DEC INTERNATIONAL, INC.
and
NATIONAL FIBERSTOK CORPORATION
121/2% Senior Notes due April 24, 2003
and
210,868 Shares of Class A Common Stock
of
DEC International, Inc.
SECURITIES PURCHASE AGREEMENT
Dated as of April 24, 1997
TABLE OF CONTENTS
> Page
SECTION 1. PURCHASE AND SALE OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Issue of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purchase and Sale of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Registration of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Delivery Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Issue Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Direct Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.7 Lost, Etc. Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.8 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.9 Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.10 Other Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Delivery of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Legal Investment; Purchase Permitted by Applicable Laws . . . . . . . . . . . . . . 9
2.3 Payment of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.4 Compliance with Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.5 Completion of Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7 Proceedings Satisfactory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.8 Consents and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.9 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.10 No Material Judgment or Order . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.11 Payment of Accrued Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.12 Amendment of Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3. REPRESENTATIONS AND WARRANTIES OF NFC AND DEC . . . . . . . . . . . . . . . . . . . 11
3.1 Authorization; Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 No Violation or Conflict; No Default . . . . . . . . . . . . . . . . . . . . . . . . 13
3.3 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.4 No Material Adverse Change; Financial Statements . . . . . . . . . . . . . . . . . . 13
3.5 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.6 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.7 No Violation of Regulations of Board of Governors of Federal Reserve System . . . . 15
3.8 Private Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.9 Governmental Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.10 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.11 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.12 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.14 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.16 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.17 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.18 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.19 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.20 Consummation of the Pending Acquisition . . . . . . . . . . . . . . . . . . . . . . 20
3.21 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4. REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER . . . . . . . . . . . . . . . . . . 20
4.1 Purchase for Own Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.2 Accredited Investor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Page
4.3 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.4 Securities Restricted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.5 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.1 Payment of Notes; Satisfaction of Obligations . . . . . . . . . . . . . . . . . . . 22
5.2 Financial Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.3 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.4 Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.5 Limitation on Additional Indebtedness and Issuance of Disqualified Capital Stock . . 26
5.6 Limitation on Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . 26
5.7 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.8 Limitation on Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.9 Limitation on Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.10 Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries . . . . 29
5.11 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.12 Minimum Consolidated Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . 31
5.13 Fiscal Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.14 Limitation on Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.15 Stay, Extension and Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.16 Corporate Existence; Merger; Successor Corporation . . . . . . . . . . . . . . . . . 33
5.17 Limitation on Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.18 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.19 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.20 Ownership of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.21 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.22 Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.23 ERISA Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.24 Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.25 Compliance with Laws; Maintenance of Licenses . . . . . . . . . . . . . . . . . . . 35
5.26 Inspection of Properties and Records . . . . . . . . . . . . . . . . . . . . . . . . 36
5.27 Representation on Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . 36
5.28 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.29 Information to Prospective Purchasers . . . . . . . . . . . . . . . . . . . . . . . 37
5.30 Private Placement Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.31 Rating of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.32 Available Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6. REDEMPTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.1 Optional and Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.2 Selection of Notes to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.3 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.4 Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.5 Payment of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7. DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.2 Acceleration of Notes; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.3 Premium on Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.4 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.5 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.6 Rights of Holders to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . 42
7.7 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Page
SECTION 8. AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.1 With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.2 Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.3 Notation on or Exchange of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.4 Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.2 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.2 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.5 Governing Law; Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . 59
10.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.9 Disclosure of Financial Information . . . . . . . . . . . . . . . . . . . . . . . . 60
Annexes:
Annex A Form of Note
Annex B Share Price Adjustment Agreement
Annex C Registration Rights Agreement
Annex D Stockholders' Agreement
Annex E Opinion of Counsel to DEC and NFC
Schedules:
1.2
3.1(a)
3.1(b)
3.17
5.28
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement dated as of April 24, 1997 (this
"Agreement") is entered into by and among DEC International, Inc., a Delaware
corporation ("DEC"), National Fiberstok Corporation, a Delaware corporation
("NFC"), and the purchasers listed on the signature pages hereto (each a
"Purchaser" and collectively, the "Purchasers").
Capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms in Section 9.1.
In consideration of the premises, mutual covenants and agreements
hereinafter contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, NFC and DEC agree,
jointly and severally, and each of the Purchasers agrees, severally but not
jointly, as follows:
SECTION 1. PURCHASE AND SALE OF SECURITIES.
1.1 Issue of Securities.
(a) On or before the Closing, DEC will have authorized the original
issue and sale to the Purchasers, in the respective amounts set forth on
the signature pages hereof, of $35,000,000 aggregate principal amount of
its 121/2% Senior Notes due April 24, 2003 (the "Notes"), to be
substantially in the form attached hereto as Annex A, and an aggregate of
210,868 shares (the "Closing Shares") of its Class A Common Stock, par
value $0.0001 per share (the "Class A Common Stock"). In addition, on or
before the Closing, DEC shall authorize the issue and delivery of PIK
Notes pursuant to Section 1 of the Notes and the issue and delivery of
additional shares of Class A Common Stock (the "Additional Class A
Shares" and together with the Closing Shares, the "Class A Shares")
pursuant to the Share Price Adjustment Agreement in the form attached
hereto as Annex B (the "Share Price Adjustment Agreement"). The
aggregate principal amount of the Notes outstanding at any time may not
exceed $35,000,000 plus the aggregate principal amount of PIK Notes
issued pursuant to Section 1 of the Notes. The Notes and the Class A
Shares shall each individually be referred to herein as a "Security" and
collectively referred to herein as the "Securities."
(b) Each Holder of Class A Shares will have certain registration
rights as set forth in the Amended and Restated Registration Rights
Agreement in the form attached hereto as Annex C (the "Registration
Rights Agreement") and other rights and obligations with respect to the
Class A Shares, as provided in the Amended and Restated Stockholders'
Agreement in the form attached hereto as Annex D (the "Stockholders'
Agreement"). The terms and provisions pertaining to the Class A Shares
and contained in the Share Price Adjustment Agreement shall constitute,
and are hereby expressly made, a part of this Agreement and, to the
extent applicable, DEC and the Holders, by their execution and delivery
of this Agreement, expressly agree to such terms and provisions and to be
bound thereby.
1.2 Purchase and Sale of Securities.
(a) Purchase and Sale. DEC agrees to sell and, subject to the
terms and conditions set forth herein and in reliance on the
representations and warranties of the Companies contained or incorporated
herein, each of the Purchasers agrees, severally but not jointly, to
purchase the Securities set forth below such Purchaser's name on the
signature pages hereto at the purchase price indicated therein. A portion
of the aggregate purchase price to be paid for the Securities shall be
paid in the form of 10,000 shares of Cumulative Redeemable Preferred
Stock. DEC and the Purchasers hereby agree to treat, for Federal Income
and all other tax purposes, (i) the Notes as having an aggregate issue
price equal to $34,213,000 (taking into account any amounts payable by
DEC to the Purchasers at closing as an adjustment to the issue price
under applicable treasury regulations) (ii) the Class A Shares as having
an aggregate issue price equal to $500,000, and (iii) the Cumulative
Redeemable Preferred Stock as having an aggregate fair market value equal
to its accreted value in the amount of $9,713,000. Unless otherwise
required by applicable law, DEC and the Purchasers shall not take any
position contrary to such treatment for any federal income or other tax
purposes.
(b) Closing. The purchase and sale of the Securities shall take
place at a closing (the "Closing") at the offices of White & Case, 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m. on April
24, 1997, or such other business day as may be agreed upon by the
Purchasers, NFC and DEC (the "Closing Date"). At the Closing, DEC will
deliver to each of the Purchasers the Securities to be purchased by such
Purchaser (in such denomination or denominations and registered in such
Purchaser's name or the name of such nominee or nominees as such
Purchaser may request), dated the Closing Date, against payment of the
purchase price therefor by (i) intra-bank or Federal funds bank wire
transfer of same day funds to such bank account which is identified on
Schedule 1.2 hereto or such other account as DEC shall designate at least
two Business Days prior to the Closing (ii) and delivery of certificates
representing 10,000 shares of Cumulative Redeemable Preferred Stock,
together with related stock powers duly endorsed in blank.
(c) Fees and Expenses. Regardless of whether the Securities are
sold, each of NFC and DEC agrees, severally and jointly, to pay or
reimburse all reasonable expenses relating to this Agreement, including
but not limited to:
(i) each Purchaser's reasonable expenses incurred in
connection with the transactions contemplated by this Agreement, the
Share Price Adjustment Agreement, the Stockholders' Agreement, the
Registration Rights Agreement and the other Documents including,
without limitation, travel and lodging expenses and all costs
incurred in connection with such Purchaser's review of each of the
Companies' business and operations;
(ii) the fees and other charges and expenses of the Purchasers'
counsel, Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, in connection
herewith and with the other Documents;
(iii) the cost of printing, reproducing and delivering to
each Purchaser's home office or the office of such Purchaser's
designee, insured to such Purchaser's satisfaction, this Agreement,
the Share Price Adjustment Agreement, the Stockholders' Agreement,
the Registration Rights Agreement, the Securities and the other
Documents;
(iv) the reasonable fees and expenses (including the reasonable
fees and expenses of counsel) in connection with any registration or
qualification of the Securities required in connection with the
offer and sale of the Securities pursuant to this Agreement under
the securities or "blue sky" laws of any jurisdiction requiring such
registration or qualification or in connection with obtaining any
exemptions from such requirements;
(v) each Purchaser's expenses (including the reasonable fees
and expenses of counsel) relating to any amendment to, or
modification of, or any waiver or consent or preservation of rights
under, this Agreement or any of the other Documents; and
(vi) all other expenses, including without limitation
reasonable counsel's fees, accountants' fees and any rating agency
fees incurred by the Companies in connection with the transactions
contemplated by this Agreement and the other Documents.
NFC and DEC, jointly and severally, shall deliver to each of the
Purchasers or to such other persons as such Purchaser shall direct,
concurrently with the Closing, by intra-bank or Federal funds bank wire
transfer of same day funds, payment for any documented out-of-pocket
expenses for which such Purchaser is entitled to reimbursement pursuant
to this Section 1.2(c), including, without limitation, the documented
fees and expenses of such Purchaser's counsel.
(d) Other Purchasers. Each Purchaser's obligations hereunder are
subject to the execution and delivery of this Agreement by the other
Purchasers listed on the signature pages hereof. The obligations of each
Purchaser shall be several and not joint, and no Purchaser shall be
liable or responsible for the acts of any other Purchaser under this
Agreement.
1.3 Registration of Securities.
DEC shall cause to be kept at its principal office (a) a register
for the registration and transfer of the Notes (the "Notes Register") and (b)
a register for the registration and transfer of the Class A Shares (the "Class
A Common Stock Register"). The names and addresses of the Holders of Notes,
the issuance of PIK Notes, the transfer of Notes and the names and addresses
of the transferees of the Notes shall be registered in the Notes Register.
The names and addresses of the Holders of Class A Shares, the transfer of
Class A Shares and the names and addresses of the transferees of Class A
Shares shall be registered in the Class A Common Stock Register.
The Person in whose name any registered Security shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
of this Agreement, and DEC shall not be affected by any notice to the
contrary, until due presentment of such Security for registration of transfer
as provided in this Section 1.3. Payment of or on account of the principal,
premium, if any, and interest on any registered Securities shall be made to or
upon the written order of such registered holder.
When Securities are presented to DEC with a request to register the
transfer of such Securities or to exchange such Securities for an equal
principal amount of Securities of other authorized denominations, DEC shall
register the transfer or make the exchange as requested if its reasonable
requirements for such transaction are met.
1.4 Delivery Expenses.
If a Holder surrenders any Note or any certificate representing any
Class A Share to DEC for any reason, DEC agrees to pay the cost of delivering
to such Holder's home office or to the office of such Holder's designee from
DEC, insured to such Holder's satisfaction, the surrendered Security and each
Security issued in substitution, replacement or exchange for the surrendered
Security.
1.5 Issue Taxes.
DEC and NFC, jointly and severally, agree to pay all documentary
stamp taxes and other governmental charges (other than taxes in the nature of
income, franchise, property, estate, inheritance, gift or similar taxes) and
governmental fees in connection with the issuance or delivery by DEC to each
Holder of the Notes and the Class A Shares, as the case may be, and the
execution and delivery of the other Documents and any modification of any of
such Securities and Documents and will save such Holder harmless without
limitation as to time against any and all liabilities with respect to all such
taxes and fees. The obligations of DEC and NFC under this Section 1.5 are in
addition to any other obligations of DEC and NFC contained elsewhere in this
Agreement and shall survive the payment or prepayment of the Notes, at
maturity, upon redemption or otherwise and the termination of this Agreement
and the other Documents.
1.6 Direct Payment.
DEC will pay or cause to be paid all amounts payable with respect to
any Note (without any presentment of such Note and without any notation of
such payment being made thereon) by crediting (before 12:00 Noon, New York
time), by Federal funds bank wire transfer in same day funds to each Holder's
account in any bank in the United States of America as may be designated and
specified in writing by such Holder at least two Business Days prior thereto.
Each Purchaser's initial bank account for this purpose is on the signature
pages thereto. In the event that DEC elects to make a PIK Interest Payment,
then, in addition to making the wire transfer of the cash portion of the PIK
Interest Payment, DEC shall deliver the portion of such PIK Interest Payment
being paid in PIK Notes to each Holder at such Holder's address as it appears
in the Notes Register or at such address as may be designated and specified in
writing by such Holder at least two Business Days prior thereto.
1.7 Lost, Etc. Securities.
If a mutilated Security is surrendered to DEC or if the Holder of a
Security claims and submits an affidavit or other evidence, satisfactory to
DEC, to the effect that the Security has been lost, destroyed or wrongfully
taken, DEC shall issue a replacement Security if the customary requirements
relating to replacement securities are reasonably satisfied. If required by
DEC, such Holder must provide an indemnity bond, or other form of indemnity,
sufficient in the judgment of DEC to protect DEC from any loss which it may
suffer if a Security is replaced. If any Purchaser or any other institutional
Holder (or nominee thereof) is the owner of any such lost, stolen or destroyed
Security, then the affidavit of an authorized officer of such owner, setting
forth the fact of loss, theft or destruction and of its ownership of the
Security at the time of such loss, theft or destruction shall be accepted as
satisfactory evidence thereof, and no further indemnity shall be required as a
condition to the execution and delivery of a new Security other than the
unsecured written agreement of such owner reasonably satisfactory to DEC, to
indemnify DEC or at the option of the Purchaser, an indemnity bond in the
amount of the Security remaining outstanding.
Every replacement Security is an obligation of DEC.
1.8 Indemnification.
In addition to all other sums due hereunder or provided for in this
Agreement or any of the other Documents and any and all obligations of NFC or
DEC to indemnify any Purchaser hereunder or under any of the other Documents,
NFC and DEC (each, an "Indemnifying Party") hereby agree, jointly and
severally, without limitation as to time, to indemnify each Purchaser, each
Affiliate of a Purchaser and each director, officer, employee, counsel, agent
or representative of such Purchaser and its Affiliates (collectively, the
"Indemnified Parties") against, and hold it and them harmless from, to the
fullest extent lawful, all losses, claims, damages, liabilities, costs
(including, without limitation, costs of preparation and attorneys' fees and
disbursements) and expenses, including expenses of investigation
(collectively, "Losses"), incurred by it or them and arising out of or in
connection with this Agreement, the Acquisition Agreement, the Senior Credit
Agreement, the Indenture, the other Documents or the transactions contemplated
hereby or thereby (or any other document or instrument executed herewith or
pursuant hereto or thereto), regardless of whether the transactions
contemplated by this Agreement are consummated and regardless of whether any
Indemnified Party is a formal party to any proceeding; provided, however, that
the Indemnifying Parties shall not be liable to any Indemnified Party for any
Losses to the extent that it shall be finally determined by a court of
competent jurisdiction (which determination is not subject to appeal or
review) that such Losses arose from the gross negligence or willful misconduct
of such Indemnified Party, which (i) is independent of any wrongful act by the
Indemnifying Parties, their Affiliates or any of their respective
representatives and (ii) was not taken by such Indemnified Party in reliance
upon any of the representations, warranties, covenants or promises of any
Indemnifying Party herein (including, without limitation, those incorporated
by reference herein) or in the other Documents, including (without limitation)
the certificates delivered by any of the Companies pursuant hereto or thereto.
Each Indemnifying Party agrees, jointly and severally, to reimburse any
Indemnified Party promptly for all such Losses as they are incurred by such
Indemnified Party (regardless of whether it is or may be ultimately determined
that an Indemnified Party is not entitled to indemnification hereunder). The
obligations of each Indemnifying Party to each Indemnified Party hereunder
shall be separate obligations, and the Indemnifying Party's liability to any
such Indemnified Party hereunder shall not be extinguished solely because any
other Indemnified Party is not entitled to indemnity hereunder. The
obligations of each Indemnifying Party under this Section 1.8 shall survive
the payment or prepayment of the Notes, at maturity, upon acceleration,
redemption or otherwise, the redemption or repurchase by DEC of the Class A
Shares purchased by any Purchaser, the redemption or repurchase of any Class A
Shares, any transfer of the Securities by any Purchaser and the termination of
this Agreement, the Indenture, the Senior Credit Agreement, the Share Price
Adjustment Agreement, the Stockholders' Agreement and any of the other
Documents.
In addition, each Indemnifying Party jointly and severally, shall,
without limitation as to time, indemnify, reimburse, defend, and hold harmless
the Indemnified Parties for, from, and against all Losses asserted against,
resulting to, imposed on, or incurred by any of the Indemnified Parties,
directly or indirectly, in connection with any of the following: (i) the
events, circumstances and conditions relating to environmental matters
described in the Offering Memorandum, the Private Placement Memorandum or the
Acquisition Agreement; (ii) any pollution or threat to human health or the
environment that is related in any way to the management, use, control,
ownership or operation of the business or property in connection with the
business of the Companies, by the Companies, or any Person for whom any
Company is or may be responsible by law or contract, including, without
limitation, all on-site and off-site activities involving Materials of
Environmental Concern, and that occurred, existed, arises out of conditions or
circumstances that occurred or existed, or was caused, in whole or in part, on
or before the Closing Date, regardless of whether the pollution or threat to
human health or the environment is described in the Offering Memorandum, the
Private Placement Memorandum or the Acquisition Agreement; (iii) any
Environmental Claim against any Person whose liability for such Environmental
Claim any Company has assumed or retained either contractually or by operation
of law, including but not limited to any pollution or threat to human health
or the environment, or any Federal, state, local or foreign approvals; or (iv)
the breach of any environmental representation or warranty set forth or
incorporated by reference herein.
In case any action, claim or proceeding shall be brought against any
Indemnified Party with respect to which indemnity may be sought against any
Indemnifying Party hereunder, such Indemnified Party shall promptly notify
each Indemnifying Party in writing and such Indemnifying Party shall assume
the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Party and payment of all fees and expenses
incurred in connection with the defense thereof. The failure to so notify
such Indemnifying Party shall not affect any obligation it may have to any
Indemnified Party under this Agreement or otherwise except to the extent that
(as finally determined by a court of competent jurisdiction (which
determination is not subject to review or appeal)) such failure materially and
adversely prejudiced such Indemnifying Party. Each Indemnified Party shall
have the right to employ separate counsel in such action, claim or proceeding
and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of each Indemnified Party unless: (i) such
Indemnifying Party has agreed to pay such expenses; or (ii) such Indemnifying
Party has failed promptly to assume the defense and employ counsel reasonably
satisfactory to such Indemnified Party; or (iii) the named parties to any such
action, claim or proceeding (including any impleaded parties) include any
Indemnified Party and such Indemnifying Party or an Affiliate of such
Indemnifying Party, and such Indemnified Party shall have been advised by
counsel that either (x) there may be one or more legal defenses available to
it which are different from or in addition to those available to such
Indemnifying Party or such Affiliate or (y) a conflict of interest may exist
if such counsel represents such Indemnified Party and such Indemnifying Party
or its Affiliate; provided that, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel in the
circumstances described in clause (ii) or (iii) above, such Indemnifying Party
shall not have the right to assume the defense thereof and such counsel shall
be at the expense of the Indemnifying Parties; provided, however, that such
Indemnifying Party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be responsible hereunder for the fees and
expenses of more than one such firm of separate counsel (in addition to any
local counsel), which counsel shall be designated by such Indemnified Party.
No Indemnifying Party shall be liable for any settlement of any such action
effected without its written consent (which shall not be unreasonably
withheld). Each Indemnifying Party agrees, jointly and severally, that it
will not, without the Indemnified Party's prior written consent, consent to
entry of any judgment or settle or compromise any pending or threatened claim,
action or proceeding in respect of which indemnification or contribution may
be sought hereunder unless the foregoing contains an unconditional release, in
form and substance reasonably satisfactory to the Indemnified Parties, of the
Indemnified Parties from all liability and obligation arising therefrom.
If the indemnification provided for in this Section 1.8 is
unavailable to, or insufficient to hold harmless, any Indemnified Party in
respect of any Losses referred to therein, then each Indemnifying Party shall
have an obligation to contribute to the amount paid or payable by such Persons
as a result of such Losses in such proportion as is appropriate to reflect the
relative fault of each Indemnifying Party, its subsidiaries and Affiliates, on
the one hand, and such Indemnified Party, on the other hand, in connection
with the actions which resulted in such Losses as well as any other relevant
equitable considerations. The amount paid or payable by any such Person as a
result of the Losses referred to above shall be deemed to include, subject to
the limitations set forth in this Section 1.8, any legal or other fees or
expenses reasonably incurred by such Person in connection with any
investigation, lawsuit or legal or administrative action or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 1.8 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who is not guilty of such fraudulent
misrepresentation.
The Indemnified Parties shall have and be entitled to all rights of
subrogation, in respect of any Losses or other amounts as to which the
foregoing indemnity provisions apply, with respect to the claims of NFC
against any of the other parties to the Acquisition Agreement.
1.9 Further Actions.
During the period from the date hereof to the Closing Date, NFC and
DEC each shall (i) take all actions necessary or appropriate to cause its
representations and warranties contained in Section 3 to be true and correct
as of the Closing Date (unless stated to refer to another date), both before
and after giving effect to the transactions contemplated by this Agreement,
the Acquisition Agreement and the other Documents, as if made on and as of
such date, and (ii) take, or cause to be taken, all action, and do, or cause
to be done, all things necessary, proper or advisable under applicable law and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including, without limitation, obtaining all consents and
approvals of all Persons and removing all injunctive or other impediments or
delays, legal or otherwise, which are necessary to the consummation of the
transactions contemplated by this Agreement, the Acquisition Agreement and the
other Documents.
1.10 Other Covenants.
Each of NFC and DEC further covenants and agrees to not, and will
ensure that no affiliate (as defined in Rule 501(b) of the Securities Act) of
NFC or DEC will, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Securities Act) that
would be integrated with the sale of the Securities in a manner that would
require the registration under the Securities Act of the sale to the
Purchasers of the Securities.
SECTION 2. CLOSING CONDITIONS.
The obligations of each Purchaser to purchase and pay for the
Securities to be delivered to such Purchaser at the Closing shall be subject
to the satisfaction of each of the following conditions on or before the
Closing Date:
2.1 Delivery of Documents.
NFC and DEC shall have delivered to each Purchaser, in form and
substance satisfactory to such Purchaser, the following:
(a) The Notes being purchased by such Purchaser, duly executed by
DEC, in the aggregate principal amount set forth below such Purchaser's
name on the signature pages hereto, and certificates representing the
Closing Shares being purchased by such Purchaser, representing the number
of Closing Shares set forth below such Purchaser's name on the signature
pages hereto.
(b) (1) An Opinion of Counsel, dated the Closing Date and
addressed to the Purchasers, from White & Case, counsel for NFC and DEC,
as to the matters set forth on Annex E.
(2) Each legal opinion delivered pursuant to the Acquisition
Agreement, dated the Closing Date and addressed to the Purchasers or
accompanied by a written authorization from the Person delivering such
legal opinion stating that the Purchasers may rely on such opinion as
though it were addressed to them.
(3) A legal opinion, dated the Closing Date and addressed to
the Purchasers, from Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel
for the Purchasers.
(4) Such other Opinions of Counsel covering matters
incidental to the transactions contemplated by this Agreement and the
other Documents as any Purchaser may reasonably request.
In rendering such opinions described in this subsection (b),
each counsel may rely as to factual matters upon certificates or other
documents furnished by officers and directors of the Companies (copies of
which shall be delivered to such Purchaser) and by government officials,
and upon such other documents as such counsel deem appropriate as a basis
for their opinion. Such counsel shall opine, as applicable, as to the
Federal laws of the United States, the General Corporation Law of the
State of Delaware, the laws of the States of New York and the laws of the
state or states of incorporation of the Companies, if other than Delaware
or New York, and the laws of the state or states governing the
Acquisition Agreement, if other than Delaware or New York.
(c) Resolutions of the Board of Directors of NFC, certified by the
Secretary or Assistant Secretary of NFC, to be duly adopted and in full
force and effect on such date, authorizing (i) the execution, delivery
and performance of this Agreement, the Acquisition Agreement, the other
Documents to which NFC is a party and the consummation of the
transactions contemplated hereby and thereby and (ii) specific officers
of NFC to execute and deliver this Agreement and any other Documents to
which NFC is a party.
(d) Resolutions of the Board of Directors of DEC, certified by the
Secretary or Assistant Secretary of DEC, to be duly adopted and in full
force and effect on such date, authorizing (i) the execution, delivery
and performance of this Agreement, the Share Price Adjustment Agreement,
the Stockholders' Agreement, the Registration Rights Agreement, the other
Documents to which DEC is a party and the consummation of the
transactions contemplated hereby and thereby, (ii) the issuance of the
Notes, the PIK Notes and the Class A Shares pursuant to this Agreement
and (iii) specific officers of DEC to execute and deliver this Agreement,
the Share Price Adjustment Agreement, the Stockholders' Agreement, the
Registration Rights Agreement, the Notes, the PIK Notes and the Class A
Shares and any other Documents to which DEC is a party.
(e) Certificates of the Chief Executive Officer and Chief Financial
Officer of each of NFC and DEC, dated the Closing Date, certifying that
(i) all of the conditions set forth in Sections 2.3, 2.4, 2.5, 2.8, 2.9
and 2.10 are satisfied on and as of such date and specifying as to each
such condition the satisfaction thereof, (ii) all of the representations
and warranties of NFC and DEC, as the case may be, contained or
incorporated by reference herein or in any of the other Documents are
true and correct on and as of such date as though made on and as of such
date (unless stated to relate to another date), both immediately prior to
and after the consummation of the Pending Acquisition (and after giving
effect to the transactions contemplated by this Agreement and the other
Documents), (iii) each of the Companies has performed its obligations
that are required to be performed on or before the closing under the
Acquisition Agreement in accordance therewith and with all applicable
law, and (v) as to such other matters as such Purchaser may reasonably
request.
(f) A certificate in form, scope and substance reasonably
satisfactory to the Purchasers, from the Chief Financial Officer of each
of DEC and NFC, dated the Closing Date, to the effect that at the Closing
Date, both immediately prior to and after the consummation of the Pending
Acquisition (and after giving effect to the transactions contemplated
hereby and by the Acquisition Agreement (including without limitation,
the issuance of the Securities, the application of the proceeds therefrom
and the consummation of the Pending Acquisition)), each of the Companies
is Solvent.
(g) Audited consolidated financial statements of each of the
Companies (as described in the first sentence of Section 3.4(b)) for the
fiscal years ended on December 31, 1996, 1995 and 1994 and unaudited
consolidated financial statements of each of the Companies for the three-
month periods ended March 31, 1997 and 1996, in each case together with a
certificate of the Chief Financial Officer of such Company to the effect
that they were prepared in accordance with GAAP and fairly present the
consolidated financial position, shareholders' equity and income of such
Company. The audited financial statements referred to above shall be
delivered together with a report thereon by the applicable Company's
independent accountants, which report shall be unqualified, shall express
no doubts about the ability of such Company and each of its Subsidiaries
to continue as a going concern, and shall state that such consolidated
financial statements fairly present the consolidated financial position
of such Company and each of its Subsidiaries as of the dates indicated
and the results of their operations and their cash flows for the periods
indicated in conformity with GAAP applied on a basis consistent with
prior years (except as otherwise disclosed in such financial statements)
and that the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with United
States of America generally accepted auditing standards.
(h) Governmental certificates, dated the most recent practicable
date prior to the Closing Date, showing that each of the Companies is
organized, existing and in good standing in the jurisdiction of its
incorporation and is qualified as a foreign corporation and in good
standing in all other jurisdictions in which it has executive offices or
transacts business, except where the failure to be so qualified could not
reasonably be expected to have a Material Adverse Effect.
(i) Copies of each consent, license and approval required in
connection with the execution, delivery and performance by each of the
Companies of this Agreement, the Securities, the Acquisition Agreement,
the Share Price Adjustment Agreement, the Stockholders' Agreement, the
Registration Rights Agreement and the other Documents and the
consummation of the transactions contemplated hereby and thereby
(including without limitation consents, if any, required pursuant to the
HSR Act).
(j) Copies of the Charter Documents of each of the Companies,
certified as of a recent date by the Secretaries of State of the relevant
state of incorporation and certified by the Secretary or Assistant
Secretary of each Company, as true and correct as of the Closing Date.
(k) Certificates of the Secretary or an Assistant Secretary of each
of the Companies as to the incumbency and signatures of the officers or
representatives of such Company executing this Agreement, the Securities,
the Acquisition Agreement, the Share Price Adjustment Agreement, the
Stockholders' Agreement, the Registration Rights Agreement, the other
Documents and any other certificate or other document to be delivered
pursuant hereto or thereto, together with evidence of the incumbency of
such Secretary or Assistant Secretary.
(l) True and correct copies of the Acquisition Agreement, the
Senior Credit Agreement, the Indenture and all amendments thereto.
(m) Such additional information and materials as any Purchaser may
reasonably request, including, without limitation, copies of any debt
agreements, security agreements and other contracts to which any of the
Companies is a party.
2.2 Legal Investment; Purchase Permitted by Applicable Laws.
Each Purchaser's acquisition of the Securities (a) shall not be
prohibited by any applicable law or governmental regulation, release,
interpretation or opinion (including, without limitation, Regulations G, T, U
and X of the Board of Governors of the Federal Reserve System), (b) shall
constitute a legal investment as of the Closing Date under the laws and
regulations and orders of each jurisdiction to which such Purchaser may be
subject (without resort to any "basket" or "leeway" provision), and (c) shall
not subject such Purchaser to any penalty or, in its reasonable judgment,
other onerous condition in or pursuant to any such law, regulation or order;
and such Purchaser shall have received such certificates or other evidence as
such Purchaser may reasonably request to establish compliance with this
condition.
2.3 Payment of Fees.
DEC shall have delivered to each of the Purchasers or to such other
persons as such Purchaser shall direct on the signature pages hereto, at the
Closing, by intra-bank or Federal funds bank wire transfer of same day funds,
payment for such Purchaser's fee of such percent of the aggregate principal
amount of the Notes being purchased by such Purchaser as is set forth on such
Purchaser's signature page hereto.
2.4 Compliance with Agreements.
Each of the Companies shall have performed and complied in all
material respects with all agreements, covenants and conditions contained
herein, in each of the other Documents and in any other document contemplated
hereby or thereby which are required to be performed or complied with by such
Company on or before the Closing Date. The Purchasers shall have received
evidence, in form and substance satisfactory to them, that all transactions
required by the Acquisition Agreement to have occurred prior to or on the
Closing Date have been consummated and that all certificates, financial
statements, opinions and other documents delivered thereunder were delivered
in a form satisfactory to the Purchasers.
2.5 Completion of Other Transactions.
Simultaneously with or prior to the sale to each Purchaser of the
Securities to be purchased by such Purchaser:
(a) Each of the Documents shall have been executed and delivered by
each of the parties thereto (other than such Purchaser) in form and
substance satisfactory to the Purchasers, and such parties shall have
consummated the transactions contemplated thereby in accordance with all
applicable laws (including without limitation, the Securities Act, all
applicable state securities laws and all related rules and regulations
under such statutes and other laws).
(b) All of the other Purchasers listed in the signature pages
hereof shall have consummated their purchase of Securities pursuant to
this Agreement.
(c) DEC shall own, directly, 100% of the outstanding Equity
Interests of NFC in existence immediately prior to the consummation of
the Pending Acquisition.
2.6 Representations and Warranties.
Unless stated to relate to another date, all of the representations
and warranties of each of the Companies contained or incorporated by reference
herein or in any of the other Documents shall be true and correct in all
material respects (except that such phrase "in all material respects" shall be
disregarded to the extent that any such representation and warranty is
qualified by "material," "Material Adverse Effect" or any similar terms or by
any phrase using any of such terms) on and as of the Closing Date, both before
and after giving effect to the Pending Acquisition and the other transactions
contemplated hereby and by the other Documents.
2.7 Proceedings Satisfactory.
All proceedings taken in connection with the sale of the Securities,
the transactions contemplated hereby (including, without limitation, the
Pending Acquisition), and all documents and papers relating thereto, shall be
reasonably satisfactory to such Purchaser. Such Purchaser and its counsel
shall have received copies of such documents and papers as they may reasonably
request in connection therewith, or as a basis for the Closing opinions, all
in form and substance satisfactory to such Purchaser.
2.8 Consents and Permits.
Each of the Companies shall have received all consents, permits,
approvals and authorizations and sent or made all notices, filings,
registrations and qualifications as may be required pursuant to any law,
statute, regulation or rule (Federal, state, local or foreign) or pursuant to
any other agreement, order or decree to which any of them is a party or to
which any of them is subject, in connection with the transactions to be
consummated on or prior to the Closing Date as contemplated by this Agreement
or any of the other Documents.
2.9 No Material Adverse Effect.
Subsequent to December 31, 1996: (A) none of the Companies shall
have suffered any adverse change in its properties, business, operations,
assets, condition (financial or otherwise) or prospects which could reasonably
be expected to result in a Material Adverse Effect; and (B) (i) except as
described in NFC's Annual Report on Form 10-K for the year ended December 31,
1996, there shall not have been any material change in the capital stock or
long-term debt, or material increase in short-term debt, of any of the
Companies and (ii) none of the Companies shall have incurred any liability or
obligation, direct or contingent, that is material to such Company, is
required to be disclosed on a balance sheet in accordance with GAAP and is not
disclosed on the latest balance sheet previously provided to the Purchasers.
2.10 No Material Judgment or Order.
There shall not be on the Closing Date any judgment or order of a
court of competent jurisdiction or any ruling of any agency of the Federal,
state or local government that, in the reasonable judgment of any Purchaser or
its counsel, would prohibit the sale or issuance of the Securities hereunder
or subject DEC to any material penalty if the Securities were to be issued and
sold hereunder.
2.11 Payment of Accrued Dividends.
In accordance with the provisions of the Certificate of
Designations, all unpaid dividends that have accrued through the Closing Date
on the shares of Cumulative Redeemable Preferred Stock, shall have been
declared by the Board of Directors of DEC and paid in full in cash to the
Persons who are the holders of record of such shares on the Closing Date
(immediately prior to giving effect to the purchase and sale of the Securities
pursuant to Section 1.2).
2.12 Amendment of Certificate of Incorporation.
The certificate of incorporation of DEC shall have been amended to
include the provisions described in Section 5.27.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF NFC AND DEC.
Each of NFC and DEC represents and warrants, jointly and severally,
on the date hereof and as of the Closing, as follows:
3.1 Authorization; Capitalization.
Each of the Companies has taken all actions necessary to authorize
it (i) to execute, deliver and perform all of its obligations under each of
the Documents to which it is a party, and (ii) to consummate the transactions
contemplated thereby. Without limiting the generality of the preceding
sentence, DEC has taken all actions necessary to authorize it to issue and
perform all of its obligations under the Notes and the Class A Shares. Each
of the Documents to which any of the Companies is a party is a legally valid
and binding obligation of such Company, enforceable against it in accordance
with its respective terms, except for (a) the effect thereon of bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or
affecting the rights of creditors generally and (b) limitations imposed by
equitable principles upon the specific enforceability of any of the remedies,
covenants or other provisions thereof and upon the availability of injunctive
relief or other equitable remedies.
Prior to the Pending Acquisition, NFC is the only direct or indirect
Subsidiary of DEC. Immediately after giving effect to the Pending
Acquisition, NFC and the entities identified on Schedule 3.1(a) will be the
only direct or indirect Subsidiaries of DEC. The total authorized Capital
Stock of DEC consists of (a) 4,000,000 shares of Class A Common Stock and
300,000 shares of Class B Common Stock, par value $0.0001 per share, of which
2,457,122 shares and no shares, respectively, were issued and outstanding on
the date hereof and 2,667,990 shares and no shares, respectively, will be
issued and outstanding upon consummation of the transactions contemplated
hereby and (b) 250,000 shares of preferred stock, of which 10,000 shares were
issued and outstanding on the date hereof and no shares will be issued and
outstanding upon consummation of the transactions contemplated hereby. All
outstanding options and other rights to acquire shares of Capital Stock of DEC
are as set forth on Schedule 3.1(b). The total authorized Capital Stock of
NFC consists of 300,000 shares of common stock, of which 283,803 shares were
issued and outstanding on the date hereof. DEC owns 100% of the outstanding
Equity Interests or other securities evidencing equity ownership of NFC.
Except for 283,803 shares of common stock of NFC, DEC does not own any Equity
Interest in, or any other securities of, any Person. Prior to the Pending
Acquisition, NFC does not own any Equity Interest in, or any other securities
of, any Person. Immediately after giving effect to the Pending Acquisition,
NFC will not own any Equity Interest in, or any other securities of, any
Person, other than the Equity Interests identified on Schedule 3.1(b). NFC
directly or indirectly owns 100% of the outstanding Equity Interests or other
securities evidencing equity ownership of the entities identified on Schedule
3.1(b), in each case free and clear of any Lien. All of the outstanding
Equity Interests of each of the Companies and their Subsidiaries have been
duly authorized and validly issued, are fully paid and nonassessable and were
not issued in violation of, and are not subject to, any preemptive or similar
rights.
On the Closing Date, the Securities will be duly authorized and
validly issued, will be fully paid and nonassessable and will not have been
issued in violation of, nor will they be subject to, any preemptive or similar
rights other than those in favor of the Purchasers or as contemplated in the
Stockholders' Agreement. Except as set forth on Schedule 3.1(b), on the
Closing Date, there are no outstanding (i) securities convertible into or
exchangeable for any Equity Interests of any of the Companies, (ii) options,
warrants or other rights to purchase or subscribe to Equity Interests of any
of the Companies or securities convertible into or exchangeable for Equity
Interests of any of the Companies, (iii) contracts, commitments, agreements,
understandings, arrangements, calls or claims of any kind relating to the
issuance of any Equity Interests of any of the Companies, any such convertible
or exchangeable securities or any such options, warrants or rights or (iv)
voting trusts, agreements, contracts, commitments, understandings or
arrangements with respect to the voting of any of the Equity Interests of any
of the Companies.
Except for the Registration Rights Agreement, DEC has not entered
into an agreement to register its securities under the Securities Act. Except
for this Agreement, DEC has not entered into any agreement to issue, purchase
or sell any of its securities.
There are no securities of DEC registered under the Exchange Act or
listed on a national securities exchange registered under Section 6 of the
Exchange Act or quoted in a United States automated inter-dealer quotation
system.
3.2 No Violation or Conflict; No Default.
(a) Neither the execution, delivery or performance of this
Agreement, the Securities, the Acquisition Agreement, the Share Price
Adjustment Agreement, the Stockholders' Agreement, the Registration
Rights Agreement or any of the other Documents by any of the Companies,
nor the compliance with their respective obligations hereunder or
thereunder, nor the consummation of the transactions contemplated hereby
and thereby, nor the issuance, sale or delivery of the Securities will:
(i) violate any provision of the Charter Documents of any of
the Companies;
(ii) violate any statute, law, rule or regulation or any
judgment, decree, order, regulation or rule of any court or
governmental authority or body to which any of the Companies or any
of their respective properties may be subject;
(iii) permit or cause the acceleration of the maturity of
any debt or obligation of any of the Companies; or
(iv) violate, or be in conflict with, or constitute a default
under, or permit the termination of, or require the consent of any
Person under, or result in the creation or imposition of any Lien
(other than Permitted Liens) upon any property of any of the
Companies under, any mortgage, indenture, loan agreement, note,
debenture, agreement for borrowed money or any other agreement to
which any of the Companies is a party or by which any of the
Companies (or their respective properties) may be bound, other than
such violations, conflicts, defaults, terminations and Liens, or
such failures to obtain consents, which could not reasonably be
expected to result in a Material Adverse Effect.
(b) None of the Companies is in default (without giving effect to
any grace or cure period or notice requirement) under any agreement for
borrowed money or under any agreement pursuant to which any of its
securities were sold.
3.3 Use of Proceeds.
Approximately $23 million of the net proceeds from the sale of the
Securities hereunder will be used to make a capital contribution to NFC.
3.4 No Material Adverse Change; Financial Statements.
(a) No Material Adverse Change. Since December 31, 1996, none of
the Companies has suffered any material adverse change in their
properties, business, operations, assets, condition (financial or
otherwise) or prospects which could reasonably be expected to result in a
Material Adverse Effect.
(b) Financial Statements. DEC and NFC have previously provided to
you (i) the audited consolidated balance sheet of each Company as of
December 31, 1996, 1995 and 1994, (ii) related audited consolidated
statements of income, changes in shareholders' equity and cash flows for
the fiscal years ended December 31, 1996, 1995 and 1994 and (iii) a
consolidated balance sheet for each of the Companies as of March 31, 1997
and 1996 and related statements of income, changes in shareholders'
equity and cash flows for the three-month periods ended March 31, 1997
and 1996. Such financial statements present fairly the consolidated
financial position, results of operations, shareholders' equity and cash
flows of each of the Companies at the respective dates or for the
respective periods to which they apply. Except as disclosed therein,
such statements and related notes have been prepared in accordance with
GAAP consistently applied throughout the periods involved. All financial
statements concerning DEC and its Subsidiaries that will hereafter be
furnished by DEC and its Subsidiaries to the Purchasers or any Holder
pursuant to this Agreement will be prepared in accordance with GAAP
consistently applied (except as disclosed therein) and will present
fairly in all material respects the financial condition of the
corporations covered thereby as at the dates thereof and the results of
their operations for the periods then ended.
(c) Pro Forma Balance Sheets. The Pro Forma Balance Sheets were
prepared by DEC in accordance with GAAP, with only such pro forma
adjustments thereto as would be required to present fairly in all
material respects the information contained therein.
(d) Projections. True and complete copies of (i) projections of
the consolidated revenues, earnings before depreciation, interest and
taxes, operating margins, fixed charges, net income and capital
expenditures of DEC and its Subsidiaries for each of the fiscal years
ending December 31, 1997, 1998, 1999, 2000 and 2001, prepared by senior
management of DEC assuming the consummation of the transactions
contemplated hereby and by the Acquisition Agreement and the other
Documents (the "Projections") and (ii) the assumptions and supplemental
data used in preparing the Projections (collectively, the "Supplemental
Data") have been delivered by DEC to the Purchasers. The Projections
were prepared on the basis of the Supplemental Data which represent a
reasonable basis for such preparation. The Projections and the
Supplemental Data reflect the best currently available estimates and
judgment of DEC's senior management as to the expected future financial
performance of DEC and its Subsidiaries, provided that it is understood
that there can be no assurances that suitable acquisition candidates can
be found as shown in the acquisition model of the Projections.
3.5 Full Disclosure.
Neither this Agreement (including without limitation the
representations and warranties incorporated herein by reference), the
financial statements referred to in Section 3.4, any Document, nor any other
document, certificate or written statement furnished by or on behalf of any of
the Companies to any Purchaser in connection with the negotiation and sale of
the Securities, when taken as a whole, contains any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained herein or therein not misleading in light of the
circumstances under which they were made. There is no material fact known to
any of the Companies that has had or could reasonably be expected to have a
Material Adverse Effect and that has not been disclosed herein or in such
other documents, certificates and written statements furnished to the
Purchasers for use in connection with the transactions contemplated hereby.
3.6 Third Party Consents.
Neither the nature of any of the Companies nor of any of their
businesses or properties, nor any relationship between any of the Companies
and any other Person, nor any circumstance in connection with the offer,
issuance, sale or delivery of the Securities at the Closing nor the
performance by any of the Companies of their other obligations hereunder or
under, or the consummation of the transactions contemplated by, the
Securities, the Share Price Adjustment Agreement, the Stockholders' Agreement,
the Registration Rights Agreement or any other Document, as the case may be,
is such as to require a consent, approval or authorization of, or notice to,
or filing, registration or qualification with, any governmental authority or
other Person on the part of any of the Companies as a condition to the
execution and delivery of this Agreement, the Acquisition Agreement, the Share
Price Adjustment Agreement, the Stockholders' Agreement, the Registration
Rights Agreement or any of the other Documents or the offer, issuance, sale or
delivery of the Securities at the Closing other than such consents, approvals,
authorizations, notices, filings, registrations or qualifications which shall
have been made or obtained on or prior to the Closing Date and such filings
under Federal and state securities laws which are permitted to be made after
the Closing Date and which DEC hereby agrees to file within the time period
prescribed by applicable law.
3.7 No Violation of Regulations of Board of Governors of Federal Reserve
System.
None of the transactions contemplated by this Agreement (including,
without limitation, the use of the proceeds from the sale of the Securities)
will violate or result in a violation of Section 7 of the Exchange Act or any
regulation issued pursuant thereto, including, without limitation, Regulations
G, T, U and X of the Board of Governors of the Federal Reserve System.
3.8 Private Offering.
Assuming the truth and correctness of the representations and
warranties set forth in Section 4, the sale of the Securities hereunder is
exempt from the registration and prospectus delivery requirements of the
Securities Act. In the case of each offer or sale of the Securities, no form
of general solicitation or general advertising was used by any of the
Companies or their respective representatives, including, but not limited to,
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or radio,
or any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
The Purchasers are the sole purchasers of the Securities. No
securities have been issued and sold by any of the Companies within the six-
month period immediately prior to the date hereof. DEC agrees that it will
not, nor will anyone acting on its behalf, offer or sell the Securities, or
any portion of them, if such offer or sale might bring the issuance and sale
of the Securities to any Purchaser hereunder within the provisions of Section
5 of the Securities Act nor offer any similar securities for issuance or sale
to, or solicit any offer to acquire any of the same from, or otherwise
approach or negotiate with respect thereto with, anyone if the sale of the
Securities and any such securities could be integrated as a single offering
for the purposes of the Securities Act, including without limitation
Regulation D thereunder.
3.9 Governmental Regulations.
DEC is not subject to regulation under the Investment Company Act of
1940, as amended, the Public Utility Holding Company Act of 1935, as amended,
the Federal Power Act, the Interstate Commerce Act, the Commodity Exchange Act
or to any Federal or state statute or regulation limiting its ability to
consummate the transactions contemplated hereby and by the other Documents.
3.10 Brokers.
None of the Companies has dealt with any broker, finder, commission
agent or other such intermediary in connection with the sale of the Securities
and the transactions contemplated by this Agreement and the other Documents,
other than XxXxxx De Leeuw & Co., and none of the Companies is under any
obligation to pay any broker's or finder's fee or commission or similar
payment in connection with such transactions (other than $500,000 payable to
XxXxxx De Leeuw & Co.).
Each of NFC and DEC agrees, jointly and severally, to indemnify and
hold the Holders harmless from and against any and all actions, suits, claims,
costs, expenses, losses, liabilities and/or obligations in connection with or
relating to any broker's or finder's fees or commission or similar payment in
connection with such transactions, except with respect to such fees or
commissions incurred by any Purchaser for its account, so long as NFC or DEC
receives notice of any such action, suit, claim, etc., reasonably promptly
after the Holders become aware thereof; provided that the failure to give such
notice as provided in this sentence shall not relieve NFC or DEC of its
obligations under this sentence except to the extent, and only to the extent,
that NFC or DEC is materially prejudiced by such failure to give notice (as
determined by a court of competent jurisdiction in a final nonappealable
judgment).
3.11 Solvency.
Immediately prior to and after giving effect to the issuance of the
Securities and the execution, delivery and performance of this Agreement, the
Acquisition Agreement, the other Documents and any instrument governing
Indebtedness of any Company incurred as of the Closing Date, each of the
Companies is Solvent.
3.12 Representations and Warranties.
(a) All representations and warranties (and the related schedules)
of each of the parties to the Acquisition Agreement contained in the
Acquisition Agreement and all representations and warranties (and the
related schedules) of each of the Companies contained in the Share Price
Adjustment Agreement, the Stockholders' Agreement, the Registration
Rights Agreement, the Senior Credit Agreement or the other Documents,
each in the form as in effect on the date hereof without amendment or
waiver, shall be deemed to constitute representations and warranties of
NFC and DEC under this Agreement with the same force and effect as the
representations and warranties expressly set forth herein. Such
representations and warranties are true and correct in all material
respects (except that such phrase "in all material respects" shall be
disregarded to the extent that any such representation and warranty is
qualified by "material," "Material Adverse Effect" or any similar terms
or by any phrase using any of such terms) on the date hereof and will be
true and correct in all material respects (except that such phrase "in
all material respects" shall be disregarded to the extent that any such
representation and warranty is qualified by "material," "Material Adverse
Effect" or any similar terms or by any phrase using any of such terms) as
of the Closing Date as if made at and as of such date, both before and
after the consummation of the Pending Acquisition, and are hereby
incorporated by reference herein as if made hereby by NFC and DEC to the
Purchasers. For purposes of this Section 3.12, the definitions contained
in the Senior Credit Agreement, the Share Price Adjustment Agreement, the
Stockholders' Agreement, the Registration Rights Agreement, the
Acquisition Agreement and any other Documents (insofar as they relate to
the representations and warranties incorporated herein) are hereby
incorporated by reference herein and made a part hereof.
(b) There exist no material defaults with respect to the
Acquisition Agreement nor any basis for the exercise by any party thereto
of any rights of cancellation or rescission or any material rights of
offset.
3.13 Litigation.
(a) There is no action, claim, suit, citation or proceeding
(including, without limitation, an investigation or partial proceeding,
such as a deposition), whether commenced, or to the knowledge of NFC or
DEC, threatened ("Proceedings") against or affecting any of the Companies
or any of their properties or assets, except for such Proceedings that,
if finally determined adversely to any of the Companies, could not
reasonably be expected to have a Material Adverse Effect, and there is no
Proceeding seeking to restrain, enjoin, prevent the consummation of or
otherwise challenge the Pending Acquisition, this Agreement or any of the
other Documents or the transactions contemplated hereby or thereby.
(b) None of the Companies is subject to any judgment, order,
decree, rule or regulation of any court, governmental authority or
arbitration board or tribunal that has had a Material Adverse Effect or
that could reasonably be expected to have a Material Adverse Effect.
3.14 Labor Relations.
None of the Companies, nor any Person for whom any Company is or may
be responsible by law or contract, is engaged in any unfair labor practice
that could reasonably be expected to have a Material Adverse Effect. There is
(a) no unfair labor practice charge or complaint pending or threatened against
any of the Companies, or any Person for whom any Company is or may be
responsible by law or contract, before the National Labor Relations Board or
any corresponding state, local or foreign agency, and no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending or threatened, (b) no strike, labor dispute, slowdown
or stoppage pending or threatened against any of the Companies, or any Person
for whom any Company is or may be responsible by law or contract, and (c) no
union representation claim or question existing with respect to the employees
of any of the Companies, or any Person for whom any Company is or may be
responsible by law or contract, and no union organizing activities taking
place. None of the Companies, nor any Person for whom any Company is or may
be responsible by law or contract, is a party to any collective bargaining
agreement.
Except such as could not, singly or in the aggregate, reasonably be
expected to result in a Material Adverse Effect, none of the Companies nor any
of their Subsidiaries has violated any applicable Federal, state, provincial
or foreign law relating to employment or employment practices or the terms and
conditions of employment, including, without limitation, discrimination in the
hiring, promotion or pay of employees, wages, hours of work, plant closings
and layoffs, collective bargaining, and occupational safety and health, or any
provisions of ERISA or the rules and regulations promulgated thereunder or any
other applicable law (whether foreign or domestic) relating to or governing
the operation or maintenance of any plan or arrangement falling within the
definition of an "employee benefit plan" (as such term is defined in Section 3
of ERISA) or any other employee benefit plan or arrangement.
3.15 Taxes.
All material Tax Returns required to be filed by any of the
Companies have been timely filed and such returns are true, complete and
correct in all material respects. All material Taxes due or claimed to be due
from any of the Companies that are due and payable have been paid, other than
those (i) being contested in good faith and for which an adequate reserve or
accrual has been established in accordance with GAAP or (ii) those currently
payable without penalty or interest and for which an adequate reserve or
accrual has been established or extensions duly filed. Neither NFC nor DEC
knows of (A) any actual or proposed material additional tax assessments or (B)
any probable basis for the imposition of any material additional tax
assessments for any fiscal period against any of the Companies.
3.16 Environmental Matters.
Except as to those two Superfund (as defined in the Offering
Memorandum) matters described in the Offering Memorandum, or as could not
reasonably be expected to have a Material Adverse Effect:
(a) each of the Companies, and any Person for whom any Company is
or may be responsible by law or contract (which such Person is included
in the definition of "Company" for purposes of this Section 3.16), is in
full compliance with all Environmental Laws, which compliance includes,
but is not limited to, (1) compliance with all standards, schedules and
timetables therein, (2) the possession of all permits, licenses,
approvals and other authorizations required under the Environmental Laws
or with respect to the operation of the Companies' or such Person's
business, property and assets, and compliance with the terms and
conditions thereof and (3) any Federal, state, local or foreign approvals
required pursuant to any Environmental Laws that pertain or relate to the
transactions contemplated by this Agreement;
(b) none of the Companies has received any communication (written
or oral), whether from a governmental authority, citizens group, employee
or otherwise, that alleges that any of the Companies is not in full
compliance with any Environmental Law, none of the Companies has any
liability under any Environmental Law, and there are no past or present
actions, activities, circumstances, conditions, events or incidents that
may be expected to prevent or interfere with full compliance with
applicable Environmental Laws in the future;
(c) there is no Environmental Claim pending or threatened against
any of the Companies;
(d) there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence or disposal of any
Material of Environmental Concern, that could be expected to form the
basis of any Environmental Claim against any of the Companies;
(e) no real property or facility owned, used, operated, leased,
managed or controlled by any of the Companies, or any predecessor in
interest, is listed or proposed for listing on the National Priorities
List or the Comprehensive Environmental Response, Compensation, and
Liability Information System pursuant to the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended, or on any other
state or local list established pursuant to any Environmental Law;
(f) there have been no releases (including, without limitation, any
past or present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposing or
dumping, on-site or off-site) of Materials of Environmental Concern by
any of the Companies, or any predecessor in interest, at, on, under, from
or into any facility or real property owned, operated, leased, managed or
controlled by any of the Companies, and none of the Companies has
incurred or expects to incur liability for contamination at, on, under,
from or into any on-site or off-site locations where any of the Companies
have stored, disposed or arranged for the disposal of Materials of
Environmental Concern;
(g) no underground storage tank or other underground storage
receptacle, or related piping, is located on a facility or property
currently owned, operated, leased, managed or controlled by any of the
Companies;
(h) there is no asbestos contained in or forming part of any
building, building component, structure or office space, and no
polychlorinated biphenyls ("PCBs") or PCB-containing items are used or
stored at any property, owned, operated, leased, managed or controlled,
whether currently or in the past (for which such matters the Companies
could be liable), by any of the Companies.
"Environmental Claim" means any claim, action, cause of action,
investigation of which the Companies, including any of their employees, are
aware, or notice (written or oral) by any Person alleging potential liability
(including, without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of, based on or
resulting from (a) the presence, or release into the environment, of any
Material of Environmental Concern at any location, regardless of whether owned
or operated by any of the Companies, or (b) circumstances forming the basis of
any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all Federal, state, local and foreign
laws and regulations relating to pollution or protection of human health or
the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including, without
limitation, laws and regulations relating to emissions, discharges, releases
or threatened releases of Materials of Environmental Concern, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental
Concern.
"Materials of Environmental Concern" means chemicals, pollutants,
contaminants, industrial, toxic or hazardous wastes, substances or
constituents, petroleum and petroleum products (or any by-product or
constituent thereof), asbestos or asbestos-containing materials, or PCBs.
3.17 ERISA.
Based upon the Purchasers' representation in Section 4.5, the
execution and delivery of this Agreement, the other Documents and the sale of
the Securities to be purchased by the Purchasers will not involve any non-
exempt "prohibited transaction." Except as set forth on Schedule 3.17 hereto,
none of the Companies or any of their ERISA Affiliates is a "party in
interest" or a "disqualified person" with respect to any "employee benefit
plan" (as determined immediately after consummation of the Pending
Acquisition). No condition exists or event or transaction has occurred in
connection with any "employee benefit plan" maintained or contributed to by
any of the Companies or any of their ERISA Affiliates (any such plan being
herein referred to as a "Company Plan") that has resulted or is reasonably
likely to result in any of the Companies or any such ERISA Affiliate incurring
any liability, fine or penalty except as could not reasonably be expected to
have a Material Adverse Effect. Except as set forth on Schedule 3.17, no
Company Plan is subject to Title IV of ERISA. There is no liability under
Title IV of ERISA, whether actual or contingent that could reasonably be
expected to result in a Material Adverse Effect. No amounts payable pursuant
to any compensation or benefit plan, policy, scheme or arrangement, or any
other contract, arrangement or agreement will, in connection with the
transactions contemplated under this Agreement, the Acquisition Agreement or
the other Documents, fail to be deductible for Federal income tax purposes by
virtue of Section 280G or 162(m) of the Code. The terms "employee benefit
plan" and "party in interest" shall have the meanings assigned to such terms
in Section 3 of ERISA, the term "disqualified person" shall have the meaning
assigned to such term in Section 4975 of the Code, the term "prohibited
transaction" shall have the meaning assigned to such term in Section 406(a) of
ERISA and Section 4975 of the Code, and the term "ERISA Affiliate" shall mean
each person (as defined in Section 3(9) of ERISA) which together with the
Companies would be deemed to be a "single employer" within the meaning of
Sections 414(b) and (c) of the Code.
3.18 Intellectual Property.
The Companies and their Subsidiaries own or possess adequate
licenses or other rights to use all trademarks, service marks, trade names,
copyrights, and know-how necessary to conduct the business now conducted by
them as described in the Offering Memorandum, and, none of the Companies or
any of their Subsidiaries has received any notice of infringement of or
conflict with (or knows of such infringement of or conflict with) asserted
rights of others with respect to trademarks, service marks, trade names,
copyrights, or know-how which, individually or in the aggregate, could
reasonably be expected to result in any Material Adverse Effect. The
Companies and their Subsidiaries do not in the conduct of their business as
now conducted as described in the Offering Memorandum, infringe or conflict
with any right of any third party, known to any of the Companies or any of
their Subsidiaries, where such infringement or conflict could reasonably be
expected to result in any Material Adverse Effect.
3.19 Compliance with Laws.
Each of the Companies has obtained and has maintained in good
standing any licenses, permits, consents and authorizations required to be
obtained by it under all laws or regulations relating to its business
(collectively, the "Laws"), the absence of which (individually or in the
aggregate) could reasonably be expected to have a Material Adverse Effect, and
any such licenses, permits, consents and authorizations remain in full force
and effect, except as to any of the foregoing the absence of which
(individually or in the aggregate) could not reasonably be expected to have a
Material Adverse Effect. Each of the Companies is in compliance with the Laws
except for such noncompliance which, singly or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, and there is no
pending or, to any of the Companies' or any of their Subsidiaries' knowledge,
threatened, action or proceeding against any of the Companies or any of their
Subsidiaries under any of the Laws, other than any such actions or proceedings
which, individually or in the aggregate, if adversely determined, could not
reasonably be expected to have a Material Adverse Effect.
3.20 Consummation of the Pending Acquisition.
The Pending Acquisition will be, on the Closing Date, duly
consummated in accordance with the terms of the Acquisition Agreement without
amendment or waiver of any material term or provision thereof. True and
correct copies of the Acquisition Agreement have been delivered to each
Purchaser. None of the Companies or any of their Affiliates is in default
under the Acquisition Agreement or under any instrument or document to be
delivered in connection therewith. The representations and warranties made in
the Acquisition Agreement by any of the Companies or their Affiliates will be
true and correct in all material respects (except for changes expressly
provided for therein or herein) on and as of the Closing Date as though made
on and as of such date. All of the transactions engaged in by the Companies
and their Affiliates as part of the Pending Acquisition were legal and valid
and in compliance with all applicable law.
3.21 Survival of Representations and Warranties.
All of the Companies' representations and warranties hereunder and
under the Acquisition Agreement, the Senior Credit Agreement, the Share Price
Adjustment Agreement, the Stockholders' Agreement, the Registration Rights
Agreement and the other Documents shall survive the execution and delivery of
the same, any investigation by any Purchaser and the issuance of the
Securities.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER.
Each Purchaser (as to itself only) and each Account Manager (as to
the managed accounts of Purchasers) represents and warrants to NFC and DEC
that:
4.1 Purchase for Own Account.
Such Purchaser or such Account Manager is purchasing the Securities
to be purchased by it solely for its own account (or in the case of Account
Managers, on behalf of managed accounts) and not as nominee or agent for any
other person (other than for such managed accounts, if applicable) and not
with a view to, or for offer or sale in connection with, any distribution
thereof (within the meaning of the Securities Act) that would be in violation
of the securities laws of the United States of America or any state thereof,
without prejudice, however, to its right at all times to sell or otherwise
dispose of all or any part of said Securities pursuant to a registration
statement under the Securities Act or pursuant to an exemption from the
registration requirements of the Securities Act, and subject, nevertheless, to
the disposition of its property being at all times within its control.
4.2 Accredited Investor.
Such Purchaser or such Account Manager is knowledgeable,
sophisticated and experienced in business and financial matters; it has
previously invested in securities similar to the Securities and it
acknowledges that the Securities have not been registered under the Securities
Act and understands that the Securities must be held indefinitely unless they
are subsequently registered under the Securities Act or such sale is permitted
pursuant to an available exemption from such registration requirement; it (or,
in the case of an Account Manager, the managed account on behalf of which the
Account Manager is acting) is able to bear the economic risk of its investment
in the Securities and is presently able to afford the complete loss of such
investment; it (or, in the case of an Account Manager, the managed account on
behalf of which the Account Manager is acting) is an "accredited investor" as
defined in Regulation D promulgated under the Securities Act; and it has been
afforded access to information about each of the Companies and their financial
condition and business sufficient to enable it to evaluate its investment in
the Securities.
4.3 Authorization.
Each Purchaser has taken all actions necessary to authorize it (or,
in the case of an Account Manager, such Account Manager is duly authorized by
the managed account for which it is acting) (i) to execute, deliver and
perform all of its obligations under this Agreement, (ii) to perform all of
its obligations under the Securities and (iii) to consummate the transactions
contemplated hereby and thereby. This Agreement is a legally valid and
binding obligation of each Purchaser enforceable against it in accordance with
its terms, except for (a) the effect thereon of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting the
rights of creditors generally and (b) limitations imposed by Federal or state
law or equitable principles upon the specific enforceability of any of the
remedies, covenants or other provisions thereof and upon the availability of
injunctive relief or other equitable remedies.
4.4 Securities Restricted.
Each Purchaser acknowledges that the Securities have not been
registered under the Securities Act and understands that the Securities must
be held indefinitely unless they are subsequently registered under the
Securities Act or such sale is permitted pursuant to an available exemption
from such registration requirement.
No transfer or sale (including, without limitation, by pledge or
hypothecation) of Securities by any Holder which is otherwise permitted
hereunder, other than a transfer or sale to DEC, shall be effective unless
such transfer or sale is made (A) pursuant to an effective registration
statement under the Act and a valid qualification under applicable state
securities or "blue sky" laws or (B) without such registration or
qualification as a result of the availability of an exemption therefrom, and,
if reasonably requested by DEC, counsel for such Holder shall have furnished
DEC with an opinion, reasonably satisfactory in form and substance to DEC, to
the effect that no such registration is required because of the availability
of an exemption from the registration requirements of the Securities Act;
provided, however, that with respect to transfers by Holders to their
Affiliates, no such opinion shall be required. A transfer made by a Holder
which is a state-sponsored employee benefit plan to a successor trust or
fiduciary pursuant to a statutory reconstitution shall be expressly permitted
and no opinions of counsel shall be required in connection therewith.
4.5 ERISA.
Such Purchaser represents that either:
(a) it is not acquiring the Securities for or on behalf of any
employee pension benefit plan or employee welfare benefit plan (as
defined in Section 3 of ERISA) or any "plan" (as defined in Section 4975
of the Code) (each hereafter a "Plan");
(b) the assets used to acquire the Securities are assets of an
insurance company general account and the purchase of the Securities
would be exempt under the provisions of the Prohibited Transaction Class
Exemption ("PTCE") 95-60; or
(c) if it is acquiring the Securities on behalf of a Plan, either
directly or through an investment fund (such as a "bank collective
investment fund" as defined in PTCE 91-38 or an "insurance company pooled
separate account" as defined in PTCE 90-1), then, assuming that the plans
listed in Schedule 3.17 are the only employee benefit plans (as defined
in Section 3 of ERISA) or Plans with respect to which NFC is a "party in
interest" or "disqualified person" (as such terms are defined in Section
3 of ERISA and Section 4975 of the Code, respectively), either
(i) no part of the funds to be used to purchase the Securities
constitutes assets allocable to any trust that contains assets of
the employee benefit plans listed in Schedule 3.17, or
(ii) an exemption from the prohibited transaction rules applies
such that the use of such funds does not constitute a non-exempt
prohibited transaction in violation of Section 406 of ERISA or
Section 4975 of the Code, which could be subject to a civil penalty
assessed pursuant to Section 502 of ERISA or a tax imposed under
Section 4975 of the Code.
The representations contained in this Section 4.5 are made in
express reliance on the list of employee benefit plans contained in Schedule
3.17.
SECTION 5. COVENANTS.
So long as any of the Notes remain unpaid and outstanding, DEC
covenants to the Holders of outstanding Securities as follows:
5.1 Payment of Notes; Satisfaction of Obligations.
DEC shall pay the principal of, premium, if any, and interest on the
Notes on the dates and in the manner provided in the Notes. To the extent
lawful, DEC shall pay interest (including interest accruing after the
commencement of any proceeding under any Bankruptcy Law) on all due and unpaid
amounts outstanding under the Notes (including overdue installments of
principal or interest) at a rate equal to 141/2% per annum, compounded
quarterly. PIK Notes issued pursuant to Section 1 of the Notes shall not
constitute due and unpaid amounts outstanding under the Notes.
5.2 Financial Statements and Reports.
(a) DEC will maintain, and will cause each of its Subsidiaries to
maintain, a system of accounting established and administered in
accordance with sound business practices to permit preparation of
financial statements in conformity with GAAP. DEC will deliver to each
Holder the financial statements and other reports described below:
(i) Monthly Financials. As soon as available and in any event
within thirty (30) days after the end of each month ending after the
Closing Date, DEC will deliver the consolidated balance sheets of
DEC and its Subsidiaries as at the end of such month and the related
consolidated statements of income and stockholders' equity and cash
flows for such month and in each case for the period from the
beginning of the then current fiscal year to the end of such month,
setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous fiscal year
and the corresponding figures from the consolidated plan and
financial forecast for the current fiscal year delivered pursuant to
subsections (a)(v), (a)(viii) and (b) of this Section 5.2, to the
extent prepared on a monthly basis, all in reasonable detail and
certified by the chief financial officer of DEC that they fairly
present in all material respects the financial condition of DEC and
its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject
to changes resulting from audit and normal year-end adjustments;
(ii) Quarterly Financials. As soon as available and in any
event within forty-five (45) days after the end of each fiscal
quarter (other than the last quarter of any fiscal year), DEC will
deliver its quarterly report on Form 10-Q relating to such fiscal
quarter;
(iii) Year-End Financials. As soon as available and in any
event within ninety (90) days after the end of each fiscal year, DEC
will deliver: (A) the consolidated balance sheet of DEC and its
Subsidiaries as at the end of such year and the related consolidated
statements of income, shareholders' equity and cash flows of DEC and
its Subsidiaries for such fiscal year, setting forth in each case in
comparative form the corresponding figures for the previous fiscal
year and the corresponding figures from the consolidated plan and
financial forecast delivered pursuant to subsection (a)(v) and (b)
of this Section 5.2 for the fiscal year covered by such financial
statements, all in reasonable detail and certified by the chief
financial officer of DEC that they fairly present in all material
respects the financial condition of DEC and its Subsidiaries as at
the dates indicated and the results of their operations and their
cash flows for the periods indicated, (B) a narrative report
describing the operations of DEC and its Subsidiaries in the form
prepared for presentation to senior management for such fiscal year,
and (C) in the case of such consolidated financial statements, a
report thereon of independent certified public accountants of
recognized national standing selected by DEC, which report shall be
unqualified, shall express no doubts about the ability of DEC and
its Subsidiaries to continue as a going concern, and shall state
that such consolidated financial statements fairly present in all
material respects the consolidated financial position of DEC and its
Subsidiaries as of the dates indicated and the results of their
operations, shareholders' equity and their cash flows for the
periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants
in connection with such consolidated financial statements has been
made in accordance with United States generally accepted auditing
standards;
(iv) Promptly upon receipt thereof, copies of all reports
submitted to the management of DEC or NFC by independent public
accountants, whether in connection with each annual, interim or
special audit of the consolidated financial statements of DEC made
by such accountants or otherwise, including the management letter
submitted by such accountants to management in connection with their
annual audit;
(v) Copies of any financial or other report or notice
delivered to, or received from, (a) any lenders pursuant to Section
4.3 of the Senior Credit Agreement and (b) the trustee pursuant to
Section 4.10 of the Indenture (or any similar provision contained in
any successor agreements) not otherwise delivered to the Holders
pursuant to this Section 5.2; provided, however, that regardless of
whether DEC or NFC is required to deliver any financial plan
pursuant to the Senior Credit Agreement or the Indenture, DEC shall
deliver to each Holder a financial plan of DEC and its Subsidiaries
on or prior to December 15 of the year preceding the year to which
such plan relates;
(vi) Copies of all material reports, letters and other
correspondence from local, state or Federal regulatory or other
agencies relating to business, licenses or operating contracts of
DEC or any of its Subsidiaries;
(vii) Notice to each Holder of (i) any violation of or
noncompliance with any Environmental Laws that could reasonably be
expected to have a Material Adverse Effect, (ii) any communication
(written or oral) or Environmental Claim, whether from a
governmental authority, citizens group, employee or otherwise,
alleging that any of the Companies is not in compliance with any
Environmental law or asserting liability of any of the Companies for
contamination from or as a result (directly or indirectly) of any
Materials of Environmental Concern, which noncompliance or liability
could reasonably be expected to have a Material Adverse Effect, or
(iii) any releases or threatened releases (including, without
limitation, any releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping, on-site or off-site) of any Materials of
Environmental Concern for which any of the Companies could be held
liable, either in fact or by law, which releases could reasonably be
expected to have a Material Adverse Effect; and
(viii) Copies of such other information and data with
respect to DEC or any of its Subsidiaries as from time to time may
be reasonably requested by any Holder.
(b) Each financial statement delivered pursuant to subsections
(a)(i), (a)(ii) and (a)(iii) of this Section 5.2 shall be in a form
reasonably acceptable to each Purchaser and, in the case of financial
statements delivered pursuant to subsections (a)(ii) and (a)(iii) of this
Section 5.2, shall be accompanied by a brief narrative description of
business and financial trends and developments material to DEC and its
Subsidiaries and significant transactions that have occurred in the
appropriate period or periods covered thereby.
5.3 Compliance Certificate.
(a) DEC shall deliver to the Holders, within forty-five (45) days
after the end of each fiscal quarter and within ninety (90) days after
each fiscal year, an Officers' Certificate stating that a review of the
activities of DEC and its Subsidiaries during the preceding fiscal
quarter or fiscal year, as the case may be, has been made under the
supervision of the signing Officers with a view to determining whether
DEC and its Subsidiaries have kept, observed, performed and fulfilled
their respective obligations under this Agreement and the Notes, and
further stating, as to each such Officer signing such certificate, that
to his or her knowledge, DEC and its Subsidiaries each has kept,
observed, performed and fulfilled each and every covenant contained in
this Agreement (or, if a violation or event that, with notice or the
passage of time or both would be a violation shall have occurred,
describing all such violations or prospective violations of which he or
she may have knowledge) and that to his or her knowledge no event has
occurred and remains in existence by reason of which payments of
interest, principal or premium on the Notes are prohibited or if such
event has occurred, a description of the event. The Officers'
Certificate shall set forth all financial calculations for such fiscal
quarter or fiscal year necessary to demonstrate compliance with the
covenants contained in this Section 5.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the financial
statements delivered pursuant to Section 5.2(a)(iii) shall be accompanied
by a written statement of independent certified public accountants of
recognized national standing selected by DEC that in making the
examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that
DEC or any of its Subsidiaries has violated any provisions of this
Agreement or, if any such violation has occurred, specifying the nature
and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation.
(c) DEC and NFC shall deliver to the Holders, forthwith upon
becoming aware of (i) any Default or Event of Default or (ii) any default
or event of default under any other loan agreement, mortgage, indenture
or instrument referred to in Section 7.1(f), an Officers' Certificate
specifying in reasonable detail such Default, Event of Default or default
or event of default and the nature of any remedial or corrective action
the DEC or NFC proposes to take with respect thereto.
5.4 Limitation on Restricted Payments.
(a) DEC shall not,
(i) declare or pay any dividends, either in cash or property,
on, or make any distribution to the holders (as such) in respect of,
any class of Equity Interest in DEC, NFC or any of their respective
Subsidiaries (other than dividends or distributions payable in
Equity Interests (other than Disqualified Capital Stock) of DEC, NFC
or any of their respective Subsidiaries);
(ii) purchase, redeem or otherwise acquire or retire for value
any Equity Interests of DEC, NFC or any of their respective
Subsidiaries or any other Affiliate of DEC or NFC; provided that, as
long as no Default or Event of Default has occurred and is
continuing, DEC may purchase Equity Interests in DEC beneficially
owned by directors, officers and employees of DEC or any of its
Subsidiaries pursuant to the terms of employment contracts or
employee benefit plans of DEC or any of its Subsidiaries not to
exceed $250,000 in any fiscal year.
(iii) purchase, redeem, defease or otherwise acquire or
retire for value any Indebtedness (other than the Notes and the
Indebtedness referred to in clause (v) of Section 5.6(b)); or
(iv) make any Investment other than (A) any guarantee of
Indebtedness by DEC permitted pursuant to the provisions of Section
5.5(a), (B) any Investment of cash by DEC in a Wholly Owned
Subsidiary of DEC solely to fund an Acquisition made by NFC or any
of its Subsidiaries, which Acquisition is not prohibited pursuant to
the provisions of Section 5.14.(b) and (C) any Investments in Cash
Equivalents.
(b) NFC shall not, and shall cause each of its Subsidiaries to not,
(i) fail to comply with the provisions of Section 4.03 of the Indenture
(as in effect on the Closing Date) or (ii) directly or indirectly, make
or pay any Restricted Payment (as defined in the Indenture (as in effect
on the Closing Date)) permitted to be made pursuant to the provisions of
Section 4.03 of the Indenture if after giving effect to such Restricted
Payment, NFC would not have the availability under clause (iii) of the
first paragraph of Section 4.03 of the Indenture to pay dividends or make
other distributions to DEC in an amount which would enable DEC to pay the
interest on the Notes for the remaining term of the Notes; provided that
NFC shall not be precluded by the provisions of this Section 5.4(b) from
making the Restricted Payments referred to in the second paragraph of
Section 4.03 of the Indenture (other than the Restricted Payments
referred to in clause (1) of such paragraph), except that the limitation
referred to in clause (8) of such paragraph shall be $550,000 rather than
$2.0 million; provided further that the provisions of this Section 5.4(b)
shall not prohibit the payment of dividends or other distributions by NFC
or any of its Subsidiaries directly or indirectly to DEC.
5.5 Limitation on Additional Indebtedness and Issuance of Disqualified
Capital Stock.
(a) DEC shall not, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable with
respect to (collectively, "incur") any Indebtedness or issue any
Disqualified Capital Stock; provided that DEC may guarantee Indebtedness
of any of its Subsidiaries to the extent that the incurrence of such
Indebtedness by such Subsidiary or such guarantee by DEC (without
duplication) does not violate the provisions of Section 5.5(b) at the
time of such incurrence.
(b) NFC shall not, and shall cause each of its Subsidiaries
(including without limitation, upon the creation or acquisition of such
Subsidiary) to not fail to comply with the provisions of Section 4.04 of
the Indenture (as in effect on the Closing Date). In addition, and
without limiting the foregoing provisions of this Section 5.5., NFC shall
not, and shall cause each of such Subsidiaries to not directly or
indirectly, (i) incur any Indebtedness or issue any Disqualified Capital
Stock, if after giving effect to such incurrence of Indebtedness or
issuance of Disqualified Capital Stock, (A) the Consolidated Leverage
Ratio of DEC and its Subsidiaries would exceed 5.0 or (B) any Default or
Event of Default shall have occurred and be continuing or would occur as
a consequence of such incurrence of Indebtedness or issuance of
Disqualified Capital Stock or (ii) issue any Preferred Stock under any
circumstances. Notwithstanding the foregoing, DEC may incur (i) up to
$25,000,000 aggregate principal amount of Indebtedness outstanding at any
one time under the Senior Credit Agreement and (ii) up to $44,000,000
aggregate principal amount of Indebtedness (regardless of whether
incurred under the Senior Credit Agreement or otherwise) to be incurred
in order to finance the Xxxxxxxx Acquisition permitted pursuant to the
provisions of Section 5.14(c), as long as, in the case of this clause
(ii), no Default or Event of Default has occurred and is continuing or
would occur and be continuing after giving effect on a pro forma basis
to the incurrence of such Indebtedness or issuance of Disqualified Stock.
5.6 Limitation on Transactions With Affiliates.
(a) DEC and NFC shall not, and each shall cause each of its
Subsidiaries to not, directly or indirectly, enter into or permit to
exist any transaction or series of related transactions (including,
without limitation, the purchase, sale, lease or exchange of any property
or the rendering of any service) with, or for the benefit of, any of
their respective Affiliates (each an "Affiliate Transaction"), other than
(i) Affiliate Transactions permitted under paragraph (b) of this covenant
and (ii) Affiliate Transactions on terms that are no less favorable to
DEC or the applicable Subsidiary than those that might reasonably have
been obtained in a comparable transaction at such time on an arm's-length
basis from a Person that is not an Affiliate of DEC or such Subsidiary.
All Affiliate Transactions (and each series of related Affiliate
Transactions which are similar or part of a common plan) involving
aggregate payments or other property with a fair market value in excess
of $1,000,000 shall be approved by the Board of Directors of DEC, such
approval to be evidenced by a Board Resolution stating that such Board of
Directors has determined that such transaction complies with the
foregoing provisions. If DEC, NFC or any of their respective
Subsidiaries enters into an Affiliate Transaction (or a series of related
Affiliate Transactions related to a common plan) that involves an
aggregate fair market value of more than $5,000,000, DEC shall, prior to
the consummation thereof, obtain a favorable opinion as to the fairness
of such transaction or series of related transactions to DEC, NFC or the
relevant Subsidiary, as the case may be, from a financial point of view,
from an Independent Financial Advisor (as defined in the Indenture as in
effect on the Closing Date).
(b) The restrictions set forth in clause (a) shall not apply to (i)
reasonable fees and compensation paid to and indemnity provided on behalf
of Xx. Xxxx Xxxx, in his capacity as a consultant to DEC or any
Subsidiary of DEC, such reasonableness being determined in good faith by
DEC's Board of Directors; (ii) transactions exclusively between or among
DEC and any of its Wholly Owned Subsidiaries or exclusively between or
among such Wholly Owned Subsidiaries, provided such transactions are not
otherwise prohibited by the Indenture (as in effect on the Closing Date);
(iii) Restricted Payments (as defined in the Indenture as in effect on
the Closing Date) permitted by the Indenture (as in effect on the Closing
Date); (iv) payments by DEC or any of its Subsidiaries to MDC Entities
pursuant to the terms of the Advisory Services Agreement initially in an
amount not to exceed $350,000 in any fiscal year, which amount may be
increased to an amount not to exceed $500,000 in any fiscal year with the
approval of the members of the Board of Directors of DEC who do not have
a direct financial interest in any Person receiving such payments under
the Advisory Services Agreement; and (v) the purchase by NFC of notes
payable by shareholders of DEC from MDC Entities in an aggregate amount
not to exceed $550,000.
5.7 Limitation on Liens.
(a) DEC shall not create or suffer to exist any Liens other than
Permitted Liens upon any assets of DEC (including without limitation, any
shares of Capital Stock of NFC).
(b) NFC shall not, and shall cause each of its Subsidiaries to not,
fail to comply with the provisions of Section 4.15 of the Indenture (as
in effect on the Closing Date).
5.8 Limitation on Sale of Assets.
(a) DEC and NFC shall not, and each shall cause each of its
Subsidiaries to not, make any Asset Sale, unless no Default or Event of
Default exists and is continuing or is created by such Asset Sale and:
(i) DEC or such Subsidiary receives consideration at the time
of such Asset Sale at least equal to the fair market value of such
assets (as determined in good faith by the Board of Directors of DEC
and evidenced by a resolution set forth in an Officers' Certificate,
including as to the value of all noncash consideration);
(ii) at least 80% of the consideration therefor received by
DEC, NFC or such Subsidiary, as the case may be, shall be in the
form of cash or Cash Equivalents; provided, however, that for the
purposes of this subsection (a)(ii), the following are deemed to be
cash: (x) any liabilities of DEC, NFC or such Subsidiary (as shown
on the most recent balance sheet or in the notes thereto of DEC, NFC
or such Subsidiary) that are assumed by the transferee in connection
with the Asset Sale (other than liabilities that are incurred in
connection with or in anticipation of such Asset Sale); and (y)
securities received by DEC or such Subsidiary from such transferee
that are immediately converted into cash at the face amount or fair
market value thereof by DEC or such Subsidiary; and
(iii) upon the consummation of an Asset Sale made by NFC or
any of its Subsidiaries, NFC shall apply the Net Cash Proceeds of
such Asset Sale within 300 days of the consummation of such Asset
Sale: (x) to prepay, purchase, defease or otherwise retire any
Indebtedness of NFC or its Subsidiaries (including without
limitation, the NFC Senior Notes and any Indebtedness under the
Senior Credit Agreement), in each case, with a permanent reduction
in amounts available to be borrowed or the Indebtedness that may be
incurred under the instrument evidencing such Indebtedness and/or
(y) to reinvest in Productive Assets. Any Net Cash Proceeds from
any Asset Sale consummated by NFC or any of its Subsidiaries that
are not applied or reinvested as provided in this subsection
(a)(iii) of this Section 5.8 and all Net Cash Proceeds from any
Asset Sale consummated by DEC shall constitute excess proceeds
("Excess Net Cash Proceeds") and shall be held in cash or Cash
Equivalents.
(b) When the aggregate amount of Excess Net Cash Proceeds exceeds
$5,000,000, DEC shall promptly make an offer (the "Asset Sale Offer") to
all Holders of the Notes to purchase the maximum principal amount of
Notes that may be purchased out of the Excess Net Cash Proceeds, at an
offer price in cash in an amount (the "Asset Sale Offer Price") equal to
100% of the principal amount of such Notes, plus accrued and unpaid
interest thereon to the Asset Sale Date.
If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Net Cash Proceeds, DEC shall
select the Notes to be purchased on a pro rata basis, in such manner as
complies with applicable legal requirements, if any. Upon completion of
such Asset Sale Offer, the amount of Excess Net Cash Proceeds shall be
reset at zero.
Simultaneously with the making of such Asset Sale Offer, DEC
shall provide the Holders with an Officers' Certificate setting forth the
Asset Sale Offer Price, the Asset Sale Date and the calculations used in
determining the amount of Excess Net Cash Proceeds to be applied to the
repurchase of the Notes.
If the date on which the Asset Sale Offer closes (the "Asset
Sale Date") is on or after an interest payment record date and on or
before the related interest payment date, any accrued interest will be
paid to the person in whose name a Note is registered at the close of
business on such record date, and no additional interest will be payable
to holders who tender Notes pursuant to the Asset Sale Offer.
(c) Notice of any Asset Sale Offer shall be mailed by DEC to each
Holder at its last registered address. The Asset Sale Offer shall remain
open from the time of mailing until twenty (20) Business Days thereafter,
and no longer, unless a longer period is required by law. The notice
shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Asset Sale Offer. The notice,
which shall govern the terms of the Asset Sale Offer, shall state:
(i) that the Asset Sale Offer is being made pursuant to this
Section 5.8 and that Notes will be accepted for payment either (A)
in whole or (B) in part in integral multiples of $1,000;
(ii) the Asset Sale Offer Price and the Asset Sale Date;
(iii) that any Note not tendered will continue to accrue
interest;
(iv) that any Note accepted for payment pursuant to the Asset
Sale Offer shall cease to accrue interest from and after the Asset
Sale Date (so long as DEC does not default in its obligation to
promptly pay the Asset Sale Offer Price);
(v) that Holders electing to have a Note purchased pursuant to
the Asset Sale Offer will be required to surrender the Note, with
the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, at the address specified in the
notice prior to the close of business on the Business Day preceding
the Asset Sale Date;
(vi) that Holders will be entitled to withdraw their election
on the terms and subject to the conditions set forth in the notice;
(vii) that Holders whose Notes are purchased only in part
will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered; provided, however,
that any portion of a Note repurchased by DEC and any new Note
issued to the Holder in respect of the unpurchased portion thereof
shall be in the principal amount of $1,000 or an integral multiple
thereof.
(d) On the Asset Sale Date, DEC shall (i) accept for payment all
Notes or portions thereof validly tendered pursuant to the Asset Sale
Offer and (ii) promptly thereafter mail or deliver to each Holder of
Notes accepted for purchase payment in the amount equal to the aggregate
Asset Sale Offer Price for such Notes, and DEC shall execute and mail or
deliver to such Holders a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered. DEC will notify the
Holders of the results of the Asset Sale Offer on the Asset Sale Date.
5.9 Limitation on Capital Expenditures.
(a) DEC shall not make or incur Capital Expenditures in any fiscal
year in an aggregate amount in excess of $250,000.
(b) NFC shall not, and shall not permit any of its Subsidiaries to,
make or incur Capital Expenditures in any fiscal year in an aggregate
amount for NFC and its Subsidiaries in excess of $15,000,000.
(c) Notwithstanding the provisions of subsection (b) of this
Section 5.9, NFC and its Subsidiaries may make or incur Capital
Expenditures in order to consummate Acquisitions permitted pursuant to
the provisions of Section 5.14.
5.10 Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries.
DEC and NFC shall not, and each shall cause each of its Subsidiaries
to not, directly or indirectly, create or otherwise cause or suffer to exist
or become effective any consensual encumbrance or restriction on the ability
of any Subsidiary of DEC to (a) pay dividends or make any other distributions
on its Capital Stock or any other interest or participation in, or measured
by, its profits owned by, or pay any Indebtedness owed to, DEC, (b) make loans
or advances to DEC, (c) transfer any of its properties or assets to DEC,
except for such encumbrances or restrictions existing under or by reason of
(i) any restrictions existing under or contemplated by this Agreement, the
Indenture (as in effect on the Closing Date) and the Senior Credit Agreement
(as in effect on the Closing Date); (ii) any restrictions, with respect to a
Subsidiary of DEC that is not a Subsidiary of DEC on the date hereof, in
existence at the time such Person becomes a Subsidiary of DEC (so long as such
restrictions are not created in anticipation of such Person becoming a
Subsidiary of DEC); (iii) with respect to clause (c) above only, any
restrictions existing under Capital Lease Obligations or Indebtedness secured
by Permitted Liens (as defined in the Indenture (as in effect on the Closing
Date)) (provided that, in each case, such prohibition shall only relate to the
assets which are subject to such Capitalized Lease Obligations or which secure
such Indebtedness and the proceeds therefrom); or (iv) any restrictions
existing under any new agreement evidencing Indebtedness or any agreement that
refinances or replaces the agreements containing the restrictions in the
foregoing clauses (i), (ii) and (iii); provided, that the terms and conditions
of any such restrictions are no more restrictive than those under or pursuant
to the agreements containing the restrictions referenced in the foregoing
clauses (i), (ii) or (iii).
5.11 Change of Control.
(a) Change of Control. Upon the occurrence of a Change of Control,
DEC shall give each Holder prompt, and in any event within ten (10)
Business Days of the occurrence of the Change of Control (the "Change of
Control Date"), notice describing in reasonable detail the nature of the
Change of Control, offering to each Holder the right to require DEC to
repurchase all or any part of such Holder's Notes (the "Change of Control
Offer") at a purchase price equal to 101% of the aggregate principal
amount thereof, together with unpaid interest to the date of repurchase
(the "Change of Control Offer Price").
(b) Procedure. The notice of a Change of Control Offer shall state
a date not less than thirty (30) days nor more than sixty (60) days after
the date of mailing of such notice by DEC for repurchase of the Notes
pursuant to the Change of Control Offer (the "Change of Control Payment
Date"). The notice, which shall govern the terms of the Change of
Control Offer, shall state:
(i) that the Change of Control Offer is being made pursuant to
this Section 5.11;
(ii) the Change of Control Offer Price and the Change of
Control Payment Date;
(iii) that, unless DEC defaults in the payment of the
Change of Control Offer Price, all Notes accepted for payment shall
cease to accrue interest on and after the Change of Control Payment
Date;
(iv) that Holders electing to require DEC to repurchase any Notes
will be required to surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse side of the Note completed and
otherwise in proper form for transfer, to the address specified in the
notice prior to the close of business on the Business Day preceding the
Change of Control Payment Date;
(v) that the Holders will be entitled to withdraw their election to
require DEC to repurchase any Notes on the terms and conditions set forth
in such notice; and
(vi) that the Holders electing to require DEC to repurchase any
Notes in part will be issued a new Note in a principal amount equal to
the unpurchased portion of the Notes surrendered; provided, however, that
any portion of a Note repurchased by DEC and any new Note issued to the
Holder in respect of the unpurchased portion thereof shall be in the
principal amount of $1,000 or an integral multiple thereof.
(c) Acceptance of Notes. On a Change of Control Payment Date, DEC
shall (i) accept for payment all Notes or portions thereof validly
tendered pursuant to the Change of Control Offer and (ii) promptly
thereafter mail or deliver to each Holder of Notes accepted for
repurchase payment in the amount equal to the aggregate Change of Control
Offer Price for such Notes, and DEC shall execute and mail or deliver to
such Holders a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered. As soon as practicable, DEC will
notify the Holders of the results of the Change of Control Offer on the
Change of Control Payment Date.
(d) "Change of Control" means (i) the sale, lease or transfer of
all or substantially all of DEC's or NFC's assets to any Person or group
(as such term is used in Section 13(d)(3) of the Exchange Act), (ii) the
liquidation or dissolution of DEC or NFC (it being understood that a
merger or consolidation of DEC and/or NFC shall not constitute a
dissolution or liquidation of DEC or NFC for purposes of this clause
(ii)), (iii) the acquisition by any Person or group (as such term is used
in Section 13(d)(3) of the Exchange Act) (other than a Permitted Holder)
of a direct or indirect interest in Voting Securities of DEC representing
a majority (more than 50%) of the aggregate Voting Power of the
outstanding Voting Securities of DEC, by way of merger or consolidation
or otherwise, (iv) any transaction occurring prior to a Qualified Public
Equity Offering of DEC, as the result of which (A) Permitted Holders do
not own (and have the exclusive power to vote with respect to), directly
or indirectly, Voting Securities representing a majority (more than 50%)
of the aggregate Voting Power of the outstanding Voting Securities of
DEC, (B) any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act) (other than Permitted Holders) owns (or has the power
to vote with respect to), directly or indirectly, Voting Securities
representing more of the aggregate Voting Power of the outstanding Voting
Securities of DEC than Permitted Holders or (C) Permitted Holders do not
own Equity Interests of DEC representing at least 40% of the aggregate
economic interest of all outstanding Equity Interests of DEC, (v) any
transaction occurring after a Qualified Public Equity Offering of DEC, as
the result of which any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act) owns, directly or indirectly, Voting
Securities representing more of the aggregate Voting Power of the
outstanding Voting Securities of DEC than Permitted Holders, (vi) any
transaction, as the result of which DEC owns (or has the exclusive power
to vote with respect to), directly or indirectly, less than 100% of the
Capital Stock of NFC or (vii) the replacement of a majority of the Board
of Directors of DEC over a two-year period from the directors who
constituted the Board of Directors of DEC at the beginning of such
period, and such replacement shall not have been approved by a vote of at
least a majority of the Board of Directors of DEC then still in office
who either were members of such Board of Directors at the beginning of
such period or whose election as a member of such Board of Directors was
previously so approved.
5.12 Minimum Consolidated Fixed Charge Coverage Ratio.
DEC shall not permit its Consolidated Fixed Charge Coverage Ratio
for the four-fiscal quarter period ending on the last day of the fiscal
quarter ending on or about the date set forth below to be less than the amount
set forth below opposite the date shown:
Date Consolidated Fixed Charge
Coverage Ratio
June 30, 1997 1.20
September 30, 1997 1.30
December 31, 1997 1.40
March 31, 1998 1.40
June 30, 1998 1.50
September 30, 1998 1.60
December 31, 1998 1.60
March 31, 1999 1.60
June 30, 1999 1.70
September 30, 1999 and thereafter 1.75
5.13 Fiscal Years.
At all times, DEC and NFC shall maintain, and each shall cause each
of its Subsidiaries to maintain, its fiscal year ending on December 31st.
5.14 Limitation on Acquisitions.
(a) DEC shall not make any Acquisition.
(b) Subject to the provisions of Section 5.14(c), NFC shall not,
and shall cause each of its Subsidiaries to not make an Acquisition,
unless:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect, on a
pro forma basis, to, the consummation of such Acquisition;
(ii) the Acquisition (A) is effected by way of (1) merger or
consolidation of NFC or any of its Subsidiaries in accordance with
the provisions of Section 5.16 with or into another Person, (2)
acquisition by NFC or any of its Subsidiaries of assets or property
that constitute all or substantially all of a business operating
unit of another Person, or (3) acquisition by NFC or any of its
Subsidiaries of all of the Capital Stock in such other Person and
(B) relates only to acquisitions of Productive Assets and is
approved by the Board of Directors of the acquired Person (if
applicable); and
(iii) the aggregate Purchase Price for such Acquisition
does not exceed $25,000,000.
(c) Notwithstanding the provisions of Section 5.14(b), NFC may
consummate the Xxxxxxxx Acquisition, as long as no Default or Event of
Default has occurred and is continuing or would occur after giving effect
on a pro forma basis to the consummation of such Acquisition.
5.15 Stay, Extension and Usury Laws.
Each of the Companies covenants and agrees (to the extent that it
may lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, and will use its
best efforts to resist any attempts to claim or take the benefit of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of its obligations
under this Agreement or the Notes; and each of the Companies (to the extent it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the Holders, but
will suffer and permit the execution of every such power as though no such law
has been enacted.
5.16 Corporate Existence; Merger; Successor Corporation.
(a) Each of DEC and NFC shall do or cause to be done all things
necessary to preserve and keep in full force and effect the corporate or
other existence of such Company and each of its Subsidiaries in
accordance with the organizational documents and the corporate or other
rights (charter and statutory), licenses and franchises of such Company
and each of its Subsidiaries; provided, however, that such Company and
its Subsidiaries shall not be required to preserve any such right,
license or franchise, or corporate or other existence, if the board of
directors of DEC shall determine in good faith that the preservation
thereof is no longer desirable in the conduct of the business of DEC and
its Subsidiaries taken as a whole and that the loss thereof is not
adverse in any material respect to any Holder.
(b) DEC shall not, in a single transaction or through a series of
related transactions, adopt a Plan of Liquidation.
(c) DEC shall not consolidate with or merge with or into, or
transfer all or substantially all of its assets to, any Person, and DEC
will not permit any of its Subsidiaries to enter into any such
transaction or series of transactions if such transaction or series of
transactions, in the aggregate, would result in a sale, assignment,
transfer, lease or other disposition of all or substantially all of the
properties and assets of DEC and its Subsidiaries on a consolidated basis
to any other Person or Persons unless either DEC is the surviving entity
or, if such other Person is the resulting or surviving entity, such
Person is a corporation organized and existing under the laws of the
United States, a State thereof or the District of Columbia, and such
Person expressly assumes all the obligations of DEC to the Holders of the
Notes. Additionally, immediately before and immediately after giving
effect to such transaction and treating any indebtedness which becomes an
obligation as a result of the transaction as having been incurred by DEC
at the time of such transaction, no default or event of default (or with
notice or passage of time or both) shall have occurred and be continuing
under DEC's Indebtedness, the obligations of DEC with respect to the
Notes or any material contracts, agreements or arrangements to which DEC
is a party. Moreover, immediately after giving effect to such
transaction, (i) the Consolidated Net Worth of such surviving entity must
be equal to or greater than that of DEC's immediately prior to giving
effect to such transaction and (ii) DEC would have complied with Section
5.12 as of the date of the end of the most recent fiscal quarter
preceding such transaction if its Consolidated Fixed Charge Coverage
Ratio for the four fiscal quarters ending on such date were determined on
a pro forma basis as if such transaction had occurred at the beginning of
such four-quarter period.
5.17 Limitation on Business.
DEC shall not conduct or operate any business, perform any
obligations, incur any Indebtedness or hold any assets; provided, however,
that DEC may own 100% of the Equity Interests of NFC, may hold cash or Cash
Equivalents, may perform its obligations pursuant to this Agreement, the Share
Price Adjustment Agreement, the Stockholders' Agreement and the Registration
Rights Agreement, may issue new shares of common stock, may pay its Taxes and
may maintain its corporate existence. DEC and NFC shall, and each shall cause
each of its Subsidiaries not to engage in any business other than the business
in which such Person is engaged immediately prior to the date hereof and those
businesses reasonably related thereto.
5.18 Taxes.
DEC and NFC shall, and each shall cause each of its Subsidiaries to,
pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (i) all Taxes levied or imposed upon such Company or such
Subsidiary, as the case may be, or upon the income, profits or property of
such Company or such Subsidiary, as the case may be, and (ii) all lawful
claims, whether for labor, materials, supplies, services or anything else,
which, if unpaid, would or may by law become a Lien, upon the property of such
Company or such Subsidiary, as the case may be; provided, however, that none
of the Companies nor any of their respective Subsidiaries shall be required to
pay or discharge or cause to be paid or discharged any such Tax, the
applicability or validity of which is being contested in good faith by
appropriate proceedings which will prevent the forfeiture or sale of any
property of such Company or such Subsidiary, as the case may be, and for which
disputed amounts reserves have been established in accordance with GAAP, in an
amount which DEC believes in good faith is adequate.
5.19 Investment Company Act.
DEC and NFC shall not, and each shall cause each of its Subsidiaries
to not, become an investment company subject to registration under the
Investment Company Act of 1940, as amended.
5.20 Ownership of Subsidiaries.
DEC shall at all times own, directly or indirectly, 100% of the
Equity Interests of NFC and each of its other Subsidiaries in existence at the
Closing, and no Equity Interest of any of DEC's Subsidiaries in existence at
the Closing or hereafter created or acquired shall be owned at any time by any
Affiliate of DEC (other than Subsidiaries of DEC).
5.21 Insurance.
DEC and NFC shall, and each shall cause each of its Subsidiaries to,
maintain liability, casualty and other insurance with a reputable insurer or
insurers in such amounts and against such risks as is carried by responsible
companies engaged in similar businesses and owning similar assets.
5.22 Employee Plans.
DEC and NFC shall not, and each shall cause each of its Subsidiaries
to not, directly or indirectly, (i) terminate any employee pension benefit
plan subject to Title IV of ERISA if as a result of such termination DEC and
its Subsidiaries, collectively, would incur a liability with respect to such
plan in excess of $5,000,000 in the aggregate, or (ii) make a complete or
partial withdrawal (within the meaning of Section 4201 of ERISA) from any
multiemployer plan if as a result of such withdrawal (within the meaning of
Section 4201 of ERISA), DEC and its Subsidiaries, collectively, would incur a
liability with respect to such plan in excess of $5,000,000 in the aggregate.
As used in this Section 5.22, the terms "employee pension benefit
plan" and "multiemployer plan" shall have the meanings assigned to such terms
in Section 3 of ERISA.
5.23 ERISA Notices.
Promptly, but in any event within thirty (30) days thereafter, DEC
shall deliver to the Purchasers (or, if no Purchaser continues to be a Holder,
such Person as the Majority Holders shall designate), if and when DEC or when
to the knowledge of DEC, any of its Subsidiaries (i) gives or is required to
give notice to the Pension Benefit Guaranty Corporation (the "PBGC") of any
"reportable event" (as defined in Section 4043 of ERISA) with respect to any
employee pension benefit plan maintained by DEC or any of its Subsidiaries or
any entity which is a member of the same controlled group as DEC, which
"reportable event" would constitute grounds for a termination of such plan
under Title IV of ERISA or the imposition of a tax under section 4971 of the
Code, or knows that the plan administrator of any such plan has given or is
required to give notice of any such reportable event, a copy of the notice of
such reportable event given or required to be given to the PBGC, (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA or
notice that any multiemployer plan to which DEC or any of its Subsidiaries or
any entity which is a member of the same controlled group as DEC contributes
or is obligated to contribute is in reorganization or has been terminated, a
copy of such notice, (iii) receives notice from the PBGC under Title IV of
ERISA of an intent to terminate or appoint a trustee to administer any
employee pension benefit plan maintained by DEC or any of its Subsidiaries or
any entity which is a member of the same controlled group as DEC, a copy of
such notice, (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Code, a copy of such application, (v) gives notice of
intent to terminate any employee pension benefit plan, subject to Title IV of
ERISA, maintained by DEC or any of its Subsidiaries or any entity which is a
member of the same controlled group as DEC under Title IV of ERISA, a copy of
such notice, (vi) fails to make any payment or contribution to any employee
pension benefit plan (or multiemployer plan or in respect of any benefit
arrangement) or makes any amendment to any employee pension benefit plan or
benefit arrangement which would result in the imposition of a lien or the
posting of a bond or other security, a certificate of the Chief Executive
Officer of DEC setting forth details as to such occurrence and action, if any,
which DEC or any of its Subsidiaries is required or proposes to take, (vii)
adopts, establishes, maintains or enters into any obligation to make
contributions that are material with respect to DEC or any of its Subsidiaries
to any new employee benefit plan or multiemployer plan, a certificate of the
Chief Executive Officer of DEC setting forth details as to such obligation,
(viii) modifies in any material respect any existing employee benefit plan
maintained by DEC or any of its Subsidiaries or any entity which is a member
of the same controlled group as DEC (other than any modification to medical,
dental or other employee welfare benefit plans in the ordinary course of
business) so as to materially increase its obligations thereunder, a
certificate of the Chief Executive Officer of DEC setting forth details as to
such modification or (ix) materially increases a contribution obligation to
any multiemployer plan contributed to or required to be contributed to by DEC
or any of its Subsidiaries or any entity which is a member of the same
controlled group as DEC, a certificate of the Chief Executive Officer of DEC
setting forth details as to such increase.
As used in this Section 5.23, the terms "employee pension benefit
plan," "employee welfare benefit plan," "multiemployer plan" and "employee
benefit plan" shall have the meanings assigned to such terms in Section 3 of
ERISA and the term "controlled group" shall have the meaning assigned to such
term in Section 414(b) and (c) of the Code.
5.24 Inconsistent Agreements.
DEC and NFC shall not, and each shall cause each of its Subsidiaries
to not, (i) enter into any agreement or arrangement that is inconsistent with,
or would impair the ability of DEC or any of its Subsidiaries to fulfill the
obligations of DEC or any of its Subsidiaries under, this Agreement, or (ii)
supplement, amend or otherwise modify the terms of any agreement or
arrangement or of their respective Charter Documents, if the effect thereof
would be materially adverse to the Holders.
5.25 Compliance with Laws; Maintenance of Licenses.
DEC and NFC shall, and each shall cause each of its Subsidiaries to,
comply with all statutes, ordinances, governmental rules and regulations,
judgments, orders and decrees (including all Environmental Laws) to which any
of them is subject, and maintain, obtain and keep in effect all licenses,
permits, franchises and other governmental authorizations necessary to the
ownership or operation of their respective properties or the conduct of their
respective businesses, except to the extent that the failure to so comply or
maintain, obtain and keep in effect could not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
5.26 Inspection of Properties and Records.
DEC and NFC shall allow, and each shall cause each of its
Subsidiaries to allow, each Purchaser and each Holder of at least $10,000,000
aggregate principal amount of Notes (or such Persons as any of them may
designate) (individually and collectively, "Inspectors"), subject to
appropriate agreements as to confidentiality, (i) to visit and inspect any of
the properties of DEC or any of its Subsidiaries, (ii) to examine all their
books of account, records, reports and other papers and to make copies and
extracts therefrom, (iii) to discuss their respective affairs, finances and
accounts with their respective officers and employees, and (iv) to discuss the
financial condition of DEC and its Subsidiaries with their independent
accountants upon reasonable notice to DEC of its intention to do so and so
long as DEC shall be given the reasonable opportunity to participate in such
discussions (and by this provision DEC and NFC each authorize said accountants
to have such discussions with the Inspectors). All such visits, examinations
and discussions set forth in the preceding sentence shall be upon prior notice
at such reasonable times and as often as may be reasonably requested. If a
Default or an Event of Default shall have occurred and be continuing, DEC
shall pay or reimburse all Inspectors for expenses which such Inspectors may
reasonably incur in connection with any such visitations or inspections.
5.27 Representation on Board of Directors.
(a) DEC covenants and agrees to the following and shall cause its
certificate of incorporation to include enforceable provisions to the
following effect:
(i) The Majority Holders, voting separately as a class, shall
be entitled, at each annual meeting of stockholders or special
meeting to elect directors, to elect one member of the Board of
Directors of DEC. DEC shall take all action necessary for one
member of its Board of Directors to be elected by the Holders on the
Initial Issue Date and at each annual meeting of stockholders or
special meeting to elect directors.
(ii) In addition to the rights set forth in clause (i) of this
Section 5.27(a), in the event that an Event of Default shall have
occurred and be continuing, the Majority Holders shall be entitled,
at the next annual meeting of the stockholders or at any special
meeting, to elect one additional director. Upon election, such
director shall become an additional director of DEC and the
authorized number of directors of DEC shall thereupon be
automatically increased by one. Such right of the Majority Holders
to elect such additional director may be exercised until such Event
of Default shall no longer be continuing, and immediately
thereafter, the right of the Majority Holders to elect such
additional director shall cease, the term of such director
previously elected shall thereupon terminate, and the authorized
number of directors of DEC shall thereupon return to the number of
authorized directors otherwise in effect, but subject always to the
same provisions for the renewal and divestment of such special
voting rights in the case of any such future Event of Default or
Events of Default. The fact that any Event of Default shall have
ceased to be continuing as required by the preceding sentence shall
be evidenced by a certificate executed by the President and the
Chief Financial Officer of DEC and delivered to the Board of
Directors.
(iii) At any time when such special voting rights have been
so vested in the Holders, the Secretary of DEC may, and upon the
written request of the Majority Holders addressed to such Secretary
at the principal office of DEC shall, call a special meeting of the
Holders for the election of the directors to be elected by them as
hereinabove provided, to be held in the case of such written request
within forty (40) days after delivery of such request, and in either
case to be held at the place and upon the notice provided by law and
in DEC's Bylaws for the holding of meetings of stockholders;
provided, however, that the Secretary shall not be required to call
such a special meeting if any such request is received less than
ninety (90) days before the date fixed for the next ensuing annual
or special meeting of stockholders.
(iv) The Board of Directors of DEC may not, except to satisfy
the provisions of this Section 5.27, be increased to more than 10
members.
(v) DEC shall reimburse promptly all members of its Board of
Directors elected pursuant to the provisions of this Section 5.27
for all reasonable expenses incurred by such members in connection
with their attendance at meetings of such Board of Directors and any
committees thereof.
(vi) The provisions of DEC's certificate of incorporation
described above in this Section 5.27(a) may be amended only with the
approval of the Majority Holders.
(b) In addition to the rights described above in Section 5.27(a),
each of the Purchasers shall have the right to have one representative
present (whether in person or by telephone) at all meetings of the Boards
of Directors (and committees thereof) of DEC and NFC; provided that such
representative shall not be entitled to vote at such meetings. DEC and
NFC shall send to each such representative all of the notices,
information and other materials that are distributed to the members of
the board of directors of DEC and NFC, respectively, and shall provide
the Purchasers with a notice and agenda of each meeting of the board of
directors (and committees thereof) of DEC or NFC, respectively, at the
same time as delivered to the members of such Board of Directors;
provided, however, that upon the request of any such representative, DEC
or NFC, as the case may be, shall refrain from sending such notices,
information and other materials for so long as such representative shall
request. Such Purchasers shall provide notice to DEC and NFC of the
identity and address of, or any change with respect to the identity or
address of, such representative.
5.28 Maintenance of Office or Agency.
DEC shall maintain (i) an office or agency in the Borough of
Manhattan, The City of New York where the Notes may be presented for payment;
(ii) an office or agency where the Notes may be presented for registration and
transfer and for exchange as provided in this Agreement; and (iii) an office
or agency where notices and demands to or upon DEC in respect of the Notes may
be served. The location of such office or agency or offices or agencies
initially shall be as set forth on Schedule 5.28. DEC shall give to each
Holder written notice of any change of location thereof.
5.29 Information to Prospective Purchasers.
DEC shall, upon the request of any Purchaser or subsequent Holder,
deliver to such Purchaser or such Holder and any prospective purchaser
designated by such Purchaser or such Holder promptly following the request of
such Purchaser or such Holder or such prospective purchaser such information
which such Purchaser or such Holder or such prospective purchaser may
reasonably request in order to comply with the information requirements of
Rule 144A.
5.30 Private Placement Number.
DEC consents to the filing of copies of this Agreement with Standard
& Poor's Corporation to obtain a private placement number and with the
National Association of Insurance Commissioners.
5.31 Rating of the Notes.
DEC shall, upon the request of any Purchaser and in order to obtain
a rating of the Notes, deliver to a securities rating agency designated by
such Purchaser, copies of this Agreement, the other Documents and any other
materials reasonably requested by such Purchaser.
5.32 Available Cash.
(a) NFC shall, and each of DEC and NFC shall cause each of its
Subsidiaries to, pay dividends or make other distributions directly or
indirectly to DEC in the amounts and at the times required to enable DEC
to pay in cash when due, pursuant to the terms hereof and of the Notes,
the principal of (and premium, if any, on) the Notes, each installment of
interest on the Notes and any other amount required by the terms hereof
or of the Notes to be paid in respect of the Notes, whether upon
redemption, repurchase or otherwise (any such payment in respect of the
Notes being referred to in this Section 5.32 as a "Note Payment"), unless
NFC's Consolidated Fixed Charge Coverage Ratio (as defined in the
Indenture (as in effect on the Closing Date)) is not greater than (i)
1.75 to 1.0, if the date of such Note Payment is on or prior to June 15,
1997, (ii) 2.00 to 1.0, if the date of such Note Payment is after June
15, 1997 and on or prior to June 15, 1998, or (iii) 2.25 to 1.0, if the
date of such Note Payment is after June 15, 1998. The provisions of this
Section 5.32(a) shall not relieve DEC of its obligation to pay Note
Payments in accordance with the terms of the Notes and the other
provisions of this Agreement.
(b) DEC shall not expend any cash, except for (i) the payment of
Note Payments, (ii) the payment of taxes in compliance with the
provisions of Section 5.18, (iii) Capital Expenditures in compliance with
the provisions of Section 5.9(a) and (iv) the payment of expenses
incurred in the ordinary course of business and expenses incurred solely
in connection with Acquisitions permitted pursuant to Section 5.14.
SECTION 6. REDEMPTION.
6.1 Optional and Mandatory Redemption.
(a) DEC may redeem the Notes, or a portion thereof, in accordance
with the terms and conditions provided herein and in Section 5(a) or
Section 5(b) of the Notes.
(b) DEC shall redeem Notes at the times and in the aggregate
principal amounts required pursuant to Section 5(c) of the Notes.
(c) DEC shall redeem all the outstanding Notes on the Maturity Date
at a redemption price equal to 100% of the principal amount thereof plus
accrued and unpaid interest thereon to the Redemption Date.
6.2 Selection of Notes to Be Redeemed.
If fewer than all of the Notes are to be redeemed, DEC shall redeem
the Notes pro rata, in such manner as complies with applicable legal
requirements, if any. Notes in denominations of $1,000 may be redeemed only
in whole. DEC may select for redemption portions (equal to $1,000 or any
integral multiple thereof) of the principal of Notes that have denominations
larger than $1,000. Provisions of this Agreement that apply to Notes called
for redemption also apply to portions of Notes called for redemption.
6.3 Notice of Redemption.
At least thirty (30) days but not more than sixty (60) days before
any Redemption Date, DEC shall mail a notice of redemption ("Notice of
Redemption") by first-class mail to each Holder whose Notes are to be redeemed
at such Holder's registered address; provided, however, that in the case of a
redemption of Notes required pursuant to Section 5(b) of the Notes, DEC shall
be required to mail the relevant Notice of Redemption within ten (10) days
after the consummation of the Qualified Public Equity Offering referenced
therein, and in the case of a redemption of Notes required pursuant to Section
5(c) of the Notes, DEC shall be required to mail the relevant Notice of
Redemption within two (2) days prior to the Redemption Date. Each Notice of
Redemption shall identify the Notes to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) the name and address of DEC;
(d) that Notes called for redemption must be surrendered to DEC to
collect the Redemption Price;
(e) that, unless DEC defaults in making the Redemption Price,
interest on Notes called for redemption ceases to accrue on and after the
Redemption Date, and the only remaining right of the Holders of such
Notes is to receive payment of the Redemption Price upon surrender to DEC
of the Notes redeemed;
(f) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
Redemption Date, and upon surrender of such Note, a new Note or Notes in
aggregate principal amount equal to the unredeemed portion thereof will
be issued; provided, however, that any portion of a Note redeemed by DEC
and any new Note issued to the Holder in respect of the unredeemed
portion thereof shall be in the principal amount of $1,000 or an integral
multiple thereof;
(g) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion(s) thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be
redeemed and the aggregate principal amount of Note(s) to be outstanding
after such partial redemption; and
(h) the paragraph of the Notes pursuant to which the Notes are to
be redeemed.
6.4 Effect of Notice of Redemption.
Once Notice of Redemption is mailed in accordance with Section 6.3
above, Notes called for redemption become due and payable on the Redemption
Date and at the Redemption Price.
6.5 Payment of Redemption Price.
On presentation and surrender of any Notes with respect to which a
notice of redemption has been given, at a place of payment specified in such
notice, such Notes or specified portions thereof shall be paid and redeemed by
DEC at the applicable Redemption Price.
If, on or prior to the Redemption Date, DEC deposits in a segregated
account or otherwise sets aside funds sufficient to pay the Redemption Price
of the Notes called for redemption, then, unless DEC defaults in the payment
of such Redemption Price, interest on the Notes to be redeemed will cease to
accrue on and after the applicable Redemption Date, regardless of whether such
Notes are presented for payment.
SECTION 7. DEFAULTS AND REMEDIES.
7.1 Events of Default.
An "Event of Default" occurs if:
(a) DEC defaults in the payment of the principal of or premium, if
any, on any Note when the same becomes due and payable at maturity, upon
redemption or otherwise (including, without limitation, the failure to
make a payment to purchase Notes tendered pursuant to a Change of Control
Offer or an Asset Sale Offer);
(b) DEC defaults in the payment of interest on any Note or any
other amount payable hereunder when the same becomes due and payable and
the Default continues for a period of five (5) days (it being understood
that the issuance of PIK Notes in accordance with the provisions of
Section 1 of the Notes shall not constitute any Event of Default under
this paragraph (b));
(c) DEC or NFC fails to comply with any of the agreements,
covenants, or provisions of this Agreement or the Notes and the Default
continues for the period and after the notice specified below;
(d) if any of the representations or warranties of DEC or NFC made
in this Agreement (including those representations and warranties
incorporated by reference herein) are untrue in any respect, the result
of which could reasonably be expected to have a Material Adverse Effect;
(e) if DEC transfers or disposes of any Equity Interests of NFC;
(f) if (i) DEC or any of its Subsidiaries defaults in the payment
of principal or interest payments under the Indenture or the Senior
Credit Agreement, regardless of the principal amount of the Indebtedness
outstanding thereunder, (ii) DEC or any of its Subsidiaries defaults in
the payment of principal or interest payments under any loan agreement,
note, mortgage, indenture or instrument (including without limitation the
Indenture and the Senior Credit Agreement) under which there may be
issued or by which there may be secured or evidenced any other
Indebtedness of DEC or any of its Subsidiaries for borrowed money (or the
payment of which is guaranteed by DEC or any of its Subsidiaries),
whether such indebtedness or guarantee now exists or shall be created
hereafter, and the principal amount of such indebtedness, together with
the principal amount of any other such indebtedness for which there is a
default in the payment of interest, premium, if any, or principal,
aggregates $5,000,000 or more, or (ii) an event of default occurs under
any loan agreement, note, mortgage, indenture or instrument which shall
represent a default in payment upon final maturity or otherwise result in
the acceleration of such indebtedness prior to its expressed maturity and
the principal amount of such indebtedness, together with the principal
amount of any other such indebtedness with respect to which there has
been a default in payment upon final maturity or the maturity of which
has been so accelerated and has not been paid, aggregates $5,000,000 or
more;
(g) a final judgment or final judgments for the payment of money
are entered by a court or courts of competent jurisdiction against DEC or
any Subsidiary of DEC and such remains undischarged for a period (during
which execution shall not be effectively stayed) of thirty (30) days,
provided that the aggregate of all such judgments exceeds $5,000,000;
(h) the filing by DEC or any of its Subsidiaries (any such person,
a "Debtor") of a petition commencing a voluntary case under section 301
of title 11 of the United States Code, or the commencement by a Debtor of
a case or proceeding under any other Bankruptcy Law seeking the
adjustment, restructuring, or discharge of the debts of such Debtor, or
the liquidation of such Debtor, including without limitation the making
by a Debtor of an assignment for the benefit of creditors; or the taking
of any corporate action by a Debtor in furtherance of or to facilitate,
conditionally or otherwise, any of the foregoing;
(i) the filing against a Debtor of a petition commencing an
involuntary case under section 303 of title 11 of the United States Code,
with respect to which case (a) such Debtor consents or fails to timely
object to the entry of, or fails to seek the stay and dismissal of, an
order of relief, (b) an order for relief is entered and is pending and
unstayed on the 60th day after the filing of the petition commencing such
case, or if stayed, such stay is subsequently lifted so that such order
for relief is given full force and effect, or (c) no order for relief is
entered, but the court in which such petition was filed has not entered
an order dismissing such petition by the 60th day after the filing
thereof; or the commencement under any other Bankruptcy Law of a case or
proceeding against a Debtor seeking the adjustment, restructuring, or
discharge of the debts of such Debtor, or the liquidation of such Debtor,
which case or proceeding is pending without having been dismissed on the
60th day after the commencement thereof;
(j) the entry by a court of competent jurisdiction of a judgment,
decree or order appointing a receiver, liquidator, trustee, custodian or
assignee of a Debtor or of the property of a Debtor, or directing the
winding up or liquidation of the affairs or property of a Debtor, and (a)
such Debtor consents or fails to timely object to the entry of, or fails
to seek the stay and dismissal of, such judgment, decree, or order, or
(b) such judgment, decree or order is in full force and effect and is not
stayed on the 60th day after the entry thereof, or, if stayed, such stay
is thereafter lifted so that such judgment, decree or order is given full
force and effect.
The term "Bankruptcy Law" means title 11, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Custodian" means
any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
A Default under clause (c) of this Section 7.1 shall be an Event of
Default without any notice or passage of time in the case of a breach of any
of Sections 5.4, 5.5, 5.6, 5.7, 5.8, 5.9, 5.10, 5.11, 5.12, 5.13, 5.14, 5.20,
5.22 and 5.32, and in the case of any other agreement, covenant or provision
of this Agreement or the Notes, when the Majority Holders notify DEC of the
Default and DEC does not cure the Default within thirty (30) days after
receipt of the notice. A Default under clause (f) of this Section 7.1 (other
than a Default resulting from the acceleration of any indebtedness described
therein, which Default shall be an Event of Default without the notice
specified in this paragraph) shall not be an Event of Default until the
Majority Holders notify DEC of the Default. Each notice referred to in this
paragraph must specify the Default, demand that it be remedied and state that
the notice is a "Notice of Default."
7.2 Acceleration of Notes; Remedies.
Subject to the following paragraph, if an Event of Default (other
than an Event of Default specified in clause (h), (i) or (j) of Section 7.1)
occurs and is continuing, the Majority Holders, by notice to DEC, may declare
the unpaid principal of and any accrued interest on all the Notes to be due
and payable, and immediately upon such declaration, the principal, premium, if
any, and interest shall be due and payable. If an Event of Default specified
in clause (h), (i) or (j) of Section 7.1 occurs, such an amount shall ipso
facto become and be immediately due and payable without any declaration or
other act on the part of any Holder.
The Majority Holders, by notice to DEC, may rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration.
7.3 Premium on Acceleration.
In the event of an acceleration of the Notes upon an Event of
Default occurring by reason of any willful action (or deliberate inaction)
taken (or not taken) by or on behalf of DEC with the intention of avoiding
payment of the premium that DEC would have had to pay if DEC had elected to
redeem the Notes and such acceleration is not rescinded or annulled, the
Holders shall be entitled to receive, in addition to any other payments to
which they may be entitled, a premium equal to the percentages of principal
set forth below if the declaration date of the acceleration occurs during the
twelve month period commencing on April 24 of the year set forth below:
Year % of Principal Amount
1997 112.50
1998 110.00
1999 107.50
2000 105.00
2001 102.50
2002 100.00
7.4 Other Remedies.
If an Event of Default occurs and is continuing, Holders of the
Notes may pursue any available remedy to collect the payment of principal or
interest on the Notes or to enforce the performance of any provision of the
Notes, this Agreement or any other Documents.
A delay or omission by any Holder of any Notes in exercising any
right or remedy accruing upon an Event of Default shall not impair the right
or remedy or constitute a waiver of or acquiescence in the Event of Default.
All remedies are cumulative to the extent permitted by law.
7.5 Waiver of Past Defaults.
The Majority Holders, by notice to DEC, may waive an existing
Default or Event of Default and its consequences except a continuing Default
or Event of Default in the payment of the principal of or interest on any
Notes.
7.6 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Agreement, the right of
any Holder of a Note to receive payment of principal and interest on the Note,
on or after the respective due dates expressed in the Note, or to bring suit
for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of the Holder.
7.7 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Agreement, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party
litigant.
SECTION 8. AMENDMENTS AND WAIVERS.
8.1 With Consent of Holders.
DEC and NFC, when authorized by a resolution of the board of
directors of DEC or NFC, as the case may be, with the written consent of the
Majority Holders, may amend this Agreement or the Notes, provided that each
Holder shall have received prior notice of such proposed amendment. The
Majority Holders may waive compliance by DEC or NFC with any provision of this
Agreement or the Notes, provided that each Holder shall have received prior
notice of such proposed amendment. Without the consent of each Holder
affected, however, no amendment or waiver may (with respect to any Notes held
by a nonconsenting Holder of Notes):
(a) reduce the principal amount of Notes whose Holders must consent
to an amendment or waiver of any provision of this Agreement or the
Notes;
(b) reduce the principal of or change the fixed maturity of any
Note or alter the provisions with respect to the redemption of Notes,
reduce the purchase price payable in connection with repurchases of the
Notes pursuant to Section 5.8 or Section 5.11 or reduce the premium
payable pursuant to Section 7.3;
(c) reduce the rate of or change the time for payment of interest
on any Note;
(d) waive a Default or an Event of Default in the payment of
principal of or premium, if any, or interest on the Notes or that
resulted from a failure to comply with Section 5.8 or Section 5.11
(except a rescission of acceleration of the Notes by the Majority Holders
and a waiver of the payment default that resulted from such
acceleration);
(e) make the principal of, premium, if any, or the interest on, any
Note payable in any manner other than that stated in this Agreement and
the Notes;
(f) make any change in the provisions of this Agreement relating to
waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of, premium (if any) or interest on the Notes;
(g) waive the payment of the Redemption Price with respect to any
Note; or
(h) make any change in the foregoing amendment and waiver
provisions.
It shall not be necessary for the consent of the Holders under this
Section 8 to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof.
After an amendment or waiver under this Section 8 becomes effective,
DEC shall mail to the Holders affected thereby a notice briefly describing the
amendment or waiver. Any failure of DEC to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such amendment or waiver.
In connection with any amendment under this Section 8, DEC may
offer, but shall not be obligated to offer, to any Holder who consents to such
amendment or waiver, consideration for such Holder's consent.
8.2 Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a
Holder is a continuing consent by the Holder and every subsequent Holder of a
Note or portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note.
However, any such Holder or subsequent Holder may revoke the consent as to his
Note or portion of his Note by notice to DEC received before the date on which
the Majority Holders have consented (and not theretofore revoked such consent)
to the amendment or waiver.
DEC may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment or
waiver, which record date shall be at least thirty (30) days prior to the
first solicitation of such consent. If a record date is fixed, then
notwithstanding the last sentence of the immediately preceding paragraph,
those persons who were Holders at such record date (or their duly designated
proxies), and only those persons, shall be entitled to revoke any consent
previously given, regardless of whether such persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than ninety (90) days after such record date.
After an amendment or waiver becomes effective, it shall bind every
Holder, unless it makes a change described in any of clauses (a) through (h)
of Section 8.1, in which case, the amendment or waiver shall bind only each
Holder of a Note who has consented to it and every subsequent Holder of a Note
or portion of a Note that evidences the same debt as the consenting Holder's
Note; provided that any such waiver shall not impair or affect the right of
any Holder to receive payment of principal of, premium (if any) and interest
on a Note, on or after the respective due dates expressed in such Note, or to
bring suit for the enforcement of any such payment on or after such respective
dates without the consent of such Holder.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver, consent or amendment, Notes
owned by DEC or any Affiliate of DEC shall be considered as though not
outstanding.
8.3 Notation on or Exchange of Notes.
If an amendment or waiver changes the terms of a Note, DEC may
require the Holder of the Note to deliver it to DEC so that it may place an
appropriate notation on the Note that reflects the amendment or waiver and
return it to the Holder.
8.4 Payment of Expenses.
DEC and NFC, jointly and severally, agree to pay or reimburse each
Purchaser's out-of-pocket expenses (including the reasonable fees and expenses
of counsel) relating to any amendment or modification of, or any waiver or
consent under, this Agreement, the Securities and any other Documents.
SECTION 9. DEFINITIONS.
9.1 Definitions.
As used in this Agreement, the following terms shall have the
following meanings:
"Account Manager" means each Purchaser, if any, duly authorized to
act as attorney in-fact on behalf of any Person in purchasing, in the name of
and using funds provided by such Person, Securities hereunder.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of DEC or
assumed in connection with the acquisition by DEC or any of its Subsidiaries
of assets from such Person, which Indebtedness was not incurred in connection
with or in anticipation of such acquisition.
"Acquisition" means the acquisition (including by way of a merger or
consolidation or in a series of related transactions) of all or substantially
all of the assets or property of another Person or of Voting Securities of
such Person representing a majority (more than 50%) of the aggregate Voting
Power of the outstanding Voting Securities of such Person by purchase in cash,
exchange of property or securities, or by any other method.
"Acquisition Agreement" means the Stock Purchase Agreement dated as
of February 20, 1997 by and among NFC, AmeriComm and the stockholders of
AmeriComm listed on Annex I thereto.
"Additional Class A Shares" has the meaning given to such term in
Section 1.1(a).
"Advisory Services Agreement" means the Amended and Restated
Services Agreement dated as of June 28, 1996 among MDC Management Company II,
L.P., MDC Management Company and NFC, as in effect on the date thereof.
"Affiliate" means, with respect to any referenced Person, a Person
(i) which directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, such referenced Person,
(ii) which directly or indirectly through one or more intermediaries
beneficially owns or holds 10% or more of the combined voting power of the
total Voting Securities of such referenced Person or (iii) of which 10% or
more of the combined voting power of the total Voting Securities directly or
indirectly through one or more intermediaries is beneficially owned or held by
such referenced Person or a Subsidiary of such referenced Person. When used
herein without reference to any Person, Affiliate means an Affiliate of DEC.
For all purposes of this Agreement, XxXxxx De Leeuw & Co. and its Affiliates
shall be considered an Affiliate of DEC. For purposes of this definition,
"control" when used with respect to any person means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such person, whether through the ownership of Voting
Securities, by agreement or otherwise; and the terms "affiliated,"
"controlling" and "controlled" have meanings correlative to the foregoing.
Notwithstanding the foregoing, for purposes of this Agreement, Trust Company
of the West and its Affiliates and any other Purchaser and its Affiliates
shall not be considered Affiliates of DEC or any of its Subsidiaries.
"Affiliate Transaction" has the meaning given to such term in
Section 5.6.
"Agreement" means this Securities Purchase Agreement dated as of
April 24, 1997, by and among DEC, NFC and the Purchasers.
"AmeriComm" means AmeriComm Direct Marketing, Inc., a Delaware
corporation.
"Asset Acquisition" means (a) an Investment by DEC or any of its
Subsidiaries in any other Person pursuant to which such Person shall become a
Subsidiary of DEC, or shall be merged with or into DEC or any of its
Subsidiaries, or (b) the acquisition by DEC or any of its Subsidiaries of the
assets of any Person (other than a Subsidiary of DEC) which constitute all or
substantially all of the assets of such Person or comprise any division or
line of business of such Person or any other properties or assets of such
Person other than in the ordinary course of business.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of assets (including by way of a sale-and-leaseback) of DEC, NFC
or any of their respective Subsidiaries, other than sales of inventory in the
ordinary course of business consistent with past practice or (ii) the issuance
or sale of Equity Interests of any of the Subsidiaries of DEC or NFC to any
Person other than DEC, in the case of either clause (i) or (ii) above, whether
in a single transaction or a series of related transactions; provided,
however, that Asset Sales shall not include, (i) a transaction or series of
related transactions for which DEC or its Subsidiaries receive aggregate
consideration of less than $350,000, (ii) the sale, lease, conveyance,
disposition or other transfer of all or substantially all of the assets of DEC
as permitted under Section 5.16(c), (iii) disposals or replacements of
obsolete equipment in the ordinary course of business and (iv) the sale,
lease, conveyance, disposition or other transfer by DEC or any Wholly Owned
Subsidiary of DEC of assets or property to one or more Wholly Owned
Subsidiaries of DEC.
"Asset Sale Date" shall have the meaning set forth in Section
5.8(b).
"Asset Sale Offer" shall have the meaning set forth in Section
5.8(b).
"Asset Sale Offer Price" shall have the meaning set forth in Section
5.8(b).
"Board of Directors" means, as to any Person, the board of directors
of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be
in full force and effect on the date of such certification.
"Business Day" means any day which is not a Legal Holiday.
"Capital Expenditures" means, without duplication, for any Person
for any period, the aggregate of all expenditures including deposits (whether
paid in cash or property or accrued as liabilities and including the aggregate
amount of all principal payments due for the entire term of all Capital Leases
that are required to be capitalized on the balance sheet) made by such Person
that, in conformity with GAAP, are required to be included in the property,
plant, equipment, or similar fixed asset account; provided, however, there
shall be excluded from the calculation of Capital Expenditures permitted under
Section 5.9 that portion of all such expenditures DEC or any of its
Subsidiaries is permitted to reinvest or use for replacement or restoration of
assets through the use of insurance proceeds, awards of compensation arising
from condemnation or eminent domain proceedings or from Net Cash Proceeds of
Asset Sales.
"Capital Lease" means any lease of any property (whether real,
personal or mixed) that, in conformity with GAAP, should be accounted for as a
capital lease.
"Capital Stock" means any and all shares, interests, participations
or other equivalents (however designated) of corporate stock, including
without limitation all common stock and preferred stock.
"Capitalized Lease Obligation" means, with respect to any Person for
any period, any obligation of such Person to pay rent or other amounts under a
Capital Lease; the amount of such obligation shall be the capitalized amount
thereof determined in accordance with GAAP.
"Cash Equivalents" means (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States Government or issued
by any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition
thereof; (b) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Xxxxx'x
Investors Service, Inc. ("Moody's"); (c) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moody's; (d) certificates of deposit or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by any bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia or any United States branch of a foreign bank having at
the date of acquisition thereof combined capital and surplus of not less than
$250,000,000; (e) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (a) above
entered into with any bank meeting the qualifications specified in clause (d)
above; and (f) investments in money market funds which invest substantially
all their assets in securities of the types described in clauses (a) through
(e) of this definition.
"Certificate of Designation" means the Certificate of Designation of
Preferences of Cumulative Redeemable Preferred Stock of DEC filed with the
Secretary of State of the State of Delaware on June 28, 1996, as amended.
"Change of Control" has the meaning given to such term in Section
5.11.
"Change of Control Date" has the meaning given to such term in
Section 5.11.
"Change of Control Offer" has the meaning given to such term in
Section 5.11.
"Change of Control Offer Price" has the meaning given to such term
in Section 5.11.
"Change of Control Payment Date" has the meaning given to such term
in Section 5.11.
"Charter Documents" means the Articles of Incorporation or
Certificate of Incorporation and Bylaws (or any similar organizational
documents), as amended or restated (or both) to date, of any of the Companies,
or any of their respective Subsidiaries, as applicable.
"Class A Common Stock" has the meaning given to such term in Section
1.1(a).
"Class A Common Stock Register" has the meaning given to such term
in Section 1.3.
"Class A Shares" has the meaning given to such term in Section
1.1(a).
"Closing" has the meaning given to such term in Section 1.2(b).
"Closing Date" has the meaning given to such term in Section 1.2(b).
"Closing Shares" has the meaning given to such term in Section
1.1(a).
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor statute or law thereto.
"Companies" means, collectively, NFC, DEC and each of their
Subsidiaries.
"Consolidated" or "consolidated," when used with reference to any
accounting term, means the amount described by such accounting term,
determined on a consolidated basis in accordance with GAAP, after elimination
of intercompany items.
"Consolidated EBITDA" means, with respect to DEC and its
Subsidiaries, for any period, the sum (without duplication) of (a)
Consolidated Net Income of DEC and its Subsidiaries and (b) to the extent
Consolidated Net Income of DEC and its Subsidiaries has been reduced thereby,
(i) all income taxes of DEC and its Subsidiaries paid or accrued in accordance
with GAAP for such period (other than income taxes attributable to
extraordinary, unusual or nonrecurring gains or losses or taxes attributable
to sales or dispositions outside the ordinary course of business), (ii)
Consolidated Interest Expense of DEC and its Subsidiaries and (iii)
Consolidated Non-Cash Charges of DEC and its Subsidiaries, less any non-cash
items increasing Consolidated Net Income of DEC and its Subsidiaries for such
period, all as determined on a consolidated basis for the of DEC and its
Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to
DEC and its Subsidiaries, at any date, the ratio of Consolidated EBITDA of DEC
and its Subsidiaries during the four full fiscal quarters (the "Four Quarter
Period") ending on or prior to such date (the "Calculation Date") to
Consolidated Fixed Charges of DEC and its Subsidiaries for the Four Quarter
Period. In addition to and without limitation of the foregoing, for purposes
of this definition, "Consolidated EBITDA" and "Consolidated Fixed Charges"
shall be calculated after giving effect on a pro forma (including any pro
forma expense and cost reductions arising out of events that are directly
attributable to a specific transaction, are factually supportable and are
expected to have a continuing effect, in each case as determined on a basis
consistent with the procedures set forth in Article 11 of Regulation S-X of
the Securities Act and as interpreted by the Staff of the Securities Exchange
Commission prior to December 1996 which would include cost savings resulting
from headcount reductions, closure of facilities and similar restructuring
charges) basis for the period of such calculation to (a) the incurrence or
repayment of any Indebtedness of DEC or any of its Subsidiaries (and the
application of the proceeds thereof) giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness (and the
application of the proceeds thereof), other than the incurrence or repayment
of Indebtedness in the ordinary course of business for working capital
purposes pursuant to working capital facilities, occurring during the Four
Quarter Period or at any time subsequent to the last day of the Four Quarter
Period and on or prior to the Calculation Date, as if such incurrence or
repayment, as the case may be (and the application of the proceeds thereof),
occurred on the first day of the Four Quarter Period and (b) any Asset Sales
or Asset Acquisitions (including, without limitation, any Asset Acquisition
giving rise to the need to make such calculation as a result of DEC or any of
its Subsidiaries (including any Person who becomes a Subsidiary of DEC as a
result of the Asset Acquisition) incurring, assuming or otherwise being liable
for Acquired Indebtedness and also including any Consolidated EBITDA
attributable to the assets which are the subject of the Asset Acquisition or
Asset Sale during the Four Quarter Period) occurring during the Four Quarter
Period or at any time subsequent to the last day of the Four Quarter Period
and on or prior to the Calculation Date, as if such Asset Sale or Asset
Acquisition (including the incurrence, assumption or liability for any such
Acquired Indebtedness) occurred on the first day of the Four Quarter Period.
If DEC or any of its Subsidiaries directly or indirectly guarantees
Indebtedness of a third Person, the preceding sentence shall give effect to
the incurrence of such guaranteed Indebtedness as if DEC or the Subsidiary, as
the case may be, had directly incurred or otherwise assumed such guaranteed
Indebtedness. Furthermore, in calculating "Consolidated Fixed Charges" for
purposes of determining the denominator (but not the numerator) of this
"Consolidated Fixed Charge Coverage Ratio," (i) interest on outstanding
Indebtedness determined on a fluctuating basis as of the Calculation Date and
which will continue to be so determined thereafter shall be deemed to have
accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Calculation Date; (ii) if interest on any
Indebtedness actually incurred on the Calculation Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate,
a eurocurrency interbank offered rate, or other rates, then the interest rate
in effect on the Calculation Date will be deemed to have been in effect
during the Four Quarter Period; and (iii) notwithstanding clause (i) above,
interest on Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by agreements relating to Interest Swap Obligations, shall
be deemed to accrue at the rate per annum resulting after giving effect to the
operation of such agreements.
"Consolidated Fixed Charges" means, with respect to DEC and its
Subsidiaries for any period, the sum, without duplication, of (a) Consolidated
Interest Expense (including any premium or penalty paid in connection with
redeeming or retiring Indebtedness of DEC and its Subsidiaries prior to the
stated maturity thereof pursuant to the agreements governing such
Indebtedness) of DEC and its Subsidiaries, plus (b) the product of (i) the
amount of all dividend payments on any series of Preferred Stock of DEC or
any of its Subsidiaries (other than dividends paid in Qualified Capital Stock)
paid, accrued or scheduled to be paid or accrued during such period times (ii)
a fraction, the numerator of which is one and the denominator of which is one
minus the then current effective consolidated federal, state and local income
tax rate of such Person, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to DEC and its
Subsidiaries for any period, the sum of, without duplication: (a) the
aggregate of the interest expense of DEC and its Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (i) any amortization of original issue discount other than
original issue discount in respect to the Notes, (ii) the net costs under
Interest Swap Obligations, (iii) all capitalized interest and (iv) the
interest portion of any deferred payment obligation; and (b) the interest
component of Capitalized Lease Obligations paid, accrued and/or scheduled to
be paid or accrued by DEC and its Subsidiaries during such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Leverage Ratio" means, when used with respect to DEC
and its Subsidiaries, on any date, the ratio of (a) the total consolidated
Indebtedness of DEC and its Subsidiaries on such date (the "Calculation Date")
to (b) Consolidated EBITDA of DEC and its Subsidiaries during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the
Calculation Date. In addition to and without limitation of the foregoing, for
purposes of this definition, "total consolidated Indebtedness" and
"Consolidated EBITDA" shall be calculated after giving effect on a pro forma
(including any pro forma expense and cost reductions arising out of events
that are directly attributable to a specific transaction, are factually
supportable and are expected to have a continuing effect, in each case as
determined on a basis consistent with the procedures set forth in Article 11
of Regulation S-X of the Securities Act and as interpreted by the Staff of the
Securities Exchange Commission prior to December 1996 which would include cost
savings resulting from headcount reductions, closure of facilities and similar
restructuring charges) basis for the period of such calculation to (a) the
incurrence or repayment of any Indebtedness of DEC or any of its Subsidiaries
(and the application of the proceeds thereof) giving rise to the need to make
such calculation and any incurrence or repayment of other Indebtedness (and
the application of the proceeds thereof), other than the incurrence or
repayment of Indebtedness in the ordinary course of business for working
capital purposes pursuant to working capital facilities, occurring during the
Four Quarter Period or at any time subsequent to the last day of the Four
Quarter Period and on or prior to the Calculation Date, as if such incurrence
or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period and (b) any
Asset Sales or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of
DEC or any of its Subsidiaries (including any Person who becomes a Subsidiary
of DEC as a result of the Asset Acquisition) incurring, assuming or otherwise
being liable for Acquired Indebtedness and also including any Consolidated
EBITDA attributable to the assets which are the subject of the Asset
Acquisition or Asset Sale during the Four Quarter Period) occurring during the
Four Quarter Period or at any time subsequent to the last day of the Four
Quarter Period and on or prior to the Calculation Date, as if such Asset Sale
or Asset Acquisition (including the incurrence, assumption or liability for
any such Acquired Indebtedness) occurred on the first day of the Four Quarter
Period. If DEC or any of its Subsidiaries directly or indirectly guarantees
Indebtedness of a third Person, the preceding sentence shall give effect to
the incurrence of such guaranteed Indebtedness as if DEC or the Subsidiary, as
the case may be, had directly incurred or otherwise assumed such guaranteed
Indebtedness.
"Consolidated Net Income" means, with respect to DEC and its
Subsidiaries for any period, the aggregate net income (or loss) of DEC and its
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom (a) after-tax gains
from Asset Sales or abandonments or reserves relating thereto, (b) after-tax
items classified as extraordinary or nonrecurring gains, (c) the net income of
any Person acquired in a "pooling of interests" transaction accrued prior to
the date it becomes a Subsidiary of DEC or is merged or consolidated with DEC
or any of its Subsidiaries, (d) the net income of any Person, other than a
Subsidiary of DEC, except to the extent of cash dividends or distributions
paid to DEC or to a Subsidiary of DEC by such Person, (e) income or loss
attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were
classified as discontinued) and (f) in the case of a successor to DEC by
consolidation or merger or as a transferee of DEC's assets, any net income (or
loss) of the successor corporation prior to such consolidation, merger or
transfer of assets.
"Consolidated Net Worth" with respect to any Person, means, as at
any date of determination, the sum of (i) the consolidated equity of the
common stockholders of such Person and its consolidated Subsidiaries
determined in accordance with GAAP plus (ii) the respective amounts reported
on such Person's most recent balance sheet with respect to any series of
preferred stock (other than Disqualified Capital Stock) that by its terms is
not entitled to the payment of dividends unless such dividends may be declared
and paid only out of net earnings in respect of the year of such declaration
and payment, but only to the extent of any cash received by such Person upon
issuance of such preferred stock, provided that the consolidated net worth of
any Person shall exclude the effect of any non-cash charges relating to the
acceleration of stock options or similar securities of such Person or another
Person with which such Person is merged or consolidated.
"Consolidated Non-Cash Charges" means, with respect to DEC and its
Subsidiaries, for any period, the aggregate depreciation, amortization and
other non-cash expenses of DEC and its Subsidiaries reducing Consolidated Net
Income of DEC and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges
constituting an extraordinary item or loss or any such charge which requires
an accrual of or a reserve for cash charges for any future period).
"Cumulative Redeemable Preferred Stock" means DEC's Cumulative
Redeemable Preferred Stock, par value $0.0001 per share, issued pursuant to
the Certificate of Designation.
"DEC" means DEC International, Inc., a Delaware corporation.
"Default" means any event which is, or after notice or passage of
time would be, an Event of Default.
"Disqualified Capital Stock" means any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof, in whole or in part,
on or prior to the Maturity Date.
"Documents" means this Agreement, the Securities, the Share Price
Adjustment Agreement, the Stockholders' Agreement, the Registration Rights
Agreement and the Acquisition Agreement collectively, or each of such
documents singularly, and any documents or instruments contemplated by or
executed in connection with any of them or any of the transactions
contemplated hereby or thereby.
"Environmental Claim" has the meaning given to such term in Section
3.16.
"Environmental Law" has the meaning given to such term in Section
3.16.
"Equity Interest" means (i) with respect to a corporation, any and
all Capital Stock or warrants, options or other rights to acquire Capital
Stock (but excluding any debt security which is convertible into, or
exchangeable or exercisable for, Capital Stock) and (ii) with respect to a
partnership, limited liability company or similar Person, any and all units,
interests, rights to purchase, warrants, options or other equivalents of, or
other ownership interests in any such Person.
"ERISA" means The Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute or law thereto.
"Event of Default" has the meaning given to such term in Section
7.1.
"Excess Net Cash Proceeds" has the meaning given to such term in
Section 5.8(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, from time to time, and any successor statute or law thereto.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such on the Closing Date by the American
Institute of Certified Public Accountants acting through its Accounting
Principles Board or by the Financial Accounting Standards Board or through
other appropriate boards or committees thereof and which are consistently
applied for all periods after the date hereof so as to properly reflect the
financial conditions, and the results of operations, shareholders' equity and
cash flows, of DEC and its consolidated Subsidiaries.
"Government Body" means any Federal, state, local or foreign
governmental authority or regulatory body, any subdivision, agency, commission
or authority thereof or any quasi-governmental or private body exercising any
governmental regulatory authority thereunder and any Person directly or
indirectly owned by and subject to the control of any of the foregoing, or any
court, arbitrator or other judicial or quasi-judicial tribunal.
"Xxxxxxxx" means Xxxxxxxx Advertising Incorporated, a Texas
corporation.
"Xxxxxxxx Acquisition" means the Acquisition by NFC, within six
months following the Closing Date of all of the Equity Interests, or all of
the assets of Xxxxxxxx, for an aggregate Purchase Price of not more than
$44,000,000.
"guaranty" means, with respect to any Person, any contract,
agreement or understanding of such Person pursuant to which such Person
guarantees, or in effect guarantees, any Indebtedness of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including
without limitation:
(a) agreements to purchase such Indebtedness or any property
constituting security therefor;
(b) agreements to advance or supply funds (i) for the purchase or
payment of such Indebtedness, or (ii) to maintain working capital, equity
capital or other balance sheet conditions;
(c) agreements to purchase property, securities or services
primarily for the purpose of assuring the holder of such Indebtedness of
the ability of the primary obligor to make payment of the Indebtedness;
(d) letters or agreements commonly known as "comfort" or "keepwell"
letters or agreements; or
(e) any other agreements to assure the holder of the Indebtedness
of the primary obligor against loss in respect thereof;
except that "guaranty" shall not include (i) the endorsement by a Person in
the ordinary course of business of negotiable instruments or documents for
deposit or collection, or (ii) indemnities given by DEC or its Subsidiaries in
brokerage, management and other agreements in the ordinary course of business
substantially consistent with past practices.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against
fluctuations in interest rates.
"Holder" or "Holders" means each Purchaser (so long as it holds any
Securities) and any other holder of any of the Securities.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated pursuant thereto.
"Indebtedness" means, with respect to any Person, the aggregate
amount of, without duplication, the following:
(a) all obligations for borrowed money;
(b) all obligations evidenced by bonds, debentures, notes or other
similar instruments;
(c) all obligations to pay the deferred purchase price of property
or services (except Trade Payables, accrued commissions and other similar
accrued current liabilities in respect of such obligations, in any case,
not overdue, arising in the ordinary course of business);
(d) all Capitalized Lease Obligations;
(e) all obligations or liabilities of others secured by a lien on
any asset owned by such Person or Persons regardless of whether such
obligation or liability is assumed;
(f) all obligations of such Person or Persons, contingent or
otherwise, in respect of any letters of credit or bankers' acceptances;
(g) all Hedging Obligations; and
(h) all guaranties.
"Indemnified Parties" has the meaning given to such term in Section
1.8.
"Indemnifying Parties" has the meaning given to such term in Section
1.8.
"Indenture" means that certain Indenture, dated as of June 15, 1996,
by and between NFC and Wilmington Trust Company, as Trustee, together with all
related documents, including security documents.
"Initial Issue Date" means the date that Notes are first issued by
DEC.
"Inspectors" has the meaning given to such term in Section 5.26.
"Interest Swap Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest
on a stated notional amount in exchange for periodic payments made by such
other Person calculated by applying a fixed or a floating rate of interest on
the same notional amount and shall include, without limitation, interest rate
swaps, caps, floors, collars and similar agreements.
"Investment" means, with respect to any Person, any direct, indirect
or beneficial investment by such Person, whether by means of share purchase,
loan, advance, extension of credit (other than accounts receivable and trade
credits arising in the ordinary course of business), capital contribution or
otherwise, in or to any other Person, the guaranty by such Person of any
Indebtedness of any other Person or the subordination of any claim against any
other Person to other Indebtedness of such other Person.
"Laws" has the meaning given to such term in Section 3.19.
"Legal Holiday" means a Saturday, Sunday or day on which banks and
trust companies in the principal place of business of DEC or in New York are
not required to be open.
"Lien" means any mortgage, pledge, lien, encumbrance, charge or
adverse claim affecting title or resulting in a charge against real or
personal property, or security interest of any kind (including, without
limitation, any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell and any filing of
any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).
"Majority Holders" means, at any time, the Holder or Holders of at
least a majority in aggregate principal amount of the then outstanding Notes.
"Material Adverse Effect" means (a) a material adverse effect upon
the business, operations, properties, assets, condition (financial or
otherwise) or prospects of the Companies taken as a whole or (b) a material
adverse effect on the ability of NFC or DEC to perform its obligations under
this Agreement or of any Purchaser or Holder to enforce or collect any of the
obligations hereunder. In determining whether any individual event could
reasonably be expected to result in a Material Adverse Effect, notwithstanding
that such event does not of itself have such effect, a Material Adverse Effect
shall be deemed to have occurred if the cumulative effect of such event and
all other then existing events could reasonably be expected to result in a
Material Adverse Effect.
"Materials of Environmental Concern" has the meaning given to such
term in Section 3.16.
"Maturity Date" means April 24, 2003.
"MDC Entities" means, collectively, XxXxxx De Leeuw & Co. II, LP,
XxXxxx, De Leeuw Associates, LP and MDC/JAF CO Ventures, LP and any of their
respective Affiliates.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents, including payments in
respect of deferred payment obligations when received in the form of cash or
Cash Equivalents (other than the portion of any such deferred payment
constituting interest) received by DEC or any of its Subsidiaries from such
Asset Sale, net of (a) reasonable out-of-pocket expenses and fees relating to
such Asset Sale (including, without limitation, legal, accounting and
investment banking fees and sales commissions), (b) taxes paid or payable
after taking into account any reduction in consolidated tax liability due to
available tax credits or deductions and any tax sharing arrangements, (c)
repayment of Indebtedness that is required to be repaid in connection with
such Asset Sale and (d) appropriate amounts to be provided by DEC or any of
its Subsidiaries, as the case may be, as a reserve, in accordance with GAAP,
against any post closing adjustments or liabilities associated with such Asset
Sale and retained by DEC or any of its Subsidiaries, as the case may be, after
such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale.
"NFC" means National Fiberstok Corporation, a Delaware corporation.
"NFC Senior Notes" means the 115/8% Senior Notes due 2002 of NFC.
"Notes" has the meaning given to such term in Section 1.1.
"Notes Register" has the meaning given to such term in Section 1.3.
"Notice of Redemption" has the meaning given to such term in Section
6.3.
"Offering Memorandum" means the Offering Memorandum, dated June 21,
1996, of NFC relating to the NFC Senior Notes.
"Officer" of a Person mean its Chairman of the Board, Chief
Executive Officer, President, Treasurer, any Vice President, Secretary or any
Assistant Secretary.
"Officers' Certificate" means a certificate signed by any two
Officers, one of whom must be the Chairman of the Board, the Chief Executive
Officer, the President, the Treasurer or a Vice President of DEC.
"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to each of the Purchasers. Unless otherwise required
by any of the Purchasers, the legal counsel may be an employee of or counsel
to NFC or DEC. For purposes of Section 4.4, "Opinion of Counsel" means a
written opinion from legal counsel who is reasonably acceptable to DEC and who
may be an employee of or counsel to any Purchaser or Holder.
"Pending Acquisition" means the acquisition of all the capital stock
of AmeriComm by NFC pursuant to the Acquisition Agreement.
"Permitted Holder" means XxXxxx De Leeuw & Co. II, L.P., a
California limited partnership, XxXxxx De Leeuw Associates L.P., a California
limited partnership and MDC/JAFCO Ventures, a California limited partnership.
"Permitted Liens" means with respect to any Person: (i) Liens
incurred or deposits made by such Person under worker's compensation laws,
unemployment insurance laws or similar legislation, or Liens incurred or good
faith deposits made in connection with bids, tenders, contracts (other than
for the payment of Indebtedness) or leases to which such Person is a party, or
Liens incurred or deposits made to secure public or statutory obligations of
such Person or deposits of cash or United States government bonds made to
secure the performance of statutory obligations, surety, stay, customs and
appeal bonds to which such Person is a party, or deposits made as security for
contested taxes or import duties or for the payment of rent, in each case in
the ordinary course of business; (ii) Liens imposed by law, such as carriers,
warehousemen's, materialmen's and mechanics' Liens or Liens arising out of
judgments or awards against such Person with respect to which such Person
shall then be prosecuting appeal or other proceedings for review; provided
that, in each case, such appeal or other proceeding is being made in good
faith and with respect to which reserves or other appropriate provisions are
being made in accordance with GAAP; (iii) Liens securing the payment of Taxes
which are not yet subject to penalties for non-payment or which are being
contested in good faith and by appropriate proceedings, with respect to which
reserves or other appropriate provisions are being maintained in accordance
with GAAP; (iv) Liens in favor of issuers of surety bonds or letters of credit
issued pursuant to the request of and for the account of such Person in the
ordinary course of its business; (v) minor survey exceptions, encumbrances,
easements or reservations of, or rights of others for, rights of way, sewers,
electric lines, telegraph and telephone lines and other similar purposes, or
zoning or other restrictions as to the use of real properties or Liens
incidental to the conduct of the business of such Person or to the ownership
of its properties which were not incurred in connection with Indebtedness or
other extensions of credit and which do not in the aggregate materially
adversely affect the value of said properties or materially impair their use
in the operation of the business of such Person.
"Person" means an individual, partnership, corporation, limited
liability company, trust or unincorporated organization or a government or
agency or political subdivision thereof.
"PIK Interest Payment" means the payment of all or a portion of a
payment of interest on the Notes by the issuance of additional Notes in
accordance with the provisions of Section 1 of the Notes.
"PIK Note" means any Note issued by DEC in order to make a PIK
Interest Payment.
"Plan" has the meaning given to such term in Section 4.5(a).
"Plan of Liquidation" means, with respect to any Person, a plan that
provides for, contemplates or the effectuation of which is preceded or
accompanied by (regardless of whether substantially contemporaneously, in
phases or otherwise) (i) the sale, lease, conveyance or other disposition of
all or substantially all of the assets of such person otherwise than as an
entirety or substantially as an entirety and (ii) the distribution of all or
substantially all of the proceeds of such sale, lease, conveyance or other
disposition and all or substantially all of the remaining assets of such
person to holders of Capital Stock of such person.
"Preferred Stock" of any Person means any Capital Stock of such
Person that has preferential rights to any other Capital Stock of such Person
with respect to dividends or redemptions or upon liquidation.
"Private Placement Memorandum" means the Private Placement
Memorandum, dated May 1996, of DEC relating to, among other things, the
Cumulative Redeemable Preferred Stock.
"pro forma" means, with respect to any calculation made or required
to be made pursuant to the terms of this Agreement, a calculation reflecting
events that are directly attributable to a specific transaction, are factually
supportable and are expected to have a continuing effect, in each case as
determined on a basis consistent with the procedures outlined in Article 11 of
Regulation S-X of the Securities Act and as interpreted by the Staff of the
Securities and Exchange Commission prior to December 1996 which would include
cost savings resulting from headcount reductions, closure of facilities and
similar restructuring charges.
"Pro Forma Balance Sheets" means the unaudited consolidated balance
sheets of DEC and its Subsidiaries as of March 31, 1997 and December 31, 1996
after giving effect to this Agreement, the Acquisition Agreement, the Share
Price Adjustment Agreement, the Stockholders' Agreement, the Registration
Rights Agreement, the other Documents and the transactions contemplated hereby
and thereby, previously delivered to the Purchasers.
"Proceedings" has the meaning given to such term in Section 3.3.
"Productive Assets" means assets or properties used in the same type
of business engaged in by NFC and its Subsidiaries immediately prior to the
date hereof or in a business reasonably related thereto.
"Property" or "property" means any assets or property of any kind or
nature whatsoever, real, personal or mixed (including fixtures), whether
tangible or intangible, provided that the terms "Property" or "property," when
used with respect to any Person, shall not include securities issued by such.
"Public Equity Offering" of any Person, means a sale by such Person
of Equity Interests of such Person in an underwritten (firm commitment) public
offering registered under the Securities Act.
"Purchase Price" means, with respect to any Acquisition, the
aggregate consideration (including without limitation cash, Cash Equivalents,
securities and other property (computed at the fair market value thereof
determined in good faith by the Board of Directors of DEC), Acquired
Indebtedness and deferred consideration (other than deferred consideration
based on future financial performance criteria) paid, to be paid or assumed by
DEC or any of its Subsidiaries in connection with such Acquisition plus all
other expenses associated with such Acquisition.
"Purchasers" means the purchasers on the signature pages hereto.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Public Equity Offering" of any Person, means a Public
Equity Offering of such Person resulting in the listing of such Equity
Interest on a nationally recognized stock exchange or the NASDAQ National
Market System, pursuant to which such Person receives net proceeds of at least
$35,000,000.
"Redemption Date" means, when used with respect to any Note to be
redeemed, the date fixed for such redemption pursuant to this Agreement and
the Notes.
"Redemption Price" means, when used with respect to any Note to be
redeemed, the price fixed for such redemption pursuant to this Agreement and
the Notes.
"Registration Rights Agreement" has the meaning given to such term
in Section 1.1.(b).
"Related Transactions" means the execution and delivery of the
Documents, the consummation of the Pending Acquisition, the funding of the
Notes on the Closing Date and the payment of all fees, costs and expenses
associated with all of the foregoing.
"Rule 144" means Rule 144 as promulgated by the SEC under the
Securities Act, as amended from time to time, and any successor rule or
regulation thereto.
"Rule 144A" means Rule 144A as promulgated by the SEC under the
Securities Act, as amended from time to time, and any successor rule or
regulation thereto.
"SEC" means the Securities and Exchange Commission and any successor
thereto.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor statute or law thereto.
"Security" or "Securities" has the meaning given to such term in
Section 1.1.
"Senior Credit Agreement" means that certain Credit Agreement dated
as of June 28, 1996 by and among NFC, as Borrower, Xxxxxx Financial, Inc. and
the other lenders party thereto, as lenders, and Xxxxxx Financial, Inc. as
Agent, as amended, replaced, refinanced, modified or supplemented from time to
time, and all related documents, including security documents.
"Share Price Adjustment Agreement" has the meaning given to such
term in Section 1.1(a).
"Solvent" means, with respect to any Person on a particular date,
that on such date, (a) the fair saleable value of the assets of such Person
exceeds its probable liability on its debts as they become absolute and
mature; (b) all of such Person's assets, at a fair valuation, exceed the sum
of such Person's debts; (c) such Person is able to pay its debts or
liabilities as such debts and liabilities mature; and (d) such Person is not
engaged in a business or transaction, and is not about to engage in a business
or transaction, for which such Person's assets would constitute an
unreasonably small capital.
"Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is, at the date of determination, directly
or indirectly, owned by such Person, by one or more Subsidiaries of such
Person or by such Person and one or more Subsidiaries of such Person or (ii) a
partnership in which such Person or a Subsidiary of such Person is, at the
date of determination, a general or limited partner of such partnership, but,
in the case of a limited partner, only if such Person or its Subsidiary is
entitled to receive more than 50% of the assets of such partnership upon its
dissolution, or (iii) any limited liability company or any other Person (other
than a corporation or a partnership) in which such Person, a Subsidiary of
such Person or such Person and one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination, has (a) at least a
majority ownership interest or (b) the power to elect or direct the election
of a majority of the directors or other governing body of such Person.
"Stockholders' Agreement" has the meaning given to such term in
Section 1.1(b).
"Taxes" means all Federal, state, local and foreign taxes, and other
assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties
applicable thereto.
"Tax Returns" means all Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
"Trade Payables" means, with respect to any Person, accounts payable
and other similar accrued current liabilities in respect of obligations or
indebtedness to trade creditors created, assumed or guaranteed by such Person
or any of its Subsidiaries in the ordinary course of business in connection
with the obtaining of property or services.
"U.S. Legal Tender" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Voting Securities" means any class of Equity Interests of a Person
pursuant to which the holders thereof have, at the time of determination, the
general voting power ("Voting Power") under ordinary circumstances to vote for
the election of directors, managers, trustees or general partners of such
Person (regardless of whether at the time any other class or classes will have
or might have voting power by reason of the happening of any contingency).
"Wholly Owned Subsidiary" means, with respect to any Person, at any
time, a Subsidiary of such Person, all of the Equity Interests of which
(except director's qualifying shares) are at the time owned directly or
indirectly by such Person.
9.2 Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) "or" is not exclusive;
(c) words in the singular include the plural, and words in the
plural include the singular;
(d) provisions apply to successive events and transactions;
(e) "herein," "hereof," "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any
particular Section or other subdivision; and.
(f) any reference to a "Section," "Annex" or "Schedule" refers to a
Section of, an Annex to, or a Schedule to this Agreement,
respectively.
SECTION 10. MISCELLANEOUS.
10.1 Notices.
All notices and other communications provided for or permitted
hereunder shall be made by hand-delivery, first-class mail, telex, telecopier,
or overnight air courier guaranteeing next day delivery:
(a) if to any Purchaser at the address or telecopy number set forth
on the signature pages hereto, with a copy to Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, 000 X. Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, Telecopy No. (000) 000-0000, Attention: Xxx X. Xxxxxx,
Xx., Esq.; and
(b) if to NFC or DEC, to NFC, 0000 Xxxxxxxxx Xxxxxxxx Xxxx, Xxxxx
X000, Xxxxxxx, XX, Telecopy No. (000) 000-0000, Attention: Xxxxxx
Xxxxxxx, with a copy to XxXxxx De Leeuw & Co., 000 X. 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, Telecopy No. (000) 000-0000, Attention: Xxxxx Xxxx, with
a copy to White & Case, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Telecopy No. (000) 000-0000, Attention: Xxxxx X. Xxxxxx, Esq.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back if telexed; when receipt acknowledged, if telecopied; and
the next business day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery. The parties may change
the addresses to which notices are to be given by giving five days' prior
notice of such change in accordance herewith.
10.2 Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties.
10.3 Counterparts.
This Agreement may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
10.4 Headings.
The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
10.5 Governing Law; Submission to Jurisdiction.
THIS AGREEMENT, THE NOTES AND ALL ISSUES HEREUNDER AND THEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK (WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW EXCEPT
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, EACH OF DEC AND NFC
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT
SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT
OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
AND THE NOTES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
EACH OF DEC AND NFC IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER OF A NOTE TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEEDING AGAINST DEC OR NFC IN ANY OTHER JURISDICTION.
10.6 Entire Agreement.
This Agreement, together with the Securities, the Share Price
Adjustment Agreement, the Stockholders' Agreement, the Registration Rights
Agreement and the other Documents, is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein and therein. This Agreement, together
with the Securities, the Share Price Adjustment Agreement, the Stockholders'
Agreement, the Registration Rights Agreement and the other Documents
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
10.7 Severability.
In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired or affected, it
being intended that each Purchaser's rights and privileges shall be
enforceable to the fullest extent permitted by law.
10.8 Further Assurances.
NFC and DEC shall, and shall cause each of their Subsidiaries to, at
its cost and expense, upon request of any Purchaser or Holder, duly execute
and deliver, or cause to be duly executed and delivered, to such Purchaser or
Holder such further instruments and do or cause to be done such further acts
as may be necessary or proper in the reasonable opinion of such Purchaser or
Holder to carry out more effectually the provisions and purposes of this
Agreement and the other Documents.
10.9 Disclosure of Financial Information
Each Holder is hereby authorized to deliver a copy of any financial
statement or any other information relating to the business, operations or
financial condition of DEC and each of its Subsidiaries which may be furnished
to it hereunder or otherwise, to any other Holder, any court, Governmental
Body having jurisdiction over such Holder, to the National Association of
Insurance Commissioners or similar organizations, as may be required or
appropriate in response to any summons or subpoena in connection with any
litigation, to the extent necessary to comply with any law, order, regulation
or ruling applicable to such Holder, to any rating agency, in order to protect
its investment hereunder, or to any Person which shall, or shall have any
right or obligation to, succeed to all or any part of such Holder's interest
in any of the Securities and this Agreement or to any actual or prospective
purchaser or assignee thereof.
[Signature pages follow]
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties set forth below as of the date first written above.
DEC INTERNATIONAL, INC.
By:
Name:
Title:
NATIONAL FIBERSTOK CORPORATION
By:
Name:
Title:
TCW/CRESCENT MEZZANINE PARTNERS, L.P.
TCW/CRESCENT MEZZANINE TRUST
TCW/CRESCENT MEZZANINE INVESTMENT PARTNERS, L.P.
By: TCW/CRESCENT MEZZANINE, L.L.C.,
its general partner or managing owner
By:
Name:
Title:
By:
Xxxx X. Xxxxxxx
Senior Vice President
Principal amount of Notes to be purchased:
$22,527,428.00 by TCW/Crescent Mezzanine Partners, L.P.
$6,856,994.00 by TCW/Crescent Mezzanine Trust
$615,578.00 by TCW/Crescent Mezzanine Investment Partners, L.P.
Number of Closing Shares to be purchased:
126,675 Closing Shares by TCW/Crescent Mezzanine Partners, L.P.
38,558 Closing Shares by TCW/Crescent Mezzanine Trust
3,461 Closing Shares by TCW/Crescent Mezzanine Investment Partners, L.P.
Aggregate purchase price of Notes and Closing Shares to be purchased:
$30,000,000.00
Fee: $400,000.00, payable to TCW/Crescent Mezzanine, LLC by wire transfer to
Bank of America, 000 Xxxxx Xxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, ABA
No.: 000-000-000, Account Name: TCW/Crescent Mezzanine, LLC, Account No.:
0000-0-00000
Initial Bank Account and Wire Address for Notices:
Instructions: TCW/Crescent Mezzanine, LLC
State Street Bank and Trust 11100 Santa Xxxxxx Boulevard
(Boston) Suite 0000
Xxxxxxxxx Xxxxx Xxxxxxxxxx Xxx Xxxxxxx, XX 00000
Two International Place Attn: Xxxx-Xxxx Xxxxxx
Xxxxxx, XX 00000 Telecopy No.: (000) 000-0000
ABA: 000000000
DDA: 0000-000-0 with a copy to:
Account No. Ref.:
State Street Bank and Trust
EW0620 TCW/Crescent Company
Mezzanine Partners, L.P. Securities Processing
EW0621 TCW/Crescent Department
Mezzanine Trust X.X. Xxx 0000
XX0000 XXX/Xxxxxxxx Xxxxxx, XX 00000
Mezzanine Investment Telecopy No.: (000) 000-0000
Partners, L.P.
Attn: Xxx Xxxxxxxx
(000) 000-0000
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW ADVISORS (BERMUDA), LIMITED,
as General Partner
By:
Xxxx X. Xxxxxxxxx
Group Managing Director
By: TCW INVESTMENT MANAGEMENT COMPANY, as Investment Advisor
By:
Name:
Title:
Principal amount of Notes to be purchased: $4,000,000.00
Number of Closing Shares to be purchased: 33,739
Aggregate purchase price of Notes and Closing Shares to be purchased:
$4,000,000.00
Fee: $80,000.00, payable to TCW Leveraged Income Trust, L.P. by wire transfer
to the bank account described below.
Initial Bank Account and Wire Instructions:
State Street Bank and Trust (Boston)
Corporate Trust Xxxxxxxxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
ABA: 000000000
DDA: 00000000
Account No.: EW0877
Ref:TCW Leveraged Income Trust, L.P.
Attn: Xxx Xxxxxxxx
Telecopy No.: (000) 000-0000
Address for Notices:
Trust Company of the West
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxx-Xxxx Xxxxxx
Telecopy No.: (000) 000-0000
TCW SHARED OPPORTUNITY FUND II, L.P.
By: TCW INVESTMENT MANAGEMENT
COMPANY, its investment advisor
By:
Name:
Title:
By:
Xxxx X. Xxxxxxx
Senior Vice President
Principal amount of Notes to be purchased: $1,000,000.00
Number of Closing Shares to be purchased: 8,435
Aggregate purchase price of Notes and Closing Shares to be purchased:
$1,000,000.00
Fee: $20,000.00, payable to TCW Shared Opportunity Fund II, L.P. by wire
transfer to the bank account described below.
Initial Bank Account and Wire Instructions:
Citibank/NYC/Bear Xxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, XX
ABA: 000000000
A/C: Bear Xxxxxxx/0925-3186
Account No. Ref.: 102-02730
FBO: TCW Shared Opportunity Fund II, L.P.
Address for Notices:
Trust Company of the West
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxx-Xxxx Xxxxxx
Telecopy No.: (000) 000-0000
