SECURITIES
PURCHASE AGREEMENT dated as
of September 20, 1999, by
and among EAGLE PACIFIC
INDUSTRIES, INC., a
corporation organized under
the laws of the State of
Minnesota (the "Company"),
and the Persons listed on
Schedule 1.1 hereto
(individually, an
"Investor" and
collectively, the
"Investors").
RECITALS
WHEREAS, the Company and its Subsidiaries (as hereinafter
defined) manufacture and distribute polyvinyl chloride pipe and polyethylene
tubing products used for turf and water irrigation, water works, natural gas,
water xxxxx, fiber optic lines, electronic and telephone lines and commercial
and industrial plumbing (the "Subject Business");
WHEREAS, the Company plans to acquire from Mitsubishi Chemical
America, Inc., a Delaware corporation ("Mitsubishi") and Mitsubishi Plastics
Industries Ltd., a Japanese corporation ("MPI") all of the outstanding capital
stock of Pacific Western Extruded Plastics Company, a Delaware corporation ("PW
Pipe") for a cash purchase price equal to $80,000,000 (subject to adjustment)
and thereafter PW Pipe will be merged with and into the Company, with the
Company being the surviving corporation (such transactions being, the
"Acquisition");
WHEREAS, the Company desires to issue to the Investors and the
Investors, severally and not jointly, desire to purchase from the Company up to
$32,500,000 principal amount of senior subordinated notes, on the terms and for
the consideration provided herein;
WHEREAS, the proceeds of the notes shall be used to (i) fund a
portion of the Acquisition, (ii) refinance certain indebtedness of the Company
and PW Pipe and (iii) pay related fees and expenses, subject to the terms and
conditions set forth in this Agreement and the other Transaction Documents (as
hereinafter defined);
WHEREAS, in consideration of the Investors several agreement
to purchase the Notes, the Company desires to issue to the Investors and the
Investors, jointly and not severally, desire to purchase from the Company
warrants to purchase shares of the common stock of the Company, subject to the
terms and conditions contained in this Agreement and the Warrant Agreement (as
hereinafter defined);
WHEREAS, the Notes shall be subordinated in all respects to
the $100,000,000 senior credit facility provided to the Company pursuant to the
terms of the Second Amended and Restated Loan and Security Agreement dated the
date hereof (as such agreement may be amended, modified, restated or otherwise
supplemented from time to time in accordance with the provisions thereof and
hereof, including, without limitation Section 8.11(c) hereof, the "Senior Credit
Agreement") among the Company, the financial institutions party thereto from
time to time (the "Senior Lenders") and Fleet Capital Corporation, as agent for
the Senior Lenders (in such capacity, the "Senior Bank Agent").
NOW THEREFORE, the parties to this Agreement hereby agree as
follows:
Article I
DEFINITIONS
1.1 Defined Terms.
As used in this Agreement, the following terms shall have the following
respective meanings:
"Acquisition" has the meaning given to such term in the
recitals to this Agreement.
"Affiliate" means, with respect to any specified Person, any
other Person that directly or indirectly through one or more intermediaries
Controls, is Controlled by or is under common Control with such Person.
"Agreement" means this Agreement, together with all Schedules,
Exhibits and Annexes attached hereto, as amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"Applicable Law" means all provisions of laws, statutes,
ordinances, rules, regulations, permits, certificates or orders of any
Governmental Authority applicable to the Person in question or any of its assets
or property, and all judgments, injunctions, orders and decrees of all courts
and arbitrators in proceedings or actions in which the Person in question is a
party or by which any of its assets or properties are bound.
"Applicable Prepayment Premium" means, at any date of
determination in connection with a prepayment of the Notes in accordance with
Sections 3.5 and 3.6 hereof during any period set forth below, an amount equal
to the amount set forth below opposite such period:
Prepayment Date During % of Principal
the Period Being Paid
Closing Date to and including the first anniversary of
the Closing Date 10%
After the first anniversary of the Closing Date to and
including the second anniversary of the Closing Date 8%
After the second anniversary of the Closing Date to and
including the third anniversary of the Closing Date 6%
After the third anniversary of the Closing Date to and
including the fourth anniversary of the Closing Date 4%
After the fourth anniversary of the Closing Date to and
including the fifth anniversary of the Closing Date 2%
After the fifth anniversary of the Closing Date to and
including the sixth anniversary of the Closing Date 1%
At any time after the sixth anniversary of the Closing
Date 0%
provided, however, that the amount of any Applicable Prepayment Premium payable
to an Investor in accordance with the foregoing may be reduced by such Investor,
in its sole discretion.
"Bankruptcy Code" means the United States Bankruptcy Code, 11
U.S.C. ss. 101 et seq., as amended from time to time.
"Board" means the board of directors of the Company.
"Board of Governors" means the Board of Governors of the
Federal Reserve System of the United States of America.
"Business Day" means any day other than a Saturday, Sunday or
a day on which banks are authorized or required to be closed in New York, New
York; provided, however, that any determination of a Business Day relating to a
securities exchange or other securities market means a Business Day on which
such exchange is open for trading.
"Capital Lease Obligations" means any Indebtedness represented
by obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
"Capital Expenditures" means expenditures made or liabilities
incurred for the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than one
year, including the total principal portion of Capitalized Lease Obligations.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person, but
excluding any debt securities convertible into such equity.
"Carryover Amount" for any fiscal year means, an amount equal
to the lesser of $1,000,000 or the aggregate amount of the Capital Expenditures
permitted to made in accordance with Section 8.9(c) for the previous fiscal year
without giving effect to any Carryover Amount minus the actual amount of Capital
Expenditure made in such fiscal year.
"Cash Equivalents" means:
(i) investments in direct obligations of the United States of America, or
any agency thereof or obligations guaranteed by the United States of
America, provided that such obligations mature within one year from the
date of acquisition thereof;
(ii) investments in certificates of deposit maturing within one year from
the date of acquisition issued by a bank or trust company organized
under the laws of the United States or any state thereof having capital
surplus and undivided profits aggregating at least $100,000,000; and
(iii) investments in commercial paper given the highest rating by a national
credit rating agency and maturing not more than 270 days from the date
of creation thereof.
"Change of Control" means the occurrence of any of the
following events: (i) all or substantially all of the Company's assets, on a
consolidated basis, are sold as an entirety to any Person or related group of
Persons or there shall be consummated any consolidation or merger of the Company
(A) in which the Company is not the continuing or surviving company (other than
a consolidation or merger with a wholly owned Subsidiary in which all shares of
Common Stock outstanding immediately prior to the effectiveness thereof are
changed into or exchanged for the same consideration) or (B) pursuant to which
the Common Stock would be converted into cash, securities or other property, in
any case, other than a sale of assets or consolidation or merger of the Company
in which the holders of the Common Stock immediately prior to the sale of assets
or consolidation or merger have, directly or indirectly, at least a majority of
the Common Stock of the transferee or continuing or surviving company
immediately after such sale of assets or consolidation or merger, (ii) any
"person" (as such term is used in Sections 13(d) and 14 (d) of the Exchange Act)
other than the Spell Group, is or becomes the beneficial owner (as defined in
Rules 13d-3 and 13d-5 of the Exchange Act provided that such person shall be
deemed to have "beneficial ownership" of all shares that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 35% of the total
voting power of the outstanding voting securities of the Company; or (iii)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board (together with any new directors whose
election by such members of the Board or whose nomination for election by the
shareholders of the Company, as the case may be, was approved by a vote of at
least a majority of the directors of the Company then still in office) cease for
any reason to constitute a majority of the Board then in office.
"Closing" means the issuance and purchase of the Notes and the
Warrants on the Closing Date.
"Closing Date" has the meaning given to such term in Section
2.2.
"Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations issued thereunder, as from time to time in effect,
or any successor thereto.
"Commission" means the Securities and Exchange Commission (or
a successor thereto).
"Common Stock" has the meaning given to such term in the
Warrant Agreement.
"Company" has the meaning given to such term in the Preamble
to this Agreement.
"Compliance Sideletter" means the Regulatory Compliance
Sideletter in substantially the form of Exhibit G hereto, as such Sideletter may
be amended, supplemented or otherwise modified from time to time.
"Confidential Information Memorandum" means the Confidential
Information Memorandum of the Company dated July 1999.
"Consolidated" means the consolidation in accordance with GAAP
of the accounts or other items as to which such term applies.
"Consolidated Net Income" means, with respect to the Company
and its Subsidiaries for any fiscal period, the net income (or loss) of the
Company and its Subsidiaries for such period taken as a whole (determined in
accordance with GAAP on a consolidated basis), but excluding in any event: (a)
any gains or losses on the sale or other disposition of Investments or fixed or
capital assets or from any transaction classified as extraordinary under GAAP,
any taxes on such excluded gains and any tax deductions or credits on account of
any such excluded losses; (b) the proceeds of any life insurance policy; (c) net
earnings and losses of any business entity, substantially all the assets of
which have been acquired in any manner by the Company or any of its
Subsidiaries, realized by the business entity prior to the date of such
acquisition, (d) net earnings and losses of business entity which shall have
merged into the Company or any Subsidiary of the Company earned or incurred
prior to the date of such merger, (e) net earnings of any business entity (other
than a Consolidated Subsidiary) in which the Company has an ownership interest
unless such net earnings shall have been received by the Company in the form of
cash distributions; (f) earnings resulting from a reappraisal, revaluation or
write-up of assets; (g) any charge to net earnings resulting from the
amortization of the value of stock options given to employees to the extent
required by FASB 25; (h) any increase or decrease of net income arising from a
change in the Company's accounting methods; (i) any gains resulting from the
forgiveness of Indebtedness or the retirement of Indebtedness at a discount; (j)
any gain arising from the acquisition of any Securities of the Company; and (k)
any reversal of any contingency reserve, except that provision for such
contingency reserve shall have been made from income arising during such period.
"Control" means, with respect to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Convertible Preferred Stock" means the Company's 8%
Convertible Preferred Stock due 2004 par value $.01 per share issued and sold
pursuant to the terms of the MassMutual Stock Purchase Agreement.
"Default" means any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both, become an Event
of Default.
"Deferred Interest Amount" has the meaning given to such term
in Section 3.3(a).
"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terns of any security into which its is convertible, or for
which its is exchangeable, in each case at the option of the holder thereof), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder thereof, in whole or in part, on or prior to the date that is 91 days
after the date on which the Notes mature. Notwithstanding the preceding
sentence, any Capital Stock that would constitute Disqualified Stock solely
because the holders thereof have the right to require the Company to repurchase
such Capital Stock upon the occurrence of a change of control or an asset sale
shall not constitute Disqualified Stock if the terms of such Capital Stock
provide that the Company may not repurchase or redeem any such Capital Stock
pursuant to such provisions unless such repurchase or redemption complies with
Section 8.5 hereof.
"EBITDA" means, with respect to the Company and its
Subsidiaries for any fiscal period, the sum of Consolidated Net Income of the
Company and its Subsidiaries for such period plus amounts deducted (or added) in
determining Consolidated Net Income in respect of (a) any provision for (or less
any benefit from) income taxes whether current or deferred, (b) amortization and
depreciation expense, (c) Interest Expense for such period, all as determined in
accordance with GAAP and (d) prior to December 31, 1999, that portion of cost of
goods sold resulting from the write up of inventory in connection with the
Acquisition pursuant to APB16; provided that the aggregate amount added to
EBITDA pursuant to this clause (d) shall not exceed $3,000,000.
"Environmental Laws" means all federal, state, local and
foreign statutes, regulations, ordinances and other provisions having the force
or effect of law, all judicial and administrative orders and determinations, all
contractual obligations and all common law concerning public health and safety,
worker health and safety, and pollution or protection of the environment,
including without limitation all those relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now or hereafter in
effect.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and all rules and regulations from time to time promulgated
thereunder.
"Event of Default" means the occurrence of any event set forth
in Article XI.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Final Maturity Date" means September 20, 2007.
"Financial Officer" of any Person means its chief financial
officer or principal accounting officer.
"Funded Debt" means, with respect to the Company and its
Subsidiaries, (i) Indebtedness arising from the lending of money by any Person
to the Company or its Subsidiaries; (ii) Indebtedness, whether or not in any
such case arising from the lending by any Person of money to the Company or its
Subsidiaries (A) which is represented by notes payable or drafts accepted that
evidence extensions of credit, (B) which constitutes obligations evidenced by
bonds, debentures, notes or similar instruments, or (C) upon which interest
charges are customarily paid (other than accounts payable) or that was issued or
assumed as full or partial payment for Property; (iii) Indebtedness that
constitutes a Capitalized Lease Obligation; (iv) reimbursement obligations with
respect to letters of credit or guaranties of letters of credit; (v) all
obligations of such Person in respect of interest rate protection agreements,
foreign currency hedging arrangements or other interest or exchange rate hedging
arrangements; and (vi) Indebtedness of the Company or its Subsidiaries under any
guaranty of obligations that would constitute Indebtedness for Funded Debt under
clauses (i) through (v) hereof or any other obligation, contingent or otherwise,
having the economic effect of guaranteeing any Indebtedness or other obligation
of any other Person, if owed directly by the Company or such Subsidiary. In
computing the amount of Funded Debt, the Notes will be valued at full face value
(less any payments thereon) without giving effect to any original issue
discount.
"GAAP" means generally accepted accounting principles in the
United States of America in effect from time to time.
"Governmental Authority" means any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, or any court, in each case whether of the United States or any
political subdivision thereof, or of any other country.
"Indebtedness" of any Person means, without duplication,
(i) all items which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side
of a balance sheet of such Person as at the date as of which
Indebtedness is to be determined, including, without
limitation, Capitalized Lease Obligations,
(ii) all obligations of other Persons which such Person has
guaranteed,
(iii) all reimbursement obligations in connection with letters of
credit or letter of credit guaranties issued for the account
of such Person, and;
(iv) in the case of the Company (without duplication), the
Obligations.
"Indemnified Person" has the meaning given to such term in
Section 12.5.
"Interest Coverage Ratio" means, with respect to the Company
and its Subsidiaries for any period of determination, the ratio of (a) EBITDA
for such period to (b) Interest Expense paid in cash for such period.
"Interest Expense" means, with respect to the Company and its
Subsidiaries for any period determined on a consolidated basis, the interest
expense incurred for such period excluding interest income, as determined in
accordance with GAAP.
"Interest Payment Date" means each March 20, June 20,
September 20 and December 20.
"Interest Period" means (i) initially, the period from and
including the Closing Date to but excluding the first Interest Payment Date to
occur thereafter and (ii) thereafter, the period from and including each
Interest Payment Date to but excluding the immediately following Interest
Payment Date.
"Investment" means all investments in the property or assets
of any Person, in cash or property, whether by any advance, loan, extension of
credit by the Company or any of its Subsidiaries, (by way of guaranty or
otherwise) or capital contribution, or purchase of a stock, bonds, notes,
debentures or other securities or any assets constituting the purchase of a
business or line of business.
"Leverage Ratio" means, with respect to the Company and its
Subsidiaries for any period of determination, the ratio of (a) Funded Debt
outstanding on such date to (b) EBITDA for such period.
"Lien" means any interest in Property securing an obligation
owed to, or a claim by, a Person other than the owner of the Property, whether
such interest is based on common law, statute or contract. The term "Lien" shall
also include reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting Property. For the purpose of the Agreement, an Obligor
shall be deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement or other arrangement pursuant to which
title to the Property has been retained by or vested in some other Person for
security purposes.
"MassMutual Stock Purchase Agreement" means the Preferred
Stock Purchase Agreement dated as of May 1, 1997 among the Company and the
Investors party thereto.
"Material Adverse Effect" means (a) a material adverse effect
on the business, assets, liabilities (actual or contingent), operations, results
of operations, condition (financial or other) or prospects of the Obligors taken
as a whole, (b) any material impairment of the ability any Obligor to perform
any of its respective material obligations under any Transaction Document to
which such Obligor is a party, (c) any material impairment of any material
rights of or benefits available to the Investors under any Transaction Document.
"Mitsubishi" has the meaning given to such term in the
recitals to this Agreement.
"MPI" has the meaning given to such term in the recitals to
this Agreement.
"Multiemployer Plan" has the meaning set forth in Section
4001(a)(3) of ERISA.
"Note Documents" means this Agreement, the Subsidiary Guaranty
and the Notes.
"Notes" means the $32,500,000 14% Senior Subordinated Notes
due 2007 dated the Closing Date in substantially the form of Exhibit A hereto.
"Notes Purchase Price" has the meaning given to such term in
Section 2.1(c).
"Note Register" shall have the meaning given to such term in
Section 3.7(a).
"Obligations" means the due and punctual payment of the
principal of, premium, if any, and interest on the Notes, and other monetary
obligations, liabilities and the performance of all other obligations of each
Obligor to the Investors, howsoever created, arising or evidenced, whether
direct or indirect, joint or several, absolute or contingent, primary or
secondary, due or to become due, or now existing or hereafter arising, under
this Agreement, the Notes or any other Note Document.
"Obligors" means the Company.
"Permitted Liens" means any Lien permitted in accordance with
Section 8.4.
"Permitted Investments" means,
(i) Investments in the Company or, in a Subsidiary Guarantor;
(ii) Investments in Cash Equivalents;
(iii) Investments made as a result of the receipt of non-cash
consideration from an asset sale that was made pursuant to and
in compliance with Section 8.6 ;
(iv) any acquisition of assets solely in exchange for the issuance
of equity Securities (other than Disqualified Stock) of the
Company;
(v) any interest rate protection agreements entered into in
accordance with the Senior Credit Agreement;
(vi) Investments made in any debtor of the Company as a result of
the receipt of stock, obligations or securities in settlement
of debts created in the ordinary course of business and owing
to the Company or any of its Subsidiaries;
(vii) Investments in receivables owing to the Company or any
subsidiary if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with
customary trade terms; provided, however, that such trade
terms may include such concessionary trade terms as the
Company or any such Subsidiary deems reasonable under the
circumstances;
(viii) any other Investments in any Person having an aggregate fair
market value (measured on the date each such investment was
made and without giving effect to subsequent changes in
value), when taken together with all other investments made
pursuant to this clause (vii) not to exceed $3,000,000;
(ix) up to $2,000,000 of loans at any one time outstanding to
officers, directors or employees of the Company, the proceeds
of which are used to purchase common stock of the Company; and
(x) Investments in the Notes.
"Plan" means an employee benefit plan now or hereafter
maintained for employees of the Company or any of its Subsidiaries that is
covered by Title IV of ERISA.
"Projections" means the Company's forecasted Consolidated and
consolidating (a) balance sheets, (b) profit and loss statements, (c) cash flow
statements, and (d) capitalization statements, all prepared on a consistent
basis with the Company historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Purchase Documents" means the Stock Purchase Agreement dated
as of September 20, 1999 between the Company, Mitsubishi and MPI, pursuant to
which the Company is acquiring all of the issued and outstanding capital stock
of PW Pipe, as such Agreement may be amended, supplemented or otherwise modified
from time to time in accordance with the terms thereof.
"PW Pipe" has the meaning given to such term in the recitals
to this Agreement.
"Person" shall be construed as broadly as possible and
includes natural person, corporation, limited liability company, partnership,
joint venture, trust, unincorporated association or other organization and a
Governmental Authority.
"Proceeding" shall have the meaning set forth in Section 9.2
hereof.
"Registration Rights Agreement" has the meaning given to such
term in the Warrant Agreement.
"Reportable Event" means any of the events set forth in
Section 4043(b) of ERISA.
"Required Investors" means Investors holding Notes
representing a majority of the then outstanding principal balance of the Notes.
"Responsible Officer" of any Person means, (i) with respect to
any individual, such individual or any other Person duly authorized to act on
behalf of such individual and (ii) with respect to any institution, the chief
executive officer or a Financial Officer of such Person.
"Restricted Investment" means any investment made in cash or
by delivery of Property to any Person, whether by acquisition of stock,
Indebtedness or other obligation, or by loan, advance or capital contribution,
or otherwise, or in any Property except for Permitted Investments.
"Restricted Payment" means, with respect to the Company and
its Subsidiaries,
(i) the declaration or payment of any dividend or the
incurrence of any liability to make any other payment or distribution
of cash or other property or assets in respect of the capital stock or
other equity securities of the Company or any Subsidiary, other than
(A) dividends or distributions to the Company or any Subsidiary
Guarantor or (B) dividends or distributions payable solely in shares of
capital stock or (C) dividends or distribution by any Subsidiary of the
Company to the Company to permit the Company (x) to any taxes which are
due and payable by the Company or any of its Subsidiary as a part of a
consolidated tax group or (y) to purchase the Company's capital stock
or other equity securities to the extent permitted by clause (ii)
hereof;
(ii) any payment on account of the purchase, redemption,
defeasance, sinking fund or other retirement of the capital stock or
other equity securities Company or any Subsidiary or any other payment
or distribution made in respect thereof, either directly or indirectly,
except that the Company may repurchase its capital stock or other
equity securities either (x) in open market transactions or (y) from
former employees of the Company or any of its Subsidiaries upon the
death, disability or termination of employment of such Person or
otherwise in accordance with any shareholder agreement, stock option
plan or any employee stock ownership plan; provided, that the aggregate
amount of all such repurchases made pursuant to the foregoing
subclauses (x) and (y) shall not exceed $1,500,000 in any fiscal year;
(iii) any payment or prepayment of principal of, premium, if
any, or interest, fees or other charges on or with respect to, and any
redemption, purchase, retirement, defeasance, sinking fund or similar
payment and any claim for rescission with respect to, any Indebtedness
the terms of which provide that such Indebtedness is junior in right of
payment to the Notes; and
(iv) any Restricted Investment.
"Restricted Securities" means the Notes, to the extent the
Notes have not then been sold to the public pursuant to (a) registration under
the Securities Act or (b) Rule 144 (or similar or successor rule) promulgated
under the Securities Act.
"Security" has the meaning given to such term in Section 2(l)
of the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Bank Agent" has the meaning given to such term in the
recitals hereof.
"Senior Credit Agreement" has the meaning given to such term
in the recitals hereof.
"Senior Credit Documents" has the meaning given to the term
"Loan Documents" in the Senior Credit Agreement.
"Senior Indebtedness" means,
(a) all "Obligations" under and as defined in the Senior Credit
Agreement, now existing or hereinafter created, under the Senior Credit
Agreement, including the principal of, and premium (if any) and interest on
loans and other extensions of credit under the Senior Credit Agreement
(including, without limitation, any interest accruing subsequent to the
commencement of any Proceeding whether or not such interest constitutes an
allowed claim in any such Proceeding) and all commitment, facility and other
fees payable under the Senior Credit Agreement and all expenses, reimbursements,
indemnities and other amounts payable by the Company under the Senior Credit
Agreement;
(b) with respect to any Subsidiaries of the Company, the contingent
obligations or guaranty of such Subsidiary, under or in respect of Indebtedness
covered under clause (a) above; and
(c) subject to the provisions of Section 8.11(c), any and all
refinancings, replacements or refunding of any of the amounts referred to in
clauses (a) and (b) above; provided, that the aggregate principal amount of
Indebtedness (or any refinancing, replacement or refunding thereof),
constituting "Senior Indebtedness" hereunder shall not exceed, at any one time
outstanding $110,000,000 (such amount being referred to as the "Maximum
Principal Amount of Senior Indebtedness"); provided further, that the Maximum
Principal Amount of Senior Indebtedness shall be reduced from time to time by
all scheduled payments and mandatory prepayments of the term loans or reduction
of the commitments made from time to time under the Senior Credit Agreement or
any Senior Refinancing Agreement which result in a permanent reduction of the
term loans or commitments thereunder. Senior Indebtedness shall be considered
outstanding whenever any loan commitment under the Senior Credit Agreement or
any Senior Refinancing Agreement is outstanding.
"Senior Lenders" has the meaning given to such term in the
recitals hereof.
"Senior Nonmonetary Default" means the occurrence or existence
of any event, circumstance, condition or state of facts that, by the terms of
any instrument pursuant to which any Senior Indebtedness is outstanding, permits
one or more holders of such Senior Indebtedness (or a trustee or agent on behalf
of the holders thereof) to declare such Senior Indebtedness due and payable
prior to the date on which it would otherwise become due and payable, other than
a Senior Payment Default.
"Senior Nonmonetary Default Notice" shall have the meaning
given to such term in Section 9.3(b).
"Senior Payment Default" means any default in the payment of
principal of (or premium, if any) or interest on, or other amount payable in
respect of, any Senior Indebtedness when due that, by the terms of any
instrument pursuant to which any Senior Indebtedness is outstanding, permits one
or more holders of such Senior Indebtedness (or a trustee or agent on behalf of
the holders thereof) to declare such Senior Indebtedness due and payable prior
to the date on which it would otherwise become due and payable, other than a
Senior Nonmonetary Default.
"Senior Refinancing Agreement" shall have the meaning given to
such term in Section 8.11(c).
"Series A Preferred Stock" means the Company's Series A 7%
Convertible Preferred Stock, $0.01 par value.
"Solvent" means, as to any Person, such Person (i) owns
Property whose fair saleable value is greater than the amount required to pay
all of such Person's Indebtedness (including contingent debts), (ii) is able to
pay all of its Indebtedness as such Indebtedness matures and (iii) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage.
"Spell Group" has the meaning given to such term in the
Warrant Agreement.
"Stated Rate" has the meaning given to such term in Section
3.3 hereof.
"Subject Business" has the meaning given to such term in the
recitals to this Agreement.
"Subordinated Obligations" shall have the meaning given to
such term in Section 9.1.
"Subsidiary" means, with respect to any Person, any other
Person of which more than fifty percent (50%) of the shares of stock or other
interests entitled to vote in the election of directors or comparable Persons
performing similar functions (excluding shares or other interests entitled to
vote only upon the failure to pay dividends thereon or other contingencies) are
at the time owned or controlled, directly or indirectly through one or more
Subsidiaries, by such Person.
"Subsidiary Guarantor means any Subsidiary of the Company that
is a party to the Subsidiary Guaranty.
"Subsidiary Guaranty" means the Senior Subordinated Subsidiary
Guaranty in substantially the form of Exhibit B hereto, in favor of the
Investors, as such Subsidiary Guaranty may be amended, supplemented or otherwise
modified from time to time.
"Transaction Documents" means the Warrants, the Warrant
Agreement, the Registration Rights Agreement, the Compliance Sideletter, the
Note Documents and any other document, instrument or agreement executed and
delivered by the Company in connection with any of the foregoing.
"Transfer" means any sale, transfer, assignment, or other
disposition of any interest in, with or without consideration, any security,
including any disposition of any security or of any interest therein which would
constitute a sale thereof within the meaning of the Securities Act.
"US$" and "United States Dollars" shall each mean lawful
currency of the United States.
"United States" means the United States of America.
"Warrant Agreement" means the Warrant Agreement dated the date
hereof among the Company and the other signatories thereto, as such Agreement
may be amended, supplemented or otherwise modified from time to time.
"Warrants" has the meaning given to such term in the Warrant
Agreement.
"Warrant Shares" has the meaning given to such term in the
Warrant Agreement.
1.2 Terms Generally.
The definitions in Section 1.1 shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation".
1.3 Use of Defined Terms.
Terms defined in this Agreement and used in any Exhibit, Schedule,
Certificate, Annex or any Transaction Document or other document delivered in
connection with this Agreement, shall have the meanings assigned herein unless
otherwise defined or the context otherwise requires.
1.4 Cross-References.
Unless otherwise specified, references in this Agreement or any
Transaction Document to any Article or Section are references to such Article or
Section of this Agreement or such Transaction Document, as the case may be, and
references in any Article, Section or definition to any clause are references to
such clause of such Section, Article or definition.
1.5 Currency.
Unless otherwise specified herein, all statements or references to
dollar amounts or $ set forth herein or in any other Transaction Document shall
refer to United States Dollars.
1.6 Accounting Terms; GAAP.
Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing. If any changes in accounting principles from those currently
employed become effective by the promulgation of rules, regulations
pronouncements and opinions by or required by the Financial Accounting Standards
Board (FASB) or the American Institute of Certified Public Accountants (AICPA)
(or any successors thereto) resulting in a change in the financial covenant
calculations set forth in Section 8.9, such covenants shall continue to be
calculated under the previous accounting principles and the holders of the Notes
and the Company agree to negotiate in good faith to amend such covenant
calculations to equitably reflect such changes with the desired result that the
criteria for evaluation of the financial condition of the Company and its
Subsidiaries shall be the same as if such changes had not been made. If no
agreement can be reached regarding such amendments within thirty (30) days after
the effectiveness of such change in accounting principles, then the Company
shall continue to calculate those covenants which were affected using the
pervious accounting principles.
ARTICLE II
PURCHASE AND SALE OF THE NOTES
2.1 Authorization and Issuance of the Notes .
(a) The Company has authorized the issuance of the Notes.
(b) On the Closing Date, the Company shall (i) sell to each Investor,
and each Investor shall severally purchase from the Company, upon satisfaction
of the conditions set forth in Section 6.1 hereof (or waiver in writing of such
conditions by the Investors), a Note in the principal amount equal to the amount
set forth opposite such Investor's name on Schedule 1.1 hereto in consideration
by the Company (x) for receipt of the Note Purchase Price in, (ii) deliver to
each Investor a duly executed Note (payable to the order of such Investor),
(iii) deliver to each Investor a legal opinion from counsel to the Company in
form and substance satisfactory to the Investors and (iv) deliver to each
Investor the additional documents specified in Section 6.1 hereof. The Investors
will deliver to the Company upon satisfaction of the closing conditions set
forth in Section 6.1 hereof (or waiver in writing of such conditions by the
Investors) either (i) the aggregate principal amount set forth opposite such
Investor's name on Schedule 1.1 hereto, in cash by wire transfer of immediately
available funds to an account designated by the Company at least two (2)
Business Days prior to the Closing Date or (y) certificates representing the
number of shares of Convertible Preferred Stock held beneficially or of record
by such Investor set forth opposite such Investor's name on Schedule 1.1 hereto
and upon delivery of such certificates such Investor shall release of all rights
and benefits relating thereto
(c) The Investors and the Company hereby acknowledge and agree that the
Notes are part of an "investment unit" within the meaning of Section 1273(c)(2)
of the Code, which includes the Warrants. Notwithstanding anything to the
contrary contained herein or in the Warrant Agreement, the Investors and the
Company hereby further acknowledge and agree that solely for United States
federal income tax purposes the aggregate "issue price" of the Notes and the
Warrants under Section 1273(b) of the Code (and for purposes of comparable state
and local income tax laws) shall equal $ 29,000,000 and $3,500,000,
respectively. The Investors and the Company agree to use the foregoing issue
prices for all income tax purposes with respect to this transaction.
(d) The Investors and the Company agree to use the foregoing issue
prices for all income tax purposes with respect to this transaction.
2.2 Closing.
Subject to the satisfaction of the conditions precedent set forth in
Section 6.1 hereof (or the waiver in writing of such conditions by the
Investors), the execution of this Agreement and the other Transaction Documents
and other documentation contemplated hereby and thereby and the delivery of the
Notes and Warrants shall occur on or prior to September 20, 1999, or such later
date as the Company and the Investors shall mutually agree to in writing (the
"Closing Date"), at the offices of Xxxxxxxxxx & Xxxxx, P.A., 1100 International
Centre, 000 Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, XX 00000-0000.
ARTICLE III
PROVISIONS OF THE NOTES AND THE WARRANTS
3.1 The Notes.
The Notes shall be in the aggregate principal amount of Thirty Two
Million, Five Hundred Thousand Dollars ($32,500,000). The Notes shall be dated
the Closing Date. The aggregate amount of the Notes shall, subject to the
provisions for mandatory and optional prepayment and acceleration contained
herein, mature and be payable in full on the Final Maturity Date.
3.2 General Provisions As To Payments.
(a) The Company shall make each payment in respect of the principal of,
premium, if any, or accrued interest on the Notes, or any other amount due to
the Investors under this Agreement or any other Note Document, not later than
2:00 p.m., New York City time, on the day when due, to the Investors as provided
in the Notes and Schedule 1.1 attached hereto, or in such other manner as
instructed from time to time in writing by the Investor. All payments hereunder
shall be made in United States Dollars by wire transfer of immediately available
funds.
(b) Whenever any payment (including principal of, premium, if any, or
interest on the Notes or other amount) hereunder or under any other Note
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
such interest, or other amount, if applicable.
(c) The Company hereby authorizes the Investors to make appropriate
notations on the grid attached to the Notes, including the date, outstanding
principal amount and any prepayment thereof and the Deferred Interest Amounts to
be added to the principal amount of the Notes in accordance with Section 3.3(a),
which notations shall be conclusive absent manifest error; provided, however,
that the failure of the Investors to make such notation or any error on the
Notes shall not affect the obligation of the Company to repay, in accordance
with the terms of the Notes and this Agreement, the principal amount of the
Notes together with all interest, prepayment premiums, if any, and other amounts
due hereunder.
(d) Neither the Company nor any of its Subsidiaries shall purchase,
redeem or otherwise acquire any Notes from any holder thereof except upon
payment or prepayment thereof in accordance with the specific terms thereof and
of this Agreement unless the Company or such Subsidiary shall have offered to
purchase, redeem or otherwise acquire, as the case may be, Notes from each
holder of the Notes at the time outstanding upon the same terms and conditions
and on a pro rata basis (based upon the principal amount of the Notes then held
by each such holder). Any Notes so purchased, redeemed or otherwise acquired by
the Company or any Subsidiary of the Company shall be cancelled and not be
deemed outstanding for any purpose under this Agreement.
(e) Except to the extent otherwise provided herein, each payment of
principal of the Notes by the Company shall be made for the account of the
holders thereof pro rata in accordance with the respective unpaid principal
amounts of the Notes held by them and each payment of interest on Notes shall be
made for the account of the holders thereof pro rata in accordance with the
amounts of interest on such Notes then due and payable to the respective
Investors.
3.3 Interest.
(a) Interest shall be payable on the principal amount of the Notes, and
to the maximum extent permitted by Applicable Law, on interest thereon at a
fixed rate per annum equal to 14% (the "Stated Rate"). Notwithstanding the
foregoing, in connection with any Interest Payment Date, the Company may elect
to defer a portion of the interest owing on such Interest Payment Date provided
that (i) no Default or Event of Default has occurred and is continuing, and (ii)
the Company gives the Investors written notice of such election prior to the
commencement of the related Interest Period, which notice shall include the
amount of interest the Company elects to defer on such Interest Payment Date;
and provided further that the maximum amount of interest the Company may elect
to defer on any Interest Payment Date shall be an amount equal to the interest
accrued on the Notes during such Interest Period at a rate equal to 2% per
annum. If the Company elects to defer a portion of the interest due on any
Interest Payment Date (such amount being hereinafter referred to as the
"Deferred Interest Amount"), then the aggregate principal amount of the Notes
shall be automatically deemed to be increased by an amount equal to the Deferred
Interest Amount owing on such Interest Payment Date.
(b) Interest on the Notes shall accrue from day to day and shall be
payable (as provided in Section 3.3(a) above) on each Interest Payment Date,
commencing December 20, 1999, on the date of any prepayment in accordance with
Sections 3.5 and 3.6 hereof and on maturity of the Notes, whether by
acceleration or otherwise. All computations of interest hereunder shall be made
on the basis of a 360-day year consisting of twelve 30-day months.
(c) Notwithstanding any other provision of this Section 3.3 or any
Note, the Company shall at any time after the seventh anniversary of the date
hereof make interest payments on account of this Note in immediately available
funds at such time and in such amounts as are necessary for this Note not to
have "significant original issue discount" as that term is defined in Section
163(i) of the Code.
(d) In no event whatsoever shall the aggregate of all amounts deemed
interest under the Notes and charged or collected pursuant to the terms of this
Agreement or pursuant to the Notes exceed the highest rate permissible under any
law which a court of competent jurisdiction shall, in a final determination,
deem applicable hereto. If any provisions of this Agreement, or the Notes are in
contravention of any such law, such provisions shall be deemed amended to
conform thereto.
3.4 Interest on Overdue Amounts.
So long as any Event of Default shall have occurred and be continuing,
the Company shall pay, in cash on demand from time to time, interest to the
extent permitted by law on the Notes at a rate per annum equal to two percent
(2%) above the Stated Rate.
3.5 Mandatory Prepayment.
(a) The Company shall repay the Notes on September 20, 2005, September
20, 2006 and September 20, 2007, in cash in an amount equal to 33.33% of the
outstanding principal amount of the Notes on each such date, together with
interest accrued but unpaid on the principal portion of the Notes being repaid
on each such date.
(b) Any and all principal of the Notes remaining unpaid, together with
all interest accrued but unpaid thereon, automatically and unconditionally shall
be due and payable in full in cash on the Final Maturity Date.
(c) In the event of a Change of Control, each Investor shall have the
option to require the Company to repurchase all the Notes held by such Investor
at a purchase price in cash equal to the then outstanding principal amount of
the Notes plus the Applicable Prepayment Premium, together with all interest
accrued on such Notes through the date of repurchase. The Company shall give the
Investors notice (a "Change of Control Notice") of any transaction that would
result in a Change of Control not less than thirty (30) days prior to the
anticipated date of the consummation of such transaction (but in no event later
than the third Business Day following the Company becoming aware thereof). Any
Investor may exercise its right to require the Company to repurchase the Notes
held by it by delivering written notice of such exercise (a "Repurchase Notice")
to the Company within twenty (20) days after receipt of the Change of Control
Notice. Within 15 days after the first date of receipt of a Repurchase Notice by
the Company (the "Repurchase Notice Date"), the Company shall give a notice to
all other Investors advising them of the receipt by the Company of such
Repurchase Notice, together with a copy of such Repurchase Notice. The date upon
which the Company shall so advise such other Holders is herein called the
"Company Notice Date". Within 15 days after the Company Notice Date, each such
other Investor also may give a Repurchase Notice to the Company and each such
Repurchase Notice shall be deemed given as of the date of the Repurchase Notice
given by the Investor initially exercising its repurchase rights hereunder. The
repurchase of the Notes shall be consummated on a date selected by the Company
upon at least 15 days' prior written notice to the Investors which have given
the relevant Repurchase Notice(s), but in no event later than the date of
consummation of such Change of Control or three (3) Business Days after the
Company becomes aware of such Change of Control (the "Repurchase Closing Date").
On the Repurchase Closing Date, the Company shall purchase from the Investors
which have given such Repurchase Notice(s), and such Investor shall sell to the
Company, the Notes held by such Investor for the purchase price specified in
this paragraph (c).
(d) In connection with any Change of Control, the Company covenants to
(i) repay in full all Indebtedness under the Senior Credit Agreement and to
terminate all commitments thereunder and to repay in full all other Senior
Indebtedness the terms of which require repayment upon a Change of Control or
offer to repay in full and terminate all commitments under all Indebtedness
under the Senior Credit Agreement and all other such Senior Indebtedness or (ii)
obtain the requisite consents under the Senior Credit Agreement and all other
Senior Indebtedness to permit the repurchase of the Notes as provided in
paragraph (c) above. The Company shall first comply with the covenant in the
immediately preceding sentence before it shall be required to repurchase the
Notes pursuant to the provisions above. The Company's failure to comply with the
covenant described in the immediately preceding sentence shall constitute an
Event of Default.
3.6 Optional Prepayments.
(a) The Company may, at any time, at its option, prepay the Notes in
whole and from time to time in part, upon not less than thirty (30) Business
Days' prior written notice to the Investors; provided, however, that each
partial prepayment shall be in an aggregate principal amount not less than
$1,000,000 or integral multiples of $100,000 in excess thereof. Each prepayment
of the Notes shall include payment in cash of the principal amount of the Notes
proposed to be prepaid on such prepayment date, all accrued but unpaid interest
thereon to the date of such prepayment on the portion of the Notes being prepaid
and the Applicable Prepayment Premium in respect of the portion of the Notes
being prepaid. In the case of each partial prepayment of the Notes, the
principal amount of the Notes to be prepaid shall be allocated pro rata among
all of the Notes outstanding at such time in proportion, to the respective
unpaid principal amounts.
(b) Each notice of prepayment pursuant to this Section 3.6 shall
specify the proposed date of such prepayment, the principal amount of the Notes
to be prepaid, the interest owing on such principal amount and the aggregate
Applicable Prepayment Premium in respect of the Notes being prepaid on such
prepayment date.
3.7 Securities Register.
(a) The Company shall cause to be kept at its principal office a
register for the registration and transfer of the Notes (the "Note Register").
The names and addresses of the holders of the Notes, the transfer of the Notes,
and the names and addresses of the transferees of the Notes shall be registered
in the Note Register.
(b) The Person in whose name any registered Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes of
this Agreement and the Company shall not be affected by any notice to the
contrary, until due presentment of such Note for registration of transfer so
provided in this Section 3.7(b). Payment of or on account of the principal,
premium, interest and any other amount paid on any registered Note shall be made
to (or based upon the written order of) such registered holder.
3.8 Lost, Etc. Securities.
Upon receipt of evidence reasonably satisfactory to the Company (an
affidavit of an Investor being satisfactory) of the ownership and the loss,
theft, destruction or mutilation of any Note, and in the case of any such loss,
theft or destruction, upon receipt of an indemnity reasonably satisfactory to
the Company (if such Investor is a financial institution or other institutional
investor, its own agreement being satisfactory) or, in the case of any such
mutilation, upon surrender of such Note, the Company shall, without charge,
issue register and deliver in lieu of such Note a new Note of like kind
representing the same rights represented by and dated the date of such lost,
stolen, destroyed or mutilated Note. Any such new Note shall constitute an
original contractual obligation of the Company, whether or not the allegedly
lost, stolen, mutilated or destroyed Note shall be at any time enforceable by
any Person.
3.9 Several Obligations; Remedies Independent.
No Investor shall have any obligation to any other Investor in respect
of the failure by such Investor to purchase any Note required to be purchased by
such Investor. The amounts payable by the Company at any time hereunder and
under the Notes to each Investor shall be separate and independent debt and
subject to the provisions of Articles IX and XI each holder shall be entitled to
protect and enforce its rights arising out of this Agreement and the Notes held
by it and it shall not be necessary for any other holder to consent to or be
joined as an additional party in, any proceedings for such purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each Obligor hereby represent and warrant to the Investors
that, after giving effect to the Acquisition and the issuance and sale of the
Notes:
4.1 Organization and Qualification.
Each Obligor and each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each Obligor and each of its Subsidiaries is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in each state or jurisdiction listed on Schedule 4.1 hereto
and in all other states and jurisdictions in which the failure of such Obligor
or any Subsidiary to be so qualified would have a Material Adverse Effect.
4.2 Corporate Power and Authority; Consent.
(a) Each Obligor and each of its Subsidiaries is duly authorized and
empowered to enter into, execute, deliver and perform this Agreement and each of
the other Transaction Document to which it is a party. The execution, delivery
and performance of this Agreement and each of the other Transaction Documents
have been duly authorized by all necessary corporate action and do not and will
not (i) contravene such Obligor's or any of its Subsidiaries' charter, articles
or certificate of incorporation or by-laws; (ii) violate, or cause such Obligor
or any of its Subsidiaries to be in default under, any provision of any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award in effect having applicability to such Obligor or any of its Subsidiaries;
(iii) result in a breach of or constitute a default under any indenture or loan
or credit agreement or any other agreement, lease or instrument to which such
Obligor or any of its Subsidiaries is a party or by which such Obligor or any of
its Subsidiaries or its or such Subsidiary's Properties may be bound or
affected; or (iv) result in, or require, the creation or imposition of any Lien
(other than Permitted Liens) upon or with respect to any of the Properties now
owned or hereafter acquired by such Obligor or any of its Subsidiaries.
(b) Except as set forth on Schedule 4.2(b) hereto, the execution and
delivery of this Agreement and each of the other Transaction Documents by the
Company or any of its Subsidiaries which is a party thereto, the issuance, sale
and delivery of the Notes and the Warrants by the Company, and the consummation
of the transactions contemplated hereby and thereby, do not and will not require
any authorization, registration or filing with, or consent or approval of, any
Person, including, without limitation, any Governmental Authority except for
such as have been made or obtained and are in full force and effect.
4.3 Legally Enforceable Agreement.
This Agreement is, and each of the other Transaction Documents when
delivered under this Agreement will be, a legal, valid and binding obligation of
each Obligor and each of its Subsidiaries (to the extent a party thereto)
enforceable against each of them in accordance with its respective terms.
4.4 Corporate Names.
No Obligor nor any of its Subsidiaries has been known as or used any
corporate, fictitious or trade names except those listed on Schedule 4.4 hereto.
Except as set forth on Schedule 4.4, no Obligor or any of its Subsidiaries has
been the surviving corporation of a merger or consolidation or acquired all or
substantially all of the stock or assets of any Person.
4.5 Business Locations; Agent for Process.
Each Obligor's and each of its Subsidiaries' chief executive office and
other places of business are as listed on Schedule 4.5 hereto. During the
preceding one-year period, no Obligor nor any of its Subsidiaries has had an
office, place of business or agent for service of process other than as listed
on Schedule 4.5 hereto.
4.6 Title to Properties.
Each Obligor and each of its Subsidiaries has good, indefeasible and
marketable title to and fee simple ownership of, or valid and subsisting
leasehold interests in, all of its real Property, and all of its other Property,
in each case, free and clear of all Liens except Permitted Liens. Each Obligor
has paid or discharged all lawful claims which, if unpaid, might become a Lien
against any of such Obligor's Properties that is not a Permitted Lien.
4.7 Financial Statements; Fiscal Year.
(a) The (i) audited Consolidated and consolidating balance sheets of
the Company and its Subsidiaries (including the accounts of all Subsidiaries of
the Company for the respective periods during which a Subsidiary relationship
existed) at December 31, 1998, December 31, 1997 and December 31, 1996 and the
related Consolidated and consolidating statements of income, shareholders'
equity and cash flows the fiscal years then ended, together with the related
notes thereto and the auditors' report thereon and (ii) the unaudited
Consolidated and consolidating balance sheet of the Company and its subsidiaries
at June 30, 1999, and the related Consolidated statements of income, changes in
stockholder's equity, and changes in financial position for the six-period then
ended, in each case, have been prepared in accordance with GAAP, applied on a
consistent basis, subject in the case of the financial statements described in
clause (ii) (x) to normal year-end, non-material adjustments and (y) the absence
of footnotes, and present fairly, in all material respects, the financial
position of the Company and its Subsidiaries at such dates and the results of
the Company's and its Subsidiaries operations for such periods. Since December
31, 1998, except for the consummation of the Acquisition and the repurchase of
Common Stock and options to acquire Common Stock from Xxxxx Xxxxxxx, there has
been no material change in the condition, financial or otherwise, of the Company
and such other Persons as shown on the Consolidated balance sheet as of such
date and no change in the aggregate value of any equipment and real Property
owned by the Company or its Subsidiaries, except changes in the ordinary course
of business, none of which individually or in the aggregate has had or could
reasonably be expected to have Material Adverse Effect. The fiscal year of the
Company and each of its Subsidiaries ends on December 31st of each year.
(b) The (i) audited Consolidated and consolidating balance sheets of PW
Pipe as of December 27, 1998, December 28, 1997 and December 29, 1996 and the
related statements of income and cash flows for the fiscal years then ended,
together with the related notes thereto and the auditors' report thereon and
(ii) the unaudited Consolidated and consolidating balance sheet of PW Pipe as of
June 27, 1999 and the related consolidated statements of income and cash flows
for the six-month period then ended, in each case have been prepared in
accordance with GAAP, applied on a consistent basis, subject in the case of the
financial statements described in clause (ii) (x) to normal year-end,
non-material adjustments and (y) the absence of footnotes, and present fairly,
in all material respects, the financial position of at PW Pipe such dates and
the results of PW Pipe's operations for such periods. Since December 27, 1998,
there has been no material change in the condition, financial or otherwise, of
PW Pipe as shown on the balance sheet as of such date and no change in the
aggregate value of equipment and real property owned by PW Pipe, except changes
in the ordinary course of business, none of which individually or in the
aggregate has had or could reasonably be expected to have a Material Adverse
Effect. PW Pipe has no Subsidiaries.
(c) The pro forma unaudited balance sheet of the Company and its
Subsidiaries delivered to the Investors on or prior to the Closing Date has been
prepared on a basis in conformity with GAAP (except for the omission of
footnotes and prior period comparative data required by GAAP and for variations
from GAAP which in the aggregate are not material and for reallocations of
values with respect to categories of assets acquired in connection with, and
adjustment of actual fees, expenses and transaction costs incurred in connection
with the Acquisition) and presents fairly the financial condition of the Company
and its Subsidiaries, assuming consummation of the Acquisition.
(d) The Projections provided to the Investors pursuant to Section 7.8
have been prepared on the basis of the assumptions which are set forth therein.
Such projections have been prepared in good faith and represent, on the date of
this Agreement, the good faith opinion of the Company's management as to the
most probable course of business of the Company on the basis of the assumptions
which are set forth therein.
4.8 Full Disclosure.
The financial statements referred to in Section 4.7 hereof do not, nor
does the Confidential Information Memorandum or this Agreement or any other
written statement of any Obligor to any Investor, contain any untrue statement
of a material fact or omit a material fact necessary to make the statements
contained therein or herein not misleading. There is no fact which any Obligor
has failed to disclose to the Investors in writing which materially affects
adversely or, so far as any Obligor can now foresee, will materially affect
adversely the Properties, business, prospects, profits or condition (financial
or otherwise) of such Obligor or any of its Subsidiaries or the ability of such
Obligor or its Subsidiaries to perform this Agreement or the other Transaction
Documents.
4.9 Solvent Financial Condition.
Each Obligor and each of its Subsidiaries is now and, after giving
effect to the consummation of the Acquisition, the issuance of the Notes and
Warrants and incurrence of the loans on the Closing Date under the Senior credit
Agreement and the application of the proceeds from the issuance of the Notes and
Warrants at all times will be, Solvent.
4.10 Surety Obligations.
No Obligor nor any of its Subsidiaries is obligated as surety or
indemnitor under any surety or similar bond or other contract issued or entered
into any agreement to assure payment, performance or completion of performance
of any undertaking or obligation of any Person.
4.11 Taxes.
The Company's federal tax identification number is 00-0000000. The
federal tax identification number of each other Obligor is shown on Schedule
4.11 hereto. Each Obligor and each of its Subsidiaries have filed all federal,
state and local tax returns and other reports any of them is required by law to
file (and all such returns were complete and correct in all material respects)
and has paid, or made provision for the payment of, all taxes, assessments,
fees, levies and other governmental charges upon any of them, any of their
income and Properties as and when such taxes, assessments, fees, levies and
charges that are due and payable, unless and to the extent any thereof are being
actively contested in good faith and by appropriate proceedings and each Obligor
maintains reasonable reserves on its books therefor. The provision for taxes on
the books of each Obligor and its Subsidiaries are adequate for all years not
closed by applicable statutes, and for its current fiscal year.
4.12 Brokers.
There are no claims for brokerage commissions, finder's fees or
investment banking fees in connection with the transactions contemplated by this
Agreement or any other Transaction document, except Xxxxxxxxx Lufkin & Xxxxxxxx
Securities Corporation.
4.13 Patents, Trademarks, Copyrights and Licenses.
Each Obligor and each of its Subsidiaries owns or possesses all the
patents, trademarks, service marks, trade names, copyrights and licenses
necessary for the present and planned future conduct of its business without any
known conflict with the rights of others. All such patents, trademarks, service
marks, tradenames, copyrights, licenses and other similar rights are listed on
Schedule 4.13 hereto.
4.14 Governmental Consents.
Each Obligor and each of its Subsidiaries has, and is in good standing
with respect to, all governmental consents, approvals, licenses, authorizations,
permits, certificates, inspections and franchises necessary to continue to
conduct its business as heretofore or proposed to be conducted by it and to own
or lease and operate its Properties as now owned or leased by it except for such
failures that could not reasonably be expect have either individually or in the
aggregate a Material Adverse Effect.
4.15 Compliance with Laws.
Each Obligor and each of its Subsidiaries has duly complied with, and
its Properties, business operations and leaseholds are in compliance, with, the
provisions of all Applicable Laws applicable to such Obligor or such Subsidiary,
as applicable, its Properties or the conduct of its business and there have been
no citations, notices or orders of noncompliance issued to such Obligor or any
of its Subsidiaries under any such law, rule or regulation, except for such
noncompliance which could not reasonably be expected to have either individually
or in the aggregate a Material Adverse Effect. Each Obligor and each of its
Subsidiaries has established and maintains an adequate monitoring system to
insure that it remains in compliance in all material respects with all
Applicable Laws applicable to it. No Inventory has been produced in violation of
the Fair Labor Standards Act (29 U.S.C. ss.201 et seq.) as amended.
4.16 Environmental Matters.
(a) Except for such environmental matters which could not reasonably be
expected to have either individually or in the aggregate a Material Adverse
Effect,
(i) each Obligor, its Subsidiaries, and their respective
predecessors and Affiliates has complied and is in compliance with all
Environmental Laws;
(ii) without limiting the generality of the foregoing clause
(i), each Obligor, its Subsidiaries and their respective predecessors
and affiliates has obtained and complied with, and is in compliance
with, all clearances, consents, permits, approvals, licenses and other
authorizations that are required pursuant to Environmental Laws for the
occupation of its facilities and the operation of its business;
(iii) no Obligor, its Subsidiaries, nor their respective
predecessors or Affiliates has received any written or oral notice,
report or other information regarding any actual or alleged violation
of any Environmental Law, or any liabilities or potential liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective obligations,
relating to any of them or its facilities arising under any
Environmental Law;
(iv) no Obligor, its Subsidiaries, nor their respective
predecessors or Affiliates has treated, stored, disposed of, arranged
for or permitted the disposal of, transported, handled, or released any
substance, including without limitation any hazardous substance, or
owned or operated any property or facility (and no such property or
facility is contaminated by any such substance) in a manner that has
given or would give rise to any liability, including any liability for
response costs, corrective action costs, personal injury, property
damage, natural resources damages or attorney fees, pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), the Solid Waste Disposal Act, as amended
("SWDA") or any other Environmental Law;
(v) neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement will result in any
obligations for site investigation or cleanup, or consent of government
agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer"
Environmental Laws;
(vi) the Obligors have provided Investors with true and
correct copies of all material environmental and occupational health
and safety, reports, assessments, audits, and documents in their
possession, custody or control that relate to the Company, its
Subsidiaries, their respective predecessors or Affiliates, or their
facilities or business;
(vii) no Obligor, its Subsidiaries, nor their respective
predecessors, or Affiliates has assumed, undertaken, or otherwise
become subject to any liability, including without limitation any
obligation for corrective or remedial action, of any other Person
relating to any Environmental Law; and
(viii) no facts, events or conditions relating to the
facilities, properties or operations of any Obligor, its Subsidiaries,
or, their respective predecessors or Affiliates will prevent, hinder or
limit continued compliance with Environmental Laws, give rise to any
investigatory, remedial or corrective obligations pursuant to
Environmental Laws, or give rise to any other liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise) pursuant to
Environmental Laws, including without limitation any relating to onsite
or offsite releases or threatened releases of hazardous materials,
substances or wastes, personal injury, property damage or natural
resources damage.
(b) All material filings with, or applications or notifications to, any
Governmental Authority required by all Applicable Law to be made in connection
with the Acquisition have been made or will be made as soon as practicable after
the Closing Date.
4.17 Insurance.
Schedule 4.17 sets forth a complete and correct description of all
insurance maintained by the Company and its Subsidiaries or by the Company for
its Subsidiaries as of the Closing Date. All such insurance is in full force and
effect and all premiums that are due and payable have been duly paid.
4.18 Restrictions.
No Obligor nor any of its Subsidiaries is a party or subject to any
contract, agreement, or charter or other corporate restriction, which materially
and adversely affects its business or the use or ownership of any of its
Properties. No Obligor nor any of its Subsidiaries is a party or subject to any
contract or agreement which restricts its right or ability to incur
Indebtedness, other than as set forth on Schedule 4.18 hereto, none of which
prohibit the execution of or compliance with this Agreement or the other
Transaction Documents by such Obligor or any of its Subsidiaries, as applicable.
4.19 Litigation.
Except as set forth on Schedule 4.19 hereto, there are no actions,
suits, proceedings or investigations pending, or to the knowledge of any
Obligor, threatened, against or affecting any Obligor or any of its
Subsidiaries, or the business, operations, Properties, prospects, profits or
condition of such Obligor or any of its Subsidiaries, except for those that
could not be reasonably expected to have either individually or in the aggregate
a Material Adverse Effect. No Obligor nor any of its Subsidiaries is in default
with respect to any order, writ, injunction, judgment, decree or rule of any
Governmental Authority, except for such defaults that could not reasonably be
expected to have either individually or in the aggregate a Material Adverse
Effect.
4.20 No Defaults.
No event has occurred and no condition exists which would, upon or
after the execution and delivery of this Agreement, or any other Transaction
Document or the performance of any Obligor's obligations hereunder or thereunder
or the consummation of the transactions contemplated herein or therein,
constitute a Default or an Event of Default. No Obligor nor any of its
Subsidiaries are or is in default, and no event has occurred and no condition
exists which constitutes, or which with the passage of time or the giving of
notice or both would constitute, a default in the payment of any Indebtedness
for borrowed money to any Person.
4.21 Leases.
Schedule 4.21(a) hereto is a complete listing of all capitalized leases
of each Obligor and its Subsidiaries and Schedule 4.21(b) hereto is a complete
listing of all operating leases of each obligor and its Subsidiaries. Each
Obligor and each of its Subsidiaries is in compliance with all of the terms of
each of its respective capitalized and operating leases, except for such
failures that could not reasonably be expected to have either individually or in
the aggregate a Material Adverse Effect.
4.22 Pension Plans.
Except as disclosed on Schedule 4.22 hereto, no Obligor nor any of its
Subsidiaries has any Plan. Each Obligor and each of its Subsidiaries is in full
compliance with the requirements of ERISA and the regulations promulgated
thereunder with respect to each Plan. No fact or situation that could result in
a material adverse change in the financial condition of any Obligor or any of
its Subsidiaries exists in connection with any Plan. No Obligor nor any of its
Subsidiaries has any withdrawal liability in connection with a Multiemployer
Plan.
4.23 Trade Relations.
There exists no actual or threatened termination, cancellation or
limitation of, or any modification or change in, the business relationship
between any Obligor or any of its Subsidiaries and any customer or any group of
customers whose purchases individually or in the aggregate are material to the
business of such Obligor or any of its Subsidiaries, or with any material
supplier, and there exists no present condition or state of facts or
circumstances which would materially affect adversely such Obligor or any of its
Subsidiaries or prevent such Obligor or any of its Subsidiaries from conducting
such business after the consummation of the transaction contemplated by this
Agreement in substantially the same manner in which it has heretofore been
conducted.
4.24 Labor Relations.
Except as described on Schedule 4.24 hereto, no Obligor nor any of its
Subsidiaries is a party to any collective bargaining agreement. There are no
material grievances, disputes or controversies with any union or any other
organization of any Obligor's or any of its Subsidiaries' employees, or threats
of strikes, work stoppages or any asserted pending demands for collective
bargaining by any union or organization.
4.25 Private Offering.
Assuming the accuracy of the representations of the Investors in
Section 5.1, the issuance and sale of the Notes to the Investors hereunder are
exempt from the registration and prospectus delivery requirements of the
Securities Act. Neither the Company nor any Person acting on its behalf has
offered or will offer the Notes or any part thereof or any similar securities
for issuance or sale to, or has solicited or will solicit any offer to acquire
any of the same from, any Person so as to bring the issuance and sale of the
Notes within the provisions of the registration and prospectus delivery
requirements of the Securities Act.
4.26 Year 2000.
Take all action necessary to assure that at all times the computerbased
systems utilized by Company and each of its Subsidiaries are able to effectively
interpret, process and manipulate data, including dates before, on and after
December 31, 1999, except to the extent that failure to do so would not be
likely to have a Material Adverse Effect. At request of the Investors, the
Company shall provide to the Investors assurance reasonably satisfactory to the
Investors that the computer-based systems utilized by the Company and each of
its Subsidiaries are able to recognize and perform without error functions
involving dates before, on and after December 31, 1999, except to the extent
that the failure to do so would not be likely to have a Material Adverse Effect.
4.27 SEC Reports.
The Company has filed all reports required to be filed by it pursuant
to Section 13 or Section 15(d) of the Exchange Act within the last 12 months on
a timely basis or has received a valid extension of time of filing; the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998, the Company's Quarterly Report on Form 10-Q for the fiscal quarters ended
March 31, 1999 and June 30, 1999 and the Company's Current Reports on Form 8-K
dated April 30, 1999 and Current Reports on Form 8-K dated September 2, 1999
(collectively, the "Reports"), complied as to form in all material respects with
the rules and regulations of the Commission under the Exchange Act on the dates
of filing and as of such dates did not contain any untrue statement of a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Except as otherwise provided to the Investors, the Company has not
filed any Current Reports on Form 8-K since September 2, 1999.
4.28 Incorporation of Representations and Warranties.
(a) The Company hereby makes to the Investors each of the
representations and warranties contained in Section 2.4 of the Warrant
Agreement, and such representations and warranties, as so made by the Company,
shall be incorporated into this Agreement by reference as if set forth in full
herein.
(b) All representations and warranties made by the Company in any of
the Purchase Documents or in the certificates delivered in connection therewith
are true and correct in all material respects as of the date hereof with the
same force and effect as though made on and as of the date hereof, and such
representations and warranties of the Company are hereby confirmed to the
Investors and made representations and warranties of the Company hereunder as
fully as if set forth herein. The Company has no knowledge that any of the
representations and warranties made in Purchase Documents by or on behalf of any
party thereto other than Company are untrue or incorrect.
4.29 Survival of Representations and Warranties.
All representations and warranties of each Obligor contained in this
Agreement or any of the other Transaction Documents shall survive the execution,
delivery and acceptance thereof by the Investors and the closing of the
transactions described therein or related thereto.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF INVESTORS
5.1 Representations and Warranties of Each Investor.
Each Investor represents and warrants to the Company, severally and not
jointly, as of the date hereof as follows:
(a) Purchase for its Own Account. Such Investor is purchasing the Notes
for its own account, without a view to the distribution thereof in violation of
the Securities Act, all without prejudice, however, to the right of such
Investor at any time, in accordance with this Agreement or the Transaction
Documents, lawfully to sell or otherwise to dispose of all or any part of the
Notes held by it.
(b) Accredited Investor. Such Investor is an "accredited investor"
within the meaning of Regulation D under the Securities Act.
(c) Authority, Etc. Such Investor has the power and authority to enter
into and perform this Agreement and the execution and performance hereof have
been duly authorized by all proper and necessary action; this Agreement
constitutes the valid and legally binding obligation of such Investor,
enforceable against it in accordance with its terms, except as limited by
bankruptcy, insolvency or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights and the application of equitable
principles.
(d) Securities Act Compliance. Such Investor understands that the
Company has not registered the Notes under the Securities Act, and each Investor
agrees that the Notes may not be sold or transferred or offered for sale or
transfer by it without registration under the Securities Act or the availability
of an exemption therefrom, all as more fully provided in Article X hereof.
ARTICLE VI
CONDITIONS TO PURCHASE
6.1 Conditions to Obligations of Investors on the Closing Date.
The obligations of the Investors to purchase the Notes hereunder is
subject to the satisfaction of the following conditions:
(a) Securities Purchase Agreement. The Investors shall have received,
in form and substance satisfactory to them and their counsel, a duly executed
copy of this Agreement and the other Transaction Documents, together with such
additional documents, instruments, certificates as the Investors and their
counsel shall require in connection therewith, including those listed in the
Schedule of Documents attached hereto as Annex A and incorporated herein, each
in form and substance satisfactory to the Investors and their counsel.
(b) No Default. No Default or Event of Default shall exist.
(c) No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.
(d) Acquisition. The Acquisition shall have been consummated, or will
be consummated simultaneously with the closing of the transactions contemplated
hereby, substantially in accordance with the terms of the Purchase Documents,
the terms and conditions of which shall be acceptable to the Investors. PW Pipe
shall have been merged with and into the Company.
(e) Environmental Assessments. The results of the Phase I Environmental
Assessments (and, if applicable Phase II Environmental Assessments) related to
the Company, its Subsidiaries, PW Pipe and the real property to be acquired by
the Company pursuant to the Acquisition, shall be acceptable to the Investors.
(f) Senior Facility. The Investors shall have received evidence
satisfactory to it that the Company shall have received at least $75,596,917
from borrowings under the Senior Credit Agreement. The terms and conditions of
the Senior Credit Documents shall be acceptable to the Investors.
(g) Transaction Fees. The Investors shall have determined to its
satisfaction that the amount of transaction fees payable in connection with the
transactions contemplated hereby shall not exceed $7,000,000.
(h) Payment of Fees and Expenses. All fees and expenses owing by the
Company to the Investors (including the fees and expenses of X'Xxxxxxxx Graev &
Karabell, LLP) under the terms of this Agreement, any Transaction Document or
any other document executed in connection herewith or therewith shall have been
paid.
(i) Requisite Approvals. The Obligors shall have obtained copies of all
required governmental and other consents, licenses, permits and approvals
relating to the transactions contemplated by this Agreement and the other
Transaction Documents, which consents, licenses, permits and approvals shall be
in form and substance acceptable to Investors and its counsel.
(j) Representations and Warranties; Performance of Covenants. The
representations and warranties of the Obligors contained herein and in any other
Transaction Document and in any certificate or other instrument delivered
pursuant to any of the foregoing shall be correct in all material respects as
though made on and as of the Closing Date. The Obligors shall have satisfied
each of the conditions precedent set forth herein on and as of the Closing Date.
(k) Legal Matters. All matters relating to the Acquisition, this
Agreement and the other Transaction Documents and the transactions contemplated
hereby and thereby shall be satisfactory to the Investors and their counsel.
(l) Such other conditions precedent deemed appropriate by the Investors
and their counsel.
ARTICLE VII
AFFIRMATIVE COVENANTS
During the term of this Agreement, and thereafter for so long
as there are any Obligations under any Note Document outstanding, each Obligor
covenants that, unless the Required Investors have first consented thereto in
writing, it shall:
7.1 Corporate Existence.
(a) Preserve, renew and keep in full force and effect its corporate
existence, except as otherwise provided in Section 8.1, and any necessary state
or other qualifications (other than any qualifications the absence of which, in
the aggregate, would not result in a Material Adverse Effect).
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of the Subject Business; maintain and operate such
business in substantially the manner in which it is presently conducted and
operated; and at all times maintain and preserve all Property material to the
conduct of such business and keep such Property in good repair (subject to
ordinary wear and tear), working order and condition and from time to time make,
or cause to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times.
7.2 Payment of Obligations.
Pay its obligations promptly and in accordance with their terms and
discharge promptly when due all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or in respect of its
property, before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials, supplies and services or otherwise that, if
unpaid, might give rise to a Lien upon such properties or any part thereof;
provided, however, that such payment and discharge shall not be required with
respect to any such tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith by appropriate
proceedings and the Company shall have set aside on its books adequate reserves
with respect thereto in accordance with GAAP and such contest operates to
suspend collection of the contested, tax, assessment or charge and enforcement
of a Lien.
7.3 Visits and Inspections.
Permit representatives of any Investor, from time to time, as often as
may be reasonably requested, but only during normal business hours, to visit and
inspect the Properties of each Obligor and each of its Subsidiaries, inspect,
audit and make extracts from its books and records, and discuss with such
Obligor's or such Subsidiary's officers, employees and independent accountants,
such Obligor's or such Subsidiaries business, assets, liabilities, financial
condition, business prospects and results of operations.
7.4 Litigation and Other Notices.
Upon any Responsible Officer of the Company obtaining knowledge
thereof, furnish to each Investor prompt written notice of the following:
(i) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) taken or proposed to
be taken with respect thereto
(ii) the filing or commencement of, or any written threat or
written notice of intention of any person to file or commence, any
action, suit or proceeding, whether at law or in equity or by or before
any Governmental Authority, against the Company or any Affiliate
thereof that if adversely determined could result in a Material Adverse
Effect;
(iii) any notices of a default or event of default under any
agreement or instrument evidencing Senior Indebtedness; and
(iv) any development that has resulted in, or could reasonably
be expected to result in, a Material Adverse Effect.
7.5 Compliance with Laws; Environmental Matters.
(a) Comply with all Applicable Laws and maintain and comply in all
material respects with all required clearances, consents, permits, approvals,
licenses and other authorizations of Governmental Authorities, except for such
noncompliance which could not reasonably be expected to have either individually
or in the aggregate a Material Adverse Effect.
(b) Comply in all material respects with all Environmental Laws and all
clearances, consents, permits, approvals, licenses and other authorizations
issued thereunder. Respond immediately to any release or threatened release of
any hazardous materials in a manner which complies in all material respects with
all Environmental Laws and reasonably mitigates any risk to human health or the
environment. Provide such documents or information, or conduct at its own cost
such studies or assessments, relating to material matters arising under
Environmental Laws, as any Investor may reasonably request.
(c) Promptly provide the Investors with copies of any notice, report or
other information regarding any actual or alleged violation of Environmental
Laws, or any liabilities or potential liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any investigatory, remedial or
corrective obligations, arising under Environmental Laws, unless the subject
matter of such notice, report, or information could not reasonably be expected
to result in a Material Adverse Effect.
7.6 Further Assurances.
Duly execute and deliver, or cause to be duly executed and delivered,
at its own cost and expense, such further instruments and documents and to take
all such action, in each case as may be necessary or proper in the reasonable
judgment of the Investors to carry out the provisions and purposes of this
Agreement and the other Transaction Documents and to better assure and confirm
unto each of the Investors, its rights and remedies under this Agreement and the
other Transaction Documents.
7.7 Maintenance of Books and Records; Financial Statements; Reports; Etc.
Keep, and cause each of its Subsidiaries to keep, adequate records and
books of account with respect to its business activities in which proper entries
are made in accordance with GAAP reflecting all its financial transactions; and
cause to be prepared and furnished to Agent and Lenders the following (all to be
prepared in accordance with GAAP applied on a consistent basis, unless the
Company's certified public accountants concur in any change therein and such
change is disclosed to Lender and is consistent with GAAP):
(i) not later than 90 days after the close of each fiscal year
of the Company, unqualified audited (in respect to the Consolidated
financial statements only) financial statements of the Company and its
Subsidiaries and operating divisions as of the end of such year, on a
Consolidated and consolidating basis, certified (in respect to the
Consolidated financial statements only) by a firm of independent
certified public accountants of recognized standing selected by the
Company but acceptable to the Investors (except for a qualification for
a change in accounting principles with which the accountant concurs);
(ii) not later than 30 days after the end of each month
hereafter, including the last month of the Company's fiscal year,
unaudited interim financial statements of the Company and its
Subsidiaries and operating divisions as of the end of such month and of
the portion of the Company's financial year then elapsed, on a
Consolidated and consolidating basis, certified by the Financial
Officer of the Company as prepared in accordance with GAAP and fairly
presenting the Consolidated financial position and results of
operations of the Company and its Subsidiaries for such month and
period subject only to changes from audit and year-end adjustments and
except that such statements need not contain notes;
(iii) promptly after the sending or filing thereof, as the
case may be, copies of any proxy statements, financial statements or
reports which the Company has made available to its shareholders and
copies of any regular, periodic and special reports or registration
statements which the Company files with the Securities and Exchange
Commission or any Governmental Authority which may be substituted
therefor, or any national securities exchange;
(iv) promptly after the filing thereof, copies of any annual
report to be filed with ERISA in connection with each Plan;
(v) promptly deliver copies of all waivers, amendments or
supplements to (A) any agreement or instrument evidencing Senior
Indebtedness, including, without limitation, the Senior Credit
Documents and (B) the Purchase Documents.
(vi) as soon as available but in any event no later than 30
days after the commencement of each fiscal year, copies of the annual
plan for the Company and its Subsidiaries for such fiscal year;
(vii) concurrently with delivery thereof, copies of all
information (financial or otherwise) provided to the Board;
(viii) The foregoing notwithstanding, the Investors agree that
in respect to operating divisions, the Company shall only be required
to deliver income statements pursuant to clauses (i) and (ii) above.
(ix) Concurrently with the delivery of the financial
statements described in clause (i) of this Section 7.7, the Company
shall forward to the Investors a copy of the accountants' letter to the
Company's management that is prepared in connection with such financial
statements and also shall cause to be prepared and shall furnish to the
Investors a certificate of the aforesaid certified public accountants
certifying to the Investors that, based upon their examination of the
financial statements of the Company and its Subsidiaries performed in
connection with their examination of said financial statements, they
are not aware of any Default or Event of Default relating to accounting
matters, or, if they are aware of such Default or Event of Default,
specifying the nature thereof, and acknowledging, in a manner
satisfactory to the Investors, that they are aware that the Investors
are relying on such financial statements in making its decisions with
respect to the Notes. Concurrently with the delivery of the financial
statements described in clauses (i) and (ii) of this Section 7.7, or
more frequently if requested by the Investors, the Company shall cause
to be prepared and furnished to the Investors a Compliance Certificate
in the form of Exhibit D hereto executed by the Financial Officer of
the Company.
(x) The Company authorizes the Investors or their designated
representatives to communicate directly with its independent certified
public accountants and authorize those accountants to disclose to the
Investors (or such representative) any and all financial statements and
other supporting financial documents and schedules. Further within five
(5) days after the earlier of the last day of each fiscal year of the
Company and the date the Company engaged independent certified public
accountants to audit the Company's financial statements, the Company
shall deliver to such independent certified public accountants a letter
from the Company addressed to such independent certified public
accountants indicating that it is a primary intention of the Company in
engaging such accountants that the Investors relies upon such financial
statements of the Company and its Subsidiaries.
7.8 Projections.
No later than 30 days prior to the end of each fiscal year of the
Company, deliver to the Investors Projections of the Company, each Subsidiary of
the Company and each of its operating divisions on a Consolidated and
unconsolidated basis for the forthcoming fiscal year, month by month, except
that for the fiscal year ending 2000, the Company shall be permitted to deliver
such projections not later than January 10, 2000. The foregoing notwithstanding,
the Investors agree that, in respect to operating divisions, the Company shall
only be required to deliver projected profit and loss statements pursuant to
this Section.
7.9 Insurance.
At all times, maintain with financially sound and reputable insurers
insurance with respect to its Properties and businesses against loss or damage
of the kind customarily insured against by companies of established reputation
engaged in the same or similar businesses and similarly situated, of such types
and in such amounts as are customarily carried under similar circumstances by
such companies.
7.10 Benefit and Pension Plans.
Comply in all material respects with the applicable provisions of ERISA
and the Code and (b) furnish to the Investors (i) as soon as possible after, and
in any event within 10 days after any Responsible Officer of the Company or any
ERISA Affiliate knows or has reason to know that, any ERISA Event has occurred
that, alone or together with any other ERISA Event could reasonably be expected
to result in liability of the Company in an aggregate amount exceeding $500,000
or requiring payments exceeding $100,000 in any year, a statement of a Financial
Officer of the Company setting forth details as to such ERISA Event and the
action, if any, that the Company proposes to take with respect thereto.
7.11 Proceeds.
Use the proceeds of the sale of the Notes and the Warrants solely for
purposes set forth in the recitals to this Agreement. No portion of the proceeds
of any Note will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, for any purpose that entails a
violation of, or that is inconsistent with, the provisions of the Regulations of
the Board of Governors of the Federal Reserve System of the United States,
including Regulations U or X.
7.12 Additional Subsidiaries.
Promptly inform the Investors of the creation or acquisition after the
date hereof of any direct or indirect Subsidiary of any Obligor and shall cause
each such direct or indirect Subsidiary not in existence on the date hereof to
execute and deliver to the Investors an instrument substantially in the form of
Annex I to the Subsidiary Guaranty pursuant to which such Subsidiary shall
become a party to the Subsidiary Guaranty.
7.13 Board Observation Rights.
So long as any Investor holds a Note, the Company will permit one
representative of each Investor (each an "Observer") to attend all meetings of
the Board and the board of directors of each Subsidiary of the Company and all
formal meetings of any committees thereof (whether in person, telephonic or
other) in a non-voting, observer capacity and shall provide to each Observer
concurrently with the members of its Board, and in the same manner, notice of
such meeting and a copy of all materials provided to such Board members. The
Company agrees to pay all out-of-pocket expenses reasonably incurred by each
Observer associated with attending such meetings.
ARTICLE VIII
NEGATIVE COVENANTS
During the term of this Agreement, and thereafter for so long
as there are any Obligations under any Note Document outstanding, each Obligor
covenants that, unless the Required Investors have first consented thereto in
writing, it shall not:
8.1 Mergers; Consolidations.
Merge or consolidate, or permit any of such Obligor's Subsidiaries to
merge or consolidate, with any Person; except (i) the Acquisition, (ii) any
Subsidiary of the Company may merge with and into the Company or any other
Obligor and (iii) the Company may merge with another Person provided that the
Company is the surviving entity of such merger and no Default or Event of
Default shall have occurred and be continuing or would result therefrom.
8.2 Indebtedness.
Create, incur, assume, or suffer to exist, or permit any Subsidiary of
such Obligor to create, incur or suffer to exist, any Indebtedness, except:
(i) Indebtedness for borrowed money existing on the Closing
Date and set forth on Schedule 8.2 hereto and any refinancing of such
Indebtedness to the extent that such refinancing (A) does not have the
effect of increasing the principal amount of such Indebtedness, (B)
does not result in such Indebtedness maturing earlier than the stated
maturity date of such Indebtedness as of the date of such refinancing,
(C) does not have the effect of decreasing the average weighted-life to
maturity of such Indebtedness from that in effect on the date hereof,
(D) does not result in such Indebtedness being senior in right of
payment to such Indebtedness being refinanced and (E) does not provide
for an annual rate of interest above the prevailing market rate of
interest for similar types of financings at the time of such
refinancing;
(ii) Indebtedness under this Agreement and the other Note
Documents;
(iii) the Senior Indebtedness;
(iv) in the case of the Company, Indebtedness arising under
interest rate protection agreements entered into in accordance with the
Senior Credit Agreement;
(v) Indebtedness under Capitalized Lease Obligations provided
that the aggregate amount of Indebtedness incurred pursuant to this
clause (v) shall not exceed $2,000,000 at any one time outstanding;
(vi) Indebtedness arising under any performance bond or letter
of credit or reimbursement obligations in respect thereof entered into
in the ordinary course of business consistent with past practice;
(vii) Indebtedness incurred under any letter of credit
facility related to any worker's compensation, health, disability or
other employee benefits;
(viii) Indebtedness arising out of, endorsements of checks or
other negotiable instruments for deposit or collection in the ordinary
course of business or any Indebtedness incurred under any bank
overdrafts provided that such Indebtedness is repaid within three (3)
Business Days of the date of incurrence thereof;
(ix) in the case of the Company, additional unsecured
Indebtedness not included in clauses (i) through (viii) above which
Indebtedness does not exceed, in the aggregate, at any one time
outstanding $3,000,000 provided that such Indebtedness shall be
subordinated in right of payment to, or be pari passu with, the Notes;
(x) in addition to the Indebtedness permitted to be incurred
in clauses (i) through (ix) above, other unsecured Indebtedness
provided that at the time such Indebtedness is incurred, and after
giving effect to the incurrence thereof (x) no Default or Event of
Default has occurred and is continuing or would result from such
incurrence and (y) the Leverage Ratio as of the last day of the four
(4) consecutive fiscal quarter period ending immediately prior to the
date of incurrence of such Indebtedness (on a pro forma basis after
giving effect to the incurrence of such Indebtedness) is less than or
equal to 3.5 to 1.0; and
(xi) accounts payable to trade creditors and current operating
expenses (other than for borrowed money) which are not aged more than
30 days from the due date, in each case incurred in the ordinary course
of business and paid within such time period, unless the same are being
actively contested in good faith and by appropriate and lawful
proceedings; and the Company or such Subsidiary shall have set aside
such reserves, if any, with respect thereto as are required by GAAP and
deemed adequate by the Company or such Subsidiary and its independent
accountants.
(xii) obligations to make all payments which such Obligor or
any of its Subsidiaries is required to make as lessee under the terms
of any operating lease provided that the aggregate amounts payable
under all operating leases to which such Obligor or any of its
Subsidiaries are party as lessee during any consecutive 12 month period
shall not exceed $1,000,000.
8.3 Affiliate Transactions.
Enter into, or be a party to, or permit any Subsidiary of such Obligor
to enter into or be a party to, any transaction with any Affiliate of, such
Obligor or such Subsidiary or stockholder, except in the ordinary course of and
pursuant to the reasonable requirements of such Obligor's or such Subsidiary's,
business and upon fair and reasonable terms which are fully disclosed to the
Investors and the terms thereof are no less favorable to such Obligor or such
Subsidiary than what would be obtainable in a comparable arm's length
transaction with a Person not an Affiliate or stockholder of such Obligor or
such Subsidiary.
8.4 Limitation on Liens.
Create or suffer to exist, or permit any Subsidiary of such Obligor to
create or suffer to exist, any Lien upon any of its Property, income or profits,
whether now owned or hereafter acquired, except:
(i) Liens incurred and arising out of surety bonds, appeal
bonds, statutory obligations, bids, performance and return of money and
similar obligations and pledges or deposits made in the ordinary course
of business in connection with worker compensation, unemployment
insurance, old age pensions and other social security benefits;
(ii) Liens securing the performance of bids, tenders, leases,
contracts (other than for the repayment of Indebtedness for borrowed
money), statutory obligations, surety and appeal bonds and other
obligations of like nature, incurred as an incident to and in the
ordinary course of business;
(iii) Liens imposed by law, including carriers',
warehousemen's, mechanics', materialmen's and vendors' Liens incurred
in the ordinary course of business and securing obligations which are
not yet due or which are being contested in good faith by appropriate
proceedings, and in any such case as to which it shall have set aside
adequate cash reserves in accordance with GAAP;
(iv) Liens securing the payment of taxes, assessments and
governmental charges or levies, either not yet due and payable or being
contested in good faith by appropriate legal or administrative
proceedings, and in any such case as to which it shall have set aside
adequate cash reserves in accordance with GAAP;
(v) Zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of
property or minor irregularities of title (and with respect to
leasehold interest, mortgages, obligations, liens and other
encumbrances incurred, created, assumed or permitted to exist and
arising by, through or under a landlord or owner of the leased
Property, with or without consent of the lessee) which do not in the
aggregate impair the use of any Property material to the operation of
the business of the Company or the value of such Property for the
purpose of the business of such Obligor and its Subsidiaries;
(vi) Purchase money liens or purchase money security interests
upon or in any Property acquired or held by such Obligor or any of its
Subsidiaries in the ordinary course of business to secure the purchase
price of such Property or to secure Indebtedness incurred solely for
the purpose of financing the acquisition of such Property, and Liens
existing on such Property at the time of its acquisition (other than
any such Lien created in contemplated of such acquisition), provided
that the incurrence of the aggregate principal amount of the
Indebtedness secured by the Liens referred to in this clause (vi) shall
be permitted to be incurred under Section 8.2;
(vii) Liens securing Senior Indebtedness;
(viii) Liens securing Indebtedness arising under interest rate
protection agreements permitted to be incurred under Section 8.2(iv);
(ix) Liens existing on the date hereof and specified on
Schedule 8.4;
(x) Liens securing Capitalized Lease Obligations if the
incurrence of such Indebtedness is permitted to be incurred under
Section 8.2(v) provided that (A) such Lien is created solely for the
purpose of securing Indebtedness representing, or incurred to finance,
refinance or refund, the cost (including without limitation, the cost
of construction) of the Property subject thereto, (B) the principal
amount of the Indebtedness secured by such Lien does not exceed 100% of
such cost and (C) such Lien does not extend to or cover any other
Property other than such item of Property and any improvements on such
item;
(xi) Extensions and renewals of Liens permitted in clauses (i)
through (ix) hereunder, provided that (A) any such extension, renewal
or replacement Lien shall be limited to the Property or assets covered
by the Lien so extended, renewed or replaced and (B) the obligations
secured by any such extension, renewal or replacement Lien shall not
exceed the amount of the Indebtedness secured by the Lien so extended,
renewed or replaced; and
(xii) Judgment Liens (other than any judgment Lien that is
described in Section 11.1(k) that constitutes an Event of Default
thereunder), provided that (A) the execution or other enforcement of
any such Lien is effectively stayed and the claims secured thereby
shall, within 30 days after attachment of such claims, be contested in
good faith and by appropriate and timely proceedings diligently
conducted and (B) such Obligor shall have set aside adequate cash
reserves in accordance with GAAP.
8.5 Investments; Restricted Payments; Etc.
(a) Declare or make, or permit any Subsidiary of such Obligor to
declare or make, any Restricted Payment at any time a Default or an Event of
Default shall have occurred and be continuing or would result from the
declaration or making of such Restricted Payment.
(b) Notwithstanding the foregoing, the Company shall be permitted to
declare and pay dividends in the form of cash to the holders of Series A Stock
in accordance with the terms of the certificate of designation relating to the
Series A Preferred Stock in effect on the Closing Date, provided that with
respect to the payment of dividends, the Leverage Ratio as of the last day of
the four (4) consecutive fiscal quarter period ending immediately prior to the
date of payment of such dividend, on a pro forma basis after giving effect to
the payment of any such dividends, shall not exceed 3.0 to 1.0.
(c) Permit any of its Subsidiaries to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such Subsidiary to (i) pay any dividends or
make any other distributions on its capital stock or any other interest or (ii)
make or repay any loans or advances to the Company or any other Subsidiary,
except for such encumbrances or restrictions existing under or by reason of (A)
any restriction applicable to such Subsidiary by Applicable Laws, (B) any
restriction existing under any agreement creating or evidencing Indebtedness
outstanding on the Closing Date, including, without limitation, the Senior
Credit Documents, or any agreement refinancing such Indebtedness to the extent
the restriction contained in any such refinancing agreement is no more
restrictive than the restrictions contained in the agreement governing the
Indebtedness being refinanced, (C) any encumbrances or restriction that
restricts in a customary manner the subletting, assignment or transfer of any
Property that is subject to a lease governing a leasehold interest of such
Obligor or any of its Subsidiaries and (D) any encumbrance or restriction
pursuant to customary provisions restricting disposition of real property
interest set forth in reciprocal easement agreements of such Obligor or any of
its Subsidiaries.
8.6 Disposition of Assets.
Sell, lease or otherwise dispose of any of, or permit any Subsidiary of
such Obligor to sell, lease or otherwise dispose any of, its Properties,
including any disposition of Property as part of a sale and leaseback
transaction, to or in favor of any Person, except (i) sales of inventory in the
ordinary course of business, (ii) replacements of equipment that is
substantially worn, damaged or obsolete with equipment of like kind, function or
value, provided that the replacement equipment shall be acquired prior to or
concurrently with any disposition of the equipment that is to be replaced, the
replacement equipment shall be free of Liens (other than Permitted Liens), (iii)
sales or other dispositions of Property by such Obligor or such Subsidiary,
provided that (A) no Default or Event of Default has occurred and is continuing
or would result therefrom, (B) the purchase price (x) consists of at least 75%
cash consideration, (y) is payable on the date of consummation of such sale and
(z) is equal to the fair market value of the Property sold, as determined in
good faith by the Board or the board of directors of such Subsidiary, as the
case may be and (C) the aggregate net book value of all Property sold pursuant
to this subclause (iii) during any fiscal year shall not exceed $1,000,000 and
(iv) other sales or dispositions of Property of such Obligor or such Subsidiary
to the extent that the net proceeds realized therefrom are used, within 180 days
after the date of consummation of such disposition, to (A) purchase capital
assets used or useful by such Obligor or such Subsidiary in the ordinary course
of such Obligor's or such Subsidiary's business, (B) are applied to outstanding
Senior Indebtedness in accordance with the terms thereof or (C) to the extent
not used to prepay Senior Indebtedness in permanent reduction thereof or to
permanently reduce the commitments thereunder, to prepay the Notes in the manner
set forth in Section 3.6.
8.7 Nature of Business.
Engage at anytime in any business or business activity other than the
Subject Business as conducted on the date hereof, and any other business
activities reasonably related to the Subject Business.
8.8 Inconsistent Agreements.
Enter into, or permit any Subsidiary of such Obligor to enter into, any
agreement containing any provision, nor shall it amend any agreement to include
any provision, which would (a) be violated or breached by the exercise or
performance by such Obligor or any of its Subsidiaries of any of their
respective rights or obligations under this Agreement or any other Transaction
Document or (b) impair in any material respect the ability of such Obligor or
any of its Subsidiaries to comply with the terms of this Agreement or any other
Transaction Document.
8.9 Financial Covenants.
(a) Leverage Ratio.
Permit the Leverage Ratio for any period set forth below to be
greater than the ratio set forth opposite such period below:
Period Ratio
October 1, 1999 through December 31, 1999 4.50 to 1.00
October 1, 1999 through March 31, 2000 4.00 to 1.00
October 1, 1999 through June 30, 2000 4.00 to 1.00
For 12 months ending September 30, 2000 3.75 to 1.00
For 12 months ending December 31, 2000 3.75 to 1.00
Trailing 12 month periods ending on March 31, 2001,
June 30, 2001, September 30, 2001 and December 31, 3.50 to 1.00
2001
Trailing 12 month periods ending on each March 31,
June 30, September 30 and December 31 thereafter 3.00 to 1.00
For purposes of calculating the Leverage Ratio (i) for the period from October
1, 1999 through December 31, 1999, EBITDA for such period shall be actual EBITDA
for such period multiplied by four (4); (ii) for the period from October 1, 1999
through March 31, 2000, EBITDA for such period shall be actual EBITDA for such
period multiplied by two (2); (iii) for the period from October 1, 1999 through
September 30, 2000, EBITDA for such period shall be actual EBITDA for such
period multiplied by four-thirds (4/3).
(b) Interest Coverage Ratio.
Permit the Interest Coverage Ratio for any period set forth
below to be less than the ratio set forth opposite such period below:
Ratio
Period
October 1, 1999 through December 31, 1999 2.00 to 1.00
October 1, 1999 through March 31, 2000 2.50 to 1.00
October 1, 1999 through June 30, 2000 2.50 to 1.00
For 12 months ending September 30, 2000 2.50 to 1.00
For 12 months ending December 31, 2000 2.75 to 1.00
Trailing 12 month periods ending on March 31, 2001,
June 30, 2001, September 30, 2001 and December 31, 2.65 to 1.00
2001
Trailing 12 month periods ending on each March 31,
June 30, September 30 and December 31 thereafter 3.25 to 1.00
(c) Capital Expenditures.
Make Capital Expenditures (including, without limitation, by
way of Capitalized Leases) which, in the aggregate as to the Company and its
Subsidiaries during any period set forth below exceeds the amount set forth
opposite such period in the following schedule:
Period Ending Permitted Capital Expenditures
Four months ending December 31, 1999 $2,750,000
$7,000,000
Twelve months ending December 31, 2000 plus the Carryover Amount
$6,000,000
Twelve months ending December 31, 2001 plus the Carryover Amount
$5,000,000
Each 12-month period ending December 31 thereafter plus the Carryover Amount
For any fiscal year, the Carryover Amount shall be the lesser of $1,000,000 or
the amount of permitted Capital Expenditures for the previous year without
giving effect to any Carryover Amount minus the actual amount of Capital
Expenditures made within such fiscal year.
8.10 Limitation on Changes in Fiscal Periods.
Permit the fiscal year to end on a day other than December 31 or change
the method of determining fiscal quarters.
8.11 Certain Documents and Agreements.
(a) Permit any amendment or modification that is adverse in any
material respect to the Investors to (i) the articles or certificate of
incorporation or analogous document of such Obligor or any of its Subsidiaries,
(ii) the certificate of designation or any other documents establishing and
setting forth the rights and terms of the Series A Preferred Stock or any other
class or series of preferred stock or common stock of such Obligor or any of its
Subsidiaries, (iii) the By-laws or analogous document of such Obligor or any of
its Subsidiaries or (iv) the Purchase Documents.
(b) Permit any waiver, supplement, modification, amendment, termination
or release of any indenture, instrument or agreement pursuant to which any
Indebtedness (other than Senior Indebtedness) is outstanding in an aggregate
amount of more than $2,500,000, to the extent that any such waiver, supplement,
modification, amendment, termination or release would be adverse to the
Investors in any material respect.
(c) Permit any change, amendment, supplement or other modification of
any terms of the Senior Credit Agreement, or refinance, replace or refund the
same (any agreement under which such refinancing, replacement or refunding is
incurred being referred to as a "Senior Refinancing Agreement"), without the
prior consent of the Required Investors, if the effect of such amendment or such
refunding or refinancing is to: (i) increase any applicable margin with respect
to the interest rate in effect on the extensions of credit under the Senior
Credit Agreement or any Senior Refinancing Agreement by more than a rate equal
to 2% per annum from those provided for in the Senior Credit Agreement as in
effect on the date hereof, or otherwise change the basis for the calculation of
the interest rate thereunder which has the effect of increasing the interest
rate charged thereunder by more than 2% per annum from those provided for in the
Senior Credit Agreement as in effect on the date hereof (provided that nothing
herein shall preclude the imposition of a post-default rate of interest in the
amount and circumstances provided in the Senior Credit Agreement as in effect on
the date hereof); (ii) shorten or extend the scheduled maturity of any payment
of any principal amount of the term loans or acquisition loans under the Senior
Credit Agreement or Senior Refinancing Agreement from the scheduled maturity
thereof as in effect on the date hereof, except (x) shortening such scheduled
maturity of such term loans or acquisition loans by no more than six months, (y)
shortening the payment schedule of such term loans or acquisition loans so as to
cause the average life to maturity of such term loans or acquisition loans to be
not more than one year shorter than the average life to maturity of such term
loans as of the date hereof or (z) altering or modifying the payment schedule of
such term loans so as to cause the final maturity of such term loans to fall on
or before the day prior to the date of the first payment required to be made to
the Investors by the Company pursuant to the provisions of Section 3.5(a)
hereof; (iii) permit the principal amount of Senior Indebtedness owed by the
Company at any time under the Senior Credit Agreement or any Senior Refinancing
Agreement to exceed the limitation contained in the definition of Senior
Indebtedness; or (iv) make more restrictive any one or more of the financial
covenants under the Senior Credit Agreement (or related definitions) as in
effect on the date hereof (or any comparable provisions of any Senior
Refinancing Agreement) or add any new financial covenant unless simultaneously
with such amendment of the Senior Credit Agreement or any Senior Refinancing
Agreement, this Agreement shall be deemed to be automatically amended in such a
manner (including adding new financial covenants or revising existing financial
covenants preserving in each case the current percentage set back) as shall make
the provisions hereof similarly more restrictive on the Company and its
Subsidiaries and each Investor and the Obligors agree to promptly thereafter
execute and deliver an amendment hereto that incorporates each such deemed
amendment.
ARTICLE IX
SUBORDINATION OF NOTES
9.1 Notes Subordinate to Senior Indebtedness.
Each Obligor hereby covenants and agrees, and the Investors by their
acceptance of the Notes, likewise covenant and agree, that, to the extent and in
the manner hereinafter set forth in this Article IX, the Indebtedness
represented by the Notes, the payment of the principal of (and premium, if any)
and interest on the Notes and any other Obligations of such Obligor under any of
the Note Documents (collectively all such amounts being hereinafter referred to
as the "Subordinated Obligations") are hereby expressly made subordinate and
subject in right of payment to the prior payment of all Senior Indebtedness as
set forth below.
9.2 Payment Over of Proceeds Upon Dissolution, Etc.
(a) In the event of (i) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to an Obligor, or to its
assets, or (ii) any proceeding for liquidation, dissolution or other winding up
of an Obligor, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (iii) any assignment for the benefit of creditors
or any other marshalling of assets and liabilities of an Obligor, then and in
any such event specified in (i), (ii) or (iii) above (each such event, if any,
herein sometimes referred to as a "Proceeding") the holders of Senior
Indebtedness shall be entitled to receive payment in full in cash or Cash
Equivalents or otherwise to the satisfaction of the holders of Senior
Indebtedness of all amounts due or to become due on or in respect of all Senior
Indebtedness, or provision shall be made for such payment, before the holders of
the Subordinated Obligations are entitled to receive any payment on account of
principal of (or premium, if any) or interest on the Subordinated Obligations,
and to that end the holders of Senior Indebtedness shall be entitled to receive,
for application to the payment thereof, any payment or distribution of any kind
or character, whether in cash, property or securities (including any such
payment or distribution which may be payable or deliverable by reason of the
payment of any other Indebtedness of an Obligor being subordinated to the
payment of the Notes) which may be payable or deliverable in respect of the
Subordinated Obligations in any such Proceeding.
(b) In the event that, notwithstanding the foregoing provisions of this
Section 9.2, any holder of the Subordinated Obligations shall have received any
payment or distribution of assets of an Obligor of any kind or character,
whether in cash, property or securities (including any such payment or
distribution which may be payable or deliverable by reason of the payment of any
other indebtedness of an Obligor being subordinated to the payment of the
Subordinated Obligations), in violation of this Article IX, and if such
violation shall, at or prior to the time of such payment or distribution, have
been made known to such holder, then and in such event such payment or
distribution shall be paid over or delivered forthwith to the Senior Bank Agent
or such other Person who is agent for the holders of Senior Indebtedness for
application to the payment of all Senior Indebtedness remaining unpaid, to the
extent necessary to pay all Senior Indebtedness in full, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness.
(c) For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include securities of an Obligor as
reorganized or readjusted, or securities of an Obligor or any other Person
provided for by a plan of reorganization or readjustment authorized by an order
or decree of a court of competent jurisdiction in a Proceeding under any
applicable bankruptcy law that does not adversely alter the rights of holders of
Senior Indebtedness which are subordinated in right of payment to all Senior
Indebtedness which may at the time be outstanding to substantially the same
extent as, or to a greater extent than, the Subordinated Obligations are so
subordinated as provided in this Article IX.
9.3 No Payment When Senior Indebtedness in Default.
(a) In the event that any Senior Payment Default shall have occurred
and be continuing, then, no payment (including any payment which may be payable
by reason of the payment of any other indebtedness of any Obligor being
subordinated to the payment of the Subordinated Obligations) shall be made by
any Obligor on account of principal of (or premium, if any) or interest on the
Subordinated Obligations unless and until (i) such Senior Payment Default shall
have been cured or waived or shall have ceased to exist or (ii) the holders of
such Senior Indebtedness or their duly authorized agents have waived the benefit
of this Section 9.3(a) or (iii) all amounts then due and payable in respect of
Senior Indebtedness shall have been paid in full in cash or Cash Equivalents or
otherwise to the satisfaction of the holders of Senior Indebtedness, or
provision shall have been made for such payment and all commitments to make
further loans, advances and other credit accommodations under the Senior Credit
Agreement have been terminated (such period during which a Senior Payment
Default continues being, a "Payment Blockage Period").
(b) In the event that any Senior Nonmonetary Default shall have
occurred and be continuing, then, upon the receipt by the Company and the
Investors of written notice of such Senior Nonmonetary Default (a "Senior
Nonmonetary Default Notice") from the Senior Bank Agent, no payment (including
any payment which may be payable by reason of the payment of any other
indebtedness of an Obligor being subordinated to the payment of the Subordinated
Obligations) shall be made by an Obligor on account of principal of (or premium,
if any) or interest on the Subordinated Obligations during the period (the
"Nonmonetary Default Blockage Period") commencing on the date of receipt of such
Senior Nonmonetary Default Notice and ending on the earlier of (a) the date on
which such Senior Nonmonetary Default shall have been cured or waived or shall
have ceased to exist and any acceleration of Senior Indebtedness shall have been
rescinded or annulled or the Senior Indebtedness to which such Senior
Nonmonetary Default relates shall have been discharged or (b) or the holders of
such Senior Indebtedness or their agents have waived the benefits of this
Section 9.3(b) or (c) the 181st day after the date of receipt of such written
notice; provided, however, that not more than one Senior Nonmonetary Default
Notice shall be given during any period of 360 consecutive days, regardless of
the number of defaults with respect to Senior Indebtedness during such 360-day
period. For all purposes of this Section 9.3(b), no event of default which
existed or was continuing on the date of commencement of any Nonmonetary Default
Blockage Period with respect to any Senior Indebtedness shall be, or be made,
the basis for the commencement of a another Nonmonetary Default Blockage Period
by the holders (or any agent or other representative thereof) of such Senior
Indebtedness whether or not within a period of 360 consecutive days, unless such
event of default shall have been cured or waived for a period of not less than
90 consecutive days (it being acknowledged that any subsequent action, or any
breach of any financial covenants for a period commencing after the date of
commencement of such Nonmonetary Default Blockage Period that, in either case,
would give rise to an event of default pursuant to any provisions under which an
event of default previously existed or was continuing shall constitute a new
event of default for this purpose).
(c) In the event that, notwithstanding the foregoing, an Obligor shall
make any payment to the holders of Subordinated Obligations prohibited by the
foregoing provisions of this Section 9.3, and if such fact shall, at or prior to
the time of such payment, have been made known to the Investors, then and in
such event such payment shall be paid over and delivered forthwith to the Senior
Bank Agent or such other Person who is agent for the holders of Senior
Indebtedness.
(d) The provisions of this Section shall not apply to any payment with
respect to which Section 9.2 would be applicable.
(e) Notwithstanding anything to the contrary contained herein, the
Notes shall continue to accrue interest during any Payment Blockage Period or
Nonmonetary Default Blockage Period at the rates provided hereunder or under the
Notes.
(f) If an Event of Default shall occur and be continuing at any time
during the continuance of a Payment Blockage Period or a Nonmonetary Default
Blockage Period, no holder of Subordinated Obligations shall ask, demand or xxx
for any payment or distribution or seek any other remedy (except as otherwise
provided in paragraph (g) below) in respect of the Subordinated Obligations or
commence or join in with any other creditor (other than the agent for the
holders of Senior Indebtedness) in commencing any Proceeding prior to the
earliest to occur of (i) acceleration of any Senior Indebtedness or any other
exercise of remedies by the Senior Bank Agent or the Senior Lenders, including
without limitation, any realization on collateral (other than realization on
collateral consisting of any repayment of loans with the proceeds of account
receivables or disposition of Property in the ordinary course as currently
provided in the Senior Credit Agreement in effect on the date hereof) or any
reduction of commitments as a result of the occurrence and continuance of any
event of default under the Senior Credit Agreement, (ii) the occurrence of an
Event of Default specified in Sections 11.1(f) or (g) hereof or (iii) the
earlier to occur of (x) 120 days after the commencement of such Payment Blockage
Period or Nonmonetary Blockage Period or (y) the expiration of such Payment
Blockage Period or Nonmonetary Default Blockage Period.
(g) Nothing in this Section 9.3 shall limit the rights of holders of
Subordinated Obligations to accelerate the maturity of the Subordinated
Obligations during a Payment Blockage Period or Nonmonetary Default Blockage
Period; provided, however, that if, at the termination or expiration of such
Payment Blockage Period or Nonmonetary Default Blockage Period, as the case may
be, all existing Defaults and Events of Default, except non-payment of principal
or interest that has become due solely because of acceleration (the "Accelerated
Amount"), have been cured or waived, then the holders of Subordinated
Obligations shall not take any action to collect, or exercise any remedies in
respect of, the Accelerated Amount and, absent subsequent Defaults or Events of
Defaults, the Accelerated Amount shall be paid in accordance with the original
scheduled terms.
9.4 Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Agreement or in
any other Note Document shall prevent an Obligor, at any time except during any
Proceeding referred to in Section 9.2 hereof or under the conditions described
in Section 9.3 hereof, from making payments (including any payment which may be
payable by reason of the payment of any other Indebtedness of an Obligor being
subordinated to payment of the Subordinated Obligations at any time on account
of principal of (and premium, if any) or interest on the Subordinated
Obligations or on account of the purchase or other acquisition of the
Subordinated Obligations.
9.5 Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the holders
of the Subordinated Obligations shall be subrogated to the extent of the
payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article (equally and ratably with the holders
of all Indebtedness of an Obligor which by its express terms is subordinated to
indebtedness of an Obligor to substantially the same extent as the Subordinated
Obligations are subordinated and is entitled to like rights or subrogation) to
the rights of the holders of such Senior Indebtedness to receive payments and
distributions of cash, property and securities applicable to the Senior
Indebtedness until the principal of (and premium, if any) and interest on the
Subordinated Obligations shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the holders of the
Subordinated Obligations would be entitled except for the provisions of this
Article to the holders of Senior Indebtedness by the holders of the Subordinated
Obligations, shall, as among an Obligor, its creditors other than holders of
Senior Indebtedness and the holders of the Subordinated Obligations, be deemed
to be a payment or distribution by an Obligor to or on account of the Senior
Indebtedness.
9.6 Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the holders of the Subordinated
Obligations on the one hand and the holders of Senior Indebtedness on the other
hand. Nothing contained in this Article or elsewhere in this Agreement or in any
other Note Document is intended to or shall (a) impair, as among any Obligor,
its creditors other than holders of Senior Indebtedness and the holders of the
Subordinated Obligations, the obligation of each Obligor, which is absolute and
unconditional, to pay to the holders of the Subordinated Obligations the
principal of (and premium, if any) and interest on the Notes as and when the
same shall become due and payable in accordance with its terms and the terms of
this Agreement; or (b) affect the relative rights against any Obligor to the
holders of the Subordinated Obligations and creditors of any Obligor other than
the holders of Senior Indebtedness; or (c) prevent the holders of the
Subordinated Obligations from exercising all remedies otherwise permitted by
Applicable Law upon default under this Agreement, subject to the rights, if any,
under this Article of the holders of Senior Indebtedness and subject further to
the provisions of Sections 9.3(f) and (g).
9.7 No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior Indebtedness
to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of any Obligor
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by any Obligor with the terms, provisions and covenants of this
Agreement, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
(b) Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the holders of the Subordinated
Obligations, without incurring responsibility to the holders of the Subordinated
Obligations and without impairing or releasing the subordination provided in
this Article or the obligations hereunder of the holders of the Subordinated
Obligations to the holders of Senior Indebtedness, do any one or more of the
following: (a) except as otherwise provided in Section 8.11(c), change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness, or otherwise amend or supplement in any manner
Senior Indebtedness, or any instrument evidencing the same or any agreement
under which Senior Indebtedness is outstanding; (b) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (c) release any Person liable in any manner for the collection of
Senior Indebtedness; and (d) exercise or refrain from exercising any rights
against any Obligor and any other Person.
9.8 Notice to Investors.
(a) The Company shall give prompt written notice to the holders of
Subordinated Obligations of any fact known to any Obligor which would prohibit
the making of any payment to the holders of Subordinated Obligations in respect
of the Subordinated Obligations. Notwithstanding the provisions of this Article
or any other provision of this Agreement, the holders of Subordinated
Obligations shall not be charged with knowledge of the existence of any facts
which would prohibit the making of any payment to the holders of Subordinated
Obligations in respect of the Subordinated Obligations, unless and until the
holders of Subordinated Obligations shall have received written notice thereof
from the Company or a holder of Senior Indebtedness or from any trustee
therefor; and, prior to the receipt of any such written notice, the holders of
Subordinated Obligations, shall be entitled in all respects to assume that no
such facts exist.
(b) The holders of Subordinated Obligations shall be entitled to rely
on the delivery to them of any written notice by a Person representing himself
to be a holder of Senior Indebtedness (or a trustee or agent therefor) to
establish that such notice has been given by a holders of Senior Indebtedness
(or a trustee or agent therefor) entitled to deliver any notice under this
Article. In the event that the holders of Subordinated Obligations determine in
good faith that further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article, the holders of Subordinated Obligations
may request such Person to furnish evidence to the reasonable satisfaction of
the holders of Subordinated Obligations as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article, and if such evidence is not furnished, the
holders of Subordinated Obligations may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
9.9 Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of any Obligor referred to
in this Article, the holders of Subordinated Obligations shall be entitled to
rely upon any order or decree entered by any court of competent jurisdiction in
which such Proceeding, or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the payment or distribution,
delivered to the Investors, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of any Obligor, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article.
ARTICLE X
TRANSFER OF SECURITIES
10.1 Restriction on Transfer.
The Restricted Securities shall not be transferable except a holder of
Restricted Securities may transfer such Restricted Securities to (i) any
Affiliate of such holder or (ii) upon the conditions specified in this Article
X, which conditions are intended to insure compliance with the provisions of the
Securities Act in respect of the transfer thereof.
10.2 Restrictive Legends.
Each certificate for the Restricted Securities, and each certificate
for any such securities issued to subsequent transferees of any such certificate
shall (unless otherwise permitted by the provisions of Section 10.3 hereof) be
stamped or otherwise imprinted with a legend in substantially the following
form:
"THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATED TO
CERTAIN SENIOR INDEBTEDNESS TO THE EXTENT PROVIDED IN THE
SECURITIES PURCHASE AGREEMENT REFERRED TO BELOW. THIS NOTE HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THIS NOTE MAY
NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. IN
ADDITION, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE
CONDITIONS SPECIFIED IN ARTICLE X OF THE SECURITIES PURCHASE
AGREEMENT REFERRED TO BELOW. NO TRANSFER OF THIS NOTE SHALL BE
VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED.
A COPY OF THE SECURITIES PURCHASE AGREEMENT IS ON FILE AND MAY
BE INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER.
THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS
CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF THE
SECURITIES PURCHASE AGREEMENT."
10.3 Notice of Transfer.
(a) Each holder shall, prior to any Transfer of any Restricted
Securities (other than a Transfer referenced in clause (i) of Section 10.1
above), give written notice to the Company of such holder's intention to effect
such Transfer and to comply in all other respects with the provisions of this
Section 10.3 in making such proposed Transfer. Each such notice shall describe
the manner and circumstances of the proposed Transfer. Upon request by the
Company, the holder delivering such notice shall deliver a written opinion,
addressed to the Company, of counsel for such holder (which may be one of its
internal counsels), stating that in the opinion of such counsel (which opinion
shall be reasonably satisfactory to the Company) such proposed Transfer does not
involve a transaction requiring registration of such Restricted Securities under
the Securities Act. Such holder shall thereupon be entitled to Transfer the
Restricted Securities in accordance with the terms of the notice delivered to
the Company, if the Company does not reasonably object to such Transfer and
request such opinion, within five days after delivery of such notice or, if the
Company does request such opinion, upon its receipt thereof. Each certificate or
other instrument evidencing the securities issued upon the Transfer of any
Restricted Securities (and each certificate or other instrument evidencing any
untransferred balance of such Restricted Securities) shall bear the legend set
forth in Section 10.2 above unless (i) such opinion of counsel is to the effect
that registration of any future Transfer is not required by the applicable
provisions of the Securities Act or (ii) the Company shall have waived the
requirement of such legend.
(b) Notwithstanding the foregoing provisions of this Section 10.3, the
restrictions imposed by this Section 10.3 upon the transferability of any
Restricted Securities shall cease and terminate when (i) any such Restricted
Securities are sold or otherwise disposed of pursuant to an effective
registration statement under the Securities Act or as otherwise contemplated by
paragraph (a) above in a manner that does not require that the Restricted
Securities so transferred continue to bear the legend set forth in Section 10.2
above or (ii) the holder of such Restricted Securities has met the requirements
for Transfer of such Restricted Securities under Rule 144(k). Whenever the
restrictions imposed by this Section shall terminate, upon the written request
of the holder of any Restricted Securities as to which such restrictions have
terminated, as promptly as practicable but in any event within ten (10) Business
Days of receipt of such request, the Company shall, without charge, issue,
register and deliver a new instrument not bearing the restrictive legend set
forth in Section 10.3 above and not containing any other reference to the
restrictions imposed by this Section.
ARTICLE XI
EVENTS OF DEFAULT
11.1 Defaults.
The occurrence of one or more of the following events shall constitute
an "Event of Default:
(a) Payment of Principal. The Company shall fail to make any payment of
principal on the Notes when and as the same shall become due and payable
including at the due date thereof, by acceleration or otherwise.
(b) Payment of Interest and Fees. The Company shall fail to make any
payment of interest on any Note, or any fee or any other amount payable
hereunder or under the Notes when and as the same shall become due and payable
including at the due date thereof, by acceleration or otherwise, and such
failure shall continue unremedied for five (5) Business Days after the due date
thereof.
(c) Covenant Defaults. Any Obligor or any of its Subsidiaries shall
default in the due observance or performance of any covenant or agreement to be
observed or performed under this Agreement or any other Note Document (other
than a covenant which is dealt with specifically elsewhere in this Section 11.1)
and such default shall continue unremedied for thirty (30) days after the
occurrence of such default.
(d) Misrepresentations. Any representation, warranty or other statement
made or furnished to the Investors by or on behalf of any Obligor or any
Subsidiary of such Obligor in this Agreement, any of the other Transaction
Documents or any instrument, certificate or financial statement furnished (in
compliance with or in reference thereto) proves to have been false or misleading
in any material respect when made or furnished.
(e) Other Defaults. Any Obligor or any of its Subsidiaries shall be in
payment default on any Indebtedness which is outstanding in a principal amount
in excess of $2,500,000 in the aggregate beyond any applicable period of grace,
or if any event shall occur or condition shall exist in respect of any
Indebtedness which is outstanding in a principal amount in excess of $2,500,000
or under any evidence of any such Indebtedness or of any mortgage, indenture or
other agreement relating thereto, which shall have caused the acceleration of
the payment of such Indebtedness and such Indebtedness shall not have been paid
in full within two (2) Business Days of the date of such acceleration.
(f) Voluntary Insolvency and Related Proceedings. Any Obligor or any of
its Subsidiaries shall (i) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United States Code, or any other
federal, state or foreign bankruptcy, insolvency or similar law, (ii) consent to
the institution of, or fail to controvert in a timely and appropriate manner,
any such proceeding or the filing of any such petition, (iii) apply for, consent
to the appointment of, or a court of competent jurisdiction shall enter an order
appointing, a receiver, trustee, custodian, sequestrator or officer with similar
powers of itself or for any substantial part of its property or assets, (iv)
file an answer admitting the material allegations of a petition filed against it
in any such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) fail generally to pay its debts as they become due (vii) shall
be adjudicated insolvent or (viii) take any corporate or stockholder action in
furtherance of any of the foregoing.
(g) Involuntary Insolvency and Related Proceedings. (i) An involuntary
proceeding shall be commenced or an involuntary petition shall be filed in a
court of competent jurisdiction seeking (x) relief in respect of any Obligor or
of any substantial part of the property or assets thereof, under Title 11 of the
United States Code or any other federal, state or foreign bankruptcy, insolvency
or similar law, (y) the appointment of a receiver, trustee, custodian,
sequestrator or similar official for any such Person or for any substantial part
of its property or (z) the winding-up or liquidation of any such Person, and any
such proceeding, petition or order shall continue unstayed and in effect for a
period of sixty (60) consecutive days or (ii) a warrant of attachment, execution
or similar process shall be issued against any substantial part of the Property
of the Company or any of its Subsidiaries and the enforcement of such
attachment, execution or similar process is not stayed pending appeal.
(h) Business Disruption: Condemnation. There shall occur a cessation of
a substantial part of the business of any Obligor or any of its Subsidiaries for
a period which significantly affects such Obligor's capacity to continue its
business, on a profitable basis; or any Obligor or any of its Subsidiaries shall
suffer the loss or revocation of any license or permit now held or hereafter
acquired by or such Subsidiaries which is necessary to the continued or lawful
operation of its business; or such Obligor or such Subsidiaries shall be
enjoined, restrained or in any way prevented by court, governmental or
administrative order from conducting all or any material part of its business
affairs; or any material lease or agreement pursuant to which such Obligor or
such Subsidiary leases, uses or occupies any Property shall be canceled or
terminated prior to the expiration of its stated term; or any material portion
of any Property of the Company or any Subsidiary of the Company shall be taken
through condemnation or the value of such Property shall be impaired through
condemnation.
(i) ERISA. A Reportable Event shall occur which the Requisite
Investors, in its or their sole discretion, shall determine in good faith
constitutes grounds for the termination by the Pension Benefit Guaranty
Corporation of any Plan or for the appointment by the appropriate United States
district court of a trustee for any Plan, or if any Plan shall be terminated or
any such trustee shall be requested or appointed, or if an Obligor or any of its
Subsidiaries is in "default" (as defined in Section 4219(c)(5) of ERISA) with
respect to payments to a Multiemployer Plan resulting from Obligor's or such
Subsidiary's complete or partial withdrawal from such Plan.
(j) Challenge to Agreement. This Agreement or any other Note Document
shall cease to be in full force and effect and enforceable in accordance with
its terms, or any Obligor or any of its Subsidiaries shall assert the invalidity
of any of the foregoing.
(k) Judgments. A judgment or judgments for the payment of money in
excess of $2,500,000 in the aggregate shall be rendered against any Obligor and
the same shall not (i) be fully covered by insurance or other comparable bond,
or (ii) within sixty (60) days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within sixty (60) days (60) after the expiration of any such stay.
then, and in any such event (other than an event described in
paragraphs (f) or (g) above), and at any time thereafter during the continuance
of such event, the Required Investors may, take any of the following actions and
at the same or different times declare the Notes (if outstanding) to be
forthwith due and payable, whereupon the entire unpaid principal of the Notes,
together with accrued but unpaid interest thereon, the then Applicable
Prepayment Premium, if any, and all other Obligations, shall become forthwith
due and payable in full in cash, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived by the
Company, anything contained herein or in any Note or other Note Document to the
contrary notwithstanding, exercise any and all other remedies provided under any
other Note Document upon the occurrence and continuance of an Event of Default;
provided, however, that with respect to the occurrence of an Event of Default
described in paragraphs (f) or (g) above, the principal of the Notes, together
with accrued but unpaid interest and fees thereon and any other liabilities of
the Obligors and any of their Subsidiaries accrued hereunder or any other Note
Document, shall automatically become due and payable in full in cash, including
the then Applicable Prepayment Premium, if any, all without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
each Obligor, anything contained herein or in the Notes or other Note Document
to the contrary notwithstanding.
ARTICLE XII
MISCELLANEOUS
12.1 Notices.
All notices, demands and requests of any kind to be delivered to any
party hereto in connection with this Agreement shall be (a) delivered
personally, (b) sent by nationally-recognized overnight courier, (c) sent by
first class, registered or certified mail, return receipt requested or (d) sent
by facsimile, in each case to such party at its address as follows:
(i) if to any Obligor, to:
Eagle Pacific Industries, Inc.
000 Xxxxx Xxxxxxx Xxxxxx
0000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxxxxxx & Xxxxx, P.A.
1100 International Centre
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx West, Esq.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(ii) if to any Investor, to such Investor's address set forth
in Schedule 1.1 hereto:
with a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Any notice, demand or request so delivered shall constitute
valid notice under this Agreement and shall be deemed to have been received (A)
on the day of actual delivery in the case of personal delivery, (B) on the next
Business Day after the date when sent in the case of delivery by
nationally-recognized overnight courier, (C) on the fifth Business Day after the
date of deposit in the U.S. mail in the case of mailing or (D) upon receipt in
the case of a facsimile transmission. Any party hereto may from time to time by
notice in writing served upon the other as aforesaid designate a different
mailing address or a different person to which all such notices, demands or
requests thereafter are to be addressed.
12.2 Survival of Agreement.
All agreements, representations and warranties contained herein or made
in writing by or on behalf of an Obligor in connection with the transactions
contemplated hereby shall survive the execution and delivery of this Agreement
and the other Transaction Documents. No termination or cancellation (regardless
of cause or procedure) of this Agreement shall in any way affect or impair the
powers, obligations, duties, rights and liabilities of the parties hereto in any
way with respect to any transaction or event occurring prior to such termination
or cancellation, or any of the representations contained in this Agreement and
the other Transaction Documents and all such undertakings, agreements,
covenants, warranties and representations shall survive such termination or
cancellation until payment in full of the Notes and all other monetary amounts
due under this Agreement. Each Obligor further agrees that to the extent such
Obligor makes a payment or payments to the Investors under this Agreement or any
other Transaction Document, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy, insolvency or similar state or United States federal law, common law
or equitable cause, then, to the extent of such payment or repayment, the
Obligation or part thereof intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been received by
the Investors. The Investors shall be entitled to rely upon, and shall be deemed
to have relied upon, all representations, warranties and covenants to be
performed prior to the Closing Date contained in any Transaction Document,
notwithstanding any knowledge of the Investors to the contrary, or any contrary
information delivered to the Investors by any Obligor or any other Person.
12.3 Successors and Assigns.
Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and permitted assigns
of such party, and all covenants, promises and agreements by or on behalf of the
Obligors or the Investors that are contained in this Agreement or any other
Transaction Document shall bind and inure to the benefit of their respective
successors and permitted assigns except that no Obligor shall assign its rights
or obligations hereunder without the consent of the Required Investors. Each
Investor shall have the right, subject to the provisions of Article X hereof, to
assign or otherwise transfer its rights under this Agreement or any Notes held
by it.
12.4 Expenses of the Investors.
The Company agrees to pay all out-of-pocket expenses reasonably
incurred by the Investors associated with the preparation, execution and
delivery of this Agreement and the other Transaction Documents or reasonably
incurred by the Investors in connection with the purchase of the Notes and
Warrants hereunder or any other Transaction Document (other than attorney fees
and expenses except to the extent expressly provided herein), all filings with
any Governmental Authority, compliance with any Applicable Law, enforcement or
protection of its rights under the provisions of this Agreement or any other
Transaction Document or otherwise in connection with this Agreement, any other
Transaction Document or the Notes issued hereunder. The Company agrees to pay
the fees and disbursements of X'Xxxxxxxx Graev & Karabell, LLP, counsel for CB
Capital Investors, L.P.
12.5 Indemnification.
(a) In addition to all rights and remedies available to the Investors
at law or in equity, the Obligors shall indemnify the Investors, each subsequent
holder of the Notes and the Warrants and their respective affiliates,
stockholders, officer, directors, employees, agents, representatives, counsel,
successors and permitted assigns (collectively, the "Indemnified Persons") and
save and hold each of them harmless against and pay on behalf of or reimburse
such party as and when incurred for any loss (including, without limitation,
diminutions in value and consequential damages), liability, demand, claim,
action, cause of action, cost, damage, deficiency, tax (including any taxes
imposed with respect to such indemnity payments), penalty, fine or expense,
whether or not arising out of any claims by or on behalf of the Company or any
third party, including interest, penalties, reasonable attorneys' fees and
expenses and all amounts paid in investigation, defense or settlement of any of
the foregoing (collectively, "Losses") which any such party may suffer, sustain
or become subject to, as a result of, in connection with, relating or incidental
to or by virtue of:
(i) any misrepresentation or breach of a representation or
warranty on the part of any Obligor under Article IV of this Agreement;
(ii) without duplication of subsection (a)(i) above, any
misrepresentation in or omission from any of the representations,
warranties, statements, schedules and exhibits hereto, certificates or
other instruments or documents furnished to the Investors by or on
behalf of any Obligor made in or pursuant to this Agreement;
(iii) any nonfulfillment or breach of any covenant or
agreement on the part of any Obligor under this Agreement or any other
Transaction Document;
(iv) any action, demand, proceeding, investigation or claim by
any third party (including, without limitation, governmental agencies)
against or affecting any Obligor which, if successful, would give rise
to or evidence the existence of or relate to a breach of any of the
representations, warranties or covenants of such Obligor; and
(v) any action, demand, proceeding, investigation, claim, by a
third party, relating to or arising from Environmental Laws (including
without limitation relating to or arising from any hazardous substance,
hazardous waste, or hazardous material) by an Obligor.
(b) Notwithstanding the foregoing, and subject to the following part of
this sentence, upon judicial determination, which is final and no longer
appealable, that the act or omission giving rise to the indemnification
hereinabove provided resulted primarily out of or was based primarily upon the
Indemnified Person's gross negligence, fraud, willful misconduct, or acts or
omissions constituting legal malpractice (unless such action was based upon the
Indemnified Person's reliance in good faith upon any of the representations,
warranties, covenants or promises made by the Obligors herein, or in the
Transaction Documents) by the Indemnified Person, no Obligor shall be
responsible for any Losses sought to be indemnified in connection therewith, and
the Obligors shall be entitled to recover from the Indemnified Person all
amounts previously paid in full or partial satisfaction of such indemnity with
interest thereon at the rate of interest borne by the Notes, together with all
costs and expenses of the Obligors reasonably incurred in effecting such
recovery, if any.
(c) All indemnification rights hereunder shall survive the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby indefinitely, regardless of any investigation, inquiry or
examination made for or on behalf of, or any knowledge of the Investors and/or
any of the Indemnified Persons or the acceptance by the Investors of any
certificate or opinion.
(d) The indemnity obligations that the Company have under this Section
12.5 shall be in addition to any liability that the Company may otherwise have.
Each Obligor further agrees that the indemnification commitment set forth in
this Agreement shall apply whether or not the Indemnified Person is a formal
party to any such lawsuits, claims or other proceedings.
(e) Any indemnification of the Investors or any other Indemnified
Person by the Company pursuant to this Section 12.5 shall be effected by wire
transfer of immediately available funds from the company to an account
designated by the Investors or any other Indemnified Person within fifteen (15)
days after the determination thereof.
12.6 GOVERNING LAW.
(a) ALL QUESTIONS CONCERNING THE CONSTRUCTION, INTERPRETATION AND
VALIDITY OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE
OR CONFLICT OF LAW PROVISION OR RULE (WHETHER IN THE STATE OF NEW YORK OR ANY
OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
(b) THE PARTIES TO THIS AGREEMENT AGREE THAT JURISDICTION AND VENUE IN
ANY ACTION BROUGHT BY ANY PARTY HERETO PURSUANT TO THIS AGREEMENT SHALL
EXCLUSIVELY LIE IN ANY FEDERAL OR STATE COURT LOCATED IN THE STATE OF NEW YORK.
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE PARTIES HERETO IRREVOCABLY
SUBMIT TO THE JURISDICTION OF SUCH COURTS FOR THEMSELVES AND IN RESPECT OF THEIR
PROPERTY WITH RESPECT TO SUCH ACTION. THE PARTIES HERETO IRREVOCABLY AGREE THAT
VENUE WOULD BE PROPER IN SUCH COURT, AND HEREBY WAIVE ANY OBJECTION THAT SUCH
COURT IS AN IMPROPER OR INCONVENIENT FORUM FOR THE RESOLUTION OF SUCH ACTION.
(c) THE COMPANY HEREBY AGREES THAT SERVICE UPON THEM BY REGISTERED OR
CERTIFIED MAIL (RETURN RECEIPT REQUESTED) SHALL CONSTITUTE SUFFICIENT NOTICE.
NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE INVESTORS TO BRING PROCEEDINGS
AGAINST THE COMPANY IN THE COURTS OF ANY OTHER JURISDICTION.
(d) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT, THE TRANSACTION DOCUMENTS OR ANY DOCUMENTS RELATED HERETO.
12.7 Waivers; Amendments.
(a) No failure or delay of the Investors in exercising any power or
right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Investors hereunder are cumulative and not exclusive of any
rights or remedies which they would otherwise have. No waiver of any provision
of this Agreement or any other Transaction Document or consent to any departure
by the Obligors therefrom shall in any event be effective unless the same shall
be authorized as provided in paragraph (b) below, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice or demand on the Obligors in any case shall entitle the
Obligors to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Company and the Required Investors; provided that no such
amendment, waiver or modification shall (i) reduce the principal amount of any
Note or reduce the rate of interest thereon, or reduce any other amounts payable
hereunder, without the written consent of each Investor affected thereby, (ii)
postpone the scheduled date of payment of the principal amount of any Note, or
any interest thereon, or any other amounts payable hereunder, or reduce the
amount of, waive or excuse any such payment, without the written consent of each
Investor affected thereby, (iii) change Section 3.2(e) hereof in a manner that
would alter the pro rata sharing of payments required thereby, without the
written consent of each Investor, (iv) change any of the provisions of this
Section 12.7 or the definition of "Required Investors" or any other provision
hereof specifying the number or percentage of Investors required to waive, amend
or modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Investor or (v) increase the
obligations of any Investor or otherwise disproportionately adversely affect any
of the rights of any Investor under this Agreement, without the written consent
of each Investor affected thereby.
12.8 Independence of Covenants.
All covenants hereunder shall be given in any jurisdiction independent
effect so that if a particular action or condition is not permitted by any of
such covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default or an Event of Default if such action is taken or
condition exists.
12.9 No Fiduciary Relationship.
No provision in this Agreement or in any of the other Transaction
Documents and no course of dealing between the parties shall be deemed to create
any fiduciary duty by the Investors to any Obligor.
12.10 No Duty.
All attorneys, accountants, appraisers, and other professional Persons
and consultants retained by the Investors shall have the right to act
exclusively in the interest of the Investors and shall have no duty of
disclosure, duty of loyalty, duty of care, or other duty or obligation of any
type or nature whatsoever to any Obligor or any of it's shareholders or any
other Person.
12.11 Construction.
The Obligors and the Investors acknowledge that each of them has had
the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement and the other Transaction Documents with
its legal counsel and that this Agreement and the other Transaction Documents
shall be construed as if jointly drafted by the Investors and the Obligors.
12.12 Severability.
Whenever possible, each provision of this Agreement will be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or any other jurisdiction, and such invalid, void or otherwise unenforceable
provisions shall be null and void. It is the intent of the parties, however,
that any invalid, void or otherwise unenforceable provisions be automatically
replaced by other provisions which are as similar as possible in terms to such
invalid, void or otherwise unenforceable provisions but are valid and
enforceable to the fullest extent permitted by law.
12.13 Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute but one contract.
12.14 Headings.
Article and Section headings and the Table of Contents used herein are
for convenience of reference only and are not to affect the construction of, or
to be taken into consideration in interpreting, this Agreement.
12.15 Entire Agreement.
This Agreement and the agreements and documents referred to herein
contain the entire agreement of the parties and supersede any and all prior
agreements among the parties with respect to the subject matter hereof.
* * * *
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their authorized officers, all as of the day
and year first above written.
OBLIGORS
EAGLE PACIFIC INDUSTRIES INC.
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
INVESTORS
CB CAPITAL INVESTORS, L.P.
By: CB Capital Investors, Inc.,
its General Partner
By: /s/ Xxxx X'Xxxxxx
Name: Xxxx X'Xxxxxx
Title: General Partner
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Managing Director
MASSMUTUAL CORPORATE INVESTORS
By: /s/ Xxxxxxxx X. Xxxxxx
Name: Xxxxxxxx X. Xxxxxx
Title: Senior Managing Director
MASSMUTUAL PARTICIPATION INVESTORS
By: /s/ Xxxxxxxx X. Xxxxxx
Name: Xxxxxxxx X. Xxxxxx
Title: Senior Managing Director
MASSMUTUAL CORPORATE VALUE PARTNERS LIMITED
By: Massachusetts Mutual Life
Insurance Company, as Investment
Manager
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Managing Director
CONFORMED COPY
================================================================================
14% SUBORDINATED NOTES DUE 2007
SECURITIES PURCHASE AGREEMENT
among
EAGLE PACIFIC INDUSTRIES, INC.,
as ISSUER,
and
The Investors listed on Schedule 1.1 Hereto
September 20, 1999
================================================================================
TABLE OF CONTENTS
Page
Article I DEFINITIONS..........................................................2
1.1 Defined Terms........................................................2
1.2 Terms Generally.....................................................14
1.3 Use of Defined Terms................................................14
1.4 Cross-References....................................................14
1.5 Currency............................................................14
1.6 Accounting Terms; GAAP..............................................14
Article II PURCHASE AND SALE OF THE NOTES.....................................15
2.1 Authorization and Issuance of the Notes ............................15
2.2 Closing.............................................................16
Article III PROVISIONS OF THE NOTES AND THE WARRANTS..........................16
3.1 The Notes...........................................................16
3.2 General Provisions As To Payments...................................16
3.3 Interest............................................................17
3.4 Interest on Overdue Amounts.........................................18
3.5 Mandatory Prepayment................................................18
3.6 Optional Prepayments................................................19
3.7 Securities Register.................................................19
3.8 Lost, Etc. Securities...............................................20
3.9 Several Obligations; Remedies Independent...........................20
Article IV REPRESENTATIONS AND WARRANTIES.....................................20
4.1 Organization and Qualification......................................20
4.2 Corporate Power and Authority; Consent..............................21
4.3 Legally Enforceable Agreement.......................................21
4.4 Corporate Names.....................................................21
4.5 Business Locations; Agent for Process...............................21
4.6 Title to Properties.................................................22
4.7 Financial Statements; Fiscal Year...................................22
4.8 Full Disclosure.....................................................23
4.9 Solvent Financial Condition.........................................23
4.10 Surety Obligations..................................................23
4.11 Taxes...............................................................23
4.12 Brokers.............................................................24
4.13 Patents, Trademarks, Copyrights and Licenses........................24
4.14 Governmental Consents...............................................24
4.15 Compliance with Laws................................................24
4.16 Environmental Matters...............................................24
4.17 Insurance...........................................................26
4.18 Restrictions........................................................26
4.19 Litigation..........................................................26
4.20 No Defaults.........................................................26
4.21 Leases..............................................................27
4.22 Pension Plans.......................................................27
4.23 Trade Relations.....................................................27
4.24 Labor Relations.....................................................27
4.25 Private Offering....................................................27
4.26 Year 2000...........................................................28
4.27 SEC Reports.........................................................28
4.28 Incorporation of Representations and Warranties.....................28
4.29 Survival of Representations and Warranties..........................28
Article V REPRESENTATIONS AND WARRANTIES OF INVESTORS.........................29
5.1 Representations and Warranties of Each Investor.....................29
Article VI CONDITIONS TO PURCHASE.............................................29
6.1 Conditions to Obligations of Investors on the Closing Date..........29
Article VII AFFIRMATIVE COVENANTS.............................................31
7.1 Corporate Existence.................................................31
7.2 Payment of Obligations..............................................31
7.3 Visits and Inspections..............................................31
7.4 Litigation and Other Notices........................................32
7.5 Compliance with Laws; Environmental Matters.........................32
7.6 Further Assurances..................................................33
7.7 Maintenance of Books and Records; Financial Statements; Reports;
Etc.................................................................33
7.8 Projections.........................................................35
7.9 Insurance...........................................................35
7.10 Benefit and Pension Plans...........................................35
7.11 Proceeds............................................................35
7.12 Additional Subsidiaries.............................................35
7.13 Board Observation Rights............................................36
Article VIII NEGATIVE COVENANTS...............................................36
8.1 Mergers; Consolidations.............................................36
8.2 Indebtedness........................................................36
8.3 Affiliate Transactions..............................................38
8.4 Limitation on Liens.................................................38
8.5 Investments; Restricted Payments; Etc...............................39
8.6 Disposition of Assets...............................................40
8.7 Nature of Business..................................................41
8.8 Inconsistent Agreements.............................................41
8.9 Financial Covenants.................................................41
8.10 Limitation on Changes in Fiscal Periods.............................42
8.11 Certain Documents and Agreements....................................42
Article IX SUBORDINATION OF NOTES.............................................44
9.1 Notes Subordinate to Senior Indebtedness............................44
9.2 Payment Over of Proceeds Upon Dissolution, Etc......................44
9.3 No Payment When Senior Indebtedness in Default......................45
9.4 Payment Permitted If No Default.....................................47
9.5 Subrogation to Rights of Holders of Senior Indebtedness.............47
9.6 Provisions Solely to Define Relative Rights.........................47
9.7 No Waiver of Subordination Provisions...............................48
9.8 Notice to Investors.................................................48
9.9 Reliance on Judicial Order or Certificate of Liquidating Agent......49
Article X TRANSFER OF SECURITIES..............................................49
10.1 Restriction on Transfer.............................................49
10.2 Restrictive Legends.................................................49
10.3 Notice of Transfer..................................................50
Article XI EVENTS OF DEFAULT..................................................51
11.1 Defaults............................................................51
Article XII MISCELLANEOUS.....................................................53
12.1 Notices.............................................................53
12.2 Survival of Agreement...............................................54
12.3 Successors and Assigns..............................................55
12.4 Expenses of the Investors...........................................55
12.5 Indemnification.....................................................55
12.6 GOVERNING LAW.......................................................57
12.7 Waivers; Amendments.................................................57
12.8 Independence of Covenants...........................................58
12.9 No Fiduciary Relationship...........................................58
12.10 No Duty.............................................................58
12.11 Construction........................................................59
12.12 Severability........................................................59
12.13 Counterparts........................................................59
12.14 Headings............................................................59
12.15 Entire Agreement....................................................59
EXHIBITS
EXHIBIT A - Form of Note
EXHIBIT B - Form of Subsidiary Guaranty
EXHIBIT C - Form of Warrant Agreement
EXHIBIT D - Form of Compliance Certificate
EXHIBIT E - Form of Solvency Certificate
EXHIBIT F - Form of Payment Direction Letter
EXHIBIT G - Form of Compliance Sideletter
ANNEXES
ANNEX A - Schedule of Documents
SCHEDULES
SCHEDULE 1.1 - Investors
SCHEDULE 4.1 - Foreign Qualifications
SCHEDULE 4.2(b) - Consents
SCHEDULE 4.4 - Trade Names
SCHEDULE 4.5 - Business Locations
SCHEDULE 4.11 - Tax Identification Numbers
SCHEDULE 4.13 - Patents and Trademarks
SCHEDULE 4.17 - Insurance
SCHEDULE 4.18 - Contractual Restrictions
SCHEDULE 4.19 - Litigation
SCHEDULE 4.21(a) - Capitalized Leases
SCHEDULE 4.21(b) - Operations Leases
SCHEDULE 4.22 - Pension Plans
SCHEDULE 4.24 - Labor Relations
SCHEDULE 8.2 - Existing Indebtedness
SCHEDULE 8.4 - Existing Liens
SCHEDULE 1.1
INVESTORS AND ADDRESSES FOR NOTICES
NUMBER OF SHARES OF
PRINCIPAL AMOUNT OF CONVERTIBLE
INVESTORS NOTES PURCHASED PREFERRED STOCK
CB Capital Investors, L.P. $22,500,000 - -
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
NUMBER OF
SHARES OF
PRINCIPAL AMOUNT OF CONVERTIBLE
NOTES PURCHASED PREFERRED STOCK
INVESTORS
Massachusetts Mutual Life Insurance
Company (LTP) $3,200,000 3,200
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Securities Investment Division
Payments
All payments on account of the Note shall be
made by crediting in the form of
bank wire transfer of Federal or other
immediately available funds, (identifying
each payment as __________, interest
and principal), to:
Citibank, N.A.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
ABA No. 000000000
For MassMutual Long-Term Pool
Account No. 4067-3488
Re: Description of security, principal and
interest split
With telephone advise of payment to the
Securities Custody and Collection
Department of Massachusetts Mutual Life
Insurance Company at (000) 000-0000
Notices
All notices and communications to be
addressed as first provided above, except
notices with respect to payments to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
Tax Identification No.: 00-0000000
NUMBER OF
SHARES OF
PRINCIPAL AMOUNT OF CONVERTIBLE
NOTES PURCHASED PREFERRED STOCK
INVESTORS
Massachusetts Mutual Life Insurance
Company (IFM) $800,000 800
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Securities Investment Division
Payments
All payments on account of the Note shall
be made by crediting in the form of
bank wire transfer of Federal or other
immediately available funds, (identifying
each payment as [insert name of issuer
and description of Note] interest and
principal), to:
Chase Manhattan Bank, N.A.
0 Xxxxx Xxxxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
ABA No. 000000000
For MassMutual IFM Non-Traditional
Account No. 910-0000000
Re: Description of security, principal and interest
split
With telephone advise of payment to the
Securities Custody and Collection
Department of Massachusetts Mutual Life
Insurance Company at (000) 000-0000
Notices
All notices and communications to be
addressed as first provided above, except
notices with respect to payments to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
Tax Identification No. 00-0000000
NUMBER OF
SHARES OF
PRINCIPAL AMOUNT OF CONVERTIBLE
NOTES PURCHASED PREFERRED STOCK
INVESTORS
MassMutual Corporate Investors $3,300,000 3,300
c/o Massachusetts Mutual Life Insurance
Company
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Securities Investment Division
Payments
All payments on account of the Note shall be
made by crediting in the form of
bank wire transfer of Federal or other
immediately available funds, (identifying
each payment as [insert name of issuer and
description of Note], interest and
principal) to:
Chase/NYC/Cust
ABA No. 000000000
A/C *000-0-000000 for F/C/T MassMutual Corporate
Investors
A/C #G06109
Attn: Bond Interest
Re: Description of security (principal and interest
split, if applicable)
With telephone advise of payment to the
Securities Custody and Collection
Department of Massachusetts Mutual Life
Insurance Company at (000) 000-0000
Instruction for mailing checks
Mass Mutual Corporate Investors
(or Xxxx & Co., if securities are registered in the
nominee name)
c/o Chase Manhattan Bank, N.A.
Attn: Income Processing, Xxxxx 0X
X.X. Xxx 0000, Xxxxxx Xxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Please include a/c #G06109 on the check
Instructions for delivery of securities
All securities should be delivered to the following address:
Chase Manhattan Bank
4 New York Plaza
Ground Floor Window
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxx
Re: #G06109
Notices
All notices and communications to be
addressed as first provided above, except
notices with respect to payments to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
Tax Identification No. 00-0000000
NUMBER OF
SHARES OF
PRINCIPAL AMOUNT OF CONVERTIBLE
NOTES PURCHASED PREFERRED STOCK
INVESTORS
MassMutual Participation Investors $1,700,000 1,700
c/o Massachusetts Mutual Life Insurance Company
c/o Massachusetts Mutual Life Insurance Company
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Securities Investment Division
Payments
All payments on account of the Note shall
be made by crediting in the form of
bank wire transfer of Federal or other
immediately available funds, (identifying
each payment as [insert name of issuer and
description of Note], interest and
principal), to:
Chase/NYC/Cust
ABA No. 000000000
A/C #000-0-000000 for F/C/T MassMutual Participation
Investors
A/C #G06110
Attn: Bond Interest
Re: Description of security (principal and interest
split, if applicable)
With telephone advice of payment to the
Securities Custody and Collection
Department of Massachusetts Mutual Life
Insurance Company at (000) 000-0000
Instructions for mailing checks
MassMutual Participation Investors
(or Xxxx & Co., if the securities are registered in
nominee name)
c/o Chase Manhattan Bank, N.A.
Attn: Income Processing, Xxxxx 0X
X.X. Xxx 0000, Xxxxxx Xxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Please include a/c #G06110 on the check.
Instructions for delivery of securities
All securities should be delivered to the following address:
Chase Manhattan Bank
4 New York Plaza
Ground Floor Window
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxx
Re: #G06110
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments to be addressed to:
Attention: Securities Custody and
Collection Department
F 381
Tax Identification No. 00-0000000
NUMBER OF
SHARES OF
PRINCIPAL AMOUNT OF CONVERTIBLE
NOTES PURCHASED PREFERRED STOCK
INVESTORS
MassMutual Corporate Value Partners Limited $1,000,000 1,000
(certificates registered in the name of
Gerlach & Co.)
c/o Bank of America Trust and Banking Corporation
(Cayman) Limited
P.O. Box 1092
Xxxxxx Town
Grand Cayman
Cayman Island, B.W.I.
Payments
All payments on account of the Note shall
be made by crediting in the form of
bank wire transfer of Federal or other
immediately available funds, (identifying
each payment as [insert name of issuer and
description of Note], interest and
principal), to:
Xxxxxxx & Co.
c/o Citibank, N.A.
ABA Number 000000000
Concentration Account 00000000
Re: MassMutual Corporate Value Partners Limited
Name of Security/CUSIP
With telephone advice of payment to the
Securities Custody and Collection
Document of Massachusetts Mutual Life
Insurance Company at (000) 000-0000
Registration of Securities
All securities should be registered in Citibank's
nominee name of Xxxxxxx & Co. and sent to the
following address:
Citibank
00 Xxxxxxxx Xxxxx - Xxxxx X
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxx
Acct. #794309
Notices
All notices and communications to be addressed as first provided above.
with a copy to the Investment Manager at:
Massachusetts Mutual Life Insurance Company
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000 XXX
Attn: Xxxxx Xxxxxxxx
Xxxxxxx Xxxxxx
ANNEX A
SCHEDULE OF DOCUMENTS
1. Insurance. Satisfactory evidence that the insurance policies required
by Section 7.9 of the Agreement are in full force and effect.;
2. Certified Charter. A copy of the Certificate or Articles of
Incorporation of the Company and each Subsidiary Guarantor, and all
amendments thereto, certified by the Secretary of State or other
appropriate official of the jurisdiction of incorporation;
3. Good Standing Certificates. Good standing certificates for the Company
and each Subsidiary Guarantor issued by the Secretary of State or other
appropriate official of the jurisdiction of incorporation of such
Person and each jurisdiction where the conduct of such Obligor's
business activities or the ownership of its Properties necessitates
qualification;
4. Solvency Certificate. A certificate from the Financial Officer of the
Company, substantially in the form of Exhibit E to the Agreement.
5. Financial Statements. True and complete copies of the financial
statements referred to in Section 4.7 of the Agreement and the
Projections.
6. Officer's Certificate. A certificate of a Responsible Officer of the
Company certifying as to the matters set forth in Section 6.1(b) and
(d) of the Agreement.
7. Secretary Certificates. A Certificate of the Secretary of each Obligor,
together with true and correct copies of the Certificate or Articles of
Incorporation and Bylaws of such Obligor, and all amendments thereto,
true and correct copies of the resolutions of the Board of Directors of
such Obligor authorizing or ratifying the execution, delivery and
performance of this Agreement, the other Transaction Documents and the
documents, agreements and contracts evidencing or effecting the
Acquisition and the names of the officer or officers of each Obligor
authorized to sign this Agreement, the other Transaction Documents (or
amendments thereto), the Other Agreements and the documents, agreements
and contracts evidencing or effecting the Acquisition together with a
sample of the true signature of each such officer;
8. Legal Opinions. The favorable, written opinion of Xxxxxxxxxx & Xxxxx,
P.A., counsel to the Obligors, as to the transactions contemplated by
this Agreement and any of the other Transaction Documents;
9. Pay-off Letters. Pay-off statements, releases and UCC-3 termination
statements, evidencing repayment in full of all Indebtedness being
repaid with the proceeds from the issuance of the Notes or borrowings
under the Senior Credit Agreement;
10. Accountant's Letter. A letter authorizing the independent certified
public accountants of the Obligors to communicate with the Investors or
their designated representatives in accordance with Section 7.7(vii).
11. Lien Searches. Satisfactory results of (i) a Uniform Commercial Code
lien search and other filings and registrations of Liens against
Properties of the Obligors and (ii) pending litigation and judgment
searches, in each such jurisdiction as the Investors shall reasonably
require;
12. Acquisition. True and complete copies of the duly executed Purchase
Documents. Each of the conditions precedent to the Company's
obligations to consummate the Acquisition shall have been satisfied or
waived with the consent of the Investors and the Acquisition shall have
been consummated in accordance with all Applicable Law. Copies of the
legal opinions referred to in 6.2(a)(iii) and 6.2(b)(v) of the Purchase
Documents, together with letters from the counsel rendering such
opinions permitting the Investors to rely thereon;
13. Environmental. Phase I environmental assessments (and, if applicable
Phase II environmental assessments) in respect to each location owned
and/or operated by the Company or any of its Subsidiaries and copies of
all other reports or assessments commissioned by the Company, together
with reliance letters permitting the Investors to rely on such
environmental reports;
14. Senior Loan Documents. True and complete copies of the executed Senior
Loan Documents. Copies of all legal opinions required to be delivered
thereunder, together with letters from counsel rendering such opinions
permitting the Investors to rely thereon. All conditions precedent to
the initial borrowings thereunder shall have been satisfied;
15. Payment Direction Letter. Duly executed originals of a letter of
direction, in substantially the form of Exhibit F to the Agreement.
16. Small Business Concern Documents. (i) Deliver to CB Capital Investors,
L.P. a Size Status Declaration on SBA Form 480 and an Assurance of
Compliance on SBA Form 652 and (ii) provide to CB Capital Investors,
L.P. the information necessary for the preparation of CB Capital
Investors, L.P. of a Portfolio Financing Report on SBA Form 1031.
17. Termination of Equity Documents. Evidence in form and substance
satisfactory to the Investors that each of the (i) MassMutal Stock
Purchase Agreement and (ii) the Rights Agreement dated as of May 1,
1997, as amended, by and among the Company and the other parties
thereto, shall have been terminated and be of no further force and
effect.
18. Other Documents. Such other documents, instruments and agreement as the
Investors shall reasonably require.
