividends thereon) held as a
consequence of any Acquisition made during or after the Exit
Relevant Period.
"Xxxxxx Preferred Catch-up Amount" means the excess of (a) the
amount necessary to provide a 16.0% compounded annual return on
the Xxxxxx Preferred Contribution from and including the Closing
Date (or, with respect to Additional LGII Contributions made in
respect of Preferred Stock, measured from and including the date
on which each such Additional LGII Contribution was made) to but
excluding the Exercise Date, over (b) the liquidation preference
as of the Exercise Date of the Xxxxxx Preferred (including all
accrued dividends whether undeclared or paid in kind).
"Xxxxxx Preferred Contribution" means the sum of (i) $63,000,000,
(ii) the Subsidiary Stock valued at $23,000,000 and (iii) the
aggregate amount of any Additional LGII Contributions made in
respect of Preferred Stock.
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"Management Equity Indebtedness" means the aggregate amount of
outstanding loans, including accrued interest thereon (whether or
not capitalized), provided by RHC to XXXX or its management for
purposes of the acquisition of Common Stock.
"Market Value" means the average of the daily closing prices of
the Xxxxxx Common Stock for the 30 trading day period ending on
the Exercise Date or such other relevant date of determination,
as the case may be. The closing price for each day shall be the
last reported sales price regular way or, in case no such
reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case
on the New York Stock Exchange, or, if the Xxxxxx Common Stock is
not listed or admitted to trading on the New York Stock Exchange,
on the American Stock Exchange, or, if the Xxxxxx Common Stock is
not listed or admitted to trading on the American Stock Exchange,
the average of the closing bid and asked prices of the Xxxxxx
Common Stock in the over- the-counter market as reported on the
NASDAQ system of the National Association of Securities Dealers,
Inc. or if the Xxxxxx Common Stock is not so quoted, the average
of the closing bid and asked price of the Xxxxxx Common Stock in
the over-the-counter market as furnished by any nationally
recognized New York Stock Exchange member firm selected by LWN
for such purpose.
"Minimum Put Multiple" means, for purposes of calculating the
Adjusted Put Creation Multiple in connection with a particular
Acquisition:
(i) 12, if the Adjusted Put Creation Multiple is
being calculated in connection with an Acquisition that does not
involve, and that has not been preceded at any time by, a
Contribution; provided, that the Minimum Put Multiple in effect
immediately following such Acquisition shall be deemed to remain
at 12 until adjusted as provided below;
(ii) 12, if the Adjusted Put Creation Multiple is
being calculated in connection with an Acquisition that involves,
but that has not been preceded at any time by, a Contribution;
provided, that the Minimum Put Multiple in effect immediately
following such Acquisition shall be deemed to be equal to the
Adjusted Put Creation Multiple calculated in connection with such
Acquisition;
(iii) the Weighted Minimum Put Multiple, if the
Adjusted Put Creation Multiple is being calculated in connection
with an Acquisition that does not involve, but that has been
preceded at any time by, a Contribution; provided, that the
Minimum Put Multiple in effect immediately following such
Acquisition shall be deemed to be equal to such Weighted Minimum
Put Multiple; and
(iv) the Minimum Put Multiple deemed to be in effect
immediately following the most recently preceding calculation of
the Adjusted Put Creation Multiple, if the Adjusted Put Creation
Multiple is being calculated in connection with an Acquisition
that involves, and that has been preceded at any time by, a
Contribution; provided that the Minimum Put Multiple in effect
immediately following
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such Acquisition shall be deemed to be equal to the Adjusted Put
Creation Multiple calculated in connection with such Acquisition.
"Mortuary" means Roses, Inc., a California corporation, and its
consolidated subsidiaries, which are being indirectly acquired by
Holdings on the Closing Date pursuant to the Merger Agreement.
"Notes" means the $80 million of 9 1/2% senior subordinated notes
due 2004 issued pursuant to the Indenture.
"Notification Date" means the date notification is given by an
exercising party under any of the Options in accordance with
Section 2.1(b) or 2.2(b).
"Obligations" means the obligation of LGII to pay on the Exercise
Date the cash portion, if any, of the Option Price, including,
without limitation, interest accruing at the Default Rate after
the Exercise Date after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like
proceeding, relating to LGII whether or not a claim for post-
filing or post-petition interest is allowed in such proceeding.
"Offering Memorandum" the offering memorandum dated November 14,
1996 relating to the offering of the Notes.
"Option" means the Call Option or the Put Option, as applicable.
"Option Price" means the Call Option Exercise Price or the Put
Option Exercise Price, as applicable and as determined in
accordance with this Agreement.
"Option Shares" means shares of Xxxxxx Common Stock issuable in
connection with the exercise of an Option.
"Option Shares" means shares of Xxxxxx Common Stock, if any,
issuable in connection with the Option.
"Permitted Holders" means, collectively Xxx Xxxxxx and his
estate, spouse, heirs, lineal descendants and legatees and legal
representatives of any of the foregoing and the trustee of any
bona fide trust of which one or more of the foregoing are the
beneficiaries, and any entity of which any of the foregoing,
individually or collectively, beneficially owns more than 50% of
the voting stock.
"Permitted Transferee" means any Person to whom a Stockholder
transfers shares of Common Stock or Preferred Stock, as the case
may be, in accordance with the Stockholders' Agreement and who is
required to, and does, become bound by the terms of this
Agreement, and includes any Person to whom a Permitted Transferee
(as thus defined) of a Stockholder (or a Permitted Transferee of
a Permitted Transferee) so further transfers shares and who is
required to, and does, become bound by the terms of this
Agreement.
12
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or other entity.
"Preferred Stock" means the 10% Pay In-Kind Cumulative Preferred
Stock, par value $.01 per share, of Holdings.
"Pro Forma Acquisition EBITDA for the Entry Relevant Period"
means:
(i) in the case of an Acquisition consummated on or prior to the date
which is 24 months prior to the end of the Exit Relevant Period,
the quotient of (a) the sum of (i) Acquisition EBITDA for first
full twelve calendar months following such consummation date
divided by 1.06 and (ii) Acquisition EBITDA for the second full
twelve calendar months following such consummation date divided
by 1.06 raised to a power equal to 2 and (b) 2, and may be
expressed as a formula calculation as follows:
First 12 mos. Acquisition EBITDA + Second 12 mos. Acquisition EBITDA
________________________________ _________________________________
2
(1.06) (1.06)
____________________________________________________________________
2
(ii) in the case of an Acquisition consummated during the 12 months
prior to the beginning of the Exit Relevant Period, the quotient
of (a) the sum of (i) Acquisition EBITDA for first full twelve
calendar months following such consummation date divided by 1.06
and (ii) Acquisition EBITDA for the period beginning on the first
day of the first month following such twelve calendar month
period and ending on last day of the Exit Relevant Period (the
"Remaining Period") divided by 1.06 raised to a power equal to
the quotient of (x) 365 plus the number of days in the Remaining
Period and (y) 365 and (b) the quotient of (x) 365 plus the
number of days in the Remaining Period and (y) 365, and may be
expressed as a formula calculation as follows:
First 12 mos. EBITDA + Remaining Period EBITDA
____________________ _______________________
((365+# days in Remaining Period)/365)
(1.06) (1.06)
___________________________________________________________________
(365+# days in Remaining Period)/365
13
"Pro Forma EBITDA for the Entry Relevant Period" means the
quotient of (a) the sum of (i) EBITDA for calendar year 1997
divided by 1.06 raised to a power equal to the quotient of (x)
the number of days elapsed between the Closing Date and December
31, 1997 and (y) 365 and (ii) EBITDA for calendar year 1998
divided by 1.06 raised to a power equal to the quotient of (x)
the number of days elapsed between the Closing Date and December,
1998 and (y) 365, and (b) 2, and may be expressed as a formula
calculation as follows:
1997 EBITDA + 0000 XXXXXX
______________________________________ _____________________________________
((# days since CD to 12-31-97)/365) ((# days since CD to 12-31-98)/365)
(1.06) (1.06)
______________________________________________________________________________
2
"Put Creation Multiple" means the greater of (i) 115% of the Call
Creation Multiple and (ii) 12.
"Put Option" is defined in Section 2.2.
"Put Option Exercise Price" is defined in Section 2.4.
"Registrable Securities" means any Xxxxxx Common Stock (i) issued
to BCP and as to which BCP, as contemplated by Section 4.1(b), is
not exercising the BCP Liquidity Right, or (ii) which is issued
or distributed in respect of any shares covered by the preceding
clause (i) by way of stock dividend or stock split or other
distribution, recapitalization or reclassification. As to any
particular Registrable Securities, once issued such securities
shall cease to be Registrable Securities when (w) a registration
statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities
shall have been disposed of in accordance with such registration
statement, (x) they shall have been sold pursuant to Rule 144 (or
any successor provision) under the Securities Act, (y) they shall
have been otherwise transferred, new certificates for them not
bearing a legend restricting further transfer shall have been
delivered by LWN and subsequent disposition of them shall not
require registration or qualification of them under the
Securities Act or any state securities or blue sky law then in
force, or (z) they shall have ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses incident
to performance of or compliance with Sections 5.2 and 5.3 of this
Agreement, including, without limitation, (i) all SEC and
securities exchange or National Association of Securities
Dealers, Inc. registration and filing fees, (ii) all fees and
expenses of complying with securities or blue sky laws (including
fees and disbursements of counsel for the underwriters in
connection with blue sky qualifications of the Registrable
Securities), (iii) all printing, messenger and delivery expenses,
(iv) all fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange
pursuant to Section 5.3(h), (v) the fees and disbursements of
counsel for LWN and of its independent public accountants,
including the expenses of any special audits and/or "cold
comfort" letters required by or incident to such performance and
compliance, (vi) the reasonable fees and disbursements of one
counsel, other
14
than LWN's counsel, selected by the Holders of a majority of the
Registrable Securities being registered to represent all Holders
of the Registrable Securities being registered in connection with
each such registration (it being understood that any Holder may,
at its own expense, retain separate counsel to represent it in
connection with such registration), (vii) any fees and
disbursements of underwriters customarily paid by the issuers or
sellers of securities, and the reasonable fees and expenses of
any special experts retained in connection with the requested
registration, but excluding underwriting discounts and
commissions and transfer taxes, if any, and (viii) subject to the
obligation of Holders under Sections 5.1 and 5.2 to pay any
Holders' Portion thereof, all underwriting discounts and
commissions or other brokers' commissions charged in connection
with the sale of Registrable
"Relevant Creation Multiple" means the (i) Call Creation Multiple
or, if RHC has consummated an Acquisition prior to the Exit
Relevant Period, the most recently calculated Adjusted Call
Creation Multiple (where Total Enterprise Value is being
calculated in connection with the exercise of the Call Option) or
(ii) the Put Creation Multiple or, if RHC has consummated an
Acquisition prior to the Exit Relevant Period, the most recently
calculated Adjusted Put Creation Multiple (where Total Enterprise
Value is being calculated in connection with the exercise of the
Put Option).
"Remaining Period" has the meaning ascribed thereto in the
definition of Pro Forma Acquisition EBITDA for the Entry Relevant
Period.
"Revolver" means the revolving credit facility made available to
RHAC by a syndicate of commercial lenders on the Closing Date, or
any other similar facility subsequently replacing such facility.
"RHC" means Holdings and all of its subsidiaries.
"RHMI Common Stock" means the shares of Common Stock held by
RHMI.
"Securities Act" shall mean the Securities Act of 1933, and the
rules and regulations promulgated thereunder, as the same may be
amended from time to time.
"SEC" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act
or the Exchange Act.
"Stockholders' Agreement" means the Stockholders' Agreement,
dated as of November 19, 1996, among the Stockholders and
Holdings.
"Subsidiary Stock" means all of the issued and outstanding shares
of capital stock of each of the companies listed on Exhibit A to
the Subscription Agreement, dated November 19, 1996 among BCP,
LWN, LGII, RDI and XXXX.
"Total Call Hurdle Value" means the sum of the BCP Contribution,
the LGII Common Contribution, the BCP Call Hurdle Profit, the
LGII Call Hurdle Profit and the Xxxxxx Preferred Catch-up Amount.
14
"Total Contribution" means the sum of (i) the BCP Contribution
and (ii) the Xxxxxx Contribution.
"Total Enterprise Value" means the product of (i) the Relevant
Creation Multiple multiplied by (ii) EBITDA for the Exit Relevant
Period.
"Total Equity Value" means, as of the Exercise Date (each of the
following shall be determined as of the Exercise Date except for
Total Enterprise Value, which shall be determined in accordance
with the definition thereof), the sum of:
the excess, if any, of (i) Total Enterprise Value over (ii) the
sum of (a) the aggregate outstanding principal amount (including
accrued but unpaid interest thereon) of Holdings' consolidated
total indebtedness (excluding any amounts outstanding under the
Revolver and excluding any indebtedness or accrued interest
thereon (whether paid or unpaid) associated with or incurred to
finance any Acquisition consummated during or after the Exit
Relevant Period, plus (b) the remaining value as of the Exercise
Date of the Capitalized Liabilities taken into account in
calculating the Creation Price or the Acquisition Creation Price
of an Acquisition, plus (c) the Xxxxxx Preferred Contribution,
plus (d) Xxxxxx Accrued Preferred Dividends; and
the sum of (e) the aggregate amount of Holdings' consolidated
total cash, cash equivalents and any other marketable securities,
plus (f) cash utilized to pay for Acquisitions (including all
related transaction costs and expenses) consummated during or
after the Exit Relevant Period, plus (g) the amount of interest
that would have been saved assuming that the amounts described in
clause (f) had instead been utilized to repay indebtedness of RHC
which could have then been voluntarily repaid, and assuming the
indebtedness bearing the highest interest rate is the first to be
repaid, plus (h) the aggregate amount of Management Equity
Indebtedness.
"Total Put Hurdle Value" means the sum of the BCP Contribution,
the LGII Common Contribution, the BCP Put Hurdle Profit and the
LGII Put Hurdle Profit.
"Transaction Costs" means all costs and expenses of every nature
incurred by RHC in connection with consummation of the
transactions contemplated by the Agreements and the financing
thereof, including without limitation costs and expenses relating
to the issuance of the Notes and the subsequent registered
exchange offer with respect to the Notes and the Credit
Agreement.
"Weighted Minimum Put Multiple" means, for purposes of
calculating the Adjusted Put Creation Multiple in connection with
a particular Acquisition, the sum of (A) the product of (i) 12
times (ii) a fraction, the numerator of which is the Acquisition
Creation Price for such Acquisition and the denominator of which
is the sum of such Acquisition Creation Price and the Cumulative
Creation Price, plus (B) the product of (i) the Minimum Put
Multiple deemed to be in effect immediately prior to such
Acquisition times (ii) a fraction, the numerator of which is the
Cumulative Creation Price and the denominator of which is the sum
of Acquisition Creation Price and such Cumulative Creation Price.
16
ARTICLE II
CALL AND PUT OPTIONS
2.1 Call Option. (a) On the terms and subject to the
conditions set forth herein, each of the BCP Entities and XXXX
hereby grants to LGII an irrevocable option (the "Call Option")
exercisable beginning on the fourth anniversary of the Closing
Date and ending on the day before the sixth anniversary of the
Closing Date, to purchase (and, upon exercise of such Call Option
in accordance herewith, each BCP Entity irrevocably agrees to
sell to LGII) all, but not less than all, of the BCP Common Stock
or the XXXX Common Stock, as the case may be, respectively owned
by them. The aggregate purchase price with respect to all the
shares of BCP Common Stock and the XXXX Common Stock being
purchased shall be equal to the Call Option Exercise Price (as
defined in Section 2.3). The consideration to be paid for each
share of BCP Common Stock and XXXX Common Stock shall equal the
Call Option Exercise Price divided by the aggregate number of
shares of BCP Common Stock and XXXX Common Stock being purchased,
provided that the BCP Entities may reallocate the Call Option
Exercise Price among themselves to the extent necessary to take
into account differences among them, if any, in making Additional
BCP Contributions.
(b) LGII shall give Blackstone Management Associates II
L.L.C., a Delaware limited liability company ("BMAII"), as agent
for each of the BCP Entities and XXXX, written notice of exercise
of the Call Option no less than 90 nor more than 120 days prior
to the Business Day specified in such notice for exercise of the
Call Option. Subject to the preceding sentence, a notice of
exercise of the Call Option may be given during or prior to the
commencement of the period in which the Call Option is
exercisable and shall irrevocably commit the Stockholders to the
purchase and sale of the BCP Common Stock and XXXX Common Stock
in accordance with the Call Option.
2.2 Put Option. (a) On the terms and subject to the
conditions set forth herein, LGII hereby grants to each BCP
Entity and XXXX an irrevocable option (the "Put Option"),
exercisable beginning on the sixth anniversary of the Closing
Date and ending on the eighth anniversary of the Closing Date, to
require LGII to purchase (and, upon exercise of such Put Option
in accordance herewith, LGII agrees to purchase from the BCP
Entities and XXXX) all, but not less than all, of the BCP Common
Stock and XXXX Common Stock respectively owned by them; provided
that the Put Option may be exercised only with respect to all the
BCP Common Stock and XXXX Common Stock, and provided further,
BMAII, as agent for each of the BCP Entities and XXXX, shall have
the exclusive authority to deliver notice of such exercise to
LGII. The aggregate purchase price with respect to all the
shares of BCP Common Stock and XXXX Common Stock being purchased
shall be equal to the Put Option Exercise Price (as defined in
Section 2.4). The consideration to be paid for each share of BCP
Common Stock and XXXX Common Stock shall equal the Put Option
Exercise Price divided by the aggregate number of shares of BCP
Common Stock and XXXX Common Stock being purchased, provided that
the BCP Entities may reallocate the Put Option Exercise Price
among themselves to the extent necessary to take into account
differences among them, if any, in making Additional BCP
Contributions.
17
(b) BMAII, as exclusive agent for BCP and XXXX, shall
give LGII written notice of exercise of the Put Option no less
than 90 nor more than 120 days prior to the Business Day
specified in such notice for exercise of the Put Option. Subject
to the preceding sentence, a notice of exercise of the Put Option
may be given at any time during or prior to the commencement of
the period in which the Put Option is exercisable and shall
irrevocably commit the Stockholders to the purchase and sale of
the BCP Common Stock and XXXX Common Stock in accordance with the
Put Option.
2.3 Call Option Exercise Price. The Call Option
Exercise Price shall be determined as of the Exercise Date and
shall be equal to:
(i) the sum of the BCP Contribution and the BCP Call
Hurdle Profit, if Total Equity Value is equal to or less than
Total Call Hurdle Value; or
(ii) the sum of (a) the BCP Contribution, (b) the BCP
Call Hurdle Profit, (c) 30% of Excess Value One, if any and (d)
15% of Excess Value Two, if any, if Total Equity Value is greater
than the Total Call Hurdle Value.
2.4 Put Option Exercise Price. The Put Option Exercise
Price shall be determined as of the Exercise Date and shall be
equal to:
(i) Adjusted Total Equity Value, if Adjusted Total
Equity Value is equal to or less than Adjusted BCP Contribution;
(ii) Adjusted BCP Contribution plus the product of (a)
Adjusted Total Equity Value minus Adjusted BCP Contribution and
(b) the ratio of the BCP Put Hurdle Profit to the sum of (1) BCP
Put Hurdle Profit and (2) Xxxxxx Accrued Preferred Dividends, if
Adjusted Total Equity Value is greater than Adjusted BCP
Contribution but less than or equal to the sum of (x) Adjusted
BCP Contribution, (y) Xxxxxx Accrued Preferred Dividends and (z)
BCP Put Hurdle Profit;
(iii) Adjusted BCP Contribution plus BCP Put Hurdle
Profit, if Adjusted Total Equity Value is greater than the sum of
(a) Adjusted BCP Contribution, (b) BCP Put Hurdle Profit and (c)
Xxxxxx Accrued Preferred Dividends, but equal to or less than the
sum of (v) Adjusted BCP Contribution, (w) BCP Put Hurdle Profit,
(x) LGII Common Contribution, (y) Xxxxxx Preferred Contribution
and (z) Xxxxxx Accrued Preferred Dividends;
(iv) Total Equity Value less the LGII Common
Contribution, if Adjusted Total Equity Value is greater than the
sum of (a) Adjusted BCP Contribution, (b) BCP Put Hurdle Profit,
(c) LGII Common Contribution, (d) Xxxxxx Preferred Contribution
and (e) Xxxxxx Accrued Preferred Dividends but equal to or less
than the sum of (u) Adjusted BCP Contribution, (v) BCP Put Hurdle
Profit, (w) LGII Common Contribution, (x) Xxxxxx Preferred
Contribution, (y) Xxxxxx Accrued Preferred Dividends and (z) $15
million;
18
(v) BCP Contribution plus BCP Put Hurdle Profit, if
Total Equity Value is greater than BCP Contribution plus BCP Put
Hurdle Profit plus LGII Common Contribution but less than Total
Put Hurdle Value; or
(vi) BCP Contribution plus BCP Put Hurdle Profit plus
30% of Excess Value One plus 15% of Excess Value Two, if Total
Equity Value is greater than Total Put Hurdle Value;
provided, however, that if (x) the ASA becomes terminable by RHAC
for any reason (other than as a result of a rejection of the ASA
following a bankruptcy event involving RHAC) or (y) LGII replaces
its designees on the board of directors of Holdings without the
consent of BCP (which consent shall not be unreasonably
withheld), then the Put Option Exercise Price shall equal the
greater of (a) the amount determined by applying the applicable
formula set forth above or (b) the sum of the BCP Put Hurdle
Profit and the BCP Contribution.
ARTICLE III
CALCULATION OF OPTION PRICE
3.1 Calculation of Creation Price and Acquisition
Creation Price. (a) Within 60 days of the Closing Date, the
Stockholders shall cause the chief financial officer of Holdings
to calculate the Creation Price and provide to the Stockholders
his written certification of his calculation of such amount.
Unless the amount so calculated is disputed by any Stockholder by
written notice given to the other Stockholders within 30 days of
its being so certified, subject to Section 7.1, it shall be final
and binding on the parties in calculating the Relevant Creation
Multiple. If such amount is so disputed by written notice as
aforesaid, such dispute shall be resolved in accordance with
Section 3.5(b), and the resolution process thereby provided shall
determine the Creation Price which shall, subject to Section 7.1,
be final and binding on the parties in calculating the Relevant
Creation Multiple.
(b) As early as practicable prior to the closing date
of any Acquisition involving Contributed Properties acquired
pursuant to a Contribution Agreement, the Stockholders shall
cause the chief financial officer of Holdings to calculate the
Acquisition Creation Price and the Cumulative Creation Price with
respect to such Acquisition (including the related Minimum Put
Multiple and Weighted Minimum Put Multiple) and provide to the
Stockholders his written certification of his calculation of such
amounts. Unless the amounts so calculated are disputed by any
Stockholder by written notice given to the other Stockholders
within 30 days of its being so certified, they shall, subject to
Section 7.1, be final and binding on the parties in calculating
the Adjusted Call Creation Multiple and the Adjusted Put Creation
Multiple. If any such amount is so disputed by written notice as
aforesaid, such dispute shall be resolved in accordance with
Section 3.5(b), and the resolution process thereby provided shall
determine the Acquisition Creation Price and the Cumulative
Creation Price, in respect of such Acquisition, which shall,
subject to Section 7.1, be final and binding on the parties for
purposes of the relevant Contribution Agreement and in
calculating the Adjusted Call Creation Multiple and the Adjusted
Put Creation Multiple (including the
19
related Minimum Put Multiple and Weighted Minimum Put Multiple)
in respect of such Acquisition.
(c) Within 60 days of the consummation of any
Acquisition that does not involve Contributed Properties acquired
pursuant to a Contribution Agreement, the Stockholders shall
cause the chief financial officer of Holdings to calculate the
Acquisition Creation Price and the Cumulative Creation Price with
respect to such Acquisition and provide to the Stockholders his
written certification of his calculation of such amounts. Unless
the amounts so calculated are disputed by any Stockholder by
written notice given to the other Stockholders within 30 days of
its being so certified, they shall, subject to Section 7.1, be
final and binding on the parties in calculating the Adjusted Call
Creation Multiple and the Adjusted Put Creation Multiple
(including the related Minimum Put Multiple and Weighted Minimum
Put Multiple). If any such amount is so disputed by written
notice as aforesaid, such dispute shall be resolved in accordance
with Section 3.5(b), and the resolution process thereby provided
shall determine the Acquisition Creation Price and the Cumulative
Creation Price, in respect of such Acquisition, which shall,
subject to Section 7.1, be final and binding on the parties in
calculating the Adjusted Call Creation Multiple and the Adjusted
Put Creation Multiple in respect of such Acquisition (including
the related Minimum Put Multiple and Weighted Minimum Put
Multiple).
3.2 Calculation of Pro Forma EBITDA for the Entry
Relevant Period and Creation Multiple. (a) Within 90 days of
the end of each of 1997 and 1998, the Stockholders shall cause
the chief financial officer of Holdings to calculate Holdings'
EBITDA for the calendar year then ended and provide to the
Stockholders his written certification of his calculation of such
amount. Unless the amount so calculated is disputed by any
Stockholder by written notice given to the other Stockholders
within 30 days of its being so certified, it shall, subject to
Section 7.1, be final and binding on the parties in calculating
Pro Forma EBITDA for the Entry Relevant Period. If such amount
is so disputed by written notice as aforesaid, such dispute shall
be resolved in accordance with Section 3.5(b), and the resolution
process thereby provided shall determine EBITDA for 1997 and/or
1998, as the case may be, which amount shall subject to Section
7.1, be final and binding on the parties in calculating Pro Forma
EBITDA for the Entry Relevant Period.
(b) Within 30 days of the determination of EBITDA for
calendar 1998, the Stockholders shall cause the chief financial
officer of Holdings to calculate Pro Forma EBITDA for the Entry
Relevant Period and the Call Creation Multiple and the Put
Creation Multiple and provide to the Stockholders his written
certification of his calculation of such amounts. Unless the
amounts so calculated are disputed by any Stockholder by written
notice given to the other Stockholders within 30 days of their
being so certified, they shall, subject to Section 7.1, be final
and binding on the parties. If such amounts are so disputed by
written notice as aforesaid, such dispute shall be resolved in
accordance with Section 3.5(b), and the resolution process
thereby provided shall determine the Pro Forma EBITDA for the
Entry Relevant Period and the Call Creation Multiple and the Put
Creation Multiple, which shall, subject to Section 7.1, be final
and binding on the parties.
20
3.3 Calculation of Pro Forma Acquisition EBITDA for
the Entry Relevant Period. (a) Within 90 days of the end of the
first full twelve calendar month period after the consummation of
an Acquisition, the Stockholders shall cause the chief financial
officer of Holdings to calculate the Acquisition EBITDA with
respect to such Acquisition for such twelve calendar month period
and provide to the Stockholders his written certification of his
calculation of such amount. Unless the amount so calculated is
disputed by any Stockholder by written notice given to the other
Stockholders within 30 days of its being so certified, it shall,
subject to Section 7.1, be final and binding in calculating Pro
Forma Acquisition EBITDA for the Entry Relevant Period. If such
amount is so disputed by written notice as aforesaid, such
dispute shall be resolved in accordance with Section 3.5(b), and
the resolution process thereby provided shall determine
Acquisition EBITDA for such twelve calendar month period, which
amount shall, subject to Section 7.1, be final and binding on the
parties in calculating Pro Forma Acquisition EBITDA for the Entry
Relevant Period.
(b) Within 90 days of the end of the second full twelve
calendar month period after the consummation of an Acquisition
but in no event later than 45 days after the Notification Date
(or, in the case of an Acquisition consummated after the date
that is 24 months prior to the end of the Exit Relevant Period,
within 45 days after the Notification Date), the Stockholders
shall cause the chief financial officer of Holdings to calculate
the Acquisition EBITDA with respect to such Acquisition and
provide to Stockholders, no later than 45 days after the
Notification Date, his written certification of his calculation
of such amount. Unless the amount so calculated is disputed by
any Stockholder by written notice given to the other Stockholders
within 30 days of its being so notified but in no event later
than 60 days after the Notification Date, it shall, subject to
Section 7.1, be final and binding in calculating Pro Forma
Acquisition EBITDA for the Entry Relevant Period. If such amount
is so disputed by written notice as aforesaid, such dispute shall
be resolved in accordance with Section 3.5(b), and the resolution
process thereby provided shall determine Acquisition EBITDA for
such twelve month period or the Remaining Period, as applicable,
which amount shall, subject to Section 7.1, be final and binding
on the parties in calculating Pro Forma Acquisition EBITDA for
the Entry Relevant Period.
3.4 Calculation of EBITDA for the Exit Relevant Period.
As promptly as practicable following the Notification Date, the
Stockholders shall cause the chief financial officer of Holdings
to calculate EBITDA for the Exit Relevant Period and provide to
the Stockholders, no later than 45 days after the Notification
Date, his written certification of his calculation of such
amount. Unless the amount so calculated is disputed by any
Stockholder by written notice given to the other Stockholders
within 15 days of its being so certified, it shall, subject to
Section 7.1, be final and binding on the parties in calculating
EBITDA for the Exit Relevant Period. If such amount is so
disputed by written notice as aforesaid, such dispute shall be
resolved in accordance with Section 3.5(b), and the resolution
process thereby provided shall determine EBITDA for the Exit
Relevant Period, which amount shall, subject to Section 7.1, be
final and binding on the parties in calculating Total Enterprise
Value.
3.5 Access to Information; Resolution of Disputes;
Miscellaneous. (a) Each Stockholder and its representatives
shall have full access to the books and records of Holdings and
its subsidiaries, and Xxxxxx shall cause Holdings, the BCP
Entities and their respective
21
advisors to be provided with full access to the books and records
of any funeral homes or cemeteries that are to be Contributed
Properties, in connection with any calculation made pursuant to
this Article III. The parties hereby agree to cause Holdings,
and Xxxxxx agrees with respect to any such proposed Contributed
Properties, to instruct the relevant auditors to make their work
papers available for review in this regard, and the Stockholders
hereby waive any objection which such Stockholder may raise with
respect thereto, and Xxxxxx hereby waives and shall cause any
relevant Affiliates to waive any objection which they may raise
with respect thereto. The fees and expenses of the Stockholders'
representatives shall be paid by Holdings.
(b) In the event any Stockholder disputes any amount
calculated by the chief financial officer of Holdings and gives
timely notice of such dispute as described above, the
Stockholders shall negotiate in good faith as promptly as
practicable. In the event such dispute is not resolved within 14
days of the giving of notice of such dispute, the parties shall
promptly engage as "Arbitrator" a "big six" accounting firm
(which shall not be KPMG Peat Marwick or Deloitte & Touche LLP or
Holdings' or LWN's then existing auditors) to reach a final
determination of the amount whose calculation is in dispute. The
fees of the Arbitrators shall be shared equally between BCP
collectively and LGII, and the Arbitrator shall render its
decision within 21 days of its engagement for such purpose.
(c) The Acquisition EBITDA, the Acquisition Creation
Price, the Acquisition Creation Multiple, the Cumulative Creation
Price, the Pro Forma Acquisition EBITDA for the Entry Relevant
Period, the Adjusted Call Creation Multiple, the Adjusted Put
Creation Multiple, the Minimum Put Multiple, the Weighted Minimum
Put Multiple, and the Relevant Creation Multiple and any other
relevant components potentially relevant to the Option Price
shall be calculated in respect of each Acquisition made by RHC,
and the amounts so calculated shall be deemed to have been
calculated and be in effect immediately following consummation of
the relevant Acquisition regardless of when the actual
calculation of each such item is finally completed.
(d) By way of illustration, the "Illustrative
Scenarios" attached to this Agreement reflect the distribution
order in a call or put scenario pursuant to the formula described
herein.
ARTICLE IV
DETERMINATION OF OPTION CONSIDERATION; CERTAIN CONDITIONS
4.1 Option Consideration. (a) (i) LGII may use for
payment of the Option Price (either in whole or in part) payable
to the BCP Entities under the Call Option or the Put Option
either cash or, subject to the conditions of Section 4.2, Xxxxxx
Common Stock, provided, however, that if the number of shares of
Xxxxxx Common Stock deliverable to BCP under this Agreement, when
aggregated with the number of shares of Xxxxxx Common Stock, if
any, previously delivered to BCP in connection with any earlier
exercise of the call option or the put option under the Put/Call
Agreement relating to the acquisition of Prime
22
Succession, Inc. which were not sold for cash as a result of the
exercise of the BCP Liquidity Right described therein, would
equal or exceed 25% of the outstanding shares of Xxxxxx Common
Stock as of the Exercise Date, then the delivery of Xxxxxx Common
Stock in payment of the Option Price hereunder shall require the
prior written consent of BCP. If Xxxxxx Common Stock is to be
issued, LWN shall notify BCP within 15 days of the Notification
Date of the percentage of the Option Price payable to the BCP
Entities to be paid in Xxxxxx Common Stock. The number of shares
of Xxxxxx Common Stock issuable to BCP on the Exercise Date will
be calculated as follows.
(ii) If BCP notifies LWN within 30 days of the
Notification Date of its desire promptly to sell the shares of
Xxxxxx Common Stock received in full or partial payment of the
Option Price, then LWN will, on behalf of LGII, issue for the
account of BCP, and will undertake for the benefit of BCP to
effectuate the sale of, such number of shares of Xxxxxx Common
Stock as would, upon consummation of such sale, yield net cash
proceeds to BCP equal to the portion of the Option Price that
would have otherwise been paid in cash to the BCP Entities (such
notification by BCP together with the sale of Xxxxxx Common Stock
for such purpose being referred to as the "BCP Liquidity Right").
(iii) LWN shall, on behalf of LGII, bear all
Registration Expenses in connection with such issuance and sale
(including the entire amount of any and all underwriters'
discounts and commissions) and provide customary and appropriate
undertakings (including hereof indemnification of BCP to the same
extent provided in Section 5.4) in connection with such issuance
and sale. If such net cash proceeds have not been paid to BCP on
the Exercise Date, the closing of the Option shall be in escrow
pending receipt of such proceeds by BCP. Any delay in remitting
net cash proceeds to BCP beyond the 90th day after the date on
which BCP notifies LWN of its desire to exercise the BCP
Liquidity Right shall require a "grossing up" (through the
issuance of additional shares) of the net cash proceeds required
to be received so as to reflect an implied interest component
(accruing from such 90th day to the date of actual payment to
BCP) at the rate of 10% per annum. If net cash proceeds have not
been received by BCP within 180 days after the date on which BCP
notifies LWN of its desire to exercise the BCP Liquidity Right,
LGII shall be required to pay the Option Price wholly in cash on
such 180th day.
(b) If BCP does not invoke the BCP Liquidity Right as
described in paragraph (a) above with respect to the entire
portion of the Option Price payable to BCP in Xxxxxx Common
Stock, the number of shares issuable to BCP in respect of the non-
cash portion of the Option Price will be based on the Market
Value of the Xxxxxx Common Stock. In this regard, LWN agrees (i)
to make an appropriate public announcement no later than the
commencement of such 30 trading day period with regard to the
pending issuance of Xxxxxx Common Stock to BCP on the Exercise
Date, and (ii) during the period commencing at the beginning of
such 30 trading day period and through the Exercise Date, not to
take any corporate action (other than the declaration or payment
of a regular dividend) in respect of combining the outstanding
shares of Xxxxxx Common Stock, including combining its
outstanding shares into a smaller number of shares or issuing
rights or warrants to stockholders of record on a date prior to
the Exercise Date.
23
4.2 Conditions to Issuance of Xxxxxx Common Stock. The
ability of LGII and LWN to issue Xxxxxx Common Stock in lieu of
LGII paying the Option Price to BCP in cash is subject to the
satisfaction, on or before the Exercise Date, of each of the
following conditions:
(a) The representations and warranties of LWN, LGII
and RDI set forth in Sections 6.1 and 6.2 hereof shall be true
and correct in all material respects when made and shall be true
and correct in all material respect at and as of the Exercise
Date.
(b) LWN, LGII and RDI shall have performed and
complied in all material respects with all agreements, covenants
and conditions contained herein which are required to be
performed or complied with by it on or before the Exercise Date.
(c) BCP shall have received a certificate, dated the
Exercise Date and signed by a principal executive officer of LWN,
certifying that the conditions set forth in Sections 4.2(a) and
4.2(b) are satisfied on and as of such date.
(d) LWN shall have provided BCP with a legal opinion
from counsel reasonably satisfactory to BCP with respect to
matters customarily covered in connection with the issuance of
shares to a private investor, and such option shall be reasonably
satisfactory in form and substance to BCP and its counsel.
(e) The receipt of the Option Shares by BCP shall not
have been enjoined (temporarily or permanently) as of the
Exercise Date or be prohibited by any applicable law or
governmental regulation.
(f) All proceedings taken in connection with the
issuance and delivery of the Option Shares and all documents and
papers relating thereto shall be reasonably satisfactory to BCP.
BCP shall have received copies of such documents and papers as it
may reasonably request in connection therewith, all in form and
substance reasonably satisfactory to it.
(g) Since the Notification Date, there shall not have
been any material adverse change in the general affairs,
management, financial position, shareholders' equity or results
of operations of LWN and its subsidiaries taken as a whole.
(h) No "Default" as described in Sections 8.6 or 8.7
of the credit agreement dated as of May 15, 1996 among LWN, LGII
and the lenders named therein (in the form thereof on the date
hereof) shall have occurred since the date of this Agreement.
ARTICLE V
REGISTRATION RIGHTS
5.1 Incidental Registration. (a) Right to Include
Registrable Securities. Following the issuance of Xxxxxx Common
Stock to BCP pursuant to Section 4.1(b), each
24
time LWN proposes to register Xxxxxx Common Stock under the
Securities Act (other than a registration on Form S-4 or S-8, or
any successor or other forms promulgated for similar purposes),
whether or not for sale for its own account, pursuant to a
registration statement on which it is permissible to register
Registrable Securities for sale to the public under the
Securities Act, it will give prompt written notice to all Holders
of its intention to do so and of the Holders' rights under this
Section 5.1(a). Upon the written request of any Holder made
within 30 days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to be
disposed of by such Holder), LWN will use its best efforts to
effect the registration under the Securities Act of all
Registrable Securities which LWN has been so requested to
register by the Holders thereof; provided that (i) if, at any
time after giving written notice of its intention to register any
securities and prior to the effective date of the registration
statement filed in connection with such registration, LWN shall
determine for any reason not to proceed with the proposed
registration, LWN may, at its election, give written notice of
such determination to each Holder and thereupon shall be relieved
of its obligation to register any Registrable Securities in
connection with such registration (but not from its obligation to
pay the Registration Expenses in connection therewith), and (ii)
if such registration involves an underwritten offering by LWN
(underwritten, at least in part, by Persons who are not
Affiliates of LWN), all Holders requesting to have Registrable
Securities included in LWN's registration must sell their
Registrable Securities to such underwriters who shall have been
selected by LWN on the same terms and conditions as apply to LWN,
with such differences, including any with respect to
indemnification and contribution, as may be customary or
appropriate in combined primary and secondary offerings. If a
proposed registration pursuant to this Section 5.1(a) involves
such an underwritten public offering, any Holder making a request
under this Section 5.1(a) in connection with such registration
may elect in writing, prior to the effective date of the
registration statement filed in connection with such
registration, to withdraw such request and not to have such
securities registered in connection with such registration.
(b) Expenses. LWN will pay all Registration Expenses
in connection with each registration of Registrable Securities
requested pursuant to this Section 5.1(a), regardless of whether
such registration statement becomes effective, and each Holder
shall pay the Holders' Portion, if any, of all underwriting
discounts and commissions relating to the sale or disposition of
such Holder's Registrable Securities pursuant to a registration
statement effected pursuant to this Section 5.1(a).
(c) Priority in Incidental Registrations. If a
registration pursuant to this Section 5.1 involves an
underwritten offering by LWN (as described in Section 5.1(a)(ii))
and the managing underwriter with respect to such offering
advises LWN in writing that, in its opinion, the number of
securities (including all Registrable Securities) which LWN, the
Holders and any other persons intend to include in such
registration exceeds the largest number of securities which can
be sold in such offering without having an adverse effect on the
offering of securities as contemplated by LWN (including the
price at which LWN proposes to sell such securities), then LWN
will include in such registration (i) first, all the securities
LWN proposes to sell for its own account, (ii) second, the number
of Registrable Securities which the Holders have requested to be
included in such registration and which, in the opinion of such
managing underwriter, can be sold without having the adverse
effect
25
referred to above, such reduced number of Registrable Securities
to be allocated pro rata among all requesting Holders on the
basis of the relative number of shares of Registrable Securities
then held by each such Holder (provided that any shares thereby
allocated to any such Holder that exceed such Holder's request
will be reallocated among the remaining requesting Holders in
like manner).
(d) Custody Agreement and Power of Attorney. Upon
LWN's request, any Holder will execute and deliver a custody
agreement and power of attorney in form and substance reasonably
satisfactory to LWN with respect to the shares of Xxxxxx Common
Stock to be registered pursuant to this Section 5.1 (a "Custody
Agreement and Power of Attorney"). The Custody Agreement and
Power of Attorney will provide, among other things, that the
Holder will deliver to and deposit in custody with the custodian
and attorney-in-fact named therein a certificate or certificates
representing such shares of Xxxxxx Common Stock (duly endorsed in
blank by the registered owner or owners thereof or accompanied by
duly executed stock powers in blank) and irrevocably appoint said
custodian and attorney-in-fact as the Holder's agent and attorney-
in-fact with full power and authority to act under the Custody
Agreement and Power of Attorney on the Holder's behalf with
respect to the matters specified therein.
(e) Other Agreements. Each Holder agrees that it will
execute such other agreements as LWN may reasonably request to
further accomplish the purposes of this Section 5.1.
5.2 Registration on Request. (a) Request by Holders.
Upon the written request of any Holder or Holders owning at least
20% of the Registrable Securities that are subject to this
Agreement, requesting that LWN effect the registration under the
Securities Act of all or part of such Holder's or Holders'
Registrable Securities (which Registrable Securities requested to
be registered have an aggregate Market Value as of the date of
such request of not less than $50 million), and specifying the
intended method of disposition thereof, LWN will promptly give
written notice of such requested registration to all other
Holders, and thereupon will, as expeditiously as possible, use
its best efforts to effect the registration under the Securities
Act of:
(i) the Registrable Securities which LWN has been so
requested to register by such Holder or Holders; and
(ii) all other Registrable Securities which LWN has
been requested to register by any other Holder thereof by written
request given to LWN within 30 days after the giving of such
written notice by LWN (which request shall specify the intended
method of disposition of such Registrable Securities),
so as to permit the disposition (in accordance with the Holders'
intended method thereof) of the Registrable Securities so to be
registered; provided, that LWN shall not be obligated to file a
registration statement relating to any registration request under
this Section 5.2(a)(i) within a period of one year after the
effective date of any other registration statement relating to
(A) any registration request under this Section 5.2(a) or (B) any
registration effected under
26
Section 5.1, or (ii) if three registration statements relating to
registration requests under this Section 5.2(a) have previously
been filed and declared effective by the SEC.
(b) Expenses. LWN will pay all Registration Expenses
in connection with the first three registrations of Registrable
Securities pursuant to this Section 5.2 upon the written request
of any of the Holders, and each Holder shall pay the Holders'
Portion, if any, of the underwriting discounts and commissions
relating to the sale or disposition of such Holder's Registrable
Securities pursuant to a registration statement effected pursuant
to this Section 5.2. All expenses for any subsequent
registrations of Registrable Securities pursuant to this Section
5.2 shall be paid pro rata by all Persons (including the Holders
and LWN) participating in such registration on the basis of the
relative number of shares of Xxxxxx Common Stock of each such
Person included in such registration.
(c) Effective Registration Statement. A registration
requested pursuant to this Section 5.2 will not be deemed to have
been effected unless it has become effective; provided, that if,
within the period ending on the earlier to occur of (i) 180 days
after the applicable registration statement has become effective,
or (ii) the date on which the distribution of the Registrable
Securities covered thereby has been completed, the offering of
Registrable Securities pursuant to such registration is
interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court,
such registration will be deemed not to have been effected.
(d) Selection of Underwriters. If a requested
registration pursuant to this Section 5.2 involves an
underwritten offering, the Holders of a majority of the
Registrable Securities which have requested inclusion in such
registration shall have the right to select the investment banker
or bankers and managers to administer the offering; provided,
however, that such investment banker or bankers and managers
shall be reasonably satisfactory to LWN; provided further, that
if LWN is including shares of Xxxxxx Common Stock in such
registration statement, LWN shall have the right to select such
bankers or managers.
(e) Priority in Requested Registrations. If a
requested registration pursuant to this Section 5.2 involves an
underwritten offering and the managing underwriter advises LWN in
writing that, in its opinion, the number of securities requested
to be included in such registration (including securities of LWN
which are not Registrable Securities) exceeds the largest number
of securities which can be sold in such offering, LWN will
include in such registration only the Registrable Securities
requested to be included in such registration. In the event that
the number of Registrable Securities requested to be included in
such registration exceeds the number which, in the opinion of
such managing underwriter, can be sold, the number of such
Registrable Securities to be included in such registration shall
be allocated pro rata among all requesting Holders on the basis
of the relative number of shares of Registrable Securities then
held by each such Holder (provided that any shares thereby
allocated to any such Holder that exceed such Holder's request
shall be reallocated among the remaining requesting Holders in
like manner). In the event that the number of Registrable
Securities requested to be included in such registration is less
than the number which, in the opinion of the managing
underwriter, can be sold, LWN may include in such registration
the
27
securities LWN proposes to sell up to the number of securities
that, in the opinion of the managing underwriter, can be sold.
5.3 Registration Procedures. If and whenever, LWN is
required to use its best efforts to effect or cause the
registration of any Registrable Securities under the Securities
Act as provided in this Agreement, LWN will, as expeditiously as
possible:
(a) prepare and, if the registration is pursuant to
notice given under Section 5.2(a), in any event within 45 days
after the giving of notice pursuant to Section 5.2(a), file with
the SEC a registration statement with respect to such Registrable
Securities on any form for which LWN then qualifies or which
counsel for LWN shall deem appropriate, and which form shall be
available for the sale of the Registrable Securities in
accordance with the intended methods of distribution thereof, and
use its best efforts to cause such registration statement to
become and remain effective; provided, however, that LWN may
discontinue any registration of its securities which is being
effected pursuant to Section 5.2 at any time prior to the
effective date of the registration statement relating thereto;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective for a period of 180 days or such
lesser period of time as LWN or any Holder may be required under
the Securities Act to deliver a prospectus in connection with any
sale of Registrable Securities, and to comply with the provisions
of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such
period in accordance with the intended methods of disposition by
the Holder or Holders thereof set forth in such registration
statement; provided, that before filing a registration statement
or prospectus, or any amendments or supplements thereto, LWN will
furnish to the Holders and their counsel copies of all documents
proposed to be filed, which documents will be subject to the
review of such counsel and will not be filed if such counsel
reasonably objects;
(c) furnish to each Holder of such Registrable
Securities such number of copies of such registration statement
and of each amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus
included in such registration statement (including each
preliminary prospectus and summary prospectus and prospectus
supplement, as applicable), in conformity with the requirements
of the Securities Act, and such other documents as such Holder
may reasonably request in order to facilitate the disposition of
the Registrable Securities by such Holder;
(d) use its best efforts to register or qualify such
Registrable Securities covered by such registration statement
under such other securities or blue sky laws of such
jurisdictions as each Holder shall reasonably request, and do any
and all other acts and things which may be reasonably necessary
or advisable to enable such Holder to consummate the disposition
in such jurisdictions of the Registrable Securities owned
28
by such Holder, except that LWN shall not for any such purpose be
required to qualify generally to do business as a foreign
corporation in any jurisdiction where, but for the requirements
of this Section 5.3(d), it would not be obligated to be so
qualified, to subject itself to taxation in any such
jurisdiction, or to consent to general service of process in any
such jurisdiction;
(e) use its best efforts to cause such Registrable
Securities covered by such registration statement to be
registered with or approved by such other governmental agencies
or authorities as may be necessary to enable the Holder or
Holders thereof to consummate the disposition of such Registrable
Securities;
(f) notify each Holder of any such Registrable
Securities covered by such registration statement, at any time
when a prospectus relating thereto is required to be delivered
under the Securities Act within the appropriate period mentioned
in Section 5.3(b), of LWN's becoming aware that the prospectus
included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing, and at the request of any such
Holder, prepare and furnish to such Holder a reasonable number of
copies of an amended or supplemental prospectus as may be
necessary so that, as thereafter delivered to the purchasers of
such Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(g) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available
to its security holders, as soon as reasonably practicable (but
not more than eighteen months) after the effective date of the
registration statement, an earnings statement which shall satisfy
the provisions of Section 11(a) of the Securities Act and the
rules and regulations promulgated thereunder;
(h) use its best efforts to cause all such Registrable
Securities to be listed on any securities exchange on which the
Xxxxxx Common Stock is then listed, if such Registrable
Securities are not already so listed and if such listing is then
permitted under the rules of such exchange, and to provide a
transfer agent and registrar for such Registrable Securities
covered by such registration statement no later than the
effective date of such registration statement;
(i) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other
actions as sellers of a majority of shares of such Registrable
Securities or the underwriters, if any, reasonably request in
order to expedite or facilitate the disposition of such
Registrable Securities, including making appropriate members of
senior management of LWN available for customary participation in
a "road show" presentation to potential investors;
29
(j) obtain a "cold comfort" letter or letters from
LWN's independent public accountants in customary form and
covering matters of the type customarily covered by "cold
comfort" letters as the Holder or Holders of a majority of the
shares of such Registrable Securities shall reasonably request
(provided that Registrable Securities constitute at least 25% of
the securities covered by such registration statement); and
(k) make available for inspection by representatives
of the Holders of the Registrable Securities covered by such
registration statement, by any underwriter participating in any
disposition to be effected pursuant to such registration
statement and by any attorney, accountant or other agent retained
by such Holders or any such underwriter, all pertinent financial
and other records, pertinent corporate documents and properties
of LWN, and cause all of LWN's officers, directors and employees
to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection
with such registration statement.
LWN may require each Holder of Registrable Securities as to which
any registration is being effected to furnish LWN with such
information regarding such Holder and pertinent to the disclosure
requirements relating to the registration and the distribution of
such securities as LWN may from time to time reasonably request
in writing.
Each Holder of Registrable Securities agrees that, upon receipt
of any notice from LWN of the happening of any event of the kind
described in Section 4(f), such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until
such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 4(f), and, if so
directed by LWN, such Holder will deliver to LWN (at LWN's
expense) all copies, other than permanent file copies then in
such Holder's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such
notice. In the event LWN shall give any such notice, the period
mentioned in Section 5.3(b) shall be extended by the number of
days during the period from the date of the giving of such notice
pursuant to Section 5.3(f) and through the date when each seller
of Registrable Securities covered by such registration statement
shall have received the copies of the supplemented or amended
prospectus contemplated by Section 5.3(f).
5.4 Indemnification. (a) Indemnification by LWN. In
the event of any registration of any securities of LWN under the
Securities Act pursuant to Section 5.1 or 5.2, LWN hereby
indemnifies and agrees to hold harmless, to the extent permitted
by law, each Holder of Registrable Securities covered by such
registration statement, each affiliate of such Holder and their
respective directors and officers or general and limited partners
(and the directors, officers, affiliates and controlling Persons
thereof), each other Person who participates as an underwriter in
the offering or sale of such securities and each other Person, if
any, who controls such Holder or any such underwriter within the
meaning of the Securities Act (collectively, the "Indemnified
Parties"), against any and all losses, claims, damages or
liabilities, joint or several, and expenses to which such
Indemnified Party may become subject under the Securities Act,
common law or otherwise, insofar as such losses, claims, damages
30
or liabilities (or actions or proceedings in respect thereof,
whether or not such Indemnified Party is a party thereto) arise
out of or are based upon (a) any untrue statement or alleged
untrue statement of any material fact contained in any
registration statement under which such securities were
registered under the Securities Act, any preliminary, final or
summary prospectus contained therein, or any amendment or
supplement thereto, or (b) any omission or alleged omission to
state therein a material fact necessary to make the statements
made, in the light of the circumstances under which they were
made, not misleading, and LWN will reimburse such Indemnified
Party for any legal or other expenses reasonably incurred by it
in connection with investigating or defending any such loss,
claim, liability, action or proceeding; provided, that LWN shall
not be liable to any Indemnified Party in any such case to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is
based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement,
in any such preliminary, final or summary prospectus, or any
amendment or supplement thereto in reliance upon and in
conformity with written information with respect to such
Indemnified Party furnished to LWN by such Indemnified Party for
use in the preparation thereof; and provided, further, that LWN
will not be liable to any Person who participates as an
underwriter in the offering or sale of Registrable Securities or
any other Person, if any, who controls such underwriter within
the meaning of the Securities Act, under the indemnity agreement
in this Section 5.4(a) with respect to any preliminary prospectus
or the final prospectus or the final prospectus as amended or
supplemented, as the case may be, to the extent that any such
loss, claim, damage or liability of such underwriter or
controlling Person results from the fact that such underwriter
sold Registrable Securities to a person to whom there was not
sent or given, at or prior to the written confirmation of such
sale, a copy of the final prospectus (including any documents
incorporated by reference therein) or of the final prospectus as
then amended or supplemented (including any documents
incorporated by reference therein), whichever is most recent, if
LWN has previously furnished copies thereof to such underwriter.
Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of such Holder or any
Indemnified Party and shall survive the transfer of such
securities by such Holder.
(b) Indemnification by the Holders and Underwriters.
LWN may require, as a condition to including any Registrable
Securities in any registration statement filed in accordance with
Section 5.1 or 5.2 herein, that LWN shall have received an
undertaking reasonably satisfactory to it from the prospective
Holder of such Registrable Securities or any underwriter to
indemnify and hold harmless (in the same manner and to the same
extent as set forth in Section 5.4(a)) LWN, all other prospective
Holders or any underwriter, as the case may be, and any of their
respective affiliates, directors, officers and controlling
Persons, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement,
any preliminary, final or summary prospectus contained therein,
or any amendment or supplement, if such statement or alleged
statement or omission or alleged omission was made in reliance
upon and in conformity with written information with respect to
such Holder or underwriter furnished to LWN by such Holder or
underwriter expressly for use in the preparation of such
registration statement, preliminary, final or summary prospectus
or amendment or supplement, or a document incorporated by
reference into any of the foregoing. Such indemnity shall remain
in full force and effect regardless of any
31
investigation made by or on behalf of LWN or any of the Holders,
or any of their respective affiliates, directors, officers or
controlling Persons and shall survive the transfer of such
securities by such Holder.
(c) Notices of Claims, Etc. Promptly after receipt by
an indemnified party hereunder of written notice of the
commencement of any action or proceeding with respect to which a
claim for indemnification may be made pursuant to this Section
5.4, such indemnified party will, if a claim in respect thereof
is to be made against an indemnifying party, give written notice
to the latter of the commencement of such action; provided, that
the failure of the indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its
obligations under Sections 5.4(a) or 5.4(b), except to the extent
that the indemnifying party is actually prejudiced by such
failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's
reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party will be entitled to participate in
and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof
other than reasonable costs of investigation. If, the
indemnified party has been advised by counsel that having common
counsel would result in a conflict of interest between the
interests of such indemnified and indemnifying parties, then such
indemnified party may employ separate counsel reasonably
acceptable to the indemnifying party to represent or defend such
indemnified party in such action, it being understood, however,
that the indemnifying party shall not be liable for the
reasonable fees and expenses of more than one separate firm of
attorneys at any time for all such indemnified parties (and not
more than one separate firm of local counsel at any time for all
such indemnified parties) in such action. No indemnifying party
will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of
such claim or litigation.
(d) Other Indemnification. Indemnification similar to
that specified in this Section 5.4 (with appropriate
modifications) shall be given by LWN and each Holder of
Registrable Securities with respect to any required registration
or other qualification of securities under any federal or state
law or regulation or governmental authority other than the
Securities Act.
(e) Contribution. If recovery is not available under
the foregoing indemnification provisions of this Section 5 for
any reason other than as expressly specified therein, the parties
entitled to indemnification by the terms thereof shall be
entitled to contribution to liabilities and expenses except to
the extent that contribution is not permitted under Section 11(f)
of the Securities Act. In determining the amount of contribution
to which the respective parties are entitled, there shall be
considered the relative benefits received by each party from the
offering of the Registrable Securities (taking into account the
portion of
32
the proceeds realized by each), the parties' relative knowledge
and access to information concerning the matter with respect to
which the claim was asserted, the opportunity to correct and
prevent any misstatement or omission and any other equitable
considerations appropriate under the circumstances.
(f) Non-Exclusivity. The obligations of the parties
under this Section 5 shall be in addition to any liability which
any party may otherwise have to any other party.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of All Parties.
LWN, LGII, RDI and each Stockholder represents and warrants, on a
joint and several basis in the case of LWN, LGII and RDI and on a
several and not joint basis in the case of the Stockholders, as
follows:
(a) This Agreement has been duly executed and delivered by
such Person and constitutes the legal, valid and binding
obligation of such Person, enforceable against such Person in
accordance with the terms hereof except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting creditors' rights generally and by
general principles of equity; and
(b) The execution and delivery of this Agreement by such
Person does not, and the performance by it of its obligations
under this Agreement will not, violate, conflict with or
constitute a breach of, or a default under, any material
agreement, indenture or instrument to which such Person is a
party or which is binding on such Person, and will not result in
the creation of any lien on, or security interest in, any of the
assets of such Person.
6.2 Representations and Warranties of LGII, RDI and
LWN. LGII, RDI and LWN jointly and severally represent and
warrant to the BCP Entities as follows:
(a) The Option Shares have been or will be, prior to
issuance, duly authorized and, when such shares are issued,
delivered and paid for on the Exercise Date, will be validly
issued and outstanding, fully paid and nonassessable shares of
capital stock of LWN, with no personal liability attached to the
ownership thereof; and the holders of the outstanding stock are
not entitled to preemptive or other rights to subscribe for such
shares.
(b) Neither the issuance of the Option Shares nor
their sale in connection with the exercise of the BCP Liquidity
Option nor the consummation of any other of the transactions
contemplated in this Agreement, nor the fulfillment of the terms
of this Agreement, will conflict with, result in a breach of or
constitute a default under the terms of the certificate of
incorporation or similar organizational document or bylaws of
LWN, LGII or RDI or of any material agreement, indenture or
instrument to which LWN, LGII or RDI is a party or is bound, or
any order or regulation applicable to LWN, LGII or RDI of any
court, regulatory body, administrative agency or governmental
body having jurisdiction over LWN, LGII or RDI.
(c) No consent, approval or authorization of, or
filing, registration or qualification with, any court,
governmental, administrative or judicial authority or regulatory
body will be, as of the Exercise Date, required on the part of
LWN, LGII or RDI for the valid authorization, issuance, sale and
delivery of the Option Shares or for the execution, delivery and
performance of this Agreement other than those which have been
duly obtained or made.
(d) As of the Exercise Date, there will be no action
or proceeding or investigation pending or, to the best knowledge
of LWN, LGII and RDI, threatened against LWN, LGII or RDI or any
of their subsidiaries which, if determined adversely could
adversely affect the consummation of the transactions
contemplated by this Agreement. There are no actions or
proceedings challenging or seeking to restrain, materially limit
or prohibit the consummation of the transactions contemplated
hereby.
(e) On or prior to the beginning of the 20 trading day
period ending on the third calendar day prior to the Exercise
Date, the Xxxxxx Common Stock will have been duly registered
under Section 12 of the Securities Exchange Act of 1934, and the
Option Shares will be listed on the New York Stock Exchange or
designated for inclusion in NASDAQ National Market System, as the
case may be, and such registration and listing or designation
shall remain in effect through the later of the Exercise Date or
the date shares of Xxxxxx Common Stock issued for the account of
BCP are sold for BCP's account.
6.3 Representations and Warranties of BCP and XXXX.
Each of the BCP Entities and XXXX severally and not jointly
represent and warrant to LWN, LGII and RDI as follows:
(a) On the Exercise Date, each of the BCP Entities and
XXXX will have good and valid title to the shares of Common Stock
owned by each of them, free and clear of all liens, encumbrances,
equities and claims.
(b) No consent, approval or authorization of, or
filing, registration or qualification with, any court,
governmental, administrative or judicial authority or regulatory
body will be, as of the Exercise Date, required on the part of
any of the BCP Entities or XXXX for the valid sale and delivery
of the BCP Common Stock and the XXXX Common Stock to LGII as
contemplated herein.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Calculation of EBITDA. (a) At any time that
RHC's EBITDA is calculated pursuant to this Agreement, such
calculation shall be prepared in accordance with
34
the accounting practices of Mortuary and the Association in
effect on the Closing Date, without giving effect to any
modifications to such accounting and business practices made
subsequent to the Closing Date, regardless of whether such
modifications were made pursuant to the promulgation of rules,
regulations or statutes applicable to RHC, changes in GAAP or
otherwise provided, however, that EBITDA for the Entry Relevant
Period shall be adjusted to reflect payment of property taxes and
non-consolidation of the Endowment Care Fund as a result of RHC's
for-profit status.
(b) In the event that the ASA is terminated or reduced
in scope prior to the Exercise Date, then Pro Forma EBITDA for
the Entry Relevant Period will be restated to reflect the
incremental expense RHC would have incurred in fiscal years 1997
and 1998 had the ASA not been in place during those years or had
been in place but only on a comparably reduced scope basis, as
the case may be.
(c) Notwithstanding paragraph (a) above and regardless
of proper GAAP accounting, in the event payments pursuant to the
long term incentive plan for RHC management are due on or as a
result of the exercise of an Option, such payments will be
expensed on a straight line basis from the Closing Date to the
Exercise Date for purposes of computing Pro Forma EBITDA for the
Entry Relevant Period and EBITDA for the Exit Relevant Period.
(d) To the extent any Acquisitions are consummated
during 1997 or 1998, in calculating Pro Forma EBITDA for the
Entry Relevant Period, EBITDA shall be calculated on a pro forma
basis to exclude the Acquisition EBITDA attributable to such
Acquisitions. In calculating EBITDA and Acquisition EBITDA for
any period, all overhead charges shall be allocated among Rose
Hills and the Satellite Properties, on the one hand, and the
various businesses acquired in the relevant Acquisition or
Acquisitions, on the other hand, based on their relative total
net sales during the relevant period.
(e) Notwithstanding anything to the contrary contained
herein, EBITDA shall not include any nonrecurring income or
expense or any impact or any earnings attributable to the
withdrawal of all or part of any reserve established or in
existence in connection with any trust fund maintained by RHC.
(f) Notwithstanding anything contained herein to the
contrary, in the event there are any year to year increases in
the aggregate lease expense associated with the Satellite
Properties that are in excess of a rate per annum of 5%, such
"excess" increase in lease expense shall be excluded as an
expense item in calculating EBITDA.
(g) The various amounts calculated in accordance with
Article III shall be subject to subsequent adjustment based on
relevant events that occur after such calculations are made.
Such adjusted amounts shall be calculated by the chief financial
officer of Holdings, and the notification, dispute, and dispute
resolution mechanisms described in Section 3.5(b) shall apply,
mutatis mutandis, to such adjustment process.
35
7.2 Further Assurances. (a) Subject to the terms and
conditions hereof, each of the parties hereto agrees to use its
best efforts to take, or cause to be taken, all action and to do,
or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make
effective, reasonably promptly in light of the relevant
Notification Date and Option Date, the transactions contemplated
by this Agreement.
(b) Promptly following the Notification Date, each of
the parties hereto shall prepare and file all applications and
other notices required in connection with, and use their best
efforts to obtain promptly and comply with all conditions
contained in, all necessary regulatory approvals and any other
consent, approval or other actions by, or notice to or
registration or filing with, any governmental or administrative
agency or authority required or necessary to be made, obtained or
complied with, as the case may be, by any party hereto in
connection with the performance of the transactions contemplated
by this Agreement, including without limitation any premerger
notifications pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX Xxx"). LWN, LGII and RDI
agree to, and shall cause their Affiliates to, (i) enter into
with the Federal Trade Commission and/or the Department of
Justice such decrees, consent orders and/or hold separate
undertakings and (ii) effectuate any divestitures, in each case
involving assets or operations of either RHC or LGII or its
Affiliates or both, as may be necessary in order to enable LGII
to purchase, as soon as practicable following the Notification
Date and in any event no later than the Exercise Date, the BCP
Common Stock and the XXXX Common Stock.
7.3 LWN Guarantee. (a) Guarantee. LWN hereby
unconditionally and irrevocably guarantees to the BCP Entities
and their respective successors, transferees and assigns, the
prompt and complete payment and performance by LGII and its
successors and assigns when due of the Obligations. LWN further
agrees to pay any and all expenses (including, without
limitation, all fees and disbursements of counsel) which may be
paid or incurred by the BCP Entities in enforcing any of their
rights with respect to, or collecting, any or all of the
Obligations and/or enforcing any rights with respect to, or
collecting against, LGII or against LWN under this Guarantee.
(b) Guarantee Absolute and Unconditional. LWN waives
diligence, presentment, protest, demand for payment and notice of
default or nonpayment to or upon LGII or LWN with respect to the
Obligations. This Guarantee shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to
any circumstance whatsoever (with or without notice to or
knowledge of LGII or LWN) which constitutes, or might be
construed to constitute, an equitable or legal discharge of LGII
for the Obligations, or of LWN under this Guarantee, in
bankruptcy or in any other instance. This Guarantee shall remain
in full force and effect and be binding in accordance with and to
the extent of its terms upon LWN and its successors and assigns,
and shall inure to the benefit of the BCP Entities and their
respective successors, transferees and assigns, until all the
Obligations and the obligations of LWN under this Guarantee shall
have been satisfied by payment in full.
(c) Reinstatement. This Guarantee shall continue to
be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the
36
Obligations is rescinded or must otherwise be restored or
returned by the BCP Entities upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of LGII or upon or as
a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, LGII or any
substantial part of its property, or otherwise, all as though
such payments had not been made.
7.4 Drag-Along Rights. (a) In the event of a default
by LGII or LWN of their obligations under Section 4.1 to pay the
relevant Option Price as provided for herein, and such default
shall continue for 45 days, the BCP Entities shall be entitled to
solicit offers from third parties for the purchase of all or part
of the outstanding shares of Common Stock and Preferred Stock.
If, following such Event of Default and pursuant to such
solicitation, any of the BCP Entities receives a bona fide offer
from a Person other than a BCP Entity or any of its Affiliates (a
"Third Party") to purchase in an arms'-length transaction all or
part of the outstanding shares of Common Stock and Preferred
Stock owned by the Stockholders and such offer is accepted by
such BCP Entities, then LGII, RDI, XXXX and their respective
Permitted Transferees each agrees that it will Transfer all or
part of the shares of Common Stock and Preferred Stock owned by
it to such Third Party on the terms of the offer so accepted by
such BCP Entities, including the same per share consideration.
In any such transaction where less than all of the outstanding
shares of Common Stock are to be sold, such shares to be sold
shall be sold by BCP, LGII, RDI and XXXX pro rata in proportion
to their respective holdings of Common Stock.
(b) The BCP Entities shall give notice (the "Drag-Along
Notice") to each of the other Stockholders of any proposed
Transfer giving rise to the rights of such BCP Entities set forth
in Section 7.4(a) as soon as practicable following the acceptance
of the offer referred to in Section 7.4(a). The Drag-Along
Notice shall set forth the number of shares of Common Stock and
Preferred Stock proposed to be so Transferred, the name of the
proposed transferee, the proposed amount and form of
consideration (and if such consideration consists in part or in
whole of property other than cash, the Transferring Stockholder
shall provide such information, to the extent reasonably
available to the BCP Entities, relating to such consideration as
LGII, RDI, XXXX and their respective Permitted Transferees may
reasonably request in order to evaluate such non-cash
consideration) and the other terms and conditions of the offer.
The BCP Entities shall notify the Stockholders at least 20 days
in advance of entering into a definitive agreement in connection
with such offer if Stockholders will be required to sign any
agreement containing representations, warranties and indemnities
and will provide in advance to one counsel acting for Holdings
and the other Stockholders subject to the Drag-Along Notice
(which counsel shall be other than counsel for the BCP Entities)
a copy of the representations, warranties and indemnities
proposed to be made by such Stockholders. In any such agreement
such Stockholders will be required to make the same
representations, warranties and indemnities as the BCP Entities
so long as they are made severally and not jointly. The
Stockholders agree that Holdings shall pay the fees and expenses
of counsel for the Stockholders in connection with any
transaction referred to in this Section 7.4. If the Transfer
referred to in the Drag-Along Notice is not consummated within
120 days from the date of the Drag-Along Notice, the Transferring
Stockholder must deliver another Drag-Along Notice in order to
exercise its rights under this Section 3.6 with respect to such
Transfer or any other Transfer.
37
(c) Following a default as described in Section
7.4(a), any proceeds realized from the sale pursuant to this
Section 7.4 of the shares of Common Stock or Preferred Stock held
by LGII, RDI or their respective Permitted Transferees shall be
paid over to BCP to the extent necessary to satisfy the
Obligations which remain unsatisfied following the sale of the
BCP Common Stock and XXXX Common Stock, whether pursuant to
Section 7.4 or otherwise, and any excess proceeds shall be paid
over to LGII.
ARTICLE VIII
CLOSINGS
8.1 Payment of the Option Price in Cash or Xxxxxx
Common Stock The closing of the purchase of BCP Common Stock and
XXXX Common Stock pursuant to the exercise of an Option as
provided in Sections 2.1 and 2.2 shall take place on the Exercise
Date in the event (a) the Option Price is to be paid wholly in
cash or (b) the Option Price is to be paid in part or in whole in
Xxxxxx Common Stock and BCP does not exercise the BCP Liquidity
Right.
8.2 Exercise of the BCP Liquidity Right. In the event
the Option Price is to be paid in part or in whole in shares of
Xxxxxx Common Stock and BCP exercises the BCP Liquidity Right as
provided in subsection 4.1(a)(ii), the closing of the purchase of
BCP Common Stock and XXXX Common Stock shall take place on the
Exercise Date, provided, that in the event LGII or LWN does not
deliver the net cash proceeds from the issuance and sale of
Xxxxxx Common Stock on the Exercise Date to the extent required
as a result of the exercise of the BCP Liquidity Right, (a) BCP
and XXXX shall deliver into escrow (with an escrow agent
reasonably acceptable to both LGII and BCP) on the Exercise Date
the BCP Common Stock and the XXXX Common Stock, and (b) LGII
shall on the Exercise Date deliver into escrow with such escrow
agent the portion, if any, of the Option Price being paid in
cash, together with the requisite number of shares of Xxxxxx
Common Stock, if any, as to which the BCP Liquidity Right has not
been exercised, and the closing of the exercise of the Option
shall take place on the earliest to occur of (i) the date on
which the requisite amount of net cash proceeds from the sale of
shares of Xxxxxx Common Stock as to which the BCP Liquidity Right
has been exercised are received and (ii) the 180th day after the
date on which BCP notified LWN of its desire to exercise the BCP
Liquidity Right, at which time (subject to Section 8.3) the BCP
Common Stock and XXXX Common Stock shall be released from escrow
against payment of such portion of the Option Price payable in
cash and such requisite number of shares of Xxxxxx Common Stock,
if any.
8.3 Default By LGII or LWN. In the event of a default
by LGII or LWN of their obligations to pay the Option Price on
the Exercise Date (or such later date as provided in Section
8.2), the BCP Common Stock and XXXX Common Stock shall be
released from escrow and returned to BCP and XXXX, as applicable,
and any funds or other assets held by the escrow agent in respect
of any earlier deposit by or on behalf of LGII or LWN shall be
retained by the escrow agent as collateral security for the
payment of the Obligations, and LWN and LGII hereby grant to BCP
a security interest in such funds or other amounts as
38
security for the Obligations. In the event all or any part of
the Option Price is not paid when due, such unpaid amount shall
constitute a continuing fixed obligation of LGII and shall bear
interest at the Default Rate until such unpaid amount is paid in
full (as well as after as before judgment).
8.4 Time and Place of Closing. The closing of the
purchase of the BCP Common Stock and XXXX Common Stock shall be
held at the principal office of the BCP Entities at 10:00 A.M.
local time on the date determined pursuant to this Article VIII.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices. Notices hereunder shall be given
only by personal delivery, registered or certified mail, return
receipt requested, overnight courier service, or telex, telegram
or other form of electronic mail or by telecopy (and subsequently
confirmed by any other permitted means hereunder) and shall be
deemed transmitted when personally delivered or deposited in the
mail or delivered to a courier service or a carrier for
electronic transmittal (as the case may be), postage or charges
prepaid, and addressed to the particular party to whom the notice
is to be sent as follows:
(a) in the case of BCP or XXXX:
c/o The Blackstone Group
Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
in the case of LGII or LWN:
The Xxxxxx Group Inc.
Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 358
Telecopier No.: (000) 000-0000
Attention: Senior Vice President and Chief
Financial Officer
39
with a copy to:
The Xxxxxx Group Inc.
c/x Xxxxxx Group International, Inc.
Xxxx Xxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Legal Department
or to such address as a party may instruct by notice hereunder.
Section 9.2 Severability; Mutuality of Options. In
the event any provision hereof is held or rendered void or
unenforceable by any court or other legal authority, then such
provisions shall be severable and shall not affect the remaining
provisions hereof. Notwithstanding the foregoing, in the event
either the call option or put option shall be held or rendered
void or unenforceable or breached by the party obligated thereon,
then the party holding such option shall be excused from
performing under the option it has granted.
Section 9.3 Entire Agreement. This Agreement,
together with the other agreements referred to herein, is the
entire Agreement among the parties, and, when executed by the
parties hereto, supersedes all prior agreements and
communications, either verbal or in writing, between the parties
hereto with respect to the subject matter contained herein.
Section 9.4 Amendment and Waiver. This Agreement may
not be amended, modified or supplemented unless consented to in
writing by the parties hereto. Any failure by a party hereto to
comply with any obligation, agreement or condition herein may be
expressly waived in writing by each of the other parties hereto,
but such waiver or failure to insist upon strict compliance with
such obligation, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any such subsequent or
other failure.
Section 9.5 Assignment; Binding on Transferees. The
provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and permitted transferees from and after the effective date
hereof. Subject to the last sentence of this Xxxxxxx 0.0, XXXXX,
XXXX, XXX, XXXX and RHMI may assign any of their respective
rights and obligations hereunder to any of their respective
Affiliates. LWN may not assign any of its rights and obligations
hereunder to any Person without the written consent of BCP. A
Person may become an assignee of the rights of a party hereto
only if such assignee becomes a party to this Agreement to the
same extent as the assignor; provided, that an assignment by any
party hereto of its rights hereunder shall not release such party
from its obligations hereunder unless all other parties hereto
consent to such release.
Section 9.6 Variations in Pronouns. All pronouns and
any variations thereof shall be deemed to refer to the masculine,
feminine or neuter, singular or plural, as the identity of the
antecedent person or persons or entity or entities may require.
40
Section 9.7 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York.
Section 9.8 Further Assurances. Each of the parties
shall execute such documents and other papers and take such
further actions as may be reasonably required or desirable to
carry out the provisions hereof and the transactions contemplated
hereby.
Section 9.9 Headings. The headings in this Agreement
are intended solely for convenience of reference and shall be
given no effect in the interpretation of this Agreement.
Section 9.10 Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
Section 9.11 Submission to Jurisdiction; Waivers.
Each of the parties hereto hereby irrevocably submits in any
legal action or proceeding relating to or arising out of this
Agreement, or for recognition and enforcement of any judgment in
respect thereof, to the jurisdiction of the United States
District Court for the Southern District of New York, and
appellate courts thereof. Each of the parties hereto further (i)
consents that any such action or proceeding may be brought in
such court and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in such court
or that such action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same; (ii) agrees that
service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage
prepaid, to such party at its address set forth in Section 9.2 or
at such other address of which such party shall have given notice
pursuant thereto; (iii) agrees that nothing herein shall affect
the right to effect service of process in any other manner
permitted by law or shall limit the right to xxx in any other
jurisdiction; and (iv) waives, to the maximum extent not
prohibited by law, any right it may have to claim or recover in
any legal action or proceeding referred to in this subsection any
special, exemplary, punitive or consequential damages.
Section 9.12 WAIVERS OF JURY TRIAL. EACH PARTY HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR
ANY COUNTERCLAIM THEREIN.
41
IN WITNESS WHEREOF, the undersigned have executed this
Agreement on the date first above written.
THE XXXXXX GROUP INC.
By: /s/ F. Xxxxxx Xxxxx
Name: F. Xxxxxx Xxxxx
Title:
XXXXXX GROUP INTERNATIONAL, INC.
By: /s/ F. Xxxxxx Xxxxx
Name: F. Xxxxxx Xxxxx
Title:
ROSES DELAWARE, INC.
By: /s/ F. Xxxxxx Xxxxx
Name: F. Xxxxxx Xxxxx
Title
BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P.
By: BLACKSTONE MANAGEMENT
ASSOCIATES II L.L.C.
General Partner
By: /s/ executed
Name:
Title:
XXXXXXXXXX XXXX HILLS OFFSHORE CAPITAL PARTNERS L.P.
By: BLACKSTONE MANAGEMENT
ASSOCIATES II L.L.C.
General Partner
By: /s/ executed
Name:
Title:
42
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L.P.
By: BLACKSTONE MANAGEMENT
ASSOCIATES II L.L.C.
General Partner
By: /s/ executed
Name:
Title:
RHI MANAGEMENT DIRECT L.P.
By: PSI P&S Corp.
General Partner
By:______________________
Name:
Title:
