Exhibit 10.2
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PACIFIC CIRCUITS, INC.
and the
SUBSIDIARY GUARANTORS NAMED HEREIN
$12,500,000 Principal Amount
of
12% Senior Subordinated Notes of Pacific Circuits, Inc.
and
Warrants to Purchase 2,019 Shares of Common Stock
of Pacific Circuits, Inc.
SECURITIES PURCHASE AGREEMENT
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Dated as of July 13, 1999
TABLE OF CONTENTS
SECTION 1. PURCHASE AND SALE OF SECURITIES.........................................................1
1.1 ISSUE OF SECURITIES ....................................................................1
1.2 PURCHASE AND SALE OF SECURITIES ........................................................2
1.3 REGISTRATION OF SECURITIES .............................................................3
1.4 DELIVERY EXPENSES ......................................................................4
1.5 ISSUE TAXES ............................................................................4
1.6 DIRECT PAYMENT .........................................................................4
1.7 LOST, ETC. SECURITIES ..................................................................5
1.8 INDEMNIFICATION ........................................................................5
1.9 FURTHER ACTIONS ........................................................................8
1.10 OTHER COVENANTS ........................................................................8
SECTION 2. CLOSING CONDITIONS ......................................................................8
2.1 DELIVERY OF DOCUMENTS ...................................................................8
2.2 LEGAL INVESTMENT, PURCHASE PERMITTED BY APPLICABLE LAWS ................................10
2.3 PAYMENT OF FEES . ......................................................................11
2.4 COMPLIANCE WITH AGREEMENTS .............................................................11
2.5 COMPLETION OF OTHER TRANSACTIONS .......................................................11
2.6 REPRESENTATIONS AND WARRANTIES .........................................................12
2.7 NO EVENT OF DEFAULT ....................................................................12
2.8 EQUITY CONTRIBUTION ....................................................................12
2.9 PROCEEDINGS SATISFACTORY ...............................................................12
2.10 CONSENTS AND PERMITS ...................................................................12
2.11 NO MATERIAL ADVERSE EFFECT .............................................................13
2.12 NO MATERIAL JUDGEMENT OR ORDER .........................................................13
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY ..........................................13
3.1 AUTHORIZATION, CAPITALIZATION ..........................................................13
3.2 NO VIOLATION OR CONFLICT, NO DEFAULT ...................................................14
3.3 USE OF PROCEEDS ........................................................................15
3.4 NO MATERIAL ADVERSE CHANGE: FINANCIAL STATEMENTS .......................................15
3.5 FULL DISCLOSURE ........................................................................16
3.6 THIRD PARTY CONSENTS ...................................................................16
3.7 NO VIOLATION OF REGULATIONS OF BOARD OF GOVERNORS OF FEDERAL RESERVE SYSTEM ............16
3.8 PRIVATE OFFERING .......................................................................17
3.9 GOVERNMENTAL REGULATIONS ...............................................................17
3.10 BROKERS ................................................................................17
3.11 SOLVENCY ...............................................................................18
3.12 REPRESENTATIONS AND WARRANTIES .........................................................18
3.13 LITIGATION .............................................................................18
3.14 LABOR MATTERS ..........................................................................19
3.15 TAXES ..................................................................................19
3.16 ENVIRONMENTAL MATTERS ..................................................................19
3.17 ERISA ..................................................................................20
3.18 INTELLECTUAL PROPERTY ..................................................................20
3.19 COMPLIANCE WITH LAWS ...................................................................21
3.20 CONSUMMATION OF ACQUISITIONS ...........................................................21
3.21 INDEBTEDNESS ...........................................................................21
3.22 INVESTMENTS ............................................................................22
3.23 INSURANCE ..............................................................................22
3.24 SURVIVAL OF REPRESENTATIONS AND WARRANTIES .............................................22
3.25 CONSULTING AGREEMENTS ..................................................................22
3.26 YEAR 2000 COMPLIANCE ...................................................................22
SECTION 4. REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS OF
EACH PURCHASER .........................................................................22
4.1 PURCHASE FOR OWN ACCOUNT ...............................................................23
4.2 ACCREDITED INVESTOR ....................................................................23
4.3 AUTHORIZATION ..........................................................................23
4.4 ACCESS TO INFORMATION ..................................................................24
4.5 SECURITIES RESTRICTED ..................................................................24
4.6 PLEDGE OF SECURITIES ...................................................................24
4.7 ........................................................................................24
SECTION 5. COVENANTS ..............................................................................25
5.1 PAYMENT OF NOTES, SATISFACTION OF OBLIGATIONS ..........................................25
5.2 FINANCIAL STATEMENTS AND REPORTS .......................................................25
5.3 CERTIFICATES; OTHER INFORMATION ........................................................26
5.4 LIMITATION ON RESTRICTED PAYMENTS ......................................................27
5.5 LIMITATION ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK ...............30
5.6 LIMITATION ON TRANSACTIONS WITH AFFILIATES .............................................32
5.7 RESTRICTIONS ON LIENS ..................................................................32
5.8 LIMITATION ON SALE OF ASSETS ...........................................................32
5.9 LIMITATION ON CONSOLIDATED CAPITAL EXPENDITURES ........................................35
5.10 LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES ...........35
5.11 CHANGE OF CONTROL ......................................................................36
5.12 FINANCIAL COVENANTS ....................................................................37
5.13 FISCAL YEARS ...........................................................................39
5.14 STAY, EXTENSION AND USURY LAWS .........................................................39
5.15 CORPORATE EXISTENCE, MERGER; SUCCESSOR CORPORATION .....................................39
5.16 SAME BUSINESS ..........................................................................40
5.17 TAXES ..................................................................................41
5.18 INVESTMENT COMPANY ACT .................................................................41
5.19 OWNERSHIP OF SUBSIDIARIES ..............................................................41
5.20 INSURANCE ..............................................................................41
5.21 ERISA NOTICES ..........................................................................41
5.22 INCONSISTENT AGREEMENTS ................................................................42
5.23 COMPLIANCE WITH LAWS, MAINTENANCE OF LICENSES ..........................................42
5.24 INSPECTION OF PROPERTIES AND RECORDS ...................................................42
5.25 BOARD OF DIRECTOR OBSERVATION RIGHTS ...................................................43
5.26 MAINTENANCE OF OFFICE OR AGENCY ........................................................43
5.27 INFORMATION TO PROSPECTIVE PURCHASERS ..................................................43
5.28 PRIVATE PLACEMENT NUMBER ...............................................................44
5.29 SENIOR INDEBTEDNESS AMENDMENTS .........................................................44
5.30 NOTICES OF CERTAIN PROCEEDINGS .........................................................44
5.31 CONSULTING AGREEMENTS ..................................................................44
5.32 NO AMENDMENT OR WAIVER OF CERTAIN DOCUMENTS ............................................44
SECTION 6. REDEMPTION .............................................................................45
6.1 THE COMPANY'S RIGHT TO REDEEM ..........................................................45
6.2 SELECTION OF NOTES TO BE REDEEMED ......................................................45
6.3 NOTICE OF REDEMPTION ...................................................................45
6.4 EFFECT OF NOTICE OF REDEMPTION .........................................................46
6.5 PAYMENT OF REDEMPTION PRICE ............................................................46
SECTION 7. DEFAULTS AND REMEDIES ..................................................................46
7.1 EVENTS OF DEFAULT ......................................................................46
7.2 ACCELERATION OF NOTES, REMEDIES ........................................................48
7.3 PREMIUM ON ACCELERATION ................................................................49
7.4 OTHER REMEDIES .........................................................................49
7.5 WAIVER OF PAST DEFAULTS ................................................................49
7.6 RIGHTS OF HOLDERS TO RECEIVE PAYMENT ...................................................50
7.7 UNDERTAKING FOR COSTS ..................................................................50
SECTION 8. SUBORDINATION ..........................................................................50
8.1 NOTES SUBORDINATED TO SENIOR INDEBTEDNESS ..............................................50
8.2 NO PAYMENT ON NOTES IN CERTAIN CIRCUMSTANCES ...........................................50
8.3 NOTES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR INDEBTEDNESS ON DISSOLUTION,
LIQUIDATION OR REORGANIZATION ..........................................................53
8.4 NOTEHOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS................54
8.5 OBLIGATIONS OF THE COMPANY UNCONDITIONAL ...............................................54
8.6 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE COMPANY OR HOLDERS
OF SENIOR INDEBTEDNESS .................................................................55
8.7 SECTION 8 NOT TO PREVENT EVENTS OF DEFAULT .............................................55
8.8 MISCELLANEOUS PROVISIONS ...............................................................55
SECTION 9. AMENDMENTS AND WAIVERS .................................................................56
9.1 WITH CONSENT OF HOLDERS ................................................................56
9.2 REVOCATION AND EFFECT OF CONSENTS ......................................................57
9.3 NOTATION ON OR EXCHANGE OF NOTES .......................................................58
9.4 PAYMENT OF EXPENSES ....................................................................58
SECTION 10. DEFINITIONS ............................................................................58
10.1 DEFINITIONS ............................................................................58
10.2 RULES OF CONSTRUCTION ..................................................................78
SECTION 11. SUBSIDIARY GUARANTY ....................................................................79
11.1 GUARANTY ...............................................................................79
11.2 EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTY ..........................................80
11.3 FUTURE SUBSIDIARY GUARANTORS ...........................................................81
11.4 CERTAIN BANKRUPTCY EVENTS ..............................................................81
11.5 SUBORDINATION OF SUBSIDIARY GUARANTEES .................................................81
SECTION 12. MISCELLANEOUS ..........................................................................81
12.1 NOTICES ................................................................................81
12.2 SUCCESSORS AND ASSIGNS .................................................................82
12.3 COUNTERPARTS ...........................................................................82
12.4 HEADINGS ...............................................................................82
12.5 GOVERNING LAW, SUBMISSION TO JURISDICTION ..............................................82
12.6 ENTIRE AGREEMENT .......................................................................83
12.7 SEVERABILITY ...........................................................................83
12.8 FURTHER ASSURANCES .....................................................................83
12.9 DISCLOSURE OF FINANCIAL INFORMATION ....................................................83
ANNEXES
Annex A Form of Note
Annex A-1 Form of Guaranty
Annex B Warrant Agreement
Annex C Form of Registration Rights Agreement
Annex D Form of Opinion of Counsel to the Company and its Subsidiaries
Annex E Form of Opinion of Counsel to Purchasers
SCHEDULES
Schedule 1.1 Purchaser Information
Schedule 1.2 Wire Transfer Instructions
Schedule 2.11 Material Changes
Schedule 3.1 Capitalization
Schedule 3.8 Recent Securities Offerings
Schedule 3.13 Litigation
Schedule 3.14 Labor Matters
Schedule 3.16 Environmental Matters
Schedule 3.17 ERISA
Schedule 3.18 Intellectual Property
Schedule 3.21 Existing Indebtedness
Schedule 3.23 Insurance
Schedule 3.25 Consulting Agreements
Schedule 5.5(b) Operating Leases
Schedule 5.6 Transactions With Affiliates
Schedule 5.13 Fiscal Month-End
Schedule 10.1 (a) Existing Liens
Schedule 10.1 (b) Non-Recurring Add-Backs
Schedule 10.1 (c) Investments
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT is dated as of July 13, 1999, (this
"AGREEMENT"), and entered into by and among Pacific Circuits, Inc., a
Washington corporation (the "COMPANY"), the Subsidiary Guarantor listed on the
signature pages hereto and the purchasers listed on the signature pages hereto
(each a "PURCHASER" and collectively, the "PURCHASERS").
Capitalized terms not otherwise defined herein shall have the meanings
ascribed to such terms in SECTION 10.1 hereof.
In consideration of the premises, mutual covenants and agreements
hereinafter contained and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the Company and each Subsidiary
Guarantor agrees, jointly and severally, and each of the Purchasers agrees,
severally but not jointly, as follows:
SECTION 1. PURCHASE AND SALE OF SECURITIES
1.1 ISSUE OF SECURITIES
(a) On or before the Closing,
(1) The Company will have authorized the issue and sale
to the Purchasers, in the respective amounts set forth opposite such
Purchaser's name on SCHEDULE 1.1, of $12,500,000 aggregate principal
amount of its 12% Senior Subordinated Notes (the "NOTES"), to be
substantially in the form attached hereto as ANNEX A.
(2) The Company will have authorized the issue and sale
to the Purchasers, in the respective amounts set forth opposite such
Purchaser's name on SCHEDULE 1.1, its detachable warrants (the
"WARRANTS") to purchase an aggregate of 2,019 shares of its Common
Stock pursuant to a Warrant Agreement in the form attached hereto as
ANNEX B (the "WARRANT AGREEMENT").
The Notes and the Warrants shall individually be referred to herein as
a "SECURITY" and collectively referred to herein as the "SECURITIES."
(b) The Notes shall include such notations, legends or
endorsements set forth thereon or required by law. The Notes will be issued to
the Purchasers in the initial principal amounts set forth on SCHEDULE 1.1. Each
Note shall be dated the date of its issuance. Subject to SECTION 1.7. The
aggregate principal amount of the Notes outstanding at any one time may not
exceed $12,500,000; except to the extent interest is added to the principal of
any Note in accordance with the provisions thereof. The terms and provisions
contained in the Notes shall constitute, and are hereby expressly made, a part
of this Agreement and, to the extent applicable, the Company, by its execution
and delivery of this Agreement, expressly agrees to such terms and provisions
and to be bound thereby.
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(c) Each Warrant shall be substantially in the form attached as
EXHIBIT A to the Warrant Agreement. Each Warrant shall be dated the date of its
issuance. The Warrants will be exercisable, in the manner provided in the
Warrant Agreement and the Warrants, for a number of shares of Common Stock as
provided in the Warrant Agreement (the "WARRANT SHARES"). Each Holder of Warrant
Shares will have certain registration rights and other rights and obligations
with respect to the Warrant Shares as set forth in the Registration Rights
Agreement in the form attached hereto as ANNEX C(the "REGISTRATION RIGHTS
AGREEMENT") and other rights and obligations with respect to the Warrants and
Warrant Shares, as provided in the Warrant Agreement. The terms and provisions
contained in the Warrants shall constitute, and are hereby expressly made, a
part of this Agreement and, to the extent applicable, the Company and the
Holders, by their execution and delivery of this Agreement, expressly agree to
such terms and provisions and to be bound thereby.
1.2 PURCHASE AND SALE OF SECURITIES
(a) PURCHASE AND SALE. The Company agrees to sell and, subject to
the terms and conditions set forth herein and in reliance on the representations
and warranties of the Company and the Subsidiary Guarantors contained or
incorporated herein, each of the Purchasers agrees, severally but not jointly,
to purchase the securities set forth opposite such Purchaser's name in SCHEDULE
1.1 at the purchase price indicated therein. The Company and the Purchasers
hereby agree that all Tax Returns filed by the Company and the Purchasers shall
be consistent in all material respects with such allocation (including for
purposes of section 1271 et al. of the Code).
(b) CLOSING. The purchase and sale of the Securities shall take
place at a closing (the "CLOSING") at the offices of Xxxxxx, Xxxx & Xxxxxxxx,
LLP, located at 000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, at 10:00
a.m., local time, on July 13, 1999, or such other Business Day as may be agreed
upon by the Purchasers and the Company (the "CLOSING DATE"). At the Closing, the
Company will deliver to each of the Purchasers the Securities to be purchased by
such Purchaser (in such permitted denomination or denomination or denominations
and registered in such Purchaser's name or the name of such nominee or nominees
as such Purchaser may request), dated the Closing Date, against payment of the
purchase price therefor by intra-bank or Federal funds bank wire transfer of
same day funds to such bank account which is identified on SCHEDULE 1.2 or such
other account as the Company shall designate at least two Business Days prior to
the Closing.
(c) FEES AND EXPENSES. Whether or not the Securities are sold, the
Company agrees to pay or reimburse all reasonable out-of-pocket expenses of each
Purchaser relating to this Agreement, including but not limited to:
(1) each Purchaser's reasonable out-of-pocket expenses
incurred in connection with the transactions contemplated by this
Agreement, the Warrant Agreement, the Registration Rights Agreement and
the other Documents including, without limitation, travel and lodging
expenses and all reasonable costs incurred in connection with such
Purchaser's review of the Company's and each of its Subsidiaries'
business and operations;
(2) the reasonable fees and expenses of the Purchasers'
counsel, Gardere & Xxxxx, L.L.P., in connection herewith and with the
other Documents;
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(3) the cost of printing, reproducing and delivering to
each Purchaser's home office or the office of such Purchaser's
designee, this Agreement, the Warrant Agreement, the Registration
Rights Agreement, the Securities and the other Documents;
(4) any reasonable fees and expenses (including the
reasonable fees and expenses of counsel) in connection with any
registration or qualification of the Securities required in connection
with the offer and sale of the Securities pursuant to this Agreement
under the securities or "blue sky" laws of any jurisdiction requiring
such registration or qualification or in connection with obtaining any
exemptions from such requirements;
(5) the reasonable out-of-pocket expenses (including the
fees and expenses of one counsel for each Purchaser together with such
Purchaser's Affiliates) relating to any amendment to, or modification
of, or any waiver or consent or preservation of rights under, this
Agreement or any of the other Documents; and
(6) all other expenses, including without limitation
counsel's fees, accountant's fees and any rating agency fees incurred
by the Company in connection with the transactions contemplated by this
Agreement and the other Documents.
The Company shall deliver to each of the Purchasers or to such other
persons as such Purchaser shall direct, concurrently with the Closing, by
intra-bank or Federal funds bank wire transfer of same day funds, the fee set
forth opposite such Purchaser's name on SCHEDULE 1.1 and payment for any
reasonable and documented out-of-pocket expenses which must be paid by Company
pursuant to this SECTION 1.2(c) or for which such Purchaser is entitled to
reimbursement pursuant to this SECTION 1.2(c).
(d) OTHER PURCHASERS. Each Purchaser's obligations hereunder are
subject to the execution and delivery of this Agreement by the other
Purchasers listed on the signature pages hereof. The obligations of
each Purchaser shall be several and not joint, and no Purchaser shall
be liable or responsible for the acts of any other Purchaser under this
Agreement.
1.3 REGISTRATION OF SECURITIES
The Company shall cause to be kept at its principal office a register
for the registration and transfer of the Notes (the "NOTE REGISTER") and a
register for the registration and transfer of the Warrants (the "WARRANT
REGISTER") and the Warrant Shares (the "WARRANT SHARES REGISTER"). The names and
addresses of the Holders of Notes, the transfer of Notes, and the names and
addresses of the transferees of the Notes shall be registered in the Note
Register. The names and addresses of the Holders of Warrants, the transfer of
Warrants and the names and addresses of the transferees of Warrants shall be
registered in the Warrant Register. The names and addresses of the Holders of
Warrant Shares, the transfer of Warrant Shares and the names and addresses of
the transferees of Warrant Shares shall be registered in the Warrant Shares
Register.
The Person in whose name any registered Security shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes of
this Agreement, and the Company shall
Page 3
not be affected or bound by any notice to the contrary, until due presentment of
such Security for registration of transfer so provided in this SECTION 1.3.
Payment of or on account of the principal, premium, if any, and interest on any
registered Securities shall be made to or upon the written order of such
registered holder.
When Securities are presented to the Company with a request to register
the transfer of such Securities or to exchange such Securities for an equal
principal amount of Securities of other authorized denominations, the Company
shall register the transfer or make the exchange as requested if its reasonable
requirements for such transaction are met.
1.4 DELIVERY EXPENSES
If a Holder surrenders any Note or Warrant to the Company for any
reason, the Company agrees to pay the cost of delivering to such Holder's home
office or to the office of such Holder's designee from the Company, the
surrendered Security and each Security issued in substitution, replacement or
exchange for, or upon conversion of, the surrendered Security.
1.5 ISSUE TAXES
The Company agrees to pay all taxes (other than taxes in the nature of
income, franchise or gift taxes) and governmental fees in connection with the
issuance, sale, delivery or transfer by the Company to each Holder of the Notes
and the Warrants, as the case may be, and the execution and delivery of the
other Documents and any modification of any of such Securities and Documents and
will save such Holder harmless without limitation as to time against any and
all liabilities with respect to all such taxes and fees. The obligations of the
Company under this SECTION 1.5 shall survive the payment or prepayment of the
Notes, at maturity, upon redemption or otherwise, the exercise of the Warrants
and the termination of this Agreement and the other Documents.
1.6 DIRECT PAYMENT
(a) The Company will pay or cause to be paid all amounts payable
with respect to any Note (without any presentment of such Note and without any
notation of such payment being made thereon) by crediting (before 2:00 p.m. (New
York City time) on the due date thereof), by Federal funds bank wire transfer in
same day funds to each Holder's account in any bank in the United States as may
be designated and specified in writing by such Holder at least two Business Days
prior thereto. Each Purchaser's initial bank account for this purpose is set
forth on SCHEDULE 1.1.
(b) Notwithstanding anything to the contrary contained in the
Notes, if any principal amount payable with respect to a Note is payable, at
maturity, upon redemption or otherwise, on a Legal Holiday, then the Company
shall pay such amount on the next succeeding Business Day, and interest shall
accrue on such amount until the date on which such amount is paid and payment of
such accrued interest shall be made concurrently with the payment of such
amount, provided that the Company may elect to pay in full (but not in part) any
such amount on the last Business Day prior to the date such payment otherwise
would be due, and no such additional interest shall accrue on such amount.
Notwithstanding anything to the contrary contained in the Notes, if any interest
payable with
Page 4
respect to a Note is payable on a Legal Holiday, then the Company shall pay such
interest on the next succeeding Business Day, and such extension of time shall
be included in the computation of the interest payment, provided that the
Company may elect to pay in full (but not in part) any such interest on the last
Business Day prior to the date such payment otherwise would be due, and such
diminution in time shall be included in the computation of the interest payment.
1.7 LOST, ETC. SECURITIES
If a mutilated Security is surrendered to the Company or if the Holder
of a Security claims and submits an affidavit or other evidence, satisfactory to
the Company, to the effect that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue a replacement Security if the
customary requirements relating to replacement securities are reasonably
satisfied. If required by the Company, such Holder must provide an indemnity
bond, or other form of indemnity, sufficient in the judgment of the Company to
protect the Company from any loss which it may suffer if a Security is replaced.
If any Purchaser or any other institutional Holder (or nominee thereof) is the
owner of any such lost, stolen or destroyed Security, then the affidavit of an
authorized officer of such owner, setting forth the fact of loss, theft or
destruction and of its ownership of the Security at the time of such loss, theft
or destruction shall be accepted as satisfactory evidence thereof, and no
further indemnity shall be required as a condition to the execution and delivery
of a new Security other than the unsecured written agreement of such owner
reasonably satisfactory to the Company to indemnify the Company, or at the
option of the Purchaser, an indemnity bond in the amount of the Security
remaining outstanding.
Every replacement Security is an obligation of the Company.
1.8 INDEMNIFICATION
In addition to all other sums due hereunder or provided for in this
Agreement or any of the other Documents and any and all obligations of the
Company to indemnify any Purchaser hereunder or under any of the other
Documents, the Company hereby agrees, without limitations as to time, to
indemnify each Purchaser, each Affiliate of a Purchaser and each director,
officer, employee, counsel, agent or representative of such Purchaser and its
Affiliates (collectively, the "INDEMNIFIED PARTIES") against, and hold it and
them harmless from, to the fullest extent lawful, all losses, claims, damages,
liabilities, costs (including, without limitation, costs of preparation and
reasonable attorneys' fees and disbursements) and expenses, including expenses
of investigation (collectively, "LOSSES"), incurred by it or them and arising
out of or in connection with this Agreement, the Acquisition Agreements, the
Senior Credit Agreement, the other Documents or the transactions contemplated
hereby or thereby (or any other document or instrument executed herewith or
pursuant hereto or thereto), whether or not the transactions contemplated by
this Agreement are consummated and whether or not any Indemnified Party is a
formal party to any proceeding; provided, however, that the Company shall not be
liable to any Indemnified Party for any Losses (a) to the extent that it shall
be finally determined by a court of competent jurisdiction (which determination
is not subject to appeal or review) that such Losses arose from the gross
negligence or willful misconduct of such Indemnified Party or (b) relating to
a loss in value of the Securities as a result of market conditions, including
changes in interest rates). The Company and each Subsidiary Guarantor agrees,
jointly and severally,
Page 5
to reimburse any Indemnified Party promptly for all such Losses as they are
incurred by such Indemnified Party. The obligations of the Company to each
Indemnified Party hereunder shall be separate obligations, and the Company's
liability to any such Indemnified Party hereunder shall not be extinguished
solely because any other Indemnified Party is not entitled to indemnity
hereunder. The obligations of the Company under this SECTION 1.8 shall survive
the payment or prepayment of the Notes, at maturity, upon acceleration,
redemption or otherwise, the exercise of the Warrants purchased by any
Purchaser, the redemption or repurchase of the Warrants purchased by any
Purchaser, the redemption or repurchase of any Warrant Shares, any transfer of
the Securities by any Purchaser and the termination of this Agreement, the
Securities, the Acquisition Agreements, the Senior Credit Agreement, the Warrant
Agreement, the Registration Rights Agreement and any of the other Documents.
In addition, the Company shall, without limitation as to time,
indemnify, reimburse, defend, and hold harmless the Indemnified Parties for,
from, and against all Losses asserted against, resulting to, imposed on, or
incurred by any of the Indemnified Parties, directly or indirectly, in
connection with any of the following: (i) the events, circumstances and
conditions relating to environmental matters described in the Acquisition
Agreements; (ii) any pollution or threat to human health or the environment that
is related in any way to the management, use, control, ownership or operation of
the business or property in connection with the business of the Companies, by
the Companies' employees, or any Person for whom any Company is or may be
responsible by law or contract including, without limitation, all on-site and
off-site activities involving Materials of Environmental Concern, and that
occurred, existed, arises out of conditions or circumstances that occurred or
existed, or was caused, in whole or in part, on or before the Closing Date,
whether or not the pollution or threat to human health or the environment is
described in the Acquisition Agreements; (iii) any Environmental Claim against
any Person whose liability for such Environmental Claim any Company has assumed
or retained either contractually or by operation of law, including but not
limited to any pollution or threat to human health or the environment, or any
Federal, state, local or foreign approvals; or (iv) the breach of any
environmental representation or warranty set forth or incorporated by reference
herein.
In case any action, claim or proceeding shall be brought against any
Indemnified Party with respect to which indemnity may be sought against the
Company hereunder, such Indemnified Party shall promptly notify the Company in
writing and the Company shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Party and
payment of all fees and expenses incurred in connection with the defense
thereof. The failure to so notify the Company shall not affect any obligation it
may have to any Indemnified Party under this Agreement or otherwise except to
the extent that (as finally determined by a court of competent jurisdiction
(which determination is not subject to any further review or appeal)) such
failure materially and adversely prejudiced the Company. Each Indemnified Party
shall have the right to employ separate counsel in such action, claim or
proceeding and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of each Indemnified Party unless; (i) the
Company has agreed to pay such expenses; or (ii) the Company has failed promptly
to assume the defense and employ counsel reasonably satisfactory to such
Indemnified Party; or (iii) the named parties to any such action, claim or
proceeding (including any impleaded parties) include any Indemnified Party and
such Indemnifying Party or an Affiliate of such Indemnifying Party, and such
Indemnified Party shall
Page 6
have been advised by counsel that either (x) there may be one or more legal
defenses available to it which are different from or in addition to those
available to the Company or such Affiliate or (y) a conflict of interest may
exist if such counsel represents such Indemnified Party and the Company or its
Affiliate; PROVIDED that, if such Indemnified Party notifies the Company in
writing that it elects to employ separate counsel in the circumstances described
in clause (i), (ii) or (iii) above, the Company shall not have the right to
assume the defense thereof and such counsel shall be at the expense of the
Company; PROVIDED, HOWEVER, that the Company shall not, in connection with any
one such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be responsible hereunder for the fees and
expenses of more than one such firm of separate counsel (in addition to any
local counsel), which counsel shall be designated by such Indemnified Party. The
Company shall not be liable for any settlement of any such action effected
without its written consent (which shall not be unreasonably withheld). The
Company agrees that it will not and that it will not permit any Subsidiary
Guarantor to, without the Indemnified Party's prior written consent, consent to
entry of any judgment or settle or compromise any pending or threatened claim,
action or proceeding in respect of which indemnification or contribution may be
sought hereunder unless the foregoing contains an unconditional release, in form
and substance reasonably satisfactory to such Indemnified Party, of such
Indemnified Party from all liability and obligation arising therefrom.
If the indemnification provided for in this SECTION 1.8 is unavailable
to, or insufficient to hold harmless, any Indemnified Party in respect of any
Losses referred to therein (for reasons other than such Indemnified Party's
gross negligence or willful misconduct as herein provided), then the Company
shall have an obligation to contribute to the amount paid or payable by such
Persons as a result of such Losses in such proportion as is appropriate to
reflect the relative fault of the Company, its subsidiaries and Affiliates, on
the one hand, and such Indemnified Party, on the other hand, in connection with
the actions which resulted in such Losses as well as any other relevant
equitable considerations. The amount paid or payable by any such Person as a
result of the Losses referred to above shall be deemed to include, subject to
the limitations set forth in this SECTION 1.8, any reasonable legal or other
fees or expenses reasonably incurred by such Person in connection with any
investigation, lawsuit or legal or administrative action or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this SECTION 1.8 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. No
Person guilty of fraudulent misrepresentation (within the meaning of Section 11
(f) of the Securities Act) shall be entitled to contribution from any Person
who is not guilty of such fraudulent misrepresentation.
The Indemnified Parties shall have and be entitled to all rights of
subrogation, in respect of any Losses or other amounts as to which the foregoing
indemnity provisions apply, with respect to the claims of the Company against
any of the other parties to the Acquisition Agreements.
The obligations of the Company under this SECTION 1.8 are subject to
the subordination provisions of SECTION 8 hereof, but any failure to perform
such obligations as a result of such subordination provisions shall in any event
constitute an Event of Default hereunder.
Page 7
1.9 FURTHER ACTIONS
The Company shall (i) take all actions necessary or appropriate to
cause its representations and warranties contained in SECTION 3 hereof to be
true and correct as of the Closing Date (unless stated to refer to another
date), both before and after giving effect to the transactions contemplated by
this Agreement, the Acquisition Agreements and the other Documents, as if made
on and as of such date, and (ii) take, or cause to be taken, all action, and do,
or cause to be done, all things necessary, proper or advisable under applicable
law and regulations to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, obtaining all
consents and approvals of all Persons and removing all injunctive or other
impediments or delays, legal or otherwise, which are necessary to the
consummation of the transactions contemplated by this Agreement, the Acquisition
Agreements and the other Documents.
1.10 OTHER COVENANTS
The Company further covenants and agrees not to, and will use its best
efforts to ensure that no affiliate (as defined in Rule 501(b) of the
Securities Act) of the Company will sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in the
Securities Act) that would be integrated with the sale of the Securities in a
manner that would require the registration under the Securities Act of the sale
to the Purchasers of the Securities.
SECTION 2. CLOSING CONDITIONS
The obligations of each Purchaser to purchase and pay for the
Securities to be delivered to such Purchaser at the Closing shall be subject to
the satisfaction of each of the following conditions on or before the Closing
Date:
2.1 DELIVERY OF DOCUMENTS
The Company shall have delivered to each Purchaser, in form and
substance reasonably satisfactory to such Purchaser, the following:
(a) The Notes being purchased by such Purchaser, duly executed by
the Company, in the aggregate principal amount set forth opposite such
Purchaser's name on SCHEDULE 1.1; and Warrants being purchased by such
Purchaser, duly executed by the Company, representing the number of Warrants set
forth opposite such Purchaser's name on SCHEDULE 1.1.
(b) (1) An opinion, dated the Closing Date and addressed to such
Purchaser, from Shearman & Sterling, counsel for the Company, or such
other counsel of the Company reasonably acceptable to the Purchasers,
as to the matters set forth on ANNEX D.
(2) All opinions of all counsel to the Company delivered
pursuant to the PCI Acquisition Agreement, dated the Closing Date and
addressed to the Purchasers or accompanied by a written authorization
from the Person delivering such legal opinion stating that the
Purchasers may rely on such opinion as though it were addressed to them
and a copy
Page 8
of all opinions of all counsel to the Company delivered pursuant to the
Senior Credit Agreement.
(3) An opinion, dated the Closing Date and addressed to
such Purchaser, from Gardere & Xxxxx, L.L.P., counsel for the
Purchasers, as to the matters set forth on ANNEX E.
In rendering such opinions, each counsel may rely as to factual matters
upon certificates or other documents furnished by officers and directors of the
Company (copies of which shall be delivered to such Purchaser) and by government
officials, and upon such other documents as such counsel deem appropriate as a
basis for their opinion. Such counsel shall opine, as applicable, as to the
Federal laws of the United States, the laws of the States of New York and
Washington, the laws of the state or states of incorporation of the Company and
each Subsidiary Guarantor, if other than New York or Washington, and the laws of
the state or states governing the PCI Acquisition Agreement and the Senior
Credit Agreement, as the case may be, if other than New York or Washington.
(c) Resolutions of the Board of Directors of the Company,
certified by the Secretary or Assistant Secretary of the Company, to be duly
adopted and in full force and effect on such date, authorizing (i) the
execution, delivery and performance of this Agreement, the Notes, the
Registration Rights Agreement, the Warrant Agreement, the PCI Acquisition
Agreement, the Senior Credit Agreement, the other Documents to which the Company
is a party and the consummation of the transactions contemplated hereby and
thereby, (ii) the issuance of the Notes and the Warrants and (iii) specific
officers of the Company to execute and deliver this Agreement, the Notes, the
Registration Rights Agreement, the Warrant Agreement, the PCI Acquisition
Agreement, the Senior Credit Agreement and any other Documents to which the
Company is a party.
(d) Certificates of the Chief Executive Officer and Chief
Financial Officer of the Company, dated the Closing Date, certifying that (i)
all of the conditions set forth in SECTIONS 2.3. 2.4, 2.5. 2.6, 2.7, 2.8, 2.10,
2.11 AND 2.12 are satisfied on and as of such date and specifying as to each
such condition the satisfaction thereof, (ii) all of the representations and
warranties of the Company contained or incorporated by reference herein are true
and correct on and as of such date as though made on and as of such date (unless
stated to relate to another date), both immediately prior to and after the
consummation of the PCI Acquisition (and after giving effect to the transactions
contemplated by this Agreement and the other Documents) and no event has
occurred and is continuing, or would result from the issuance of the Securities
or the incurrence of indebtedness under the Senior Credit Agreement, which
constitutes or would constitute a Default or an Event of Default, (iii)
concurrently with the purchase of the Securities, the Company (a) has
outstanding not more than $112,500,000 of Senior Term Debt and (b) has
outstanding not more than $3,000,000 of Senior Revolver Debt and (iv) the
Company has performed its obligations which are required to be performed on or
before the closing under the Acquisition Agreements and the Senior Credit
Agreement in accordance therewith and with all applicable law.
(e) Audited Financial Statements, with respect to Company,
together with a certificate of the Chief Financial Officer of the Company to the
effect that they were prepared in accordance
Page 9
with GAAP and fairly present in all material respects the consolidated financial
position, shareholders' equity and income of such Persons.
(f) Governmental certificates, dated the most recent practicable
date prior to the Closing Date, showing that each of the Companies is organized
and in good standing in the jurisdiction of its incorporation and is qualified
as a foreign corporation and in good standing in all other jurisdictions in
which it has executive offices or transacts business, except where the failure
to be so qualified could not reasonably be expected to have a Material Adverse
Effect.
(g) Copies of each consent, license and approval required in
connection with the execution, delivery and performance by the Company of this
Agreement, the Securities, the Acquisition Agreements, the Senior Credit
Agreement, the Registration Rights Agreement, the Warrant Agreement and the
other Documents and the consummation of the transactions contemplated hereby and
thereby (including without limitation consents, if any, required pursuant to the
HSR Act).
(h) Copies of the Charter Documents of each of the Companies,
certified as of a recent date by the Secretaries of State of their respective
states of incorporation, and certified by the Secretary or Assistant Secretary
of each of the Companies, as true and correct as of the Closing Date.
(i) Certificates of the Secretary or an Assistant Secretary of
each of the Companies as to the incumbency and signatures of the officers or
representatives of such entity executing this Agreement, the Securities, the PCI
Acquisition Agreement, the Senior Credit Agreement, the Registration Rights
Agreement, the Warrant Agreement, the other Documents and any other certificate
or other document to be delivered pursuant hereto or thereto, together with
evidence of the incumbency of such Secretary or Assistant Secretary.
(j) True and correct copies of the Acquisition Agreements and all
amendments thereto relating to the Pacific Acquisition and the PCI Acquisition;
(k) The Pro Forma and the Projections, each in form and substance
acceptable to Purchasers; and
(l) Such additional information and materials as any Purchaser may
reasonably request and specifically identify prior to the Closing Date,
including, without limitation, copies of any debt agreements, security
agreements and other contracts to which any of the Companies is a party.
2.2 LEGAL INVESTMENT, PURCHASE PERMITTED BY APPLICABLE LAWS
Each Purchaser's acquisition of the Securities (a) shall not be
prohibited by any applicable law or governmental regulation, release,
interpretation or opinion (including, without limitation, Regulations U and X of
the Board of Governors of the Federal Reserve System), (b) shall constitute a
legal investment as of the Closing Date under the laws and regulations and
orders of each jurisdiction to which such Purchaser may be subject (without
resort to any "basket" or "leeway" provision), and (c) shall not subject such
Purchaser to any material penalty.
Page 10
2.3 PAYMENT OF FEES.
The Company shall have delivered to each of the Purchasers or to such
other Persons as such Purchaser shall direct on SCHEDULE 1.1, at the Closing, by
intra-bank or federal funds bank wire transfer of same day funds, payment for
such Purchaser's fee as set forth opposite such Purchaser's name on SCHEDULE
1.1.
2.4 COMPLIANCE WITH AGREEMENTS
The Company shall have performed and complied in all material respects
with all agreements, covenants and conditions contained herein, in each of the
other Documents and in any other document contemplated hereby or thereby which
are required to be performed or complied with by the Company on or before the
Closing Date.
2.5 COMPLETION OF OTHER TRANSACTIONS
Simultaneously with or prior to the sale to each Purchaser of the
Securities to be purchased by such Purchaser:
(a) The Company shall have executed and delivered the Acquisition
Agreements and shall have consummated the transactions contemplated thereby to
be consummated on or prior to the Closing Date (including, without limitation,
the Pacific Acquisition and the PCI Acquisition), without amendment,
modification or waiver of any material condition.
(b) The Company and each Person a party thereto shall have executed and
delivered the Registration Rights Agreement and the Warrant Agreement and shall
have consummated the transactions contemplated thereby to be consummated on or
prior to the Closing Date in accordance with all applicable laws (including
without limitation, the Securities Act, all applicable state securities laws and
all related rules and regulations under such statutes and other laws).
(c) All of the other Purchasers listed in the signature pages hereof
shall have consummated their purchase of Securities pursuant to this Agreement.
(d) The Company and the lenders party thereto shall have executed and
delivered the Senior Credit Agreement; none of the parties to the Senior Credit
Agreement shall be in breach of any of their respective material obligations
thereunder and all of the conditions precedent to the transactions contemplated
thereby shall have been duly satisfied without amendment, modification or waiver
of any material condition; and the Company shall have not more than (a)
$112,500,000 of Senior Term Debt and (b) $3,000,000 of Senior Revolver Debt.
(e) The Company shall have issued 1,000 shares of Common Stock to the
Purchasers in the respective amounts set forth opposite each Purchaser's name
on SCHEDULE 1.1 hereto.
Page 11
2.6 REPRESENTATIONS AND WARRANTIES
Unless stated to relate to another date, all of the representations and
warranties of each of the Companies contained or incorporated by reference
herein or in any of the other Documents shall be true and correct, in all
material respects, on and as of the Closing Date, both before and after giving
effect to the PCI Acquisition and the other transactions contemplated hereby and
by the other Documents.
2.7 NO EVENT OF DEFAULT
No event shall have occurred and be continuing, or would result from
the consummation of the transactions contemplated to be consummated on or prior
to the Closing Date by this Agreement, the Acquisition Agreements, the Senior
Credit Agreement or any of the other Documents (including without limitation the
purchase of the Securities or the incurrence of indebtedness pursuant to the
Senior Credit Agreement), which constitutes or would constitute a Default or an
Event of Default.
2.8 EQUITY CONTRIBUTION
On or prior to the Closing Date, separate from payment of the purchase
price of the Warrants hereunder, the Company shall have received equity
contributions of at least $41,250,000 in cash (or other consideration reasonably
acceptable to Purchasers) from the issuance of Common Stock of the Company in
connection with the Pacific Acquisition and $37,500,000 in cash (or other
consideration reasonably acceptable to Purchasers) from the issuance of Common
Stock of the Company in connection with the PCI Acquisition.
2.9 PROCEEDINGS SATISFACTORY
All proceedings taken in connection with the sale of the Securities,
the transactions contemplated hereby (including, without limitation, the PCI
Acquisition), and all documents and papers relating thereto, shall be reasonably
satisfactory to such Purchaser. Such Purchaser and its counsel shall have
received copies of such documents and papers as they may reasonably request in
connection therewith, or as a basis for the Closing opinions, all in form and
substance satisfactory to such Purchaser.
2.10 CONSENTS AND PERMITS
The Company shall have received all consents, permits, approvals and
authorizations and sent or made all notices, filings, registrations and
qualifications as may be required pursuant to any law, statute, regulation or
rule (Federal, state, local or foreign) or pursuant to any other agreement,
order or decree to which the Company or any of its Subsidiaries is a party or to
which any of them is subject, in connection with the transactions to be
consummated on or prior to the Closing Date as contemplated by this Agreement or
any of the other Documents.
Page 12
2.11 NO MATERIAL ADVERSE EFFECT
Since the date of the most recent of the Audited Financial Statements
(A) none of the Companies shall have suffered any adverse change in their
properties, business, operations, assets or condition (financial or otherwise)
which could reasonably be expected to result in a Material Adverse Effect; and
(B) except as set forth in SCHEDULE 2.11 hereto, (i) there shall not have been
any material change in the capital stock or long-term debt, or material increase
in short-term debt, of any of the Companies and (ii) none of the Companies shall
have incurred any liability or obligation, direct or contingent, that is
material to such Company that is required to be disclosed on a balance sheet in
accordance with GAAP and is not disclosed on the latest balance sheet previously
provided to the Purchasers.
2.12 NO MATERIAL JUDGEMENT OR ORDER
There shall not be on the Closing Date any judgment or order of a court
of competent jurisdiction or any ruling of any agency of the Federal, state or
local government that, in the reasonable judgment of any Purchaser or its
counsel, would prohibit the sale or issuance of the Securities hereunder or
subject the Company to any material penalty if the Securities were to be issued
and sold hereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants on the date hereof and as of the
Closing, as follows:
3.1 AUTHORIZATION, CAPITALIZATION
(a) The Company has taken all actions necessary to authorize it (i) to
execute, deliver and perform all of its obligations under this Agreement, the
Acquisition Agreements, the Warrant Agreement, the Registration Rights
Agreement, the Senior Credit Agreement and the other Documents to which it is a
party, (ii) to issue and perform all of its obligations under the Notes and
Warrants, and (iii) to consummate the transactions contemplated hereby and
thereby. Each of this Agreement, the Notes, the Acquisition Agreements, the
Warrant Agreement, the Registration Rights Agreement, the Senior Credit
Agreement and the other Documents to which the Company is a party is a legally
valid and binding obligation of the Company, enforceable against it in
accordance with their respective terms, except for (a) the effect thereon of
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting the rights of creditors generally and (b) limitations
imposed by equitable principles upon the specific enforceability of any of the
remedies, covenants or other provisions thereof and upon the availability of
injunctive relief or other equitable remedies.
(b) The Subsidiaries listed on SCHEDULE 3.1 are the only Subsidiaries
of the Company (the "COMPANY'S SUBSIDIARIES"). The total authorized Equity
Interests of the Company consist of 10,000,000 shares of Common Stock, of which
41,250 shares of Common Stock were issued and outstanding on the date hereof
and 78,750 shares of Common Stock will be issued and outstanding upon
consummation of the transactions contemplated hereby, in each case free and
clear of any Lien,
Page 13
limitation on voting rights, encumbrance, equity or adverse interest of any
nature, other than Permitted Liens and the restrictions, if any, set forth in
the Shareholders Agreement. On the Closing Date and after giving effect to the
consummation of the transactions contemplated by the Documents, the Equity
Interests of the Company and its Subsidiaries are owned by the Persons listed on
SCHEDULE 3.1 in the amounts set forth thereon. The outstanding Equity Interests
or other securities evidencing equity ownership of the Company in each of its
Subsidiaries is owned, in each case, free and clear of any Lien (other than
Permitted Liens), limitation on voting rights, encumbrance, equity or adverse
interest of any nature. All of the outstanding Equity Interests of the Company
and each of its Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and were not issued in violation of, and are not
subject to, any preemptive or similar rights. Except for the shares of capital
stock of each of the Company's Subsidiaries or as set forth on SCHEDULE 3.1,
the Company does not own any capital stock or any other securities of any
corporation, nor does it have any Equity Interest in any firm, partnership,
association or other entity.
(c) On the Closing Date, the Securities will be duly authorized and
validly issued, will be fully paid and nonassessable and will not have been
issued in violation of, and, except as set forth on SCHEDULE 3.1 will not be
subject to, any preemptive or similar rights. Except as set forth on SCHEDULE
3.1, there are no outstanding (i) securities convertible into or exchangeable
for any Equity Interests of any of the Companies, (ii) options, warrants or
other rights to purchase or subscribe to Equity Interests of any of the
Companies or securities convertible into or exchangeable for Equity Interests of
any of the Companies, (iii) contracts, commitments, agreements, understandings,
arrangements, calls or claims of any kind relating to the issuance of any Equity
Interests of any of the Companies, any such convertible or exchangeable
securities or any such options, warrants or rights or (iv) voting trusts,
agreements, contracts, commitments, understandings or arrangements with respect
to the voting of any of the Equity Interests of any of the Companies.
(d) Except for the Registration Rights Agreement and as set forth on
SCHEDULE 3.1, none of the Companies has entered into an agreement to register
its securities under the Securities Act. Except for this Agreement and as set
forth on SCHEDULE 3.1 hereto, none of the Companies has entered into any
agreement to issue, purchase or sell any of its securities.
(e) There are no securities of the Company registered under the
Exchange Act or listed on a national securities exchange registered under
Section 6 of the Exchange Act or quoted in a United States automated
inter-dealer quotation system.
3.2 NO VIOLATION OR CONFLICT, NO DEFAULT
(a) Neither the execution, delivery or performance of this Agreement,
the Securities, the Acquisition Agreements, the Senior Credit Agreement, the
Registration Rights Agreement, the Warrant Agreement or any of the other
Documents by the Company nor the compliance with its obligations hereunder or
thereunder, nor the consummation of the transactions contemplated hereby and
thereby, nor the issuance, sale or delivery of the Securities will:
(1) violate any provision of the Charter Documents of any of
the Companies;
Page 14
(2) violate any statute, law, rule or regulation or any
judgment, decree, order, regulation or rule of any court or
governmental authority or body to which any of the Companies or any of
their respective properties may be subject except where such violation
would not have a Material Adverse Effect;
(3) permit or cause the acceleration of the maturity of any
debt or obligation of any of the Companies; or
(4) violate, or be in conflict with, or constitute a default
under, or permit the termination of, or require the consent of any
Person under, or result in the creation or imposition of any Lien
(other than Permitted Liens) upon any property of any of the Companies
under, any mortgage, indenture, loan agreement, note, debenture,
agreement for borrowed money or any other agreement to which any of the
Companies is a party or by which any of the Companies (or their
respective properties) may be bound, other than such violations,
conflicts, defaults, terminations and Liens, or such failures to obtain
consents, which could not reasonably be expected to result in a
Material Adverse Effect.
(b) None of the Companies is in default (without giving effect to any
grace or cure period or notice requirement) under any agreement for borrowed
money or under any agreement pursuant to which any of its securities were sold.
3.3 USE OF PROCEEDS
The net proceeds from the sale of the Securities hereunder will be used
solely to pay the purchase price for the PCI Acquisition, to pay the fees and
expenses associated with the PCI Acquisition and to refinance certain existing
Indebtedness of the Companies.
3.4 NO MATERIAL ADVERSE CHANGE; FINANCIAL STATEMENTS
(a) The balance sheets and the related statements of income and of cash
flows of PCI for fiscal year 1997 and fiscal year 1998 audited by Ernst & Young,
LLP are complete and correct and present fairly the financial condition of PCI
and its Subsidiaries as of such dates and the balance sheets and the related
statements of income and of cash flows of the Company, for fiscal year 1997 and
fiscal year 1998 audited by Xxxxxx Xxxxxxxx, L.L.P. are complete and correct and
present fairly the financial condition of the Company and its Subsidiaries as of
such dates (collectively, the "AUDITED FINANCIAL STATEMENTS"). Additionally,
monthly working capital detail for the trailing twelve months, the
Company-prepared pro forma (the "PRO FORMA") balance sheets of the Company and
the six-year projections (the "PROJECTIONS") have been prepared in good faith
based upon reasonable assumptions and represent the Company's best estimate of
future results. All such financial statements, including the related schedules
and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as disclosed therein).
Page 15
(b) Except as set forth in SCHEDULE 2.11, since December 31, 1998,
there has been no development or event which has had or could reasonably be
expected to have a Material Adverse Effect.
3.5 FULL DISCLOSURE
All factual information heretofore, contemporaneously or hereafter
furnished by or on behalf of the Company or any of its Subsidiaries to the
Purchasers or any Holder for purposes of or in connection with this Agreement or
any other Document, or any transaction contemplated hereby or thereby, is or
will be true and accurate in all material respects and not incomplete by
omitting to state any material fact necessary to make such information not
misleading. There is no material fact known to the Company that has had or could
reasonably be expected to have a Material Adverse Effect and that has not been
disclosed herein or in such other documents, certificates and written statements
furnished to the Purchasers for use in connection with the transactions
contemplated hereby (including information disclosed in all financial statements
and all footnotes attached thereto).
3.6 THIRD PARTY CONSENTS
Neither the nature of the Company nor of any of their businesses or
properties, nor any relationship between the Company and any other Person, nor
any circumstance in connection with the offer, issuance, sale or delivery of the
Securities at the Closing nor the performance by the Company of their other
obligations hereunder or under, or the consummation of the transactions
contemplated by, the Securities, the Acquisition Agreements, the Senior Credit
Agreement, the Registration Rights Agreement, the Warrant Agreement or any other
Document, as the case may be, is such as to require a consent, approval or
authorization of, or notice to, or filing, registration or qualification with,
any governmental authority or other Person on the part of the Company as a
condition to the execution and delivery of this Agreement, the Acquisition
Agreements, the Senior Credit Agreement, the Registration Rights Agreement, the
Warrant Agreement or any of the other Documents or the offer, issuance, sale or
delivery of the Securities at the Closing other than such consents, approvals,
authorizations, notices, filings, registrations or qualifications which shall
have been made or obtained on or prior to the Closing Date (and copies of which
will be delivered to the Purchasers) and such filings under Federal and state
securities laws which are permitted to be made after the Closing Date and which
the Company hereby agrees to file within the time period prescribed by
applicable law.
3.7 NO VIOLATION OF REGULATIONS OF BOARD OF GOVERNORS OF FEDERAL RESERVE
SYSTEM
None of the transactions contemplated by this Agreement (including,
without limitation, the use of the proceeds from the sale of the Securities)
will violate or result in a violation of Section 7 of the Exchange Act or any
regulation issued pursuant thereto, including, without limitation, Regulations U
and X of the Board of Governors of the Federal Reserve System.
Page 16
3.8 PRIVATE OFFERING
Assuming the truth and correctness of the representations and
warranties set forth in SECTION 4 hereof, the sale of the Securities hereunder
is exempt from the registration and prospectus delivery requirements of the
Securities Act. In the case of each offer or sale of the Securities, no form of
general solicitation or general advertising was used by any of the Companies or
their respective representatives, including, but not limited to, advertisements,
articles, notices or other communications published in any newspaper, magazine
or similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising.
The Purchasers are the sole purchasers of the Securities. Except as set
forth on SCHEDULE 3.8, no securities have been issued and sold by the Company
within the six-month period immediately prior to the date hereof. None of the
securities issued within such six-month period could be integrated with the
issuance of the Securities as a single offering for purposes of the Securities
Act, and the Company agrees that neither it, nor anyone acting on its behalf,
will offer or sell the Securities, or any portion of them, if such offer or sale
might bring the issuance and sale of the Securities to any Purchaser hereunder
within the provisions of Section 5 of the Securities Act nor offer any similar
securities for issuance or sale to, or solicit any offer to acquire any of the
same from, or otherwise approach or negotiate with respect thereto, with anyone
if the sale of the Securities and any such securities could be integrated as a
single offering for the purposes of the Securities Act, including without
limitation Regulation D thereunder. It is not necessary, in connection with the
transactions contemplated hereby, to qualify an indenture under the Trust
Indenture Act of 1939, as amended.
3.9 GOVERNMENTAL REGULATIONS
None of the Companies is subject to regulation under the Investment
Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935,
as amended, the Federal Power Act, the Interstate Commerce Act, the Commodity
Exchange Act or to any Federal or state statute or regulation limiting its
ability to incur indebtedness for borrowed money or consummate the transactions
contemplated hereby and by the other Documents.
3.10 BROKERS
Except as disclosed to the Purchasers, none of the Companies has dealt
with any broker, finder, commission agent or other such intermediary in
connection with the sale of the Securities and the transactions contemplated by
this Agreement and the other Documents, and none of the Companies is under any
obligation to pay any broker's or finder's fee or commission or similar payment
in connection with such transactions.
The Company agrees to indemnify and hold the Holders harmless from and
against any and all actions, suits, claims, costs, expenses, losses, liabilities
and/or obligations in connection with or relating to any broker's or finder's
fees or commission or similar payment in connection with such transactions,
except with respect to such fees or commissions incurred by any Purchaser for
its
Page 17
account, so long as the Company receives notice of any such action, suit, claim,
etc., reasonably promptly after the Holders become aware thereof; provided that
the failure to give such notice as provided in this sentence shall not relieve
the Company of its obligations under this sentence except to the extent, and
only to the extent, that the Company is materially prejudiced by such failure to
give notice (as determined by a court of competent jurisdiction in a final
nonappealable judgment).
3.11 SOLVENCY
The fair saleable value of the Company's and each of its Subsidiaries'
assets, measured on a going concern basis, exceeds all probable liabilities,
including those to be incurred pursuant to this Agreement. Neither the Company
nor any of its Subsidiaries (a) has unreasonably small capital in relation to
the business in which it is or proposes to be engaged or (b) has incurred, or
believes that it will incur after giving effect to the transactions contemplated
by this Agreement, debts beyond its ability to pay such debts as they become
due.
3.12 REPRESENTATIONS AND WARRANTIES
(a) To the best knowledge of the Company after due inquiry, all
representations and warranties (and the related schedules) of the Company
contained in the PCI Acquisition Agreement, the Registration Rights Agreement,
the Warrant Agreement, the Senior Credit Agreement and the other Documents, each
in the form as in effect on the date hereof without amendment or waiver, shall
be deemed to constitute representations and warranties of the Company under this
Agreement with the same force and effect as the representations and warranties
expressly set forth herein. Such representations and warranties are true and
correct on the date hereof, in all material respects, and will be true and
correct as of the Closing Date, in all material respects, as if made at and as
of such date, both before and after the consummation of the PCI Acquisition, and
are hereby incorporated by reference herein as if made hereby by the Company to
the Purchasers. Unless otherwise defined herein, for purposes of this SECTION
3.12, the definitions contained in the Senior Credit Agreement, the Registration
Rights Agreement, the Warrant Agreement, the Acquisition Agreements and any
other Documents (insofar as they relate to the representations and warranties
incorporated herein) are hereby incorporated by reference herein and made a part
hereof.
(b) There exist no material defaults with respect to the Acquisition
Agreements nor any basis for the exercise by any party thereto of any rights of
cancellation or rescission or any material rights of offset.
3.13 LITIGATION
Except as set forth in SCHEDULE 3.13, no litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the best knowledge of the Company, threatened by or against the Company or
any of its Subsidiaries or against any of its or their respective properties or
revenues (a) with respect to the Documents or any Note or any of the
transactions contemplated hereby, or (b) which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect.
Page 18
(d) To the best knowledge of the Company and its Subsidiaries,
Materials of Environmental Concern have not been transported or disposed of from
the Properties in violation of, or in a manner or to a location which could
reasonably be expected to give rise to liability under any Environmental Law,
nor have any Materials of Environmental Concern been generated, treated, stored
or disposed of at, on or under any of the Properties in violation of, or in a
manner that could reasonably be expected to give rise to liability under, any
applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened, under any Environmental Law to which the Company or any of its
Subsidiaries is or will be named as a party with respect to the Properties or
the Business, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
the Properties or the Business.
(f) To the best knowledge of the Company and its Subsidiaries, there
has been no release or threat of release of Materials of Environmental Concern
at or from the Properties, or arising from or related to the operations of the
Company and its Subsidiaries in connection with the Properties or otherwise in
connection with the Business, in violation of or in amounts or in a manner that
could reasonably be expected to give rise to liability under Environmental Laws.
3.17 ERISA
Except as set forth in SCHEDULE 3.17, neither a Reportable Event nor an
"accumulated funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 of ERISA) has occurred during the five-year period prior to the
date on which this representation is made or deemed made with respect to any
Plan, and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code, except to the extent that any such occurrence
or failure to comply would not reasonably be expected to have a Material Adverse
Effect. No termination of a Single Employer Plan has occurred resulting in any
liability that has remained underfunded, and no Lien in favor of the PBGC or a
Plan has arisen, during such five-year period which could reasonably be expected
to have a Material Adverse Effect. The present value of all accrued benefits
under each Single Employer Plan (based on those assumptions used to fund such
Plans) did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the value of the assets of
such Plan allocable to such accrued benefits by an amount which, as determined
in accordance with GAAP, could reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any Commonly Controlled Entity is currently
subject to any liability for a complete or partial withdrawal from a
Multiemployer Plan which could reasonably be expected to have a Material Adverse
Effect.
3.18 INTELLECTUAL PROPERTY
SCHEDULE 3.18 hereto contains a complete and accurate list of (i) all
of the Company's and its Subsidiaries' intellectual property which is the
subject of a registration or application or constitutes material unregistered
copyrights or trademarks and (ii) all license agreements to which the Company or
its Subsidiaries is a party or by which they are bound relating to intellectual
property, whether as
Page 20
the licensee or licensor thereunder. The Companies own or possess adequate
licenses or other rights to use all trademarks, service marks, trade names,
copyrights, and know-how necessary to conduct the business now conducted by the
Companies and, none of the Companies has received any notice of infringement of
or conflict with (or knows of such infringement of or conflict with) asserted
rights of others with respect to trademarks, service marks, trade names,
copyrights, or know-how which, individually or in the aggregate, could
reasonably be expected to result in any Material Adverse Effect. The Company
does not in the conduct of its business as now conducted, infringe or conflict
with any right of any third party, known to the Company, where such infringement
or conflict could reasonably be expected to result in any Material Adverse
Effect.
3.19 COMPLIANCE WITH LAWS
The Company and each of its Subsidiaries has obtained and has
maintained in good standing any licenses, permits, consents and authorizations
required to be obtained by it under all laws or regulations relating to its
business (collectively, the "Laws"), except as to any of the foregoing the
absence of which (individually or in the aggregate) could not reasonably be
expected to have a Material Adverse Effect, and any such licenses, permits,
consents and authorizations remain in full force and effect, except as to any of
the foregoing the absence of which (individually or in the aggregate) could not
reasonably be expected to have a Material Adverse Effect. The Company and each
of its Subsidiaries are in compliance with the Laws in all material respects,
and there is no pending or, to the Company's or any of its Subsidiaries'
knowledge, threatened, action or proceeding against the Company or any of its
Subsidiaries under any of the Laws, other than any such actions or proceedings
which, individually or in the aggregate, if adversely determined, could not
reasonably be expected to have a Material Adverse Effect.
3.20 CONSUMMATION OF ACQUISITIONS
The Acquisitions have been duly consummated in accordance with the
terms of the Acquisition Agreements without amendment or waiver of any material
term or provision thereof. True and correct copies of the Acquisition Agreements
have been delivered to each Purchaser pursuant to SECTION 2.1(j). The Company is
not in default under either of the Acquisition Agreements or under any
instrument or document to be delivered in connection therewith. All of the
transactions engaged in by the Company and its Affiliates as part of the
Acquisitions were legal and valid and in compliance with all applicable law.
3.21 INDEBTEDNESS
After giving effect to the Acquisitions and the transactions
contemplated thereby, other than the Seller Notes, the Retention Bonus Pool, the
Notes, the Indebtedness described on SCHEDULE 3.21 and the Senior Credit
Agreement and the notes issued pursuant thereto, none of the Companies (i) is a
party to any loan or similar agreement, (ii) has any notes, bonds, debentures or
other evidences of Indebtedness outstanding nor (iii) has guaranteed the
obligations or liabilities of any Person.
Page 21
3.22 INVESTMENTS
None of the Companies has any Investments, other than Investments in
their respective Subsidiaries and Permitted Investments.
3.23 INSURANCE
SCHEDULE 3.23 hereto lists all material insurance policies insuring,
and all material performance bonds issued in favor of, any of the Companies,
specifying (a) the name of the insurer or bonding company, (b) the risk insured
or bonded, (c) the limits of coverage, (d) the deductible, if any, (e) the
premium (including any proposed premium increases known to any of the
Companies), (f) any notice of cancellation or nonrenewal received by any of the
Companies and (g) the date through which coverage will continue by virtue of
premiums already paid.
3.24 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All of the Company's representations and warranties hereunder and
under the Registration Rights Agreement and the Warrant Agreement shall survive
the execution and delivery of the same, any investigation by any Purchaser and
the issuance of the Securities.
3.25 CONSULTING AGREEMENTS
SCHEDULE 3.25 hereto lists and attaches all management, consulting or
similar agreements or arrangements between any of the Companies, on the one
hand, and the Sponsors and/or their Affiliates, on the other hand (collectively
"CONSULTING AGREEMENTS").
3.26 YEAR 2000 COMPLIANCE
The Company has (i) initiated a review and assessment of all areas
within the Company's and each of its Subsidiaries' business and operations
(including those affected by suppliers, vendors and customers) that could be
adversely affected by the Year 2000 Problem, (ii) developed a plan and timeline
for addressing the Year 2000 Problem on a timely basis, and (iii) to date,
implemented that plan in accordance with that timetable. Based on the foregoing,
the Company believes that all computer applications of the Company that are
material to its or any of its Subsidiaries' business and operations are or are
scheduled to be Year 2000 Compliant prior to January 1, 2000 and is not aware of
any Year 2000 Problem that could reasonably be expected to have a Material
Adverse Effect.
SECTION 4. REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS OF EACH PURCHASER
Each Purchaser (as to itself only) and each Account Manager (as to the
managed accounts of Purchasers) represents and warrants to the Company that:
Page 22
4.1 PURCHASE FOR OWN ACCOUNT
Such Purchaser or such Account Manager is purchasing the Securities to
be purchased by it solely for its own account (or in the case of Account
Managers, on behalf of managed accounts) and not as nominee or agent for any
other person (other than for such managed accounts, if applicable) and not with
a view to, or for offer or sale in connection with, any distribution thereof
(within the meaning of the Securities Act) that would be in violation of the
securities laws of the United States of America or any state thereof, without
prejudice, however, to its right at all times to sell or otherwise dispose of
all or any part of said Securities pursuant to a registration statement under
the Securities Act or pursuant to an exemption from the registration
requirements of the Securities Act, and subject, nevertheless, to the
disposition of its property being at all times within its control.
4.2 ACCREDITED INVESTOR
Such Purchaser or such Account Manager is knowledgeable, sophisticated
and experienced in business and financial matters; it has previously invested in
securities similar to the Securities and it acknowledges that the Securities
have not been registered under the Securities Act and understands that the
Securities must be held indefinitely unless they are subsequently registered
under the Securities Act or such sale is permitted pursuant to an available
exemption from such registration requirement; it (or, in the case of an Account
Manager, the managed account on behalf of which the Account Manager is acting)
is able to bear the economic risk of its investment in the Securities and is
presently able to afford the complete loss of such investment; it (or, in the
case of an Account Manager, the managed account on behalf of which the Account
Manager is acting) is an "accredited investor" as defined in Regulation D
promulgated under the Securities Act and the Securities to be acquired by it
pursuant to this Agreement are being acquired for its own account; and it has
been afforded access to information about each of the Companies and their
financial condition and business sufficient to enable it to evaluate its
investment in the Securities.
4.3 AUTHORIZATION
Each Purchaser has taken all actions necessary to authorize it (or, in
the case of an Account Manager, such Account Manager is duly authorized by the
managed account for which it is acting) (i) to execute, deliver and perform all
of its obligations under this Agreement, (ii) to perform all of its obligations
under the Securities and (iii) to consummate the transactions contemplated
hereby and thereby. This Agreement is a legally valid and binding obligation of
each Purchaser enforceable against it in accordance with its terms, except for
(a) the effect thereon of bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting the rights of creditors generally
and (b) limitations imposed by Federal or state law or equitable principles upon
the specific enforceability of any of the remedies, covenants or other
provisions thereof and upon the availability of injunctive relief or other
equitable remedies.
Page 23
4.4 ACCESS TO INFORMATION
Each Purchaser has had an opportunity to discuss the Companies'
business, management and financial affairs with each Company's respective
management and has had the opportunity to review financial and other information
related to the Companies.
4.5 SECURITIES RESTRICTED
Each Purchaser acknowledges that the Securities have not been and,
except as otherwise provided in the Registration Rights Agreement, will not be
registered under the Securities Act and are being issued in a transaction that
is exempt from the registration requirements of the Securities Act. Each
Purchaser understands that the Securities must be held indefinitely unless they
are subsequently registered under the Securities Act or such sale is permitted
pursuant to an available exemption from such registration requirement.
No transfer or sale (including, without limitation, by pledge or
hypothecation) of Securities by any Holder which is otherwise permitted
hereunder, other than a transfer or sale to the Company, shall be effective
unless such transfer or sale is made (A) pursuant to an effective registration
statement under the Securities Act and a valid qualification under applicable
state securities or "blue sky" laws or (B) without such registration or
qualification as a result of the availability of an exemption therefrom, and, if
reasonably requested by the Company, counsel for such Holder shall have
furnished the Company with an opinion, reasonably satisfactory in form and
substance to the Company, that no such registration is required because of the
availability of an exemption from the registration requirements of the
Securities Act; provided, however, that with respect to transfers by Holders to
their Affiliates, no such opinion shall be required. A transfer made by a Holder
which is a state-sponsored employee benefit plan to a successor trust or
fiduciary pursuant to a statutory reconstitution shall be expressly permitted
and no opinions of counsel shall be required in connection therewith.
4.6 PLEDGE OF SECURITIES
Notwithstanding anything to the contrary in this Section 4.6, each
Holder shall be permitted to pledge the Securities held by it to a trustee for
the benefit of secured noteholders pursuant to documents relating to the
financing of such Holder. If reasonably requested by the Company, counsel for
any Holder pledging Securities pursuant to this SECTION 4.6 shall furnish the
Company with an opinion, reasonably satisfactory in form and substance to the
Company, that, in connection with any such pledge, no registration under the
Securities Act or valid qualification under applicable state securities or "blue
sky" law is required because of the availability of an exemption from the
registration requirements of the Securities Act.
4.7 PRIORITY OF NOTES
Purchasers acknowledge that, as of the Closing Date, the Indebtedness
evidenced by the Seller Notes and the Retention Bonus Pool is not contractually
subordinated to the Indebtedness evidenced by this Agreement and the Notes.
Page 24
SECTION 5. COVENANTS
The Company hereby covenants to the Holders of outstanding Securities
and agrees that it will comply, and will cause each of its Subsidiaries to
comply with such of the following as are applicable to it or them as follows:
5.1 PAYMENT OF NOTES, SATISFACTION OF OBLIGATIONS
So long as any of the Notes remain unpaid and outstanding, the Company
shall pay the principal of, premium, if any, and interest on the Notes on the
dates and in the manner provided in the Notes. All payments by the Company
shall be made without deduction, defense, setoff or counterclaim in same day
funds and delivered to Holder by wire transfer to the Purchaser's account set
forth on SCHEDULE 1.1 hereto or to such other place as the Holder may direct
from time to time by written notice to the Company. To the extent lawful, the
Company shall pay interest (including interest accruing after the commencement
of any proceeding under any Bankruptcy Law) on all unpaid amounts outstanding
under the Notes (including overdue installments of principal or interest) at a
rate equal to 14% per annum, compounded quarterly. The obligations of the
Company under this Section 5.1 are subject to the subordination provisions of
Section 8 hereof, but any failure to perform such obligations as a result of
such subordination provisions shall in any event constitute an Event of Default
hereunder.
5.2 FINANCIAL STATEMENTS AND REPORTS
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available, but in any
event within ninety (90) days after the end of each fiscal year of the Company,
a copy of the consolidated and consolidating balance sheet of the Company and
its consolidated Subsidiaries as at the end of such fiscal year and the related
consolidated and consolidating statements of income and retained earnings and of
cash flows of the Company and its consolidated Subsidiaries for such year, such
consolidated statements shall be audited by a firm of independent certified
public accountants of nationally recognized standing reasonably acceptable to
the Required Holders, and shall set forth in each case in comparative form the
figures for the previous year, reported on without a "going concern" or like
qualification or exception, or qualification indicating that the scope of the
audit was inadequate to permit such independent certified public accountants to
certify such financial statements without such qualification;
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any
event within forty-five (45) days after the end of each of the first three
fiscal quarters of the Company, a company-prepared consolidated and
consolidating balance sheet of the Company and its consolidated Subsidiaries as
at the end of such period and related company-prepared statements of income and
of cash flows for the Company and its consolidated Subsidiaries for such
quarterly period and for the portion of the fiscal year ending with such period,
in each case setting forth in comparative form consolidated and consolidating
figures for the corresponding period or periods of the preceding fiscal year
(subject to normal recurring year-end audit adjustments);
Page 25
(c) MONTHLY FINANCIAL STATEMENTS. As soon as available and in any
event within thirty (30) days after the end of each month of the Company (other
than at the end of a fiscal quarter, in which case 45 days after the end
thereof), a company-prepared consolidated and consolidating balance sheet of the
Company and its consolidated Subsidiaries as at the end of such period and
related company prepared statements of income and of cash flows for the Company
and its consolidated Subsidiaries for such monthly period and for the portion of
the fiscal year ending with such period, in each case setting forth in
comparative form consolidated and consolidating figures for the corresponding
period or periods of the preceding fiscal year (subject to normal recurring
year-end audit adjustments); and
(d) ANNUAL BUDGET PLAN. As soon as available, but in any event within
forty-five (45) days after the end of each fiscal year, a copy of the detailed
annual budget or plan of the Company for the next fiscal year on quarterly
basis, in form and detail reasonably acceptable to the Required Holders,
together with a summary of the material assumptions made in the preparation of
such annual budget or plan;
all such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal recurring
year-end audit adjustments) and to be prepared in reasonable detail and, in the
case of the annual and quarterly financial statements provided in accordance
with subsections (a) and (b) above, in accordance with GAAP applied consistently
throughout the periods reflected therein and further accompanied by a
description of, and an estimation of the effect on the financial statements on
account of, a change, if any, in the application of accounting principles as
provided in Section 10.3.
5.3 CERTIFICATES; OTHER INFORMATION
The Company shall deliver to the Holders:
(a) concurrently with the delivery of the financial statements
referred to in SECTION 5.2(a) above, a certificate of the independent certified
public accountants reporting on such financial statements stating that in making
the examination necessary therefor no knowledge was obtained of any Default or
Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in SECTIONS 5.2(a) and 5.2(b) above, a certificate of a Principal
Officer stating that, to the best of such Principal Officer's knowledge, the
Company and each of its Subsidiaries during such period observed or performed in
all material respects all of its covenants and other agreements, and satisfied
in all material respects every condition, contained in this Agreement to be
observed, performed or satisfied by it, and that such Principal Officer has
obtained no knowledge of any Default or Event of Default except as specified in
such certificate and such certificate shall include the calculations in
reasonable detail required to indicate compliance with Sections 5.9 and 5.12 as
of the last day of such period;
(c) within thirty (30) days after the same are sent, copies of all
material financial reports (other than those otherwise provided pursuant to
Section 5.2 and those which are of a promotional nature) and other financial
information which the Company sends to its shareholders, and within thirty days
after the same are filed, copies of all financial statements and
non-confidential reports which the
Page 26
Company may make to, or file with the Securities and Exchange Commission or any
successor or analogous Governmental Authority;
(d) within ninety (90) days after the end of each fiscal year of the
Company, a certificate containing information regarding the amount of all Asset
Sales and all issuances of Indebtedness or Equity Securities that were made
during the prior fiscal year and amounts received in connection with any
Recovery Event during the prior fiscal year;
(e) promptly upon receipt thereof, a copy of any other report or
"management letter" submitted by independent accountants to the Company or any
of its Subsidiaries in connection with any annual, interim or special audit of
the books of such Person;
(f) promptly, such additional financial and other information as the
Required Holders, may from time to time reasonably request.
5.4 LIMITATION ON RESTRICTED PAYMENTS
(a) Subject to SECTION 5.4(b), so long as any of the Notes remain
unpaid and outstanding, the Company shall not, and shall not cause or permit any
of its Subsidiaries to,
(i) declare or pay any dividends, either in cash or
property, on, or make any distribution to the holders (as such) in
respect of, any class of Equity Interest in the Company or any of its
Subsidiaries (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or its
Subsidiaries or dividends or distributions payable to the Company);
(ii) purchase, redeem or otherwise acquire or retire for
value any Equity Interests of the Company or any of its Subsidiaries
or any other Affiliate of the Company;
(iii) purchase, redeem, defease or otherwise acquire or
retire for value any Indebtedness (other than the Notes) that is PARI
PASSU with or subordinated to the Notes;
(iv) make any payments of principal of, interest on or
premium or redemption fees (if any) with respect to the Seller Notes
or the Retention Bonus Plan or on account of any indemnities, fees or
expenses related thereto;
(v) make any payments with respect to any of the Consulting
Agreements; or
(vi) make any Investment, other than Permitted Investments
(all such payments and other actions set forth in clauses (i) through
(vi) hereof being collectively referred to as "Restricted Payments").
(b) The foregoing provision will not prohibit the following Restricted
Payments:
Page 27
(i) so long as no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence of such
Restricted Payment, the defeasance, redemption, repurchase or
prepayment of PARI PASSU or subordinated Indebtedness with the net
proceeds from the issuance of Equity Interests (other than
Disqualified Stock);
(ii) so long as (1) no default or event of default with
respect to the Senior Indebtedness shall have occurred and be
continuing or would occur as a consequence of such Restricted Payment,
(2) no Default or Event of Default pursuant to clause (a) or (b) of
SECTION 7.1 shall have occurred and be continuing, and (3) no
Indefinite Blockage Period or Payment Blockage Period is then in
effect (A) the regularly scheduled payments of accrued interest on the
Seller Notes and (B) the amount owing in respect of the Retention
Bonus Plan in an aggregate amount not to exceed $1,200,000 in any
fiscal year of the Company; notwithstanding the foregoing, if the
Company shall have been prohibited from making payments owing in
respect of the Retention Bonus Plan as a result of the foregoing
provisions, then, so long as none of the foregoing provisions shall
have occurred or be continuing or would result therefrom, the Company
may pay any amounts past due with respect to the Retention Bonus Plan
at such time as none of the conditions set forth in the foregoing
clauses (1), (2) or (3) exists;
(iii) so long as no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence of such
Restricted Payment, dividends paid or distributions made in respect of
Equity Interests with the net proceeds of the issuance of Equity
Interests (other than Disqualified Stock);
(iv) dividends paid or distributed by any Wholly-Owned
Subsidiary of the Company to its direct parent;
(v) so long as no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence of such
Restricted Payment, subject to the Change in Control provisions of
this Agreement, the purchase or redemption of Common Stock with the
net proceeds from the issuance of Equity Interests (other than
Disqualified Stock);
(vi) Intercompany Indebtedness to the extent permitted by
clause (b)(iv) of SECTION 5.5;
(vii) so long as no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence of such
Restricted Payment, the purchase or redemption by the Company of all
or any portion of the Common Stock held by an executive officer of the
Company; PROVIDED such purchase or redemption is approved by the Board
of Directors of the Company in good faith and the aggregate amount of
purchase consideration for any and all such purchases does not exceed
$2,000,000 in the aggregate (including cash and the principal amount
of any Indebtedness of the Company or any of its Subsidiaries incurred
to purchase such Common Stock) whenever made at any time after the
Closing Date;
Page 28
(viii) so long as no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence of such
Restricted Payment, the acquisition of all or a majority of the
Capital Stock or other ownership interest in any Person (in a similar
or related line of business and which has earnings before interest,
taxes, depreciation and amortization for the prior four fiscal
quarters in an amount greater than $0) or all or a substantial portion
of the assets, property and/or operations of a Person (in a similar or
related line of business and which had earnings before interest,
taxes, depreciation and amortization for the prior four fiscal
quarters in an amount greater than $0); PROVIDED that (1) the
aggregate consideration paid by the Company and its Subsidiaries does
not exceed, in the aggregate, $1,000,000 for any single acquisition or
$2,500,000 in the aggregate for all such acquisitions in any fiscal
year; and (2) after giving effect to any such acquisition availability
under the Senior Revolver Debt is not less than $3,000,000 (excluding
any availability under any swingline or overadvance facility); and
(ix) so long as no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence of such
Restricted Payment, an Approved Use of Proceeds; PROVIDED that, such
Approved Use of Proceeds is completed on or before January 13, 2003,
and, at the time and after giving effect to such Approved Use of
Proceeds and any Indebtedness incurred or anticipated to be incurred
in connection therewith, including any Acquired Indebtedness, the
Company shall be able to incur at least $1.00 of additional
Indebtedness pursuant to SECTION 5.5(a);
(x) so long as no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence of such
Restricted Payment, the purchase, redemption, defeasance, acquisition
or retirement for value of the Operating Leases set forth on SCHEDULE
5.5(b); PROVIDED, that the total amount paid by Company and its
Subsidiaries, on a consolidated basis, with respect to such purchase,
redemption, defeasance, acquisition or retirement does not exceed the
amounts set forth on SCHEDULE 5.5(b), and such purchase, redemption,
defeasance, acquisition or retirement is consummated before the
amounts payable with respect to such purchase, redemption, defeasance,
acquisition or retirement are determined by reference to fair market
value; and
(xi) so long as no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence of such
Restricted Payments, the defeasance, redemption or repurchase of
Indebtedness listed on SCHEDULE 3.21 or Indebtedness permitted by
clause (b)(vi) of SECTION 5.5; PROVIDED that, in the event such
defeasance, redemption or repurchase is made with the net proceeds of
an incurrence of Permitted Refinancing Indebtedness, any Lien securing
such Permitted Refinancing Indebtedness shall not extend to or cover
any asset of the Company or any of its Subsidiaries other than the
assets securing the Indebtedness so refinanced, renewed, replaced,
defeased or refunded, and; provided further that in the event such
defeasance, repurchase or redemption is made from the proceeds of an
issuance of Equity Interests, such Equity Interests are not
Disqualified Stock;
(xii) Investments in Hedging Obligations to the extent
permitted by SECTION 5.5(b);
Page 29
(xiii) so long as no Event of Default has occurred and is
continuing, payment of management fees pursuant to the Consulting
Agreements in an aggregate amount not to exceed $600,000 in any fiscal
year of the Company; and
(xiv) Investments in addition to the Investments permitted
by clauses (i) through (xiii) of this SECTION 5.4(b), in an aggregate
amount not to exceed $110,000.
5.5 LIMITATION ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED
STOCK
(a) So long as any of the Notes remain unpaid and outstanding, the
Company will not, and will not permit any of its Subsidiaries (including without
limitation, upon the creation or acquisition of such Subsidiary) to, directly or
indirectly, create, incur, issue, assume, guarantee or otherwise become directly
or indirectly liable with respect to (collectively, "INCUR") any Indebtedness or
issue any Disqualified Stock provided that the Company and its Subsidiaries may,
in connection with an Approved Use of Proceeds, incur additional Senior
Indebtedness at any time on or before January 13, 2003, if:
(i) no Default or Event of Default shall have occurred and
be continuing at the time or would occur as a consequence of the
incurrence of such Indebtedness;
(ii) (1) The Leverage Ratio of the Company, on a
Consolidated basis, for the period of twelve (12)
consecutive months ending on the last day of the month
immediately preceding the date such Indebtedness is to be
incurred and for which the Holders have received the
financial information required by clause (b) of SECTION 5.2
is not greater than 4.75 to 1.00.
(2) The Senior Leverage Ratio of the Company, on a
Consolidated basis, for the period of twelve (12)
consecutive months ending on the last day of the month
immediately preceding the date on which such Indebtedness is
to be incurred and for which the Holders have received the
financial information required by clause (b) of SECTION 5.2
is not greater than 4.00 to 1.00.
(iii) provided, that each of the immediately preceding
clauses (1) and (2) shall be determined on a pro forma basis after
giving effect to the proposed Approved Use of Proceeds, the earnings
of the Company and the Acquisition Target (if applicable), the
incurrence of any Acquired Indebtedness and the incurrence of such
Senior Indebtedness, as if such Senior Indebtedness had been incurred
at the beginning of such twelve month period, all calculated and
determined to the mutual satisfaction and agreement of the Company and
Required Holders.
(b) The foregoing limitations will not apply to:
(i) the incurrence by the Company of Indebtedness under the
Senior Credit Agreement in an aggregate principal amount at any one
time outstanding (including loans, the nominal amount of outstanding
letters of credit and all unused commitments) not to exceed
Page 30
(1) $15,000,000 of Senior Revolver Debt, (2) $112,500,000 of Senior
Term Debt, and (3) $12,750,000 of Senior Revolver Debt or Senior Term
Debt, or any combination thereof which does not exceed $12,750,000, in
each case with respect to this clause (i) of SECTION 5.5(b), less the
aggregate amount of any permanent reductions of commitments with
respect to the Senior Revolver Debt or the Senior Term Debt or
repayments of the Senior Term Debt under the Senior Credit Agreement
(including those required pursuant to SECTION 5.8 hereof);
(ii) the incurrence by the Company of the Indebtedness
represented by the Notes;
(iii) the incurrence by the Company of Permitted Refinancing
Indebtedness in exchange for, or the net proceeds of which are used to
extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company referred to in clause (b)(i), (b)(ii) or
(b)(vi) of this SECTION 5.5;
(iv) intercompany Indebtedness among the Company and its
Wholly-Owned Subsidiary Guarantors; provided, however, that the
obligations of each obligor in respect of such Indebtedness shall be
unsecured and subordinated to the obligations of the Company hereunder
and under the Notes to no less an extent as such obligations under the
Notes are subordinated to Senior Indebtedness and that the
disposition, pledge or transfer of such Indebtedness to a Person other
than a Wholly-Owned Subsidiary Guarantor and the occurrence of any
event pursuant to which such Wholly-Owned Subsidiary Guarantor is no
longer a Wholly-Owned Subsidiary Guarantor shall each constitute an
incurrence of Indebtedness that is not permitted by this clause (iv);
(v) Hedging Obligations that are incurred in the ordinary
course of business for the purpose of fixing or hedging interest rate
risk with respect to any floating rate Indebtedness that is
permitted by the terms of this Agreement to be outstanding;
(vi) The incurrence by the Company and its Subsidiaries of
Indebtedness in addition to the Indebtedness permitted by clauses (i)
through (v) of this SECTION 5.5(b), which is either (1) unsecured and
incurred for borrowed money, (2) a Capitalized Lease Obligation or (3)
Purchase Money Indebtedness; PROVIDED that the aggregate amount
outstanding at any time with respect to the foregoing clauses (1),
(2) and (3) which, together with the aggregate amount outstanding with
respect to the Indebtedness listed on SCHEDULE 3.21 does not exceed
$1,500,000, provided, however that notwithstanding the foregoing, the
Operating Leases set forth on SCHEDULE 5.5(b) may be converted into
Capital Leases or other Indebtedness otherwise permitted under this
clause (vi) of this SECTION 5.5 or purchased at such time as the
Company may elect;
(vii) The incurrence by the Company of the Indebtedness
represented by the Seller Notes;
(viii) The incurrence by the Company of the Indebtedness
represented by the Retention Bonus Plan; and
Page 31
(ix) the incurrence by the Company of Indebtedness with respect to
documentary letters of credit for the purchase of goods and other merchandise
(but not under standby, direct pay or other letters of credit, except for the
letters of credit issued pursuant to the Senior Credit Agreement) generally in
an aggregate amount not to exceed $250,000 at any time.
5.6 LIMITATION ON TRANSACTIONS WITH AFFILIATES
Except for those transactions contemplated by the agreements set forth
on SCHEDULE 5.6 and except as permitted in clause (b) of the definition of
Permitted Investments, the Company shall not and shall not permit any of its
Subsidiaries to sell, lease, transfer or otherwise dispose of any of its
properties or assets to or purchase any property or assets from, or enter into
any contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, an Affiliate (an "AFFILIATE TRANSACTION"), unless such Affiliate
Transaction is upon fair and reasonable terms, set forth on SCHEDULE 5.6 or
otherwise fully disclosed in writing to the Holders and on terms and conditions
substantially as favorable to the Company or such Subsidiary as those that could
have been obtained in a comparable arm's-length transaction by the Company or
such Subsidiary with an unrelated Person.
5.7 RESTRICTIONS ON LIENS
So long as any of the Notes remain unpaid and outstanding, the Company
shall not, and shall not permit any of its Subsidiaries to, create or suffer to
exist any Liens upon any assets of the Company or any such Subsidiaries or any
shares of capital stock of such Subsidiaries, in each case now owned or
hereafter acquired; provided, however, that this SECTION 5.7 shall not prohibit
the creation or continuing existence of any Permitted Lien.
5.8 LIMITATION ON SALE OF ASSETS
So long as any of the Notes remain unpaid and outstanding, the Company
shall not, and shall not permit any of its Subsidiaries to, make any Asset Sale
unless: (i) no Default or Event of Default exists and is continuing or is
created by such disposition and (ii) in the case of any Asset Sale involving (A)
assets for Net Proceeds (whether in cash or property) in excess of $500,000 or
with a fair market value in excess of $500,000 or (B) assets for Net Proceeds
(whether in cash or property) or with a fair market value (when aggregated with
the Net Proceeds or fair market value of all other assets subject to any Asset
Sales during the same fiscal year) in excess of $750,000.
(1) the Company or such Subsidiary receives consideration at the time
of such Asset Sale at least equal to the fair market value of such assets (as
determined in good faith by the Board of Directors of the Company or such
Subsidiary and evidenced by a resolution set forth in a certificate of a
Principal Officer, including as to the value of all noncash consideration or, in
the case of any sale of an asset with a fair market value less than $500,000, as
determined in good faith by a Principal Officer of the Company);
Page 32
(2) at least 75% of the consideration therefor received by the Company
or such Subsidiary, as the case may be, shall be in the form of cash; provided,
however, that for the purposes of this clause (2), the following are deemed to
be cash: (x) any liabilities (as shown on the Company's or such Subsidiary's
most recent balance sheet or in the notes thereto) of the Company or such
Subsidiary that are assumed by the transferee in connection with the Asset Sale
(other than liabilities that are incurred in connection with or in anticipation
of such Asset Sale); and (y) securities received by the Company or such
Subsidiary from such transferee that are immediately converted into cash at the
face amount or fair market value thereof by the Company or such Subsidiary; and
(3) upon the consummation of an Asset Sale, the Company or such
Subsidiary shall apply the Net Proceeds (it being understood that the entire Net
Proceeds and not just the portion in excess of the amounts set forth in
subclauses (A) and (B) of clause (ii) above shall be subject to this subsection
(3)) of such Asset Sale within 270 days of the consummation of an Asset Sale
(the "COMMITMENT DATE") either: (x) to prepay any outstanding Senior
Indebtedness in accordance with the applicable provisions thereof (with a
permanent reduction in amounts available to be borrowed thereunder) or, after
all Senior Indebtedness is paid in full, to prepay the Notes or (y) to reinvest
in Productive Assets. Any Net Proceeds from an Asset Sale which are not applied
or reinvested as provided in this clause (3) of SECTION 5.8 constitute excess
proceeds ("EXCESS NET PROCEEDS") and shall be held in Cash or Cash Equivalents.
When the aggregate amount of Excess Net Proceeds exceeds $500,000, the
Company shall promptly make an offer (the "ASSET SALE OFFER") to all Holders of
the Notes to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Net Proceeds, at an offer price in cash in an amount
(the "ASSET SALE OFFER PRICE") equal to the percentages of principal set forth
below (if the Asset Sale Date occurs during the twelve-month period commencing
on July 13 of the year set forth below), plus accrued and unpaid interest
thereon to the Asset Sale Date:
% of Principal Amount
---------------------
1999 105%
2000 104%
2001 103%
2002 102%
2003 101%
2004 and thereafter 100%
If the aggregate principal amount of Notes surrendered by Holders
thereof exceeds the amount of Excess Net Proceeds, the Company shall select the
Notes to be purchased on a pro rata basis. Upon completion of such Asset Sale
Offer, the amount of Excess Net Proceeds shall be reset at zero. The obligations
of the Company to repurchase the Notes shall be subject to the subordination
provisions of SECTION 8 hereof, but any failure to make such repurchase as a
result of such subordination shall in any event constitute an Event of Default
hereunder.
Simultaneously with the making of such Asset Sale Offer, the Company
shall provide the Holders with a certificate of a Principal Officer setting
forth the Asset Sale Offer Price, the Asset Sale
Page 33
Date and the calculations used in determining the amount of Excess Net Proceeds
to be applied to the repurchase of the Notes.
If the date on which the Asset Sale Offer closes (the "ASSET SALE
DATE") is on or after an interest payment record date and on or before the
related interest payment date, any accrued interest will be paid to the person
in whose name a Note is registered at the close of business on such record date,
and no additional interest will be payable to holders who tender Notes pursuant
to the Asset Sale Offer.
Notice of any Asset Sale Offer shall be mailed by the Company to each
Holder at its last registered address. The Asset Sale Offer shall remain open
from the time of mailing until 20 business days thereafter, and no longer,
unless a longer period is required by law. The notice shall contain all
instructions and materials necessary to enable such Holders to tender Notes
pursuant to the Asset Sale Offer. The notice, which shall govern the terms of
the Asset Sale Offer, shall state:
(1) that the Asset Sale Offer is being made pursuant to this SECTION
5.8 and that Notes will be accepted for payment either (A) in whole or (B) in
part in integral multiples of $1,000;
(2) the Asset Sale Offer Price and the Asset Sale Date;
(3) that any Note not tendered will continue to accrue interest;
(4) that any Note accepted for payment pursuant to the Asset Sale Offer
shall cease to accrue interest from and after the Asset Sale Date (so long as
the Company does not default in its obligation to promptly pay the Asset Sale
Offer Price);
(5) that Holders electing to have a Note purchased pursuant to the
Asset Sale Offer will be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, at
the address specified in the notice prior to the close of business on the Asset
Sale Date;
(6) that Holders will be entitled to withdraw their election on the
terms and subject to the conditions set forth in the notice;
(7) that Holders whose Notes are purchased only in part will be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered.
On the Asset Sale Date, the Company shall (i) accept for payment all
Notes or portions thereof validly tendered pursuant to the Asset Sale Offer and
(ii) promptly thereafter mail or deliver to Holders of Notes accepted for
purchase payment in the amount equal to the aggregate Asset Sale Offer Price for
such Notes, and the Company shall execute and mail or deliver to such Holders a
new Note equal in principal amount to any unpurchased portion of the Notes
surrendered. The Company will notify the Holders of the results of the Asset
Sale Offer on the Asset Sale Date.
Page 34
The provisions of this SECTION 5.8 shall not apply to any Asset Sale by
Senior Bank (i) in judicial proceedings to foreclose upon any assets of the
Company and its Subsidiaries or (ii) pursuant to an exercise of any right under
applicable law or applicable Security Documents to take ownership of any such
assets in lieu of foreclosure.
5.9 LIMITATION ON CONSOLIDATED CAPITAL EXPENDITURES
So long as any of the Notes remain unpaid and outstanding, Consolidated
Capital Expenditures of the Company and its Subsidiaries which shall not include
the conversion of Operating Leases to Capital Leases or other Indebtedness as
permitted by clause (b)(x) of SECTION 5.4, as of the end of any fiscal year of
the Company shall be less than or equal to the amount set forth below during the
periods set forth below:
Period Amount
------ ------
Fiscal Year 1999 $10,000,000
Fiscal Year 2000 $ 9,775,000
Fiscal Year 2001 and $ 8,625,000
each fiscal year thereafter
5.10 LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES
So long as any of the Notes remain unpaid and outstanding, the Company
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of any Subsidiary of the
Company to (a) pay dividends or make any other distributions on its Capital
Stock or any other interest or participation in, or measured by, its profits
owned by, or pay any Indebtedness owed to, the Company, (b) make loans or
advances to the Company, (c) transfer any of its properties or assets to the
Company, except for such encumbrances or restrictions existing under or by
reason of (i) any restrictions existing under or contemplated by this Agreement
and the Senior Credit Agreement; (ii) any restrictions, with respect to a
Subsidiary of the Company that is not a Subsidiary of the Company on the date
hereof, in existence at the time such Person becomes a Subsidiary of the Company
(so long as such restrictions are not created in anticipation of such Person
becoming a Subsidiary of the Company); (iii) with respect to clause (c) above
only, any restrictions existing under Capital Lease Obligations, Purchase Money
Indebtedness or Indebtedness secured by Permitted Liens (provided that, in each
case, such prohibition shall only relate to the assets which are subject to such
Capital Lease Obligations or which secure such Indebtedness and the proceeds
therefrom); or (iv) any restrictions existing under any agreement that
refinances or replaces the agreements containing the restrictions in the
foregoing clauses (i), (ii) and (iii); provided, that the terms and conditions
of any such restrictions are no more restrictive than those under or pursuant to
the agreement evidencing the Indebtedness refinanced.
Page 35
5.11 CHANGE OF CONTROL
(a) CHANGE OF CONTROL. Upon the occurrence of a Change of Control, the
Company shall give each Holder prompt, and in any event within 10 Business Days
of the occurrence of the Change of Control (the "CHANGE OF CONTROL DATE"),
notice describing in reasonable detail the nature of the Change of Control,
offering to each Holder the right to require the Company to repurchase all or
any part of such Holder's Notes (the "CHANGE OF CONTROL OFFER") at a purchase
price equal to (i) if such Change of Control is the result of the sale,
conveyance, lease or sublease, transfer or other disposition, of all or
substantially all of the assets of the Company or sale, conveyance, lease or
sublease, transfer or other disposition (including any transaction of merger or
consolidation), of a majority of Equity Interest of the Company, 102% of the
principal amount of the Notes, together with unpaid interest thereon to the date
of repurchase if such Change of Control occurs prior to July 13, 2001 and 100%
of the principal amount of the Notes, together with unpaid interest thereon to
the debt of repurchase if such Change of Control occurs after July 13, 2001 and
(ii) otherwise, the percentages of principal set forth below (if the Change of
Control occurs during the twelve-month period commencing on July 13 of the year
set forth below), together with accrued and unpaid interest to the date of
repurchase (the "CHANGE OF CONTROL OFFER PRICE").
% of Principal Amount
1999 105%
2000 104%
2001 103%
2002 102%
2003 101%
2004 and thereafter 100%
The obligation of the Company to repurchase Notes pursuant to the
Change of Control Offer is subject to the subordination provisions of SECTION 8
hereof, but any failure to make such repurchase as a result of such
subordination provisions shall in any event constitute an Event of Default
hereunder.
(b) PROCEDURE. The notice of a Change of Control Offer shall state a
date not less than 30 days nor more than 60 days after the date of mailing of
such notice by the Company for repurchase of the Notes pursuant to the Change of
Control Offer (the "CHANGE OF CONTROL PAYMENT DATE"). The notice, which shall
govern the terms of the Change of Control Offer, shall state:
(1) that the Change of Control Offer is being made pursuant to
this SECTION 5.11;
(2) the Change of Control Offer Price and the Change of
Control Payment Date;
(3) that, unless the Company defaults in the payment of the
Change of Control Offer Price, all Notes accepted for payment shall
cease to accrue interest on and after the Change of Control Payment
Date;
Page 36
(4) that Holders electing to require the Company to repurchase
any Notes will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse side of
the Note completed and otherwise in proper form for transfer, to the
address specified in the notice prior to the close of business on the
Business Day preceding the Change of Control Payment Date;
(5) that the Holders will be entitled to withdraw their
election to require the Company to repurchase any Notes on the terms
and conditions set forth in such notice; and
(6) that the Holders electing to require the Company to
repurchase any Notes in part will be issued a new Note in a principal
amount equal to the unpurchased portion of the Notes surrendered;
provided, however, that any portion of a Note repurchased by the
Company and any new Note issued to the Holder in respect of the
unpurchased portion thereof shall be in the principal amount of $1,000
or an integral multiple thereof.
(7) whether, in the event of an IPO as described in SECTION
5(c) of the Notes, the Company has elected to exercise its option to
redeem all or any part of the Notes pursuant to such Section; PROVIDED
that if the Company notifies the Holders that it will not exercise its
option to redeem the Notes pursuant to such SECTION 5(c) of the Notes,
then the Company shall no longer have such option to redeem as provided
in such Section and the Holders shall in any event have the right to
elect to require the Company to purchase Notes as provided more fully
in this SECTION 5.11. If the Company elects to exercise its option to
redeem all or any part of the Notes pursuant to SECTION 5(c) of the
Notes in connection with an IPO, the premium payable with respect to
the Notes so redeemed shall be the amount specified in SECTION 5(c) of
the Notes and not the premium provided for in this SECTION 5.11.
(c) Acceptance of Notes. On a Change of Control Payment Date, the
Company shall (1) accept for payment all Notes or portions thereof validly
tendered pursuant to the Change of Control Offer and (ii) promptly thereafter
mail or deliver to each Holder of Notes accepted for repurchase payment in the
amount equal to the aggregate Change of Control Offer Price for such Notes, and
the Company shall execute and mail or deliver to such Holders a new Note equal
in principal amount to any unpurchased portion of the Notes surrendered. The
Company will notify the Holders of the results of the Change of Control Offer on
the Change of Control Payment Date.
5.12 FINANCIAL COVENANTS
Commencing on the day immediately following the Closing Date, the
Company shall, and shall cause each of its Subsidiaries to, comply with the
following financial covenants:
(a) LEVERAGE RATIO. The Leverage Ratio, as of the last day of each
fiscal quarter of the Company and its Subsidiaries occurring during the periods
indicated below, shall be less than or equal to the following:
Page 37
Period Ratio
------ -----
Closing Date through and including the second fiscal quarter
of fiscal year 2000 6.00 to 1.0
Third fiscal quarter of fiscal year 2000 through and including the
fourth fiscal quarter of fiscal year 2000 5.75 to 1.0
First fiscal quarter of fiscal year 2001 5.50 to 1.0
Second fiscal quarter of fiscal year 2001 5.25 to 1.0
Third fiscal quarter of fiscal year 2001 5.00 to 1.0
Fourth fiscal quarter of fiscal year 2001 through and including the
third fiscal quarter of fiscal year 2002 4.75 to 1.0
Fourth fiscal quarter of fiscal year 2002 and thereafter 4.50 to 1.0
(b) FIXED CHARGE COVERAGE RATIO. The Fixed Charge Coverage Ratio, as of
the last day of each fiscal quarter of the Company and its Subsidiaries, shall
be greater than or equal to 1.00 to 1.0.
(c) INTEREST COVERAGE RATIO. The Interest Coverage Ratio, as of the
last day of each fiscal quarter of the Company and its Subsidiaries occurring
during the periods indicated below, shall be greater than or equal to the
following:
Period Ratio
------ -----
Closing Date through and including the second fiscal quarter
of fiscal year 2000 1.70 to 1.0
Third fiscal quarter of fiscal year 2000 through and including the
fourth fiscal quarter of fiscal year 2000 1.80 to 1.0
First fiscal quarter of fiscal year 2001 1.90 to 1.0
Second fiscal quarter of fiscal year 2001 2.00 to 1.0
Third fiscal quarter of fiscal year 2001 through and including the 2.10 to 1.0
fourth fiscal quarter of fiscal year 2001
First fiscal quarter of fiscal year 2002 and thereafter 2.50 to 1.0
(d) CONSOLIDATED EBITDA. Consolidated EBITDA with respect to the
Company and its Subsidiaries, as of the last day of each fiscal quarter of the
Company occurring during the period indicated below, shall be greater than or
equal to the following:
Period Amount
------ ------
Closing Date through and including the first fiscal quarter
of fiscal year 2000 $22,100,000
Second fiscal quarter of fiscal year 2000 $23,375,000
Third fiscal quarter of fiscal year 2000 $24,225,000
Fourth fiscal quarter of fiscal year 2000 $25,075,000
First fiscal quarter of fiscal year 2001 $25,500,000
Page 38
Second fiscal quarter of fiscal year 2001 $26,350,000
Third fiscal quarter of fiscal year 2001 $27,200,000
Fourth fiscal quarter of fiscal year 2001 $28,050,000
First fiscal quarter of fiscal year 2002 through and including
the second fiscal quarter of fiscal year 2002 $29,750,000
Third fiscal quarter of fiscal year 2002 through and including
the fourth fiscal quarter of fiscal year 2002 S31,450,000
First fiscal quarter of fiscal year 2003 through and including
the second fiscal quarter of fiscal year 2003 $33,150,000
Third fiscal quarter of fiscal year 2003 and thereafter $34,850,000
5.13 FISCAL YEARS
The Company shall not change its fiscal year from a fiscal year ending
on December 31 or change any fiscal quarter end as set forth in SCHEDULE 5.13.
5.14 STAY, EXTENSION AND USURY LAWS
The Company covenants and agrees (to the extent that it may lawfully do
so) that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, and will use its best
efforts to resist any attempts to claim or take the benefit of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
which may affect the covenants or the performance of its obligations under this
Agreement or the Notes; and the Company (to the extent it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Holders, but will suffer and permit
the execution of every such power as though no such law has been enacted.
5.15 CORPORATE EXISTENCE, MERGER; SUCCESSOR CORPORATION
(a) The Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its and its Subsidiaries' corporate
existence in accordance with its organizational documents and the corporate
rights (charter and statutory), licenses and franchises of the Company and each
of its Subsidiaries; provided, however, that the Company shall not be required
to preserve any such right, license or franchise, or corporate existence, if the
Board of Directors of the Company shall determine in good faith that the
preservation thereof is no longer desirable in the conduct of the business of
the Company, and that the loss thereof is not adverse in any material respect to
any Holder.
(b) The Company shall not, and shall not permit any Subsidiary
Guarantor to, in a single transaction or through a series of related
transactions, (i) consolidate with or merge with or into any other Person, or
transfer (by lease, assignment, sale or otherwise) all or substantially all of
its properties and assets as an entirety or substantially as an entirety to
another Person or group of affiliated Persons or (ii) adopt a Plan of
Liquidation, unless, in either case:
Page 39
(1) The Company or such Subsidiary Guarantor, as the case may
be, shall be the continuing person, or the person (if other than the
Company or such Subsidiary Guarantor, as the case may be) formed by
such consolidation or into which the Company or such Subsidiary
Guarantor, as the case may be, is merged or to which all or
substantially all of the properties and assets of the Company or such
Subsidiary Guarantor, as the case may be, as an entirety or
substantially as an entirety are transferred (or, in the case of a Plan
of Liquidation, any Person to which assets are transferred) (the
Company, such Subsidiary Guarantor or such other person being
hereinafter referred to as the "SURVIVING PERSON") shall be a
corporation organized and validly existing under the laws of the United
States, any State thereof or the District of Columbia, and shall
expressly assume, by an amendment to this Agreement, all the
Obligations of the Company under the Notes and this Agreement, the
Warrants, the Registration Rights Agreement and all Obligations of such
Subsidiary Guarantor under the Subsidiary Guaranty and this Agreement,
as the case may be;
(2) immediately before and immediately after and giving effect
to such transaction and the assumption of the Obligations as set forth
in clause (1) above and the incurrence or anticipated incurrence of any
Indebtedness to be incurred in connection therewith, no Default or
Event of Default shall have occurred and be continuing; and
(3) the Company or such Subsidiary Guarantor, as the case may
be, shall have delivered to each Holder a certificate for Principal
Officer and an Opinion of Counsel, each stating that such
consolidation, merger, transfer or adoption and such amendment to this
Agreement comply with this SECTION 5.15, that the Surviving Person
agrees to be bound hereby, and that all conditions precedent herein
provided relating to such transaction have been satisfied.
(c) Upon any consolidation or merger, or any transfer of assets
(including pursuant to a Plan of Liquidation) in accordance with this SECTION
5.15, the successor person formed by such consolidation or into which the
Company or any Subsidiary Guarantor is merged or to which such transfer is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Company or such Subsidiary Guarantor, as the case may be, under
this Agreement with the same effect as if such successor person had been named
as the Company or such Subsidiary Guarantor herein; provided, however, that
neither the Company nor such Subsidiary Guarantor shall be released from the
Obligations and covenants under this Agreement or under the Notes or the
Warrants or the Subsidiary Guaranty, as the case may be.
5.16 SAME BUSINESS
For so long as any Securities are outstanding, the Company and its
Subsidiaries will not engage in any business other than the business engaged in
by the Company immediately prior to the date hereof or reasonable extensions or
reasonably related to the general nature of the business.
Page 40
5.17 TAXES
The Company shall, and shall cause its Subsidiaries to, pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all Taxes levied or imposed upon the Company or such Subsidiary,
as the case may be, or upon the income, profits or property of the Company or
such Subsidiary, as the case may be, and (ii) all lawful claims, whether for
labor, materials, supplies, services or anything else, which, if unpaid, would
or may by law become a Lien, upon the property of the Company or such
Subsidiary, as the case may be; provided, however, that neither the Company nor
any of its Subsidiaries shall be required to pay or discharge or cause to be
paid or discharged any such Tax, the applicability or validity of which is being
contested in good faith by appropriate proceedings which will prevent the
forfeiture or sale of any property of the Company or such Subsidiary, as the
case may be, and for which disputed amounts reserves have been established in
accordance with GAAP, in an amount which the Company or such Subsidiary, as the
case may be, believes in good faith is adequate.
5.18 INVESTMENT COMPANY ACT
Neither of the Company nor any of its Subsidiaries shall become an
investment company subject to registration under the Investment Company Act of
1940, as amended.
5.19 OWNERSHIP OF SUBSIDIARIES
(a) The Company shall at all times own 100% of the Equity Interests of
each of its Subsidiaries in existence at the Closing. The Company shall not
create or cause to exist any Subsidiary; provided, however, that the Company may
create or acquire Subsidiaries if (i) the Company shall at all times own 100% of
the Equity Interests of such Subsidiary and (ii) the Company shall cause such
Subsidiary to guaranty the Notes on a senior subordinated basis in accordance
with SECTION 11 hereof.
(b) Except as permitted by SECTION 5.7, 5.8 or 5.15, the Company shall
maintain (along with one or more Subsidiaries in the case of an indirect
Subsidiary) good and valid title to the Equity Interests of each of its
Subsidiaries free and clear of any Lien other than Permitted Liens.
5.20 INSURANCE
The Company and its Subsidiaries shall maintain liability, casualty and
other insurance with a reputable insurer or insurers in such amounts and against
such risks as is carried by responsible companies engaged in similar businesses
and owning similar assets, INCLUDING as set forth in SCHEDULE 3.23; PROVIDED,
HOWEVER, that the Company and its Subsidiaries may maintain self-insurance plans
to the extent companies of similar size and in similar businesses do so.
5.21 ERISA NOTICES
As soon as possible and in any event within thirty (30) days after the
Company knows or has reason to know thereof: (i) the occurrence or expected
occurrence of any Reportable Event with
Page 41
respect to any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC (other than a Permitted Lien) or a
Plan or any withdrawal from, or the termination, Reorganization or Insolvency
of, any Multiemployer Plan or (ii) the institution of proceedings or the taking
of any other action by the PBGC or the Company or any Commonly Controlled Entity
or any Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan. Such notice shall be
accompanied by a statement of a Principal Officer setting forth details of the
occurrence referred to therein and stating what action the Company proposes to
take with respect thereto.
5.22 INCONSISTENT AGREEMENTS
The Company shall not, and shall not permit any of its Subsidiaries to,
(i) enter into any agreement or arrangement which is inconsistent with, or would
impair the ability of the Company or any of its Subsidiaries to fulfill the
obligations of the Company or any of its Subsidiaries under this Agreement, or
(ii) supplement, amend or otherwise modify the terms of their respective Charter
Documents if the effect thereof would be materially adverse to the Holders;
PROVIDED, however, that notwithstanding the foregoing, the Company and its
Subsidiaries may, subject to SECTION 5.5 and SECTION 5.29, enter into the Senior
Credit Agreement and any other agreement or other documents in connection
therewith or pursuant to the terms thereof.
5.23 COMPLIANCE WITH LAWS, MAINTENANCE OF LICENSES
The Company shall, and shall cause each of its Subsidiaries to, comply
with all statutes, ordinances, governmental rules and regulations, judgments,
orders and decrees (including all Environmental Laws) to which any of them is
subject, and maintain, obtain and keep in effect all licenses, permits,
franchises and other governmental authorizations necessary to the ownership or
operation of their respective properties or the conduct of their respective
businesses, except to the extent that the failure to so comply or maintain,
obtain and keep in effect could not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
5.24 INSPECTION OF PROPERTIES AND RECORDS
The Company agrees to allow, and to cause each of its Subsidiaries to
allow, the TCW Representative and each Holder of at least $2,000,000 in
aggregate principal amount of the Notes or, in the event there is no Holder of
at least $2,000,000 in aggregate principal amount of the Notes, the TCW
Representative and the Holder who holds the greatest aggregate principal amount
of the Notes (and so long as a Default or an Event of Default has occurred and
is continuing, each Purchaser and its Affiliates and Holder and such Holder's
Affiliates) (or, in each case, such Persons as any of them may designate)
(individually and collectively, "INSPECTORS"), subject to appropriate agreements
as to confidentiality, (i) to visit and inspect any of the properties of the
Company or any of its Subsidiaries, (ii) to examine all their books of account,
records, reports and other papers and to make copies and extracts therefrom,
(iii) to discuss their respective affairs, finances and accounts with their
respective officers and employees, and (iv) to discuss the financial condition
of the Company and their Subsidiaries with their independent accountants upon
reasonable notice to the Company of its
Page 42
intention to do so and so long as the Company shall be given the reasonable
opportunity to participate in such discussions (and by this provision the
Company each authorize said accountants to have such discussions with the
Inspectors). All such visits, examinations and discussions set forth in the
preceding sentence shall be at such reasonable times and as often as may be
reasonably requested; provided that unless an Event of Default shall have
occurred and be continuing such visits shall be limited to 1 per quarter. If a
Default or an Event of Default shall have occurred and be continuing, the
Company shall pay or reimburse all Inspectors for expenses which such Inspectors
may reasonably incur in connection with any such visitations or inspections.
5.25 BOARD OF DIRECTOR OBSERVATION RIGHTS
Purchasers, as a group and so long as any Purchaser or any TCW Group
Member is a Holder, shall have the right to have one representative (the "TCW
REPRESENTATIVE"), who shall be reasonably acceptable to the Company, present
(whether in person or by telephone) at all meetings of the Boards of Directors
of the Company. The Company shall send to such representative all of the
notices, information and other materials that are distributed to the directors
of the Company; provided, however, that upon the request of such representative,
the Company shall refrain from sending such notices, information and other
materials for so long as such representative shall request. The Purchasers shall
provide notice to the Company of the identity and address of, or any change with
respect to the identity or address of, such representative. The Company shall
reimburse each such representative for the reasonable out-of-pocket expenses of
such representative incurred in connection with the attendance at such meetings.
5.26 MAINTENANCE OF OFFICE OR AGENCY
So long as any of the Notes remain unpaid and outstanding, the Company
shall maintain (i) an office or agency where the Notes may be presented for
registration and transfer and for exchange as provided in this Agreement; and
(ii) an office or agency where notices and demands to or upon the Company in
respect of the Notes may be served. The location of such office or agency
initially shall be Pacific Circuits, Inc., 00000 X.X. 00xx Xxxxx, Xxxxxxx,
Xxxxxxxxxx 00000. The Company shall give to each Holder written notice of any
change of location thereof.
5.27 INFORMATION TO PROSPECTIVE PURCHASERS
So long as any of the Notes remain unpaid and outstanding, the Company
shall, upon the request of any Purchaser or subsequent Holder, deliver to such
Purchaser or such Holder and any prospective purchaser designated by such
Purchaser or such Holder promptly following the request of such Purchaser or
such Holder or such prospective purchaser such information which such Purchaser
or such Holder or such prospective purchaser may reasonably request in order to
comply with the information requirements of Rule 144A(d)(4).
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5.28 PRIVATE PLACEMENT NUMBER
The Company consents to the filing of copies of this Agreement with
Standard & Poor's Corporation to obtain a private placement number and with the
National Association of Insurance Commissioners.
5.29 SENIOR INDEBTEDNESS AMENDMENTS
The Companies may at any time and from time to time without the consent
of or notice to the Holders, without incurring liability to the Holders and
without impairing or releasing the obligations of Holders pursuant to Section 8
of this Agreement, change the manner or place of payment or extend the time of
payment of or renew or alter any of the terms of the Senior Indebtedness, or
amend in any manner the Senior Credit Agreement or any other agreement, note,
guaranty or other instrument evidencing or securing or otherwise relating to the
Senior Indebtedness; PROVIDED that the Companies shall not increase the Senior
Indebtedness (except as permitted by Section 5.5).
5.30 NOTICES OF CERTAIN PROCEEDINGS
If any of the Company or any of its Subsidiaries is made or threatened
to be made a party to any proceeding that, if determined adversely to the
Company or such Subsidiary would result, or be likely to result, in a Material
Adverse Effect, then the Company shall promptly deliver to the Holders a
description of such proceeding, indicating the court in which it was filed, if
any, the amount in controversy or other remedies sought and the other parties
thereto.
5.31 CONSULTING AGREEMENTS
The Company will deliver to the Holders copies of all Consulting
Agreements promptly after the execution thereof. The Consulting Agreements shall
not be amended without the prior written consent of the Required Holders.
5.32 NO AMENDMENT OR WAIVER OF CERTAIN DOCUMENTS
The Company will not take any action that will amend, modify, alter or
terminate the Acquisition Agreements (including the schedules relevant thereto)
in any way or waive any material rights with respect thereto, without the prior
written consent of the Required Holders. The Company will not take any actions
to amend, modify or alter the Seller Notes or the Retention Bonus Plan without
the prior written consent of the Required Holders. Company shall not request or
seek a waiver of any default or event of default with respect to the Senior
Indebtedness to permit Restricted Payments otherwise prohibited by clause
(b)(ii) of SECTION 5.4 without also obtaining a waiver of any such default or
event of default for the benefit of Holders, including termination of any
Indefinite Blockage Period or Payment Blockage Period then in effect.
Page 44
5.33 STOCK OPTIONS
Without the prior written consent of the Required Holders, at no time
shall the options to acquire Common Stock pursuant to the Stock Option Plan in
the aggregate constitute more than twelve and one-half percent (12.5%) of the
Equity Interests, on a fully diluted basis, of the Company.
SECTION 6. REDEMPTION
6.1 THE COMPANY'S RIGHT TO REDEEM
(a) OPTIONAL REDEMPTION. The Company may redeem the Notes, or a portion
thereof, in accordance with the terms and conditions provided in Section 5 of
the Notes.
(b) MANDATORY REDEMPTION. The Company shall redeem the Notes on the
Maturity Date, as provided in Section 6(a) of the Notes.
The obligations of the Company under this Section 6 are subject to the
subordination provisions of Section 8 hereof, but any failure to perform such
obligations as a result of such subordination provisions shall in any event
constitute an Event of Default hereunder.
6.2 SELECTION OF NOTES TO BE REDEEMED
If fewer than all of the Notes are to be redeemed, the Company shall
redeem the Notes pro rata, in such manner as complies with applicable legal
requirements, if any. Notes in denominations of $1,000 may be redeemed only in
whole. The Company may select for redemption portions (equal to $1,000 or any
integral multiple thereof) of the principal of Notes that have denominations
larger than $1,000. Provisions of this Agreement that apply to Notes called for
redemption also apply to portions of Notes called for redemption.
6.3 NOTICE OF REDEMPTION
At least 15 days or, if such redemption is being made in connection
with an IPO, at least 10 days, but, in each case, not more than 60 days before a
Redemption Date, the Company shall mail a notice of redemption ("NOTICE OF
REDEMPTION") by first-class mail to each Holder whose Notes are to be redeemed
at such Holder's registered address. Each notice for redemption shall identify
the Notes to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) the name and address of the Company;
(d) that Notes called for redemption must be surrendered to the
Company to collect the Redemption Price;
Page 45
(e) that, unless the Company defaults in making the Redemption Price,
interest on Notes called for redemption ceases to accrue on and after the
Redemption Date, and the only remaining right of the Holders of such Notes is to
receive payment of the Redemption Price upon surrender to the Company of the
Notes redeemed;
(f) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the Redemption Date, and upon
surrender of such Note, a new Note or Notes in aggregate principal amount equal
to the unredeemed portion thereof will be issued;
(g) if fewer than all the Notes are to be redeemed, the identification
of the particular Notes (or, portion(s) thereof) to be redeemed, as well as the
aggregate principal amount of Notes to be redeemed and the aggregate principal
amount of Note(s) to be outstanding after such partial redemption; and
(h) the paragraph of the Notes pursuant to which the Notes are to be
redeemed.
6.4 EFFECT OF NOTICE OF REDEMPTION
Once Notice of Redemption is mailed in accordance with SECTION 6.3
above, Notes called for redemption become due and payable on the Redemption
Date and at the Redemption Price. Upon surrender to the Company, such Notes
called for redemption shall be paid at the Redemption Price.
6.5 PAYMENT OF REDEMPTION PRICE
On presentation and surrender of any Notes with respect to which a
notice of redemption has been given, at a place of payment specified in such
notice, such Notes or specified portions thereof shall be paid and redeemed by
the Company at the applicable Redemption Price.
If, on or prior to the Redemption Date, the Company deposits in a
segregated account or otherwise sets aside funds sufficient to pay the
Redemption Price of the Notes called for redemption, then, unless the Company
defaults in the payment of such Redemption Price, interest on the Notes to be
redeemed will cease to accrue on and after the applicable Redemption Date,
whether or not such Notes are presented for payment.
SECTION 7. DEFAULTS AND REMEDIES
7.1 EVENTS OF DEFAULT
An "EVENT OF DEFAULT" occurs if:
(a) the Company defaults in the payment of the principal of or premium,
if any, on any Note when the same becomes due and payable at maturity, upon
redemption or otherwise (whether or not prohibited by the subordination
provisions hereunder);
Page 46
(b) the Company defaults in the payment of interest on any Note or any
other amount payable hereunder when the same becomes due and payable and the
Default continues for a period of five Business Days (whether or not prohibited
by the subordination provisions hereunder);
(c) the Company or any Subsidiary Guarantor fails to comply with (i)
any of the agreements, covenants or provisions contained in SECTION 5 or (ii)
any of the other agreements, covenants, or provisions of this Agreement
(including the Subsidiary Guaranty) or the Notes and, in the case of this clause
(ii), the Required Holders notify the Company of the Default and the Company or
one of its Subsidiaries, as the case may be, does not cure the Default within 30
days after receipt of such notice;
(d) if any of the representations or warranties of the Company made in
this Agreement, the Warrant Agreement and the Registration Rights Agreement are
untrue in any respect as of the Closing Date, the result of which could
reasonably be expected to have a Material Adverse Effect;
(e) if the Company (i) defaults in the payment of principal or interest
payments and such default continues beyond the period of grace (not to exceed 30
days) under any loan agreement, note, mortgage, indenture or instrument (other
than the Senior Credit Agreement) under which there may be issued or by which
there may be secured or evidenced any Indebtedness (other than Senior
Indebtedness) of the Company or any of its Subsidiaries for borrowed money (or
the payment of which is guaranteed by the Company or any of its Subsidiaries),
whether such Indebtedness or guarantee now exists or shall be created hereafter,
and the principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness for which there is a default in the
payment of interest, premium, if any, or principal aggregates $750,000 or more,
or (ii) an event of default occurs under any loan agreement, note, mortgage,
indenture or instrument including the Senior Credit Agreement which shall
represent a default in payment upon final maturity or otherwise result in the
acceleration of such Indebtedness prior to its expressed maturity and the
principal amount of such Indebtedness, together with the principal amount of any
other such Indebtedness with respect to which there has been a default in
payment upon final maturity or the maturity of which has been so accelerated and
has not been paid, aggregates $750,000 or more or is Senior Indebtedness;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any Subsidiary of the Company and such remains undischarged for a period (during
which execution shall not be effectively stayed) of 30 days; PROVIDED that the
aggregate of all such judgments exceeds $750,000;
(g) the filing by the Company or any of its Subsidiaries (any such
person, a "DEBTOR") of a petition commencing a voluntary case under section 301
of Title 11 of the United States Code, or the commencement by a Debtor of a case
or proceeding under any other Bankruptcy Law seeking the adjustment,
restructuring, or discharge of the debts of such Debtor, or the liquidation of
such Debtor, including without limitation the making by a Debtor of an
assignment for the benefit of creditors; or the taking of any corporate action
by a Debtor in furtherance of or to facilitate, conditionally or otherwise, any
of the foregoing;
Page 47
(h) the filing against a Debtor of a petition commencing an involuntary
case under section 303 of title 11 of the United States Code, with respect to
which case (a) such Debtor consents or fails to timely object to the entry of,
or fails to seek the stay and dismissal of, an order of relief, (b) an order for
relief is entered and is pending and unstayed on the 60th day after the filing
of the petition commencing such case, or if stayed, such stay is subsequently
lifted so that such order for relief is given full force and effect, or (c) no
order for relief is entered, but the court in which such petition was filed has
not entered an order dismissing such petition by the 60th day after the filing
thereof; or the commencement under any other Bankruptcy Law of a case or
proceeding against a Debtor seeking the adjustment, restructuring, or discharge
of the debts of such Debtor, or the liquidation of such Debtor, which case or
proceeding is pending without having been dismissed on the 60th day after the
commencement thereof;
(i) the entry by a court of competent jurisdiction of a judgment,
decree or order appointing a receiver, liquidator, trustee, custodian or
assignee of a Debtor or of the property of a Debtor, or directing the winding
up or liquidation of the affairs or property of a Debtor, and (a) such Debtor
consents or fails to timely object to the entry of, or fails to seek the stay
and dismissal of, such judgment, decree, or order, or (b) such judgment,
decree or order is in full force and effect and is not stayed on the 60th day
after the entry thereof, or, if stayed, such stay is thereafter lifted so
that such judgment, decree or order is given full force and effect;
(j) any Person, other than the Company and the Subsidiaries, shall,
directly or indirectly, (i) terminate any employee pension benefit plan
subject to Title IV of ERISA and as a result of such termination the Company
and its Subsidiaries, collectively, would incur any liability or (ii) make a
complete or partial withdrawal (within the meaning of Section 4201 of ERISA)
from any multiemployer plan if as a result of such withdrawal (within the
meaning of Section 4201 of ERISA) the Company and its Subsidiaries,
collectively, would incur any liability that, in the case of clauses (i) and
(ii), could reasonably be expected to have a Material Adverse Effect; or
(k) any Subsidiary Guaranty shall for any reason cease to be, or be
asserted in writing by any responsible officer of any Subsidiary of the Company
or the Company not to be, in full force and effect or enforceable in accordance
with its terms unless any such Subsidiary Guaranty has been released pursuant to
the terms hereof.
The term "BANKRUPTCY LAW" means title 11, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "CUSTODIAN" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
7.2 ACCELERATION OF NOTES, REMEDIES
Subject to the following paragraph, if an Event of Default (other than
an Event of Default specified in clause (g), (h) or (i) of SECTION 7.1 occurs
and is continuing, the Required Holders by notice to the Company, may declare
the unpaid principal of and any accrued interest on all the Notes to be due and
payable (such notice being the "Acceleration Notice") and the same shall become
immediately due and payable. If an Event of Default specified in clause (g), (h)
or (i) of SECTION 7.1
Page 48
occurs, such an amount shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of any Holder.
The Required Holders by notice to the Company may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of the acceleration.
7.3 PREMIUM ON ACCELERATION
In the event of an acceleration of the Notes upon an Event of
Default occurring by reason of any willful action (or deliberate inaction)
taken (or not taken) by or on behalf of the Company with the intention of
avoiding payment of the premium that the Company would have had to pay if the
Company had elected to redeem the Notes and such acceleration is not
rescinded or annulled, the Holders, subject to SECTION 8, shall be entitled
to receive, in addition to any other payments to which they may be entitled,
a premium equal to the percentages of principal set forth below if the
declaration date of the acceleration occurs during the twelve month period
commencing on July 13 of the year set forth below:
% of Principal Amount
---------------------
1999 105%
2000 104%
2001 103%
2002 102%
2003 101%
2004 and thereafter 100%
7.4 OTHER REMEDIES
If an Event of Default occurs and is continuing, Holders of the Notes
may pursue any available remedy to collect the payment of principal or interest
on the Notes or to enforce the performance of any provision of the Notes or this
Agreement.
A delay or omission by any Holder of any Notes in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
7.5 WAIVER OF PAST DEFAULTS
The Required Holders by notice to the Company may waive an existing
Default or Event of Default and its consequences except a continuing Default or
Event of Default in the payment of the principal of or interest on any Notes.
Page 49
7.6 RIGHTS OF HOLDERS TO RECEIVE PAYMENT
Notwithstanding any other provision of this Agreement, the right of any
Holder of a Note to receive payment of principal and interest on the Note, on or
after the respective due dates expressed in the Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder.
7.7 UNDERTAKING FOR COSTS
In any suit for the enforcement of any right or remedy under this
Agreement, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
SECTION 8. SUBORDINATION
8.1 NOTES SUBORDINATED TO SENIOR INDEBTEDNESS
Notwithstanding anything in this Agreement or the Notes to the
contrary, the Company, for itself and its successors, and each Holder, by its
acceptance of the Notes, agrees that (a) the payment of the principal of and
interest or premium on the Notes and (b) any payment on account of the
acquisition or redemption of the Notes by the Company including, without
limitation, pursuant to SECTION 5.8 or 5.11, is subordinated, to the extent and
in the manner provided in this SECTION 8, to the prior payment in full of all
Senior Indebtedness of the Company and that these subordination provisions are
for the benefit of the holders of Senior Indebtedness. References in this
SECTION 8 to "SENIOR INDEBTEDNESS" are to Senior Indebtedness of the Company and
of the Subsidiary Guarantors.
This SECTION 8 shall constitute a continuing offer to all Persons who,
in reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness, and such holders are made obligees hereunder and any one or
more of them may enforce such provisions.
8.2 NO PAYMENT ON NOTES IN CERTAIN CIRCUMSTANCES
(a) No payment shall be made by or on behalf of the Company on account
of the principal of, premium, if any, or interest on the Notes or to defease or
acquire any of the Notes (including repurchases of Notes pursuant to SECTION 5.8
or 5.11) for cash or property, or on account of the redemption provisions of the
Notes (other than principal, premium or interest paid with Junior Securities),
during the period (the "INDEFINITE BLOCKAGE PERIOD") beginning on the date that
the Company and the Holders of the Notes receive written notice (a "PAYMENT
NOTICE") from the holders of such Senior Indebtedness of any default in payment
(a "PAYMENT DEFAULT") of any principal of, premium, if any, or interest on any
Senior Indebtedness or any obligation owing under or in respect of Senior
Indebtedness or their representative, and ending on the earliest of (A) the date
that all Senior Indebtedness is paid in full, (B) the date on which the Senior
Indebtedness to which such
Page 50
Payment Default relates is paid in full or such default is cured, and (C) the
date on which such Payment Default is waived in writing in accordance with the
instruments governing such Senior Indebtedness by the holders of such Senior
Indebtedness (or any requisite percentage thereof).
(b) If an event of default other than a Payment Default (an "OTHER
DEFAULT") with respect to any Senior Indebtedness, as such event of default is
defined in the instrument under which it is outstanding, has occurred, is
continuing and permits the holders (or any requisite percentage thereof) to
declare such Senior Indebtedness due and payable prior to the date on which it
would otherwise have become due and payable, then during the period (the
"PAYMENT BLOCKAGE PERIOD") commencing on the date that the Company and the
Holders receive written notice (a "DEFAULT NOTICE") of such Other Default and
ending on the earliest of: (A) 170 days after such date, (B) the date, if any,
on which the Senior Indebtedness to which such default relates is paid in full
or such Other Default is cured or waived in writing in accordance with the
instruments governing such Senior Indebtedness by the holders of such Senior
Indebtedness (or any requisite percentage thereof), and (C) the date on which
the Company and the Holders of the Notes receive from the holders of such Senior
Indebtedness (or their representative) that commenced the Payment Blockage
Period written notice that the Payment Blockage Period has been terminated, no
payment shall be made by or on behalf of the Company on account of the principal
of, premium, if any, or interest on, the Notes, or to defease or acquire any of
the Notes (including repurchases of Notes pursuant to SECTION 5.8 or 5.11) for
cash or property, or on account of the redemption provisions of the Notes or on
account of any fees and expenses relating to the Notes or this Agreement (other
than principal, premium or interest paid with Junior Securities).
Notwithstanding any other provision of this Agreement, only one Payment Blockage
Period may be commenced within any period of 365 consecutive days. No event of
default that existed or was continuing with respect to the Senior Indebtedness
for which a Default Notice commencing a Payment Blockage Period was given on the
date such Payment Blockage Period commenced shall be, or be made, the basis for
the commencement of any subsequent Payment Blockage Period unless such event of
default is cured or waived for a period of not less than 90 consecutive days.
(c) For purposes of this Agreement, the term "STANDSTILL PERIOD" shall
mean a period which commences on the date that the Company and the Holders of
the Notes receive a Payment Notice or a Default Notice, as the case may be, and
ends on the earliest to occur of (i) the termination of the Indefinite Blockage
Period relating to such Payment Notice or the termination of the Payment
Blockage Period relating to such Default Notice, as the case may be, (ii)
acceleration of the Senior Indebtedness to which such Payment Notice or Default
Notice, as the case may be, relates, (iii) an Event of Default specified in
clause (g), (h) or (i) of SECTION 7.1, (iv) 170 days after the receipt by the
Company and the Holders of the Notes of such Payment Notice or Default Notice,
as the case may be, (v) the waiver or amendment by or on behalf of the lenders
under the Senior Credit Agreement (or any requisite percentage thereof) of the
restrictions, during such Standstill Period, on asset sales or dispositions by
the Company or any of its Subsidiaries so as to permit the Company or any of
its Subsidiaries to transfer or apply the net proceeds from such asset sales or
dispositions to or for the benefit of any holders of long-term Indebtedness of
the Company or its Subsidiaries other than to repay obligations under the Senior
Credit Agreement, (vi) the waiver or amendment, during such Standstill Period,
by or on behalf of the lenders under the Senior Credit Agreement (or any
requisite percentage thereof) of the prohibition on the creation or existence of
liens on property, revenue or
Page 51
assets of the Company or any of its Subsidiaries so as to permit the creation or
existence of liens (including judgment liens) securing payment of Indebtedness
of the Company or any of its Subsidiaries which ranks PARI PASSU with the Notes
or is subordinate or junior in right of payment to the Notes, or (vii) such time
as the holders of Senior Indebtedness (or any requisite percentage thereof)
consent in writing to the termination of the Standstill Period. During the
Standstill Period, such Holders shall be prohibited from accelerating the Notes
and shall be prohibited from enforcing any of their default remedies with
respect thereto (including any right to xxx the Company or to file or
participate in the filing of any involuntary bankruptcy petition against the
Company) until the Standstill Period relating to such Payment Notice or Default
Notice, as the case may be, shall cease to be in effect; PROVIDED, HOWEVER, that
if a Holder had initiated an enforcement or collection action prior to the
commencement of such Standstill Period at a time when such Holder was entitled
to do so, then such Holder shall not be prevented during the Standstill Period
from taking any steps with respect to such pending collection or enforcement
action as are required by law or are reasonably required to avoid material
prejudice to the rights of such Holder so long as such steps are not
inconsistent with or in contravention of and which do not interfere with the
enforcement actions, if any, taken by the holders of the Senior Indebtedness or
their representative. Upon the termination of any Standstill Period, then the
Holders of the Notes may, at their sole election, exercise any and all remedies
(including acceleration of the maturity of the Notes) available to them under
this Agreement or applicable law; PROVIDED that the Indefinite Blockage Period
or the Payment Blockage Period, as the case may be (if not also terminated),
shall continue for its full period notwithstanding the termination of the
Standstill Period. Notwithstanding the foregoing, not more than one Standstill
Period may be commenced within a period of 365 consecutive days.
(d) In furtherance of the provisions of SECTION 8.1, in the event
that, notwithstanding the foregoing provisions of this SECTION 8.2, any payment
or distribution of assets on account of principal of, premium, if any, or
interest on the Notes or to defease or acquire any of the Notes (including
repurchases of Notes pursuant to SECTION 5.8 or 5.11) for cash, property or
securities, or on account of the redemption provisions of the Notes (other than
principal, premium or interest paid with Junior Securities) shall be made by the
Company and received by any Holder, at a time when such payment or distribution
was prohibited by the provisions of this SECTION 8.2, then, unless such payment
or distribution is no longer prohibited by this SECTION 8.2, such payment or
distribution shall be received and held in trust by such Holder for the benefit
of the holders of Senior Indebtedness, and shall be paid or delivered by such
Holders to the holders of Senior Indebtedness remaining unpaid or unprovided for
or their representative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate amounts on
account of the Senior Indebtedness held or represented by each, to the extent
necessary to enable payment in full (except as such payment otherwise shall have
been provided for), of all Senior Indebtedness remaining unpaid, after giving
effect to all concurrent payments and distributions and all provisions therefor,
to or for the holders of such Senior Indebtedness, but only to the extent that
as to any holder of such Senior Indebtedness such holder (or a representative
thereof) notifies the Holders of the amounts then due and owing on such Senior
Indebtedness, if any, held by such holder and only the amounts specified in such
notices to the Holders shall be paid to the holders of such Senior Indebtedness.
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The Company shall give prompt written notice to the Holders of any
default or event of default, and any cure or waiver thereof, or any acceleration
under any Senior Indebtedness or under any agreement pursuant to which Senior
Indebtedness may have been issued.
8.3 NOTES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR INDEBTEDNESS ON
DISSOLUTION, LIQUIDATION OR REORGANIZATION
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or
similar proceeding or upon assignment for the benefit of creditors:
(a) the holders of all Senior Indebtedness shall first be entitled to
receive payments in full (or to have such payment duly provided for as
determined by the Governmental Authority, administering such proceeding) of the
principal of, premium if any, and interest on and other amounts payable in
respect thereof, before the Holders are entitled to receive any payment on
account of the principal of, premium if any, and interest on the Notes (other
than principal, interest or premium paid with Junior Securities);
(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than principal,
interest or premium paid with Junior Securities), to which the Holders would be
entitled except for the provisions of this Section 8, shall be paid by the
liquidating trustee or agent or other Person making such a payment or
distribution, directly to the holders of Senior Indebtedness or their
representative, ratably according to the respective amounts of Senior
Indebtedness held or represented by each, to the extent necessary to make
payment in full (or have such payment duly provided for) of all such Senior
Indebtedness remaining unpaid after giving effect to all concurrent payments and
distributions and all provisions therefor to or for the holders of such Senior
Indebtedness;
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, shall be received by the Holders on account of principal
of, premium, if any, or interest on the Notes (other than principal, interest or
premium paid with Junior Securities), as the case may be, before all Senior
Indebtedness is paid in full (or provision made therefor), such payment or
distribution shall be received and held in trust by such Holder for the benefit
of the holders of such Senior Indebtedness, or their respective representative,
ratably according to the respective amounts of Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full (except as
such payment otherwise shall have been provided for) of all such Senior
Indebtedness remaining unpaid after giving effect to all concurrent payments and
distributions and all provisions therefor to or for the holders of such Senior
Indebtedness, but only to the extent that as to any holder of such Senior
Indebtedness such holder (or a representative therefor) notifies the Holders of
the amounts then due and owing on such Senior Indebtedness, if any, held by such
holder and only the amounts specified in such notices to the Holders shall be
paid to the holders of such Senior Indebtedness; and
(d) Upon the failure of any Holder to file appropriate claims or proofs
of claim in respect of any Note held by such Holder in any such proceeding as of
the 10th business day preceding the bar
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date thereof, each holder of Senior Indebtedness (or their representative) is
hereby irrevocably authorized and empowered (in its own name, by such
representative or otherwise), but shall have no obligation to file claims and
proofs of claim and take such other action as it may deem necessary or advisable
for the exercise or enforcement of any of the rights or interests of such Holder
with respect to the Notes held by such Holder. Notwithstanding the foregoing,
neither the holder of Senior Indebtedness nor their representative shall have
any right whatsoever to vote any claim that any Holder may have in such
proceeding to accept or reject any plan or partial or complete liquidation,
reorganization, arrangement, composition or extension.
The Company shall give prompt written notice to the Holders of any
dissolution, winding up, liquidation or reorganization of the Company or
assignment for the benefit of creditors by the Company.
8.4 NOTEHOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS OF SENIOR
INDEBTEDNESS
Subject to the payment in full of all Senior Indebtedness (or provision
made for its payment) and the expiration or termination of all commitments to
lend under the Senior Credit Agreement, the Holders of Notes shall be subrogated
to the rights of the holders of such Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness
until all amounts owing on the Notes shall be paid in full, and for the purpose
of such subrogation no such payments or distributions to the holders of such
Senior Indebtedness by or on behalf of the Company, or by or on behalf of the
Holders by virtue of this SECTION 8, which otherwise would have been made to the
Holders shall, as between the Company and the Holders, be deemed to be payment
by the Company, to or on account of such Senior Indebtedness, it being
understood that the provisions of this Section 8 are and are intended solely for
the purpose of defining the relative rights of the Holders, on the one hand, and
the holders of such Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this SECTION 8 shall have been
applied, pursuant to the provisions of this SECTION 8, to the payment of amounts
payable under Senior Indebtedness, then the Holders shall be entitled to receive
from the holders of such Senior Indebtedness any payments or distributions
received by such holders of Senior Indebtedness in excess of the amount
sufficient to pay all amounts payable under or in respect of such Senior
Indebtedness in full.
8.5 OBLIGATIONS OF THE COMPANY UNCONDITIONAL
Nothing contained in this SECTION 8 or elsewhere in this Agreement or
in the Notes is intended to or shall impair, as between the Company and the
Holders, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders the principal of, premium, if any, and interest on the Notes
as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the Holders and
creditors of the Company other than the holders of the Senior Indebtedness, nor
shall anything herein or in the Notes prevent any Holder from exercising all
remedies otherwise permitted by applicable law upon default under this
Agreement, subject to the rights and restrictions, if any, under this SECTION 8,
held by the holders of Senior Indebtedness in respect of cash, property or
securities of the Company (other than Junior
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Securities) received upon the exercise of any such remedy. Notwithstanding
anything to the contrary in this SECTION 8 or elsewhere in this Agreement or in
the Notes, upon any distribution of assets of the Company referred to in this
SECTION 8, the Holders shall be entitled to rely upon any order or decree made
by any court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
liquidating trustee or agent or other Person making any distribution to the
Holders for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Indebtedness and other Indebtedness
of the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
SECTION 8.
8.6 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE COMPANY
OR HOLDERS OF SENIOR INDEBTEDNESS
No right of any present or future holders of any Senior Indebtedness to
enforce subordination provisions contained in this SECTION 8 shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms of this Agreement,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of Senior Indebtedness may extend, renew,
modify or amend the terms of the Senior Indebtedness or any security therefor
and release, sell or exchange such security and otherwise deal freely with the
Company all without affecting the liabilities and obligations of the parties to
this Agreement or the Holders.
8.7 SECTION 8 NOT TO PREVENT EVENTS OF DEFAULT
The failure to make a payment on account of principal of, premium, if
any, or interest on the Notes by reason of any provision of this SECTION 8 shall
not be construed as preventing the occurrence of a Default or an Event of
Default under this Agreement or in any way prevent the Holders from exercising
any right hereunder other than as provided in this Section 8.
8.8 MISCELLANEOUS PROVISIONS
(a) The provisions of this SECTION 8 shall continue to be effective or
be reinstated, as the case may be, if at any time any payment of any of the
Senior Indebtedness is rescinded or must otherwise be returned by any holder of
Senior Indebtedness or any other recipient thereof, as the case may be, upon the
insolvency, bankruptcy or reorganization of the Company or otherwise, all as
though such payment had not been made.
(b) No failure on the part of any holder of Senior Indebtedness to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof of the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
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(c) The provisions of this SECTION 8 constitute a continuing agreement
and shall (i) remain in full force and effect until the Senior Credit Agreement
shall have been terminated and the Senior Indebtedness shall have been paid in
full, (ii) be binding upon the Holders and their successors and assigns and
(iii) inure to the benefit of and be enforceable by the holders of the Senior
Indebtedness and their respective successors, transferees and assigns.
SECTION 9. AMENDMENTS AND WAIVERS
9.1 WITH CONSENT OF HOLDERS
The Company, when authorized by a resolution of the Board of Directors
of the Company with written consent of the Required Holders, may amend this
Agreement or the Notes, provided that each Holder shall have received prior
notice of such proposed amendment. The Required Holders may waive compliance by
the Company with any provision of this Agreement or the Notes, provided that
each Holder shall have received prior notice of such proposed amendment. Without
the consent of each Holder affected, however, no amendment or waiver may (with
respect to any Notes held by a nonconsenting Holder of Notes):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment or waiver of any provision of this Agreement or the Notes;
(b) reduce the principal of or alter the provisions with respect to the
redemption of Notes, reduce the purchase price payable in connection with
repurchases of the Notes pursuant to SECTION 5.8 or 5.11 hereof or reduce the
premium payable pursuant to SECTION 7.3 hereof;
(c) reduce the rate of or change the time for payment of interest on
any Note;
(d) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes or that resulted from a failure to
comply with SECTION 5.8 hereof (except a rescission of acceleration of the Notes
by the Required Holders and a waiver of the payment default that resulted from
such acceleration);
(e) make the principal of, premium, if any, or the interest on, any
Note payable in any manner other than that stated in this Agreement and the
Notes;
(f) make any change in the provisions of this Agreement relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of, premium (if any) or interest on the Notes;
(g) waive a redemption payment with respect to any Note;
(h) make any change to the subordination provisions of this Agreement
that adversely affect any Holder;
(i) make any change in the definitions of Required Holders or Maturity
Date: or
Page 56
(j) make any change in the foregoing amendment and waiver
provisions.
It shall not be necessary for the consent of the Holders under this
SECTION 9 to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof.
After an amendment or waiver under this SECTION 9 becomes effective,
the Company shall mail to the Holders affected thereby a notice briefly
describing the amendment or waiver. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such amendment or waiver.
In connection with any amendment under this SECTION 9, the Company may
offer, but shall not be obligated to offer, to any Holder who consents to such
amendment or waiver, consideration for such Holder's consent.
9.2 REVOCATION AND EFFECT OF CONSENTS
Until an amendment or waiver becomes effective, a consent to it by a
Holder is a continuing consent by the Holder and every subsequent Holder of a
Note or portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note. However,
any such Holder or subsequent Holder may revoke the consent as to his Note or
portion of his Note by notice to the Company received before the date on which
the Required Holders have consented (and not theretofore revoked such consent)
to the amendment or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment or
waiver, which record date shall be at least 30 days prior to the first
solicitation of such consent. If a record date is fixed, then notwithstanding
the last sentence of the immediately preceding paragraph, those persons who were
Holders at such record date (or their duly designated proxies), and only those
persons, shall be entitled to revoke any consent previously given, whether or
not such persons continue to be Holders after such record date. No such consent
shall be valid or effective for more than 90 days after such record date.
After an amendment or waiver becomes effective, it shall bind every
Security holder, unless it makes a change described in any of clauses (a)
through (i) of SECTION 9.1, in which case, the amendment or waiver shall bind
only each Holder of a Note who has consented to it and every subsequent Holder
of a Note or portion of a Note that evidences the same debt as the consenting
Holder's Note; provided that any such waiver shall not impair or affect the
right of any Holder to receive payment of principal of, premium (if any) and
interest on a Note, on or after the respective due dates expressed in such Note,
or to bring suit for the enforcement of any such payment on or after such
respective dates without the consent of such Holder.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver, consent or amendment, Notes owned
by the Company or any Affiliate of the Company shall be considered as though not
outstanding.
Page 57
9.3 NOTATION ON OR EXCHANGE OF NOTES
If an amendment or waiver changes the terms of a Note, the Company may
require the Holder of the Note to deliver it to the Company so that it may place
an appropriate notation on the Note about the changed terms and return it to
the Holder.
9.4 PAYMENT OF EXPENSES
The Company agrees to pay or reimburse each Purchaser's out-of-pocket
expenses (including the reasonable fees and expenses of counsel) relating to any
amendment or modification of, or any waiver or consent under, this Agreement,
the Securities, the Registration Rights Agreement, the Warrant Agreement and any
other Documents.
SECTION 10. DEFINITIONS
10.1 DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
"ACCELERATION NOTICE" shall have the meaning set forth in SECTION 7.2.
"ACCOUNT MANAGER" means each Purchaser, if any, duly authorized to act
as attorney in-fact on behalf of any Person in purchasing, in the name of and
using funds provided by such Person, Securities hereunder.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person existing at the
time such Person becomes a Subsidiary of the Company or assumed in connection
with the acquisition by the Company or any of its Subsidiaries of assets from
such Person, which Indebtedness was not incurred in connection with or in
anticipation of such acquisition.
"ACQUISITIONS" means, collectively, the Pacific Acquisition and the PCI
Acquisition
"ACQUISITION AGREEMENT" means, collectively, the Pacific Acquisition
Agreement and the PCI Acquisition Agreement.
"AFFILIATE" means, with respect to any referenced Person, a Person (i)
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such referenced Person, (ii)
which directly or indirectly through one or more intermediaries beneficially
owns or holds 10% or more of the combined voting power of the total Voting
Securities of such referenced Person or (iii) of which 10% or more of the
combined voting power of the total Voting Securities directly or indirectly
through one or more intermediaries is beneficially owned or held by such
referenced Person or a Subsidiary of such referenced Person. When used herein
without reference to any Person, Affiliate means an Affiliate of the Company.
For purposes of this definition, "control" when used with respect to any person
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies
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of such person, whether through the ownership of Voting Securities, by agreement
or otherwise; and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing. Notwithstanding the foregoing, for
purposes of this Agreement, Trust Company of the West and its Affiliates and any
other Purchaser and its Affiliates shall not be considered Affiliates of the
Company or any of its Subsidiaries.
"AFFILIATE TRANSACTION" shall have the meaning set forth in SECTION
5.6.
"AGREEMENT" means this Securities Purchase Agreement dated as of July
13, 1999, by and among the Company, the Subsidiary Guarantors named therein and
the Purchasers.
"APPROVED ACQUISITION" shall mean any acquisition of substantially all
of the assets or a majority or more of the Capital Stock of any Person which
meets each of the following conditions: (i) the Holders shall have received such
Qualified Financial Information regarding the Person, operating assets or line
of business to be acquired (herein the "ACQUISITION TARGET") as the Holders may
reasonably request; (ii) the Holders shall have received all documents,
instruments, certificates and agreements to be executed, or exchanged by,
between or among the Company or any of its Subsidiaries and the Person or
Persons selling the Acquisition Target evidencing, governing or relating to such
Acquisition (the "ACQUISITION DOCUMENTS"); and (iii) upon its consummation, if
the Acquisition Target is not merged into the Company or any Subsidiary
Guarantor, the Company shall cause such Person to Guaranty the Notes on a senior
subordinated basis in accordance with SECTION 11.3 hereof.
"APPROVED USE OF PROCEEDS" means any use of the proceeds of additional
Senior Indebtedness incurred pursuant to SECTION 5.5(a) for (i) Approved
Acquisitions, or (ii) any other use approved by the Required Holders, in their
sole discretion.
"ASSET SALE" means (i) the sale, lease, conveyance or other disposition
of assets (including by way of a sale-and-leaseback) of the Company or any of
its Subsidiaries, other than sales of inventory in the ordinary course of
business consistent with past practice, sales of Cash or Cash Equivalents, trade
receivables or sales of any asset by the Company to a Subsidiary of the Company
or by a Subsidiary of the Company to another Subsidiary of the Company or (ii)
the issuance or sale of Equity Interests of any of the Subsidiaries of the
Company to any Person other than the Company, in the case of either clause (i)
or (ii) above, whether in a single transaction or a series of related
transactions.
"ASSET SALE OFFER" shall have the meaning set forth in SECTION 5.8.
"ASSET SALE DATE" shall have the meaning set forth in SECTION 5.8.
"ASSET SALE OFFER PRICE" shall have the meaning set forth in SECTION
5.8.
"AUDITED FINANCIAL STATEMENTS" shall have the meaning set forth in
SECTION 3.4.
"BANKRUPTCY LAW" shall have the meaning set forth in SECTION 7.1.
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"XXXXXXXX XXXXX" means Xxxxxxxx Xxxxx & Partners Fund, L.P., a Delaware
limited partnership.
"BUSINESS" shall have the meaning set forth in SECTION 3.16(b).
"BUSINESS DAY" means any day which is not a Legal Holiday.
"CAPITAL LEASE" means any lease of any property (whether real, personal
or mixed) that, in conformity with GAAP, should be accounted for as a capital
lease.
"CAPITAL STOCK" means any and all shares, interests, participations or
other equivalents (however designated) of corporate stock, including without
limitation all common stock and preferred stock.
"CAPITALIZED LEASE OBLIGATION" means, with respect to any Person for
any period, any obligation of such Person to pay rent or other amounts under a
Capital Lease; the amount of such obligation shall be the capitalized amount
thereof determined in accordance with GAAP.
"CASH" means U.S. Legal Tender or U.S. Government Obligations having a
maturity of one year or less from the date of issuance thereof.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
commercial paper maturing in 180 days or less from the date issued and, at the
time of acquisition, having a rating of at least A-1 from Standard & Poor's
Corporation or at least P-1 from Xxxxx'x Investors Service, Inc.; (iii)
certificates of deposit or bankers' acceptances maturing within one year from
the date of issuance thereof issued by any commercial bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia having combined capital and surplus of not less than $100,000,000 or
the equivalent thereof or assets of at least $1 billion or the equivalent
thereof and, in each case, not subject to setoff rights in favor of such bank;
(iv) time deposits maturing no more than thirty (30) days from the date of
creation thereof with commercial banks having membership in the Federal Deposit
Insurance Corporation in amounts not exceeding the lesser of $100,000 or the
maximum amount of insurance applicable to the aggregate amount of the Company's
deposits at such institution; (v) repurchase obligations with a term of not more
than ninety (90) days for underlying securities of the types described in clause
(i) above entered into with any commercial bank meeting the qualifications
specified in clause (iii) above; (vi) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed by any state of the
United States or the District of Columbia, or by any political subdivision or
taxing authority of any such state or the District of Columbia, the securities
of which state, the District of Columbia, political subdivision or taxing
authority (as the case may be) are rated at least AAA by Standard and Poor's
Corporation or AAA by Xxxxx'x Investors Services, Inc.; and (vii) shares of
money market mutual or similar funds having assets in excess of $ 100,000,000
and that invest exclusively in assets satisfying the requirements of clauses (i)
through (vi) above.
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"CHANGE OF CONTROL" shall mean the occurrence of any of the following
events: (a) the failure of the Sponsors or one or more of their Affiliates to
maintain beneficial ownership, directly or indirectly, of Voting Securities of
the Company representing at least 51% of the combined voting power of all
Voting Securities of the Company, (b) any Person or two or more Persons acting
in concert shall have acquired beneficial ownership, directly or indirectly, or
shall have acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation, will result in its or their
acquisition of control over, Voting Securities of the Company (or other
securities convertible into such Voting Securities) representing 33% or more of
the combined voting power of all Voting Securities of the Company, (c) the
failure of the Company to own, directly or indirectly, 100% of the combined
voting power of all Voting Securities of PCI, and (d) Continuing Directors shall
cease for any reason to constitute a majority of the members of the board of
directors of the Parent then in office. As used herein, "beneficial ownership"
shall have the meaning provided in Rule 13d-3 of the Securities and Exchange
Commission promulgated under the Securities Exchange Act of 1934.
"CHANGE OF CONTROL DATE" shall have the meaning provided in
SECTION 5.11(a).
"CHANGE OF CONTROL OFFER" shall have the meaning provided in
SECTION 5.11(a).
"CHANGE OF CONTROL OFFER PRICE" shall have the meaning provided in
SECTION 5.11(a).
"CHANGE OF CONTROL PAYMENT DATE" shall have the meaning provided in
SECTION 5.11(b).
"CHARTER DOCUMENTS" means the Articles of Organization, Articles of
Incorporation or Certificate of Incorporation and Bylaws, as amended or restated
(or both) to date, of any of the Companies, or any of its Subsidiaries, as
applicable.
"CLOSING" shall have the meaning set forth in SECTION 1.2(b).
"CLOSING DATE" shall have the meaning set forth in SECTION 1.2(b).
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute or law thereto and regulations promulgated
thereunder.
"COMMITMENT DATE" shall have the meaning set forth in SECTION 5.8.
"COMMONLY CONTROLLED ENTITY" shall mean an entity, whether or not
incorporated, which is under common control with the Company within the meaning
of Section 4001 of ERISA or is part of a group which includes the Company and
which is treated as a single employer under Section 414 of the Code.
"COMMON STOCK" means the Common Stock, no par value, of the Company.
"COMPANIES" means, collectively, the Company and its Subsidiaries,
including PCI.
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"COMPANY" has the meaning set forth in the introductory paragraph of
this Agreement.
"CONSOLIDATED" or "CONSOLIDATED," when used with reference to any
accounting term, means the amount described by such accounting term, determined
on a consolidated basis in accordance with GAAP, after elimination of
intercompany items.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, all capital
expenditures of the Company and its Subsidiaries on a consolidated basis for
such period, as determined in accordance with GAAP. The term "Consolidated
Capital Expenditures" shall not include capital expenditures in respect of the
reinvestment of proceeds derived from (i) Recovery Events or (ii) that portion
of all such expenditures the Company is permitted to reinvest or use for
replacement or restoration of assets from Net Proceeds of Asset Sales.
"CONSOLIDATED EBITDA" means, for any period, the sum of (i)
Consolidated Net Income for such period, plus (ii) an amount which, in the
determination of Consolidated Net Income for such period, has been deducted for
(A) Consolidated Interest Expense, (B) total federal, state, local and foreign
income, value added and similar taxes, (C) losses (or MINUS gains) on the sale
or disposition of assets outside the ordinary course of business, (D)
depreciation, amortization expense and other non-cash charges, all as determined
in accordance with GAAP, (E) amounts paid in respect of management fees to the
extent permitted hereunder and (F) other non-recurring add-backs as set forth
on SCHEDULE 10.1(b); PROVIDED, that, not withstanding the foregoing, in the
event such period includes the fourth fiscal quarter of 1998 and/or the first
fiscal quarter of 1999, Consolidated EBITDA for such fiscal quarters shall be
the amounts set forth on Schedule 10.1(b).
"CONSOLIDATED INTEREST EXPENSE" means, for any period, all cash
interest expense of the Company and its Subsidiaries (including, without
limitation, the interest component under Capital Leases and the interest
component of deferred compensation under the Retention Bonus Plan), as
determined in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, for any period, Net Income after taxes
for such period of the Company and its Subsidiaries on a consolidated basis, as
determined in accordance with GAAP.
"CONSULTING AGREEMENT" shall have the meaning set forth in SECTION
3.25.
"CONTINUING DIRECTORS" means either during any period of up to 24
consecutive months commencing after the Closing Date, individuals who at the
beginning of such 24 month period were directors of the Parent (together with
any new director whose election by the Parent's board of directors or whose
nomination for election by the Parent's shareholders was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved).
"CUSTODIAN" shall have the meaning set forth in SECTION 7.1.
"DEFAULT" means any event which is, or after notice or passage of time
would be, an Event of Default.
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"DEFAULT NOTICE" shall have the meaning set forth in SECTION 8.2(b).
"DISQUALIFIED STOCK" means any Capital Stock which, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the sole option of the holder thereof, in whole or in part, on or prior to
the Maturity Date.
"DOCUMENTS" means this Agreement, the Warrant Agreement, the
Securities, the Registration Rights Agreement, and the Acquisition Agreements
collectively, or each of such documents singularly, and any documents or
instruments contemplated by or executed in connection with any of them or any of
the transactions contemplated hereby or thereby.
"ENVIRONMENTAL CLAIM" means any claim, demand, action, investigation or
notice of violation of which the Companies, including any of their employees,
are aware, or notice (written or oral) by any Person alleging potential
liability (including, without limitation, potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of, based on or
resulting from (a) the presence, or release into the environment, of any
Material of Environmental Concern at any location, whether or not owned or
operated by any of the Companies, or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
"ENVIRONMENTAL LAWS" shall mean any and all applicable foreign,
Federal, state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority or other
Requirement of Law (including common law) regulating, relating to or
imposing liability or standards of conduct concerning protection of human health
or the environment, as now or may at any time be in effect during the term of
this Agreement.
"EQUITY INTEREST" means (i) with respect to a corporation, any and all
Capital Stock or warrants, options or other rights to acquire Capital Stock (but
excluding any debt security which is convertible into, or exchangeable or
exercisable for, Capital Stock) and (ii) with respect to a partnership, limited
liability company or similar Person, any and all units, interests, rights to
purchase, warrants, options or other equivalents of, or other ownership
interests in any such Person.
"ERISA" means The Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute or law thereto and
regulations promulgated thereunder.
"EVENT" shall have the meaning set forth in the definition of "Debt
Incurrence Ratio."
"EVENT DATE" shall have the meaning set forth in the definition of
"Debt Incurrence Ratio."
"EVENT OF DEFAULT" shall have the meaning set forth in SECTION 7.1.
"EXCESS NET PROCEEDS" shall have the meaning set forth in SECTION 5.8.
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"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
from time to time, and any successor statute or law thereto.
"FIXED CHARGE COVERAGE RATIO" means, as of the end of each fiscal
quarter of the Company, for the Company and its Subsidiaries on a consolidated
basis for the four consecutive quarters ending on such date, the ratio of (i)
Consolidated EBITDA for the applicable period MINUS Consolidated Capital
Expenditures for the applicable period to (ii) the sum of Consolidated Interest
Expense for the applicable period PLUS Scheduled Funded Debt Payments for the
applicable period PLUS cash Taxes paid during the applicable period. For
purposes hereof, the Consolidated Interest Expense and Scheduled Funded Debt
Payments components of the Fixed Charge Coverage Ratio for the first three
complete fiscal quarters to occur after the Closing Date, shall be determined by
annualizing such Consolidated Interest Expense and Scheduled Funded Debt
Payments components such that for the first complete fiscal quarter to occur
after the Closing Date such components would be multiplied by four (4), the
first two complete fiscal quarters would be multiplied by two (2) and the first
three complete fiscal quarters would be multiplied by one and one-third (1 1/3).
"FUNDED DEBT" shall mean, with respect to the Company and its
Subsidiaries, on a consolidated basis, without duplication, (a) all Indebtedness
of such Person other than Indebtedness of the types referred to in clause (e),
(f), (i) and (l) of the definition of "Indebtedness" set forth in this SECTION
10.1, (b) all Funded Debt of others of the type referred to in clause (a) above
secured by (or for which the holder of such Funded Debt has an existing right,
contingent or otherwise, to be secured by) any Lien on, or payable out of the
proceeds of production from, property owned or acquired by such Person, whether
or not the obligations secured thereby have been assumed, (c) all obligations
under any Guaranty of such Person with respect to Funded Debt of the type
referred to in clause (a) above of another Person, (d) Funded Debt of the type
referred to in clause (a) above of any partnership or unincorporated joint
venture in which such Person is legally obligated or has a reasonable
expectation of being liable with respect thereto, and (e) the full amount of all
obligations under the Notes, the Seller Notes and the Retention Bonus Plan
measured as of the maturity dates of such obligations and not on a present value
basis.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such on the Closing Date by the American
Institute of Certified Public Accountants acting through its Accounting
Principles Board or by the Financial Accounting Standards Board or through other
appropriate boards or committees thereof and which are consistently applied for
all periods after the date hereof so as to property reflect the financial
conditions, and the results of operations, shareholders' equity and cash flows,
of the Company and its consolidated subsidiaries.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"GUARANTY" means, with respect to any Person, any contract, agreement
or understanding of such Person pursuant to which such Person guarantees, or in
effect guarantees, any Indebtedness of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including without limitation:
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(a) agreements to purchase such Indebtedness or any property
constituting security therefor;
(b) agreements to advance or supply funds (i) for the purchase or
payment of such Indebtedness, or (ii) to maintain working capital, equity
capital or other balance sheet conditions;
(c) agreements to purchase property, securities or services
primarily for the purpose of assuring the holder of such Indebtedness of the
ability of the primary obligor to make payment of the Indebtedness;
(d) letters or agreements commonly known as "comfort" or
"keepwell" letters or agreements;
(e) all obligations of such Person or Persons, contingent or
otherwise, in respect of any documentary letters of credit; or
(f) any other agreements to assure the holder of the Indebtedness
of the primary obligor against loss in respect thereof;
except that "guaranty" shall not include (i) the endorsement by a Person in the
ordinary course of business of negotiable instruments or documents for deposit
or collection, or (ii) indemnities given by the Company or its Subsidiaries in
brokerage, management and other agreements in the ordinary course of business
substantially consistent with past practices.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"HOLDER" or "HOLDERS" means each Purchaser (so long as it holds any
Securities) and any other holder of any of the Securities.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated pursuant thereto.
"INDEBTEDNESS" means, with respect to any Person, the aggregate amount
of, without duplication, the following: (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, or upon which interest payments are
customarily made, (c) all obligations of such Person under conditional sale or
other title retention agreements relating to Property purchased by such Person
(other than customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (d) all obligations
of such Person issued or assumed as the deferred purchase price of Property or
services purchased by such Person (other than Trade Payables due within six
months of the incurrence thereof) which would appear as liabilities on a balance
sheet of such Person, (e) all obligations of such Person under take-or-pay or
similar arrangements or under commodities
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agreements, (f) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on, or payable out of the proceeds of production
from, Property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (g) all obligations of such
Person with respect to Indebtedness of another Person, including Guaranties,
(h) all Capitalized Lease Obligations, (i) all Hedging Obligations of such
Person, (j) the maximum amount of all standby letters of credit issued or
bankers' acceptances facilities created for the account of such Person and,
without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (k) all preferred Capital Stock issued by such Person and
which by the terms thereof could be (at the request of the holders thereof or
otherwise) subject to mandatory sinking fund payments, redemption or other
acceleration, (l) the principal balance outstanding under any synthetic
lease, tax retention operating lease, off-balance sheet loan or similar
off-balance sheet financing product, (m) the Indebtedness of any partnership
or unincorporated joint venture in which such Person is a general partner or
a joint venturer, and (n) with respect to the Company, all obligations with
respect to the Retention Bonus Plan.
"INDEFINITE BLOCKAGE PERIOD" has the meaning set forth in SECTION
8.2(a).
"INDEMNIFIED PARTIES" has the meaning set forth in SECTION 1.8.
"INSOLVENCY" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of such term as used in
Section 4245 of ERISA.
"INSPECTORS" shall have the meaning set forth in SECTION 5.25.
"INTEREST COVERAGE RATIO" means, with respect to the Company and its
Subsidiaries on a consolidated basis for the twelve month period ending on the
last day of any fiscal quarter of the Company and its Subsidiaries, the ratio of
(a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for
such period. Notwithstanding the foregoing, for purposes of calculating the
Interest Coverage Ratio of the Company and its Subsidiaries for the first three
complete fiscal quarters to occur after the Closing Date, Consolidated Interest
Expense shall be determined by annualizing the components thereof such that for
the first complete fiscal quarter to occur after the Closing Date such
components would be multiplied by four (4), the first two complete fiscal
quarters would be multiplied by two (2) and the first three complete fiscal
quarters would be multiplied by one and one-third (1-1/3).
"INVESTMENT" means, with respect to any Person, any direct, indirect or
beneficial investment by such Person, whether by means of share purchase, loan,
advance, extension of credit (other than accounts receivable and trade credits
arising in the ordinary course of business), capital contribution or otherwise,
in or to any other Person, the guaranty by such Person of any Indebtedness of
any other Person or the subordination of any claim against any other Person to
other Indebtedness of such other Person.
"IPO" means a sale by the Company of Common Stock in an underwritten
(firm commitment) public offering registered under the Securities Act of 1933,
with gross proceeds to the Company of
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not less than $30,000,000, resulting in the listing of the Company's
Common Stock on a nationally recognized stock exchange, including
without limitation, the NASDAQ National Market System.
"JUNIOR SECURITIES" means (a) any shares of Capital Stock of
the Company, or its successor, as reorganized, or other Equity
Interests of the Company or any other Person provided for by a plan of
reorganization, (b) any warrants, options or other rights to acquire
shares of Capital Stock of the Company, or its successor, as
reorganized, or other Equity Interests of the Company or any other
Person provided for by a plan of reorganization, and (c) any debt
securities of the Company, or its successor, as reorganized, or any
other Person provided for by a plan of reorganization, if (i) payment
of such debt securities is subject to subordination provisions no less
favorable to the holders of Senior Indebtedness than the provisions of
SECTION 8 and (ii) scheduled payments of the principal amount of the
Indebtedness evidenced by such debt securities are not required prior
to the maturity date of the Senior Indebtedness.
"LAWS" means, as to any Person, any law, statute, ordinance,
decree, requirement, order, judgment, rule, regulation (or official
interpretation of any of the foregoing) of, and the terms of any
license of permit issued by, any Governmental Authority which is
applicable to such Person.
"LEGAL HOLIDAY" means a Saturday, Sunday or day on which banks
and trust companies in the principal place of business of the Company
or in the State of New York are not required to be open.
"LEVERAGE RATIO" means, with respect to the Company and its
Subsidiaries on a consolidated basis for the twelve month period ending
on the last day of any fiscal quarter, the ratio of (a) Funded Debt of
the Company and its Subsidiaries on a consolidated basis on the last
day of such period to (b) Consolidated EBITDA for such twelve month
period.
"LIEN" means any mortgage, pledge, lien, encumbrance, charge
or adverse claim affecting title or resulting in a charge against real
or personal property, or security interest of any kind (including,
without limitation, any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other
agreement to sell and any filing of any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"LOSSES" shall have the meaning set forth in SECTION 1.8.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
on (a) the business, operations, property, condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole, (b)
the ability of the Company or any Subsidiary Guarantor to perform its
obligations, when such obligations are required to be performed, under
this Agreement, any of the Notes or any other Document to which it is a
party or (c) the validity or enforceability of this Agreement, any of
the Notes or any of the other Documents or the rights or remedies
of the Holders hereunder or thereunder.
"MATERIALS OF ENVIRONMENTAL CONCERN" shall mean any gasoline
or petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or
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wastes, defined or regulated as such in or under any Environmental Law,
including, without limitation, friable asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation.
"MATURITY DATE" means January 13, 2006; PROVIDED that, Company
may, by written notice to the Holders delivered not later than December
13, 2005, extend the maturity date to a date which is in no event later
than July 13, 2009, and is at least six months prior to (1) the date on
which any principal payments are first due on the Seller Notes and (ii)
the date on which any disbursements (other than an Interim Bonus
Payment Date, as defined in the Retention Bonus Plan) are required to
be made with respect to the Retention Bonus Plan pursuant to the terms
thereof.
"MULTIEMPLOYER PLAN" shall mean a Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"NET INCOME" of any Person shall mean the net income (loss) of
such Person, determined in accordance with GAAP, excluding, however,
any gain or loss realized upon the sale or other disposition
(including, without limitation, dispositions pursuant to sale and
leaseback transactions) of any real property or equipment of such
Person which is not sold or otherwise disposed of in the ordinary
course of business and any gain or loss realized upon the sale or other
disposition of any capital stock of such Person or a subsidiary of such
Person and any other extraordinary gain or loss realized over the
relevant period.
"NET PROCEEDS" means, with respect to any sale or other
disposition of any assets (including in connection with any sale and
leaseback transaction), (i) cash received by the Company or any of its
Subsidiaries from such sale or other disposition and (ii) promissory
notes received by the Company or any of its Subsidiaries from such sale
or other disposition upon the liquidation or conversion of such notes
into cash, in each case after (a) provision for all Taxes measured by
or resulting from such sale or other disposition calculated as if the
Company and its Subsidiaries were a separate consolidated group for tax
purposes and assuming such sale or other disposition of such asset was
the only transaction in which the Company and its Subsidiaries engaged
during the relevant period without giving effect to any carryforwards,
carrybacks or credits, (b) payment of all brokerage commissions and
other fees and expenses related to such sale or other disposition, (c)
amounts applied to repayment of Indebtedness (other than Senior
Indebtedness) secured by a Lien on the asset sold or disposed and (d)
amounts escrowed or booked as a reserve against liabilities associated
with such sale or disposition.
"NOTE REGISTER" shall have the meaning set forth in SECTION
1.3.
"NOTES" shall have the meaning set forth in SECTION 1.1.
"NOTICE OF REDEMPTION" shall have the meaning set forth in
SECTION 6.3.
"OBLIGATIONS" means, with reference to any Indebtedness, any
principal of, premium, interest, penalties, fees and other liabilities
payable from time to time and obligations performable under the
documentation governing such Indebtedness.
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"OFFICER" of a Person mean its Chairman of the Board, Chief
Executive Officer, President, Treasurer, any Vice President, Secretary
or any Assistant Secretary.
"OPERATING LEASE" means any lease other than a Capital Lease.
"OPINION OF COUNSEL" means a written opinion from legal
counsel who is reasonably acceptable to each of the Purchasers. Unless
otherwise required by any of the Purchasers, the legal counsel may be
an employee of or counsel to the Company. For purposes of Section 4.4,
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Company and who may be an employee of or
counsel to any Purchaser or Holder.
"OTHER CAPITALIZED COSTS" means, for any fiscal period, the
gross amount capitalized for long term assets (net of cash received in
respect of long term assets), other than (a) Consolidated Capital
Expenditures and (b) any fees and expenses capitalized with respect to
the Related Transactions, all in accordance with GAAP.
"OTHER DEFAULT" shall have the meaning set forth in SECTION 8.2(b).
"PACIFIC ACQUISITION" means the acquisition by Parent of
ninety percent (90%) of the issued and outstanding Capital Stock of
Company and the recapitalization related thereto pursuant to the
Pacific Acquisition Agreement.
"PACIFIC ACQUISITION AGREEMENT" means (x) that certain
Recapitalization and Stock Purchase Agreement dated as of December 16,
1998, by and among Parent, Pacific Circuits and Xxxxx 0. Xxxxx, III,
The Xxxxxxx Xxxxxxxx Trust No. 2, and The Xxx Xxxxx Xxxxx Trust No. 2.
and all amendments, modifications, supplements and waivers thereto, and
(y) all exhibits, schedules and any other documents, instruments and
agreements delivered in connection with, or pursuant to, such agreement
or the transactions contemplated thereby.
"PARENT" means Circuit Holdings LLC, a Delaware limited
liability company.
"PAYMENT BLOCKAGE PERIOD" shall have the meaning set forth in
SECTION 8.2(B).
"PAYMENT DEFAULT" shall have the meaning set forth in SECTION
8.2(a).
"PAYMENT NOTICE" shall have the meaning set forth in SECTION
8.2(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"PCI" means Power Circuits, Inc., a California corporation.
"PCI ACQUISITION" means the acquisition of PCI pursuant to the
PCI Acquisition Agreement together with the contribution of Power
Holdings to Parent, the contribution of Power Holdings to Company and
the dissolution of Power Holdings.
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"PCI ACQUISITION AGREEMENT" means (x) that certain Agreement
and Plan of Merger dated June 11, 1999 among PCI, its stockholders,
Xxxxxxxx Xxxxx & Partners, Inc., Xxxxxx Equity Investors IV, LLC, Power
Holdings, LLC and Power Acquisition Sub., Inc., and all amendments,
modifications, supplements and waivers thereto, and (y) all exhibits,
schedules and any other documents, instruments and agreements delivered
in connection with, or pursuant to, such agreement or the transactions
contemplated thereby.
"PERMITTED INVESTMENT" means (a) Investments in cash and Cash
Equivalents, (b) loans and advances to officers, directors, employees
and Affiliates of the Company not to exceed $1,150,000 in the
aggregate at any time outstanding, (c) Investments by the Company and
its Subsidiaries in and to the Company and its Wholly-Owned
Subsidiaries to the extent not otherwise prohibited pursuant to
SECTIONS 5.4, 5.5 AND 5.14, (d) Investments existing on the Closing
Date and set forth on Schedule 10.1 (c), and (e) additional loan
advances and/or investments of a nature not contemplated by the
foregoing clauses hereof, PROVIDED that such loans, advances and/or
investments made pursuant to this clause (e) shall not exceed an
aggregate amount of $115,000 at any time.
"PERMITTED LIENS" means with respect to any Person: (i) Liens
incurred or deposits made by such Person under worker's compensation
laws, unemployment insurance laws or similar legislation, or Liens
incurred or good faith deposits made in connection with bids, tenders,
contracts (other than for the payment of Indebtedness) or leases to
which such Person is a party, or Liens incurred or deposits made to
secure public or statutory obligations of such Person or deposits of
cash or United States Government bonds made to secure the performance
of statutory obligations, surety, stay, customs and appeal bonds to
which such Person is a party, or deposits made as security for
contested taxes or import duties or for the payment of rent, in each
case in the ordinary course of business, (ii) Liens imposed by law,
such as carriers, warehousemen's, materialmen's and mechanics' Liens or
Liens arising out of judgments or awards against such Person with
respect to which such Person shall then be prosecuting appeal or other
proceedings for review and which do not constitute an Event of Default
under SECTION 7.1 (f); provided that, in each case, such appeal or
other proceeding is being made in good faith and with respect to which
reserves or other appropriate provisions are being made in accordance
with GAAP; (iii) Liens securing the payment of Taxes which are not yet
subject to penalties for non-payment or which are being contested in
good faith and by appropriate proceedings, with respect to which
reserves or other appropriate provisions are being maintained in
accordance with GAAP; (iv) Liens in favor of issuers of surety bonds or
letters of credit issued pursuant to the request of and for the account
of such Person in the ordinary course of its business; (v) minor survey
exceptions, encumbrances, easements or reservations of, or rights of
others for, rights of way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other
restrictions as to the use of real properties or Liens incidental to
the conduct of the business of such Person or to the ownership of its
properties which were not incurred in connection with Indebtedness or
other extensions of credit and which do not in the aggregate materially
adversely affect the value of said properties or materially impair
their use in the operation of the business of such Person; (vi) Liens
existing on the date hereof and listed on Schedule 10.1 (a) hereto or,
if not listed, will be terminated within 60 days after the Closing
Date; (vii) Liens in favor of any holder of Senior Indebtedness
incurred pursuant to the Senior Credit Agreement and refinancings
thereof constituting Permitted Refinancing Indebtedness; and (viii)
Liens securing Purchase Money Indebtedness incurred in accordance with
Section 5.5(b)(vi).
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"PERMITTED REFINANCING INDEBTEDNESS" means, with respect to
any Person, any Indebtedness of such Person issued in exchange for, or
the net proceeds of which are used to extend, refinance, renew,
replace, defease or refund other Indebtedness of such Person; provided
that: (1) the principal amount of such Indebtedness does not exceed
the principal amount of the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded or, in the case of Indebtedness
being refinanced that was issued with an original issue discount, the
accreted value thereof (as determined in accordance with GAAP) at the
time of such refinancing, renewal, replacement, defeasance or refunding
(plus the amount of reasonable expenses incurred in connection
therewith); (2) such Indebtedness has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity
of the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (3) such Indebtedness is subordinated in right of
payment to the Notes on terms at least as favorable to the holders of
Notes as those, if any, contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (4) with respect to any Indebtedness other than Indebtedness
owing pursuant to or in connection with the Senior Credit Agreement,
the annual interest rate with respect to such Indebtedness (x) if it is
a fixed rate, is less than or equal to not more than two percent (2%)
more than, and is payable no more frequently than, that of the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded and (y) if it is a variable rate, the index used for the
calculation of the annual interest rate is substantially similar to and
the margin applied to such index is less than or equal to not more than
two percent (2%) more than, and such interest is payable no more
frequently than, that of the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded, (5) with respect to any
Indebtedness owing pursuant to or in connection with the Senior Credit
Agreement, the annual interest rate with respect to such Indebtedness
(x) if it is a fixed rate, is less than or equal to not more than four
percent (4%) per annum more than, and such interest is payable no more
frequently than, that of the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded and (y) if it is a variable
rate, the index used for the calculation of the annual interest rate is
substantially similar to and the margin applied to such index is IS
less than or equal to not more than four percent (4%) per annum more
than, and such interest is payable no more frequently than, that of the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (6) such Indebtedness is incurred by such Person who is an
obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (7) such Indebtedness satisfies the
provisions of the subsection of Section 5.5(b) pursuant to which the
Indebtedness being refinanced was incurred.
"PERSON" means an individual, partnership, corporation,
limited liability company, trust or unincorporated organization or a
government or agency or political subdivision thereof.
"PLAN" shall mean, at any particular time, any employee
benefit plan which is covered by Title IV of ERISA and in respect of
which the Company or a Commonly Controlled Entity is (or, if such plan
were terminated at such time, would under Section 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"PLAN OF LIQUIDATION" means, with respect to any Person, a
plan that provides for, contemplates or the effectuation of which is
preceded or accompanied by (whether or not substantially
contemporaneously, in phases or otherwise) (i) the sale, lease,
conveyance or other
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disposition of all or substantially all of the assets of such person otherwise
than as an entirety or substantially as an entirety and (ii) the distribution of
all or substantially all of the proceeds of such sale, lease, conveyance or
other disposition and all or substantially all of the remaining assets of such
person to holders of Capital Stock of such person.
"POWER HOLDINGS" means Power Holdings, LLC, a Delaware limited
liability company.
"PRINCIPAL" of any Note includes premium, if any.
"PRINCIPAL OFFICER" shall mean, as to (a) the Company, the President
and the Chief Executive Officer or the Chief Financial Officer or (b) any
Subsidiary of the Company, any duly authorized officer thereof.
"PRO FORMA" shall have the meaning set forth in SECTION 3.4(a).
"PRODUCTIVE ASSETS" means assets used in the same type of business
engaged in by the Company immediately prior to the date hereof.
"PROJECTIONS" shall have the meaning set forth in SECTION 3.4(a).
"PROPERTIES" shall have the meaning set forth in SECTION 3.16(a).
"PROPERTY" or "PROPERTY" means any assets or property of any kind or
nature whatsoever, real, personal or mixed (including fixtures), whether
tangible or intangible, provided that the terms "Property" or "property," when
used with respect to any Person, shall not include securities issued by such.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness incurred solely for
the purchase or financing of fixed or capital assets in the ordinary course of
business (other than assets owned by the Company or any of its Subsidiaries on
the Closing Date) directly related to the business of the Company on the Closing
Date provided that (1)(A) such Indebtedness is secured by purchase money Liens
on such assets and (B) such Liens do not extend to or cover any other asset of
the Company or any of its Subsidiaries, (2) such Liens secure the obligation to
pay the purchase price of such asset and interest thereon only, (3) such
Indebtedness is incurred within nine months after the acquisition of such assets
(with recourse only against such assets) and (4) the fair market value of the
assets so secured is at least equal to the amount of Indebtedness secured
thereby.
"PURCHASERS" means the purchasers on the signature pages hereto.
"QUALIFIED FINANCIAL INFORMATION" means, with respect to any
Acquisition Target, (a) financial information prepared in a manner consistent
with the financial statements required by clauses (a), (b) and (c) of SECTION
5.2 for the most recently completed fiscal year of such Acquisition Target, or
(b) if requested by Required Holders, such other reports and reviews prepared by
a nationally recognized independent firm of certified public accountants
acceptable to Required Holders.
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"RECOVERY EVENT" shall mean the receipt by the Company or any of its
Subsidiaries of any cash insurance proceeds or condemnation award payable by
reason of theft, loss, physical destruction or damage, taking or similar event
with respect to any of their respective property or assets.
"REDEMPTION DATE" means, when used with respect to any Note to be
redeemed, the date fixed for such redemption pursuant to this Agreement and the
Notes.
"REDEMPTION PRICE" means, when used with respect to any Note to be
redeemed, the price fixed for such redemption pursuant to this Agreement and the
Notes.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, substantially in the form of ANNEX C attached hereto, among the
Company, and the Purchasers.
"RELATED TRANSACTIONS" means the PCI Acquisition, the execution and
delivery of the Documents, the funding of the loans under the Senior Credit
Agreement on the Closing Date, the funding of the Notes on the Closing Date and
the payment of all fees, costs and expenses associated with all of the
foregoing.
"REORGANIZATION" shall mean, with respect to any Multiemployer Plan,
the condition that such Plan is in reorganization within the meaning of such
term as used in Section 4241 of ERISA.
"REPORTABLE EVENT" shall mean any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty-day notice
period is waived under PBGC Reg. Section 4043.
"REQUIRED HOLDERS" means, on any date of determination, Holders of at
least a majority in aggregate principal amount of the outstanding Notes on such
date of determination.
"REQUIREMENT OF LAW" shall mean, as to any Person, the Certificate of
Incorporation and By-laws or other organizational or governing documents of such
Person, and each law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"RESTRICTED PAYMENTS" shall have the meaning set forth in SECTION 5.4.
"RETENTION BONUS PLAN" shall mean that certain plan of the Company
dated as of December 15, 1998 for the purpose of providing certain designated
employees of the Company with an ongoing incentive to remain in the employ of
the Company as implemented pursuant to that certain Recapitalization and Stock
Purchase Agreement dated as of December 15, 1998 among the Parent, the Company
and certain other parties thereto.
"RULE 144" means Rule 144 as promulgated by the SEC under the
Securities Act, as amended from time to time, and any successor rule or
regulation thereto.
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"RULE 144A" means Rule 144A as promulgated by the SEC under the
Securities Act, as amended from time to time, and any successor rule or
regulation thereto.
"SCHEDULED FUNDED DEBT PAYMENTS" shall mean, as of any date of
determination for the Company and its Subsidiaries, the sum of all scheduled
payments of principal on Funded Debt for the applied period ending on the date
of determination (including payments due on Capitalized Lease Obligations during
the applicable period ending on the date of determination).
"SEC" means the Securities and Exchange Commission and any successor
thereto.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time, and any successor statute or law thereto.
"SECURITY", or "SECURITIES" shall have the meaning set forth in
SECTION 1.1.
"SECURITY AGREEMENTS" means the Security Agreements as defined in the
Senior Credit Agreement.
"SECURITY DOCUMENT" means all instruments, documents and agreements
executed by or on behalf of the Company or any of its Subsidiaries to guaranty
or provide collateral security with respect to the Obligations and other
transactions contemplated by the Senior Credit Agreement, including, without
limitation, each of the Security Documents (as defined in the Senior Credit
Agreement) and all instruments, documents and agreements executed pursuant to
the terms of the foregoing, including, without limitation, those executed
pursuant to the Security Agreements.
"SELLER NOTES" shall mean collectively, (a) that certain subordinated
note dated December 15, 1998 in the amount of $51,043.65 from the Company to The
Xxxxxxx Xxxxxxxx Trust No. 2, (b) that certain Subordinated Note dated December
15, 1998 in the amount of $51,043.65 from the Company to The Xxx Xxxxx Xxxxx
Trust No. 2, (c) that certain subordinated note dated December 15, 1998 in the
amount of $3,547,912.70 from the Company to Xxxxx 0. Xxxxx, III, and (d) that
certain subordinated note dated December 15, 1998 in the amount of $350,000.00
from the Company.
"SENIOR BANK" means (i) the lender (if the sole lender) or the agent
(if acting on behalf of lenders) under the Senior Credit Agreement and, with
respect to its successors, such persons who have been identified in a written
notice to the Purchasers as being successors, or (ii) if there is no agent,
those lenders having the ability to bind all lenders under the Senior Credit
Agreement.
"SENIOR CREDIT AGREEMENT" means that certain Credit Agreement dated as
of date hereof by and among the Company, as borrower and certain of its
Subsidiaries as guarantors, the lenders party thereto and First Union National
Bank, as Administrative Agent, Dresdner Bank AG, New York and Grand Cayman
Branches, as Syndication Agent, SunTrust Bank, Atlanta, as Documentation Agent
and First Union Capital Markets Corp., as Lead Arranger, as amended, modified or
supplemented from time to time and pursuant to which Permitted Refinancing
Indebtedness is incurred with respect thereto.
Page 74
"SENIOR FUNDED DEBT" shall mean any Indebtedness not specifically
subordinated in right of payment to the Senior Indebtedness.
"SENIOR INDEBTEDNESS" means, with respect to the Company or any
Subsidiary Guarantor, the principal of, premium, if any, and interest
(including interest accruing after the filing of a petition for bankruptcy or
for reorganization relating to the Company regardless of whether a claim for
post-filing interest is allowed) on the loans made to the Company pursuant to
the Senior Credit Agreement and reimbursement obligations in respect of
letters of credit issued pursuant to the Senior Credit Agreement and (b) any
other obligations of the Company arising out of or in connection with the
Senior Credit Agreement or any of the Security Documents (including, without
limitation, fees, expenses and indemnities and any Hedging Obligations to the
extent incurred under hedging agreements required by the Senior Credit
Agreement as in effect on the date hereof, which Hedging Obligations shall be
valued, as of any date of determination, at the termination value payable by
the Company if such agreement were terminated on such date; provided,
however, Senior Indebtedness shall not include (i) in the case of the
obligation of the Company in respect of each Note, the obligation of the
Company in respect of other Notes, (ii) Indebtedness of the Company to a
Subsidiary or an Affiliate of the Company, (iii) Indebtedness to, or
guaranteed on behalf of, any individual shareholder, director, officer or
employee of the Company or any of the Company's or such Subsidiary
Guarantor's (as the case may be) Subsidiaries (including, without limitation,
amounts owed for compensation), (iv) Indebtedness represented by Capitalized
Lease Obligations or Purchase Money Indebtedness, (v) Trade Payables and
other Indebtedness and other amounts incurred in connection with obtaining
goods, materials or services, (vi) Indebtedness incurred in violation of the
provisions of SECTION 5.5 or 5.14 hereof and (vii) any Indebtedness of the
Company or any Subsidiary Guarantor, as the case may be, which by its terms
is unsecured.
"SENIOR LEVERAGE RATIO" means, with respect to the Company and its
Subsidiaries on a consolidated basis for the twelve month period ending on the
last day of any fiscal quarter or month, as applicable, the ratio of (a) Senior
Funded Debt of the Company and its Subsidiaries on a consolidated basis on the
last day of such period to (b) Consolidated EBITDA for such twelve month period.
"SENIOR REVOLVER DEBT" means the Indebtedness of the Company pursuant
to a senior revolving credit facility under the Senior Credit Agreement
including any swingline facility related thereto.
"SENIOR TERM DEBT" means the Indebtedness of the Company pursuant to a
senior term facilities under the Senior Credit Agreement.
"SHAREHOLDERS AGREEMENT" means that certain Amended and Restated
Shareholders Agreement dated as of July 13, 1999, among the Company, the Parent,
Xxxxx 0. Xxxxx, III and those purchasers of Common Stock set forth on Schedule I
attached thereto, as amended, restated, modified or supplemented from time to
time.
"SINGLE EMPLOYER PLAN" shall mean any Plan which is not a Multiemployer
Plan.
Page 75
"SOLVENT" means, with respect to any Person on a particular date, that
on such date, (a) the fair saleable value of the assets of such Person exceeds
its probable liability on its debts as they become absolute and mature; (b) such
Person is able to pay its debts or liabilities as such debts and liabilities
mature; and (c) such Person is not engaged in a business or transaction, and is
not about to engage in a business or transaction, for which such Person's assets
would constitute an unreasonably small capital.
"SPONSORS" means a collective reference to each of Xxxxxxxx Xxxxx and
Xxxxxx.
"STANDSTILL PERIOD" shall have the meaning set forth in SECTION 8.2(c).
"SUBSIDIARY" means, with respect to any Person, (i) a corporation a
majority of whose Capital Stock with voting power, under ordinary circumstances,
to elect directors is, at the date of determination, directly or indirectly,
owned by such Person, by one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries of such Person or (ii) a partnership in
which such Person or a Subsidiary of such Person is, at the date of
determination, a general or limited partner of such partnership, but, in the
case of a limited partner, only if such Person or its Subsidiary is entitled to
receive more than 50% of the assets of such partnership upon its dissolution, or
(iii) any limited liability company or any other Person (other than a
corporation or a partnership) in which such Person, a Subsidiary of such Person
or such Person and one or more Subsidiaries of such Person, directly or
indirectly, at the date of determination, has (a) at least a majority ownership
interest or (b) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.
"SUBSIDIARY GUARANTOR" means PCI.
"SUBSIDIARY GUARANTY" shall have the meaning set forth in SECTION 11.1
(a).
"SUPPLEMENTAL DATA" shall have the meaning set forth in SECTION 3.4(d).
"SURVIVING PERSON" shall have the meaning set forth in SECTION
5.15(b)(1).
"TAXES" shall mean all Federal, state, local and foreign taxes, and
other assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties applicable
thereto.
"TAX RETURNS" shall mean all Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
"TCW GROUP MEMBER" means any Affiliate of Trust Company of the West or
any Holder for whom Trust Company of the West or any Affiliate of Trust Company
of the West acts as an Account Manager.
"TCW REPRESENTATIVE" shall have the meaning set forth in SECTION 5.25.
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"XXXXXX" means collectively, Xxxxxx Equity Investors III, L.P. and
Xxxxxx Equity Investors IV, L.P., each a Delaware limited partnership.
"TRADE PAYABLES" means, with respect to any Person, accounts payable
and other similar accrued current liabilities in respect of obligations or
indebtedness to trade creditors created, assumed or guaranteed by such Person or
any of its Subsidiaries in the ordinary course of business in connection with
the obtaining of property or services.
"U.S. GOVERNMENT OBLIGATIONS" means direct obligations of, or
obligations guaranteed as to timely payment by, the United States of America for
the payment (with respect to interest as well as principal) of which obligation
or guarantee the full faith and credit of the United States of America is
pledged.
"U.S. LEGAL TENDER" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"VOTING SECURITIES" means any class of Equity Interests of a Person
pursuant to which the holders thereof have, at the time of determination, the
general voting power under ordinary circumstances to vote for the election of
directors, managers, trustees or general partners of such Person (irrespective
of whether or not at the time any other class or classes will have or might have
voting power by reason of the happening of any contingency).
"WARRANT AGREEMENT" means that certain Warrant Agreement dated of even
date herewith by and among the Company and the Purchasers, in the form attached
hereto as ANNEX B.
"WARRANT REGISTER" shall have the meaning set forth in SECTION 1.3.
"WARRANT SHARES" shall have the meaning set forth in SECTION 1.1.
"WARRANT SHARES REGISTER" shall have the meaning set forth in SECTION
1.3.
"WARRANTS" shall have the meaning set forth in SECTION 1.1.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
"WHOLLY-OWNED" when used in reference to any subsidiary of any Person,
means that all outstanding Equity Interests (other than director's qualifying
shares) in such subsidiary are beneficially owned solely by such Person or one
or more other Wholly-Owned subsidiaries of such Person.
Page 77
"YEAR 2000 COMPLIANT" means, as to any computer application used by the
Company or any Subsidiary of the Company, that such computer application will
not be negatively impacted by the Year 2000 Problem and that such computer
application is reasonably expected on a timely basis to be able to properly
recognize and perform date-sensitive functions for all dates before and after
January 1, 2000.
"YEAR 2000 PROBLEM" means the risk that computer applications used by
the Company or any of its Subsidiaries, may be unable to properly recognize and
perform date-sensitive functions involving certain dates prior to and after
January 1, 2000.
10.2 RULES OF CONSTRUCTION
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) "or" is not exclusive;
(c) words in the singular include the plural, and words in the plural
include the singular;
(d) provisions apply to successive events and transactions;
(e) the words "including," "includes" and "include" shall be deemed to
be followed by the words "without limitation";
(f) "hereto", "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Section or other subdivision; and
(g) references to "SECTIONS", "subsections", "EXHIBITS" and "SCHEDULES"
shall be to SECTIONS, subsections, EXHIBITS and SCHEDULES, respectively, of or
to this Agreement unless otherwise specifically provided.
10.3 ACCOUNTING TERMS
Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP applied on a basis consistent with the most recent audited
consolidated financial statements of the Company delivered to the Holders;
PROVIDED that, if the Company notifies the Holder that it wishes to amend any
covenant in SECTION 5.9 OR 5.12 to eliminate the effect of any change in GAAP on
the operation of such covenant (or if the Holders notify the Company that the
Required Holders wish to amend SECTION 5.9 OR 5.12 for such purpose), then the
Company's compliance with such covenant shall be determined on the basis of GAAP
in effect immediately before the relevant change in GAAP became effective, until
either such notice is withdrawn or such covenant is amended in a manner
satisfactory to the Company and the Required Holders.
Page 78
The Company shall deliver to each Holder at the same time as the
delivery of any annual or quarterly financial statements given in accordance
with the provisions of SECTION 5.12, (i) a description in reasonable detail of
any material change in the application of accounting principles employed in the
preparation of such financial statements from those applied in the most recently
preceding quarterly or annual financial statements as to which no objection
shall have been made in accordance with the provisions above and (ii) a
reasonable estimate of the effect on the financial statements on account of such
changes in application.
SECTION 11. SUBSIDIARY GUARANTY
11.1 GUARANTY
(a) In consideration of good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, each of the Subsidiary
Guarantors hereby irrevocably and unconditionally guarantees (each a "SUBSIDIARY
GUARANTY") to each Holder of a Note, irrespective of the validity and
enforceability of this Agreement, the Notes or the obligations of the Company
under this Agreement or the Notes, that: (w) the principal and premium (if any)
of and interest on the Notes will be paid in full when due, whether at the
maturity or interest payment date, by acceleration, call for redemption, upon a
Change of Control, Asset Sale Offer, or otherwise; (x) all other obligations of
the Company to the Holders under this Agreement or the Notes will be promptly
paid in full or performed, all in accordance with the terms of this Agreement
and the Notes; and (y) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, they will be paid in full when due
or performed in accordance with the terms of the extension or renewal, whether
at maturity, by acceleration, call for redemption, upon an Asset Sale Offer,
Change of Control or otherwise. Failing payment when due of any amount so
guaranteed for whatever reason, each Guarantor shall be obligated to pay the
same before failure so to pay becomes an Event of Default.
(b) Each Subsidiary Guarantor hereby agrees that its obligations with
regard to this Subsidiary Guaranty shall be unconditional, irrespective of the
validity, regularity or enforceability of the Notes or this Agreement, the
absence of any action to enforce the same, any delays in obtaining or realizing
upon or failures to obtain or realize upon collateral, the recovery of any
judgment against the Company, any action to enforce the same or any other
circumstances that might otherwise constitute a legal or equitable discharge
or defense of a guarantor. Each Subsidiary Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company or right to require the prior disposition of the assets of
the Company to meet its obligations, protest, notice and all demands whatsoever
and covenants that this Subsidiary Guaranty will not be discharged except by
complete performance of the obligations contained in the Notes and this
Agreement.
(c) If any Holder is required by any court or otherwise to return to
either the Company or any Subsidiary Guarantor, or any custodian, trustee, or
similar official acting in relation to either the Company or such Subsidiary
Guarantor, any amount paid by either the Company or such Subsidiary Guarantor to
or such Holder, this Subsidiary Guaranty, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Subsidiary Guarantor agrees
that it will not be entitled to any right of subrogation in relation to the
Holders in respect of any obligations
Page 79
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Subsidiary Guarantor further agrees that, as between such Subsidiary
Guarantor, on the one hand, and the Holders, on the other hand, (i) the maturity
of the obligations guaranteed hereby may be accelerated as provided in SECTION
7.2 for the purposes of this Subsidiary Guaranty, notwithstanding any stay,
injunction or other prohibition preventing such acceleration as to the Company
of the obligations guaranteed hereby, and (ii) in the event of any declaration
of acceleration of those obligations as provided in SECTION 7.2, those
obligations (whether or not due and payable) will forthwith become due and
payable by each of the Subsidiary Guarantors for the purpose of this Subsidiary
Guaranty.
(d) It is the intention of each Subsidiary Guarantor and the Company
that the obligations of each Subsidiary Guarantor hereunder shall be in, but not
in excess of, the maximum amount permitted by applicable law. Accordingly, if
the obligations in respect of the Subsidiary Guaranty would be annulled, avoided
or subordinated to the creditors of any Subsidiary Guarantor by a court of
competent jurisdiction in a proceeding actually pending before such court as a
result of a determination both that such Subsidiary Guaranty was made without
fair consideration and that, at, the time thereof, immediately after giving
effect thereto, or at the time that any demand is made thereupon such Subsidiary
Guarantor was insolvent or unable to pay its debts as they mature or left with
an unreasonably small capital, then the obligations of such Subsidiary Guarantor
under such Subsidiary Guaranty shall be reduced by such an amount, if any, that
would result in the avoidance of such annulment, avoidance or subordination;
provided, however, that any reduction pursuant to this paragraph shall be made
in the smallest amount as is necessary to reach such result. For purposes of
this paragraph, "fair consideration," "insolvency," "unable to pay its debts as
they mature," "unreasonably small capital" and the effective times of
reductions, if any, required by this paragraph shall be determined in accordance
with applicable law.
11.2 EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTY
To evidence its Subsidiary Guaranty set forth in SECTION 11.1, each
Guarantor agrees that a notation of such Subsidiary Guaranty substantially in
the form annexed hereto as ANNEX A-1 shall be endorsed on each Note and that
this Agreement shall be executed on behalf of such Subsidiary Guarantor by two
Officers or by one Officer with an attestation by another Officer, by manual or
facsimile signature.
Each Subsidiary Guarantor agrees that its Subsidiary Guaranty set forth
in SECTION 11.1 shall remain in full force and effect and apply to all the
Notes notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guaranty.
If an Officer whose signature is on a Note no longer holds that office
at the time the Note on which a Subsidiary Guaranty is endorsed and issued, the
Subsidiary Guaranty shall be valid nevertheless.
The delivery of any Note by the Company shall constitute due
delivery of the Subsidiary Guaranty set forth in this Agreement on behalf of
each Subsidiary Guarantor.
Page 80
11.3 FUTURE SUBSIDIARY GUARANTORS
The Company shall cause each Person that is or becomes a Subsidiary of
the Company after the Closing Date to execute a Subsidiary Guaranty in the form
of ANNEX A-1 hereto and cause such Subsidiary to execute an amendment to this
Agreement for the purpose of adding such Subsidiary as a Subsidiary Guarantor
hereunder.
11.4 CERTAIN BANKRUPTCY EVENTS
Each Subsidiary Guarantor hereby covenants and agrees that in the event
of the insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company, such Subsidiary Guarantor shall not file (or join in any filing of), or
otherwise seek to participate in the filing of, any motion or request seeking to
stay or to prohibit (even temporarily) execution on the Subsidiary Guaranty and
hereby waives and agrees not to take the benefit of any such stay of execution,
whether under Section 362 or 105 of the United States Bankruptcy Code or
otherwise.
11.5 SUBORDINATION OF SUBSIDIARY GUARANTEES
Each Subsidiary Guarantor, for itself and its successors, and each
Holder, by its acceptance of its respective Notes, agrees that the obligations
of the Subsidiary Guarantors to the Holders of Notes pursuant to the Subsidiary
Guaranty and this Agreement are expressly subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness of each
respective Subsidiary Guarantor, to the same extent as provided in SECTION 8
hereof with respect to the subordination of payments on the Notes to the prior
payment in full of all Senior Indebtedness of the Company. For purposes of this
SECTION 11, each Subsidiary Guarantor shall have the same rights and be subject
to the same duties and obligations as the Company pursuant to SECTION 8.
SECTION 12. MISCELLANEOUS
12.1 NOTICES
All notices and other communications provided for or permitted
hereunder shall be made by hand-delivery, first-class mail, telex, telecopier,
or overnight air courier guaranteeing next day delivery:
(a) if to any Purchaser at the address or telecopy number set forth on
the signature pages hereto, with a copy to Gardere & Xxxxx, L.L.P., 0000 Xxx
Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, Telecopy No. (000)000-0000, Attention:
Xxxx X. Xxxxx, Esq.; and
(b) if to the Company or any Subsidiary Guarantor, to (i) the
Company, Pacific Circuits, Inc., 00000 X.X. 00xx Xxxxx, Xxxxxxx, Xxxxxxxxxx
00000, Telecopy No. (000) 000-0000 and (ii) Xxxxxx Capital Partners IV, 0000
Xxxxxxxxxxxx Xxxxxx, XX, Xxxxx 000, Xxxxxxxxxx, X.X. 00000, Telecopy No.
(000) 000-0000, Attention: Xxxxxxx X. Xxxxxxxx, and Xxxxxxxx Xxxxx &
Partners, Inc., 000 XX Xxxxxx Xxxx., Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx,
Telecopy No. (000) 000-0000, Attention: Xxxxxxx X. Xxxxx, with a copy to
Shearman & Sterling, 000 Xxxxxxxxxx Xxxxxx,
Page 00
Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000, Telecopy No. (000) 000-0000,
Attention: Xxxxxxxxxxx Xxxxxx;
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back if telexed; when receipt acknowledged, if telecopied; and
the next business day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery. The parties may change
the addresses to which notices are to be given by giving five days' prior
notice of such change in accordance herewith.
12.2 SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties.
12.3 COUNTERPARTS
This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
12.4 HEADINGS
The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
12.5 GOVERNING LAW, SUBMISSION TO JURISDICTION
This agreement shall be governed by and construed in accordance with
the internal laws of the State of New York. The Company and each Subsidiary
Guarantor hereby irrevocably submit to the jurisdiction of any New York State
court sitting in the State of New York or any federal court sitting in the
Borough of Manhattan in the City of New York in respect of any suit, action or
proceeding arising out of or relating to this Agreement and the Notes, and
irrevocably accepts for itself and in respect of its property, generally and
unconditionally, jurisdiction of the aforesaid courts. The Company and each
Subsidiary Guarantor irrevocably waive, to the fullest extent they may
effectively do so under applicable law, any objection which they may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. Nothing
herein shall affect the right of any Holder to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceeding
against the Company or any Subsidiary Guarantor in any other jurisdiction.
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12.6 ENTIRE AGREEMENT
This Agreement, together with the Securities, the Registration Rights
Agreement and the Warrant Agreement (and any agreement between the Company and
any Holder relating to transfers), is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein. This Agreement, together with
the Securities, the Registration Rights Agreement and the Warrant Agreement,
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
12.7 SEVERABILITY
In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected, it being
intended that each Purchaser's rights and privileges shall be enforceable to the
fullest extent permitted by law.
12.8 FURTHER ASSURANCES
The Company shall, and shall cause each of its Subsidiaries to, at its
cost and expense, upon request of any Purchaser or Holder, duly execute and
deliver, or cause to be duly executed and delivered, to such Purchaser or Holder
such further instruments and do or cause to be done such further acts as may be
necessary or proper in the reasonable opinion of such Purchaser or Holder to
carry out more effectually the provisions and purposes of this Agreement and the
other Documents.
12.9 DISCLOSURE OF FINANCIAL INFORMATION
Each Holder is hereby authorized to deliver a copy of any financial
statement or any other information relating to the business, operations or
financial condition of the Company and each of its Subsidiaries which may be
furnished to it hereunder or otherwise, to any other Holder, any court,
Governmental Authority having jurisdiction over such Holder, to any Person which
shall, or shall have any right or obligation to, succeed to all or any part of
such Holder's interest in any of the Securities and this Agreement or to any
actual or prospective purchaser or assignee thereof.
Page 83
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties set forth below as of the date first written above.
PACIFIC CIRCUITS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title Vice President
SUBSIDIARY GUARANTOR:
POWER CIRCUITS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
PURCHASERS:
TCW/CRESCENT MEZZANINE PARTNERS II, L.P.
TCW/CRESCENT MEZZANINE TRUST II
By: TCW/Crescent Mezzanine II, L.P.,
as general partner or managing owner
By: TCW/Crescent Mezzanine, L.L.C.,
its general partner
By: /s/ Xxxx-Xxxx Xxxxxx
--------------------------
Name: Xxxx-Xxxx Xxxxxx
Title: President
ADDRESS FOR NOTICES:
x/x XXX/Xxxxxxxx Xxxxxxxxx, X.X.X.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Phone: 214/000-0000
Fax: 241/000-0000
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Advisors (Bermuda), Limited,
as general partner
By: /s/ Xxxx-Xxxx Xxxxxx
-------------------------------
Name: Xxxx-Xxxx Xxxxxx
Title: Managing Director
By: TCW Investment Management Company,
as Investment Advisor
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Director
ADDRESS FOR NOTICES:
x/x XXX/Xxxxxxxx Xxxxxxxxx, X.X.X.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Phone: 214/000-0000
Fax: 214/000-0000
TCW LEVERAGED INCOME TRUST II, L.P.
By: TCW (XXXX XX), L.P.,
as general partner
By: TCW Advisors (Bermuda), Ltd.,
as general partner
By: /s/ Xxxx-Xxxx Xxxxxx
------------------------------
Name: Xxxx-Xxxx Xxxxxx
Title: Managing Director
By: TCW Investment Management Company,
as Investment Advisor
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Managing Director
ADDRESS FOR NOTICES:
x/x XXX/Xxxxxxxx Xxxxxxxxx, X.X.X.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Phone: 214/000-0000
Fax: 214/000-0000
