SECURITIES PURCHASE AGREEMENT
dated as of
November 18, 1997
between
THE XXXX GROUP, INC.
and
THE PERSONS LISTED ON
THE SIGNATURE PAGES HERETO
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS
Section 1.1. Definitions...................................................1
Section 1.2. Accounting Terms and Determinations..........................16
ARTICLE II ISSUANCE OF SECURITIES, TERMS OF SECURITIES........................16
Section 2.1. Issuance.....................................................16
Section 2.3. Interest.....................................................17
Section 2.4. Maturity of Notes; Prepayment of Notes.......................19
Section 2.5. Taxes........................................................20
ARTICLE III REPRESENTATIONS AND WARRANTIES.................................23
Section 3.1. Corporate Existence and Power................................24
Section 3.2. Authorization, Execution and Enforceability..................24
Section 3.3. Governmental Authorization...................................24
Section 3.4. Contravention................................................25
Section 3.5. Financial Information........................................25
Section 3.6. Litigation...................................................26
Section 3.7. Environmental Matters........................................26
Section 3.8. Taxes........................................................28
Section 3.9. Subsidiaries.................................................28
Section 3.10. Not an Investment Company....................................28
Section 3.11. Full Disclosure..............................................28
Section 3.12. Capitalization...............................................29
Section 3.13. Solicitation; Access to Information..........................29
Section 3.14. Non-fungibility..............................................30
Section 3.15. Permits......................................................30
Section 3.16. Representations in Other Financing
Documents and in Material Acquisition
Documents.................................................30
Section 3.17. Compliance with ERISA........................................30
Section 3.18. Labor Matters................................................31
Section 3.19. Leases.......................................................31
(i)
Section 3.20. Absence of Any Undisclosed Liabilities
or Capital Calls..........................................31
Section 3.21. Governmental Regulation......................................31
Section 3.22. Solvency.....................................................32
Section 3.23. Company Business.............................................32
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS..................32
Section 4.1. Investment Intent; Authority; Binding Agreement..............32
ARTICLE V CLOSING DELIVERIES..................................................32
Section 5.1. Closing Deliveries...........................................32
ARTICLE VI COVENANTS..........................................................33
Section 6.1. Information..................................................33
Section 6.2. Payments of Obligations......................................36
Section 6.3. Insurance....................................................36
Section 6.4. Conduct of Business and Maintenance of
Existence.................................................36
Section 6.5. Compliance with Laws........................................37
Section 6.6. Inspection of Property, Books and
Records...................................................37
Section 6.7. Investment Company Act.......................................37
Section 6.8. Limitation on Debt...........................................37
Section 6.9. Restricted Payments; Voluntary
Prepayments...............................................38
Section 6.10. Investments..................................................40
Section 6.11. Negative Pledge..............................................40
Section 6.12. Transactions with Affiliates.................................41
Section 6.13. Consolidations, Mergers and Sales of
Assets; Ownership of Subsidiaries.........................41
Section 6.14. Restrictions on Additional Subordinated
Indebtedness..............................................42
Section 6.15. Permanent Financing..........................................42
Section 6.16. Business Activities..........................................43
Section 6.17. Tax Consolidation............................................43
Section 6.18. Maintenance of Corporate Separateness........................43
Section 6.19. Packer Avenue Proceeding.....................................44
Section 6.20. Financial Statements.........................................44
ARTICLE VII EVENTS OF DEFAULT.................................................44
Section 7.1. Events of Default Defined;
Acceleration of Maturity; Waiver
of Default................................................44
(ii)
ARTICLE VIII LIMITATION ON TRANSFERS..........................................47
Section 8.1. Restrictions on Transfer.......................................47
Section 8.2. Restrictive Legends............................................47
Section 8.3. Notice of Proposed Transfers...................................48
ARTICLE IX SUBORDINATION......................................................49
Section 9.1. Notes Subordinate to Senior Notes..............................49
Section 9.2. Payment Over of Proceeds Upon Dissolution......................49
Section 9.3. Acceleration Rights; Remedies; No Payment
in Certain Circumstances....................................51
Section 9.4. Payment Otherwise Permitted....................................53
Section 9.5. Subrogation to Rights of Holders of
Senior Notes...............................................53
Section 9.6. Provisions Solely to Define Relative Rights....................53
Section 9.7. No Waiver of Subordination Provisions;
Amendment...................................................54
Section 9.8. Reliance on Judicial Order or
Certificate of Liquidating Agent............................55
ARTICLE X MISCELLANEOUS.......................................................55
Section 10.1. Notice........................................................55
Section 10.2. No Waivers; Amendments........................................55
Section 10.3. Indemnification...............................................56
Section 10.4. Expenses......................................................58
Section 10.5. Payment.......................................................58
Section 10.6. Successors and Assigns........................................59
Section 10.7. Brokers.......................................................59
Section 10.8. New York Law; Submission to
Jurisdiction; Waiver of Jury
Trial......................................................59
Section 10.9. Severability..................................................59
EXHIBIT A ...................................................................A-1
EXHIBIT B ...................................................................B-1
Annex I to Exhibit B ...................................................B-5
EXHIBIT C ...................................................................C-1
Annex A to Exhibit C ...................................................C-9
(iii)
SECURITIES PURCHASE AGREEMENT
-----------------------------
This SECURITIES PURCHASE AGREEMENT dated as of NOVEMBER 18, 1997
between THE XXXX GROUP, INC. and the Persons listed on the signature pages
hereto.
The parties hereto agree as follows:
ARTICLE
I
DEFINITIONS
Section 1.1. Definitions. The following terms, as used herein, shall
have the following meanings:
"Acceptable Financial Statements" means audited consolidated balance
sheets of NPR Holding for the years ended December 31, 1995 and January 4, 1997
and the related statements of operations and cash flows for the years then
ended, prepared in accordance with GAAP by a nationally recognized accounting
firm (which may include BDO Xxxxxxx LLP) which are delivered on or prior to
February 28, 1998 which do not disclose results of operations or financial
position of NPR Holding and its Subsidiaries taken as a whole materially worse
from the results of operations or financial position of NPR Holding and its
Subsidiaries set forth in the Deloitte & Touche Financials (it being understood
that materially worse results of operations or financial position resulting from
different applications of GAAP or from the utilization of accounting principles,
practices or methods different from those utilized by Deloitte & Touche or NPR
Holding in preparation of the Deloitte & Touche Financials (so long as such
different accounting principles, practices or methods are in accordance with
GAAP) or events occurring on or after the date of the Acquisition shall not be
taken into account in determining whether the results of operations or financial
position are materially worse).
"Acquisition" means the acquisition of 100% of the outstanding common
stock of NPR Holding all pursuant to and in accordance with the Stock Purchase
Agreement.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person. For purposes of this definition, "control" including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with", as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" means this Securities Purchase Agreement, as amended,
restated or otherwise modified from time to time in accordance with its terms.
"Asset Sale" means any sale, lease or other disposition (including any
such transaction effected by way of merger or consolidation) by any Credit Party
of any asset, including without limitation any sale-leaseback transaction, but
excluding (i) dispositions of inventory and used, surplus or worn out equipment
in the ordinary course of business, (ii) dispositions to a wholly-owned
Subsidiary of any Credit Party, (iii) operating and real property leases entered
into in the ordinary course of business and (iv) cash payments otherwise
permitted under this Agreement; provided that any disposition not excluded
pursuant to clauses (i) through (iv) shall constitute an Asset Sale only if, and
solely to the extent that, the Net Cash Proceeds therefrom, together with the
Net Cash Proceeds from all other such dispositions effected by any Credit Party
after the date hereof, exceed, in the aggregate, $1,000,000.
"Bankruptcy Events" has the meaning set forth in Section 9.2.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the Cities of New York or Philadelphia are authorized
or required by law or other government action to close.
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"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit of any domestic commercial bank (including a domestic
branch of a foreign bank) whose outstanding senior long-term debt securities are
rated either A- or higher by Standard & Poor's Ratings Services or A3 or higher
by Xxxxx'x Investors Service, Inc., (iii) repurchase obligations with a term of
not more than 7 days for underlying securities of the types described in clause
(i) entered into with any bank meeting the qualifications specified in clause
(ii) above, (iv) commercial paper rated at least A-1 or the equivalent thereof
by Standard & Poor's Ratings Services or at least P-1 or the equivalent thereof
by Xxxxx'x Investors Service, Inc., maturing within one year after the date of
acquisition, and (v) investments in money market funds substantially all of
whose assets are comprised of securities of the types described in clauses (i)
through (iv) above.
"Change of Control" means such time as (a) Xxxx, his spouse, any lineal
descendent of Xxxx or any spouse of such lineal descendent (including without
limitation (i) any person whose relationship is by legal adoption and (ii)
trusts for the benefit of any of the foregoing) shall cease to own beneficially
and of record 51% of the capital stock of the Company; or (b) during any period
of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of any Credit Party (together with any new
directors whose election was approved by a vote of a majority of the directors
then still in office, who either were directors at the beginning of such period
or whose election or nomination for the election was previously so approved)
cease for any reason to constitute a majority of the directors of such Credit
Party then in office.
"Closing" means the date on which the Notes are initially issued.
"Commission" means the Securities and Exchange Commission.
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"Company" means The Xxxx Group, Inc., a Delaware corporation.
"Company Corporate Documents" means the articles of incorporation and
by-laws of each Credit Party.
"Consolidated Subsidiary" means, at any date with respect to any
Person, any Subsidiary or other entity, the accounts of which would be
consolidated with those of such Person in its consolidated financial statements
if such statements were prepared as of such date.
"Contribution Agreement" means the Contribution Agreement dated as of
October 31, 1997 between Xxxx and The Xxxx Group, Inc.
"Credit Party" means, individually, each one of (i) the Company, (ii)
the Xxxx Companies and (iii) the NPR Companies, and "Credit Parties" means all
of the foregoing, taken collectively.
"Debt" of any Person means, at any date, (a) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary course
of business) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under Financing Leases, (c) all
obligations (contingent or otherwise) of such Person to reimburse any bank or
other Person in respect of amounts paid under a letter of credit or similar
instrument, (d) all Derivatives Obligations of such Person, (e) all Guarantee
Obligations of such Person in respect of Debt of any other Person and (f) all
liabilities of the types described in clauses (a) through (e) above secured by
any Lien on any property owned by such Person even though such person has not
assumed or otherwise become liable for the payment thereof.
"Debt Incurrence" means any incurrence by any Credit Party of any Debt
(including without limitation pursuant to the Permanent Financing), other than
Debt permitted under Section 6.8(a), 6.8(b), 6.8(c), 6.8(e) and 6.8(f).
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"Default" means any Event of Default or any event or condition which,
with the giving of notice or lapse of time or both, would, unless cured or
waived, become an Event of Default.
"Deloitte & Touche Financials" means the consolidated balance sheets of
NPR Holding for the years ended December 31, 1995 and January 4, 1997 and the
related statements of operations and cash flows for the years then ended
prepared in accordance with GAAP delivered at the Closing.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
"DLJSC" means Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation, a
Delaware corporation, and its successors.
"dollars" or "$" mean lawful currency of the United States of America.
"Domestic Taxes" has the meaning set forth in Section 2.5 (a).
"Environmental Laws" means any and all statutes, laws, judicial
decisions, regulations, ordinances, rules, judgments, orders, decrees, codes,
plans, injunctions, permits, concessions, grants, franchises, licenses and
governmental restrictions, whether now or hereafter in effect, relating to human
health, the environment or to emissions, discharges or releases or pollutants,
contaminants, Hazardous Materials or wastes into the environment, including
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing,
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distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, Hazardous Materials or wastes or the clean-up or other
remediation thereof.
"Equity Issuance" means the issuance of any equity securities by any
Credit Party (including without limitation any equity securities issued pursuant
to the exercise of stock options or warrants or the Permanent Financing), but
excluding equity securities issued to any other Credit Party.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Company and each Subsidiary, and all members of
a controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Company or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Event of Default" has the meaning set forth in Section 7.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Financing Documents" means this Agreement, the Notes and the
Subsidiary Guaranty.
"Financing Lease" means any lease of property, real or personal, the
obligations or the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"First Anniversary" means the first anniversary of the date of Issuance
of the Notes.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Guarantee Obligation" means as to any Person (the "guaranteeing
person"), without duplication, any obligation of (a) the guaranteeing person or
(b) another Person
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(including, without limitation, any bank under any letter of credit) to induce
the creation of which the guaranteeing person has issued a reimbursement,
counter-indemnity or similar obligation, in either case guaranteeing or in
effect guaranteeing any Debt, leases, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person whether or not contingent, (i) to purchase
any such primary obligation or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (1) for the purchase or
payment of any such primary obligation or (2) to maintain working capital or
equity capital or the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation against loss in respect thereof; provided, however, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business or the guaranty obligation of
any primary obligation which does not constitute Debt. The amount of any
Guarantee Obligation of any guarantee person shall be deemed to be the lower of
(a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith.
"Hazardous Materials" means (i) asbestos; (ii) polychlorinated
biphenyls; (iii) petroleum, its derivatives, by-products and other hydrocarbons;
and (iv) any other toxic, radioactive, caustic or otherwise hazardous substance
regulated under Environmental Laws.
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"Hazardous Materials Contamination" means contamination (whether now
existing or hereafter occurring) of the improvements, buildings, facilities,
personalty, soil, groundwater, air or other elements on or of the relevant
property by Hazardous Materials, or any derivatives thereof, or on or of any
other property as a result of Hazardous Materials, or any derivatives thereof,
generated on, emanating from or disposed of in connection with the relevant
property.
"Holder" means any holder of any Note.
"Xxxx" means Xxxxxx X. Xxxx, Xx., an individual currently residing in
Philadelphia, Pennsylvania.
"Xxxx Companies" means, collectively, Xxxx Cargo, Xxxx Hauling and
Warehousing System, Inc., Wilmington Stevedores, Inc., Xxxxxx Marine Services,
Inc. and The Riverfront Development Corporation.
"Xxxx Cargo" means Xxxx Cargo Systems, Inc., a Delaware corporation.
"Interest Payment Date" means each December 31, March 31, June 30 and
September 30 (or, if any such date is not a Business Day, the next succeeding
Business Day).
"Interest Period" shall mean the period from the date of this Agreement
to but excluding the 3Oth day thereafter, and thereafter each successive 30-day
period. If any Interest Period would begin or end on a date which is not a
Business Day, such Interest period shall begin or end, as the case may be, on
the next succeeding Business Day and any Interest Period that would extend
beyond the Maturity Date shall end on the Maturity Date. The Majority Holders
may, in their discretion, select Interest Periods of one day for any day on or
after the Notes shall have become due and payable in accordance with the terms
hereof.
"Investment" means, without duplication, any investment in any Person,
whether by means of share purchase, capital contribution, loan, time deposit or
otherwise.
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"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Issuance" has the meaning set forth in Section 2.1.
"LIBOR Rate" with respect to each Interest Period, shall mean for any
day, as determined by Purchaser (as defined in the Senior Securities Purchase
Agreement) (unless Purchaser does not make such determination, in which case as
determined by the Majority Holders), the interest rate per annum offered for
deposits in dollars for the Interest Period in the London interbank market which
appears on Telerate Page 3750 or such other page as may replace Telerate Page
3750 on that service or such other service or services as may be nominated by
the British Bankers' Association for the purpose of displaying such rate
(collectively, "Telerate Page 3750") as of 11:00 A.M. London time on the second
Business Day prior to any such date. If the Interest Period is of a duration
falling between the Interest Periods for which such rates appear on Telerate
Page 3750, the LIBOR Rate shall be the rate determined by interpolation between
the rates for the next shorter and the next longer Interest Periods for which
such rate appears on Telerate Page 3750, as determined by Purchaser (unless
Purchaser does not make such determination, in which case as determined by the
Majority Holders), whose determination shall be conclusive in the absence of
manifest error. In the event that (i) more than one such LIBOR Rate is provided,
the average of such rates shall apply or (ii) no such LIBOR Rate is published,
then the LIBOR Rate shall be determined from such comparable financial reporting
company as Purchaser (unless Purchaser does not make such determination, in
which case as determined by the Majority Holders), in its discretion, shall
determine.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement) and any other arrangement
having substantially the same economic effect as any of the foregoing.
-9-
"Majority Holders" means the Holders of more than 50% in aggregate
principal outstanding amount of Notes at such time.
"Material Acquisition Documents" means the Stock Purchase Agreement and
the Contribution Agreement.
"Material Adverse Effect" means a material adverse affect on the
assets, business, financial position, results of operations or prospects of
(i) the Company, (ii) the Xxxx Companies (taken as a whole), (iii) the NPR
Companies (taken as a whole) or (iv) the Company and its Subsidiaries (taken as
a whole).
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $1,000,000.
"Maturity Date" means the date three Business Days following the date
on which the Company receives financial statements consisting of the audited
balance sheet of NPR Holding for the years ended December 31, 1995 and January
4, 1997 and the related statements of operations and cash flows for the years
then ended, prepared in accordance with GAAP (other than the Deloitte & Touche
Financials); provided, however, if such financial statements are not Acceptable
Financial Statements and the failure of such financial statements to be
Acceptable Financial Statements causes DLJSC to be unable to complete the sale
of debt securities to refinance the Senior Notes in accordance with Section 6.15
of this Agreement after DLJSC has used its commercially reasonable best efforts
to complete such sale, then the Maturity Date shall be extended to the First
Anniversary (it being understood that if DLJSC fails to sell such debt
securities for reasons other than the financial statements not being Acceptable
Financial Statements (e.g. negative performance of the Xxxx Companies or
negative performance of the NPR Companies (other than negative performance of
the NPR Companies for the periods covered by the December 31 and January
financial statements referred to above) then the Maturity Date shall not be
extended to the First Anniversary); provided, further, however, if the Maturity
Date has been extended to the First Anniversary in accordance with this
definition, it shall be further extended to the
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seventh anniversary of the Issuance if the maturity of the Senior Notes is
extended until six and one-half years after the Issuance, pursuant to the terms
of the Senior Securities Purchase Agreement, as in effect on the date hereof,
without giving effect to any waiver, consent or modification thereof.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"Net Cash Proceeds" means, with respect to any transaction, an amount
equal to the cash proceeds received by any Credit Party from or in respect of
such transaction (including any cash proceeds received as income or other
proceeds of any non-cash proceeds of such transaction), less (i) any expenses
(including commissions) reasonably incurred by any Credit Party in respect of
such transaction, (ii) the amount of any Debt secured by a Lien on a related
asset and discharged from the proceeds of such transaction; (iii) any taxes paid
or payable by any Credit Party with respect to such transaction (as reasonably
estimated by such Credit Party's chief financial officer in good faith) and (iv)
amounts thereof required to be paid by any Credit Party to the holders of other
senior secured indebtedness outstanding as of the date of this Agreement (or
refinancings thereof permitted hereunder).
"Notes" means the Subordinated Unsecured Increasing Rate Notes issued
by the Company substantially in the form set forth as Exhibit A hereto.
"NPR Companies" means, collectively, each of NPR Holding, NPR S.A.,
NPR, Inc. and NPR-Navieras.
"NPR Holding" means NPR Holding Corporation, a Delaware corporation.
"NPR, Inc." means NPR, Inc., a Delaware corporation.
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"NPR-Navieras" means NPR-Navieras Receivables, Inc., a Delaware
corporation.
"NPR S.A. " means NPR S.A., Inc., a Delaware corporation.
"Obligations" shall mean all amounts, direct or indirect, contingent or
absolute, of every type of description, and at any time existing, owing to each
Holder pursuant to the terms of this Agreement including without limitation, all
principal, interest, penalties, expenses, indemnification, reimbursements,
damages and any other liabilities, together with and including any amounts
received upon the exercise of rights or recision or other rights of action
(including claims for damages) or otherwise.
"Other Taxes" has the meaning set forth in Section 2.5 (a).
"Packer Avenue Proceeding" means that certain action commenced by Xxxx
Cargo, Xxxx Hauling & Warehousing System, Inc. and Astro Holding, Inc. (the
"Plaintiffs") in the United States District Court for the Eastern District of
Pennsylvania against the Delaware River Port Authority (the "DRPA"), the
Philadelphia Regional Port Authority (the "PRPA") and the Ports of Philadelphia
and Camden (together with the DRPA and PPC the "Defendants"). The Plaintiffs
allege that the Defendants, along with other unnamed co-conspirators, acting
under the color of state law committed predatory acts under a conspiracy
designed to injure, harass and appropriate the property of the Plaintiffs.
Plaintiffs are seeking damage for Defendants' conduct which constitutes a
violation of Plaintiffs' substantive due process, equal protection and
procedural due process rights under 41 U.S.C. Section 1983.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permanent Financing" means any Debt Incurrence or Equity Issuance
following the date hereof for the purpose of refinancing, in the aggregate, the
outstanding principal
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amount of the Senior Notes and the Notes (including all additional Notes issued
as interest on any Notes).
"Permits" means all domestic and foreign licenses, permits and
approvals required for the full operation of the Company and its Subsidiaries,
taken as a whole, including, without limitation, provincial, state, federal,
city and county permits and approvals.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or any agency or political subdivision thereof) or other entity of
any kind.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Prime Rate" means, for any day, a rate per annum equal to the rate of
interest publicly announced by The Bank of New York (or its successor) from time
to time in New York, New York as its prime, reference or base rate, it being
understood that such rate is one of such bank's base rates and serves as a basis
upon which effective rates of interest are calculated for those loans making
reference thereto and may not be the lowest of such bank's base rates.
"Purchaser" means each person listed on the signature pages hereto and
their respective successors and assigns.
"Restricted Payment" means, with respect to any Person (i) any dividend
or other distribution on any shares
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of the capital stock of such Person (except dividends payable solely in shares
of capital stock of the same class of such Person) or (ii) any payment on
account of the purchase, redemption, retirement or acquisition of (a) any shares
of the capital stock of such Person or (b) any option, warrant or other right to
acquire such Person's shares of the capital stock.
"Rule 144A" has the meaning set forth in Section 8.3.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" shall mean all payment obligations now or
hereafter incurred pursuant to and in accordance with the terms of the Senior
Securities Purchase Agreement and all payment obligations now or hereafter
incurred pursuant to and in accordance with the terms of indebtedness permitted
to be incurred pursuant to Section 6.8 (including without limitation, all
principal, interest (including interest after the commencement of a Bankruptcy
Event at the rate specified in the documentation therefore, whether or not
allowed), premium, penalties, fees, expenses, indemnification, reimbursements,
damages and other liabilities payable under the relevant documentation).
"Senior Notes" means the Senior Unsecured Increasing Rate Notes issued
by the Company in an aggregate principal amount not to exceed $125 million
pursuant to the Senior Securities Purchase Agreement plus additional notes
issued as pay-in-kind interest.
"Senior Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of November 18, 1997 between The Xxxx Group, Inc. and HS
Funding Inc., as such Agreement may be amended, modified or waived from time to
time.
"Selling Shareholders" means the "Sellers" as such term is defined in
the Stock Purchase Agreement.
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"Solvent" as to any Person shall mean that (i) the sum of the assets of
such Person, both at a fair valuation and at present fair salable value, will
exceed its liabilities, including contingent liabilities, (ii) such Person will
have sufficient capital with which to conduct its business as presently
conducted and as proposed to be conducted and (iii) such Person has not incurred
debts, and does not intend to incur debts, beyond its ability to pay such debts
as they mature. For purposes of this definition, "debt" means any liability on a
claim, and "claim" means (x) a right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, or (y)
a right to an equitable remedy for breach of performance if such breach gives
rise to a payment, whether or not such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured, or unsecured. With respect to any such contingent liabilities, such
liabilities shall be computed at the amount which, in light of all the facts and
circumstances existing at the time, represents the amount which can reasonably
be expected to become an actual or matured liability net of reasonably expected
reimbursements.
"Spread" has the meaning set forth in Section 2.3 (b).
"Stock Purchase Agreement" means the Stock Purchase Agreement dated
September 25, 1997 by and among NPR Holding, each of the Selling Shareholders
signatory thereto and Xxxx Cargo, as amended, supplemented or otherwise modified
from time to time in accordance with the terms thereof.
"Subordinated obligations" has the meaning set forth in Section 9.1.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of the capital stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time directly
or indirectly owned by such Person.
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"Subsidiary Guaranty" means the Subsidiary Guaranty in the form of
Exhibit C executed and delivered pursuant to this Agreement.
"Tax Amount" has the meaning set forth in Section 6.9 (a).
"Tax Percentage" has the meaning set forth in Section 6.9 (a)
"Taxes" has the meaning set forth in Section 2.5 (a).
"Transfer" means any disposition of Notes that would constitute a sale
thereof under the Securities Act.
"Treasury Rate" has the meaning set forth in Section 2.3 (b).
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all benefits under such Plan
exceeds (ii) the fair market value of all Plan assets allocable to such benefits
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
Section 1.2. Accounting Terms and Determinations. 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 consistent basis (except for changes concurred in by the Company's
independent public accountants).
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ARTICLE 11
ISSUANCE OF SECURITIES, TERMS OF SECURITIES
Section 2.1. Issuance. Subject to the terms and conditions set forth
herein and in reliance on the representations and warranties contained herein
and in the other Financing Documents, the Company shall issue at the Closing
(the "Issuance") and deliver to the Purchasers as partial consideration for the
shares of capital stock of NPR Holding purchased by the Company from the
Purchasers pursuant to the terms of the Stock Purchase Agreement, Notes in an
aggregate outstanding principal amount of $25,000,000.
Section 2.2. Delivery of Notes: Fees. (a) The Company shall deliver to
the Purchasers separate Notes in such denominations and registered in such name
or names as set forth on Schedule 2.2.
(b) If the Notes are still outstanding on June 30, 1999, the Company
shall, at its option, distribute to the Holders, either (i) 5% of the
outstanding capital stock of Transroll Navieras Express, Inc. ("TNX") or (ii)
cash in lieu thereof equal to the Market Price (as defined in the shareholders
agreement which is being entered into on the date of the Acquisition by the
Selling Stockholders and NPR Holding, with respect to the shares of TNX (the
"TNX Shareholders Agreement") ) of 5% of the outstanding capital stock of TNX,
in the aggregate. The Company shall determine whether it will distribute the TNX
capital stock or the cash in lieu thereof, and shall notify the Purchasers of
such determination, by April 30, 1999. In the event the Company elects to
distribute the capital stock of TNX, the securities distributed to the Holders
shall be in the same form as the securities delivered to the Selling
Stockholders in connection with the Acquisition and shall be subject to the TNX
Shareholders Agreement. In the event the Company elects to distribute cash in
lieu of the TNX capital stock, the Company and the Purchasers shall begin the
Valuation Procedure (as defined in the TNX Shareholders Agreement) on April 30,
1999; provided, however, 100% of the fees and expenses of the Independent
Financial Expert shall be paid by the Company and references to the Minority
Shareholders and Minority Shareholder Shares in the definition of Valuation
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Procedure shall be deemed references to the Holders and the Notes held by the
Holders, respectively.
Section 2.3. Interest. (a) Payment Dates. Interest on each Note shall
be payable quarterly in arrears, on each Interest Payment Date of each year in
which such Note remains outstanding, commencing with the first Interest Payment
Date after the date of issuance thereof, on the principal sum of the Notes
outstanding (including Notes issued as additional interest). Interest on each
Note (including Notes issued as additional interest) shall be calculated at the
rate per annum set forth in subsection (b) below, and shall accrue from and
including the most recent Interest Payment Date to which interest has been paid
on such Note (or if no interest has been paid on such Note, from the date of
issuance thereof) to but excluding the date on which payment in full of the
principal sum of such Note has been made. At the election of the Company,
interest may be paid in the form of additional Notes with a principal amount
equal to the amount of interest payment due on each Interest Payment Date;
provided, however, if additional Notes are not issued and cash interest is not
paid, then interest shall accrue and compound quarterly on each Interest Payment
Date and provided, further, so long as any Senior Notes are outstanding,
interest must be paid in the form of additional Notes.
(b) Interest Rate. Interest shall be payable at the Prime Rate plus a
spread (the "Spread") or the LIBOR Rate plus the Spread, at the Company's
option. In the event that the Company elects the Prime Rate option, the Spread
will initially be 200 basis points. In the case of a LIBOR option, the Spread
will be 450 basis points. If the Notes are not retired in whole by the end of
the first six month period following the date of their issuance, the Spread will
increase by 100 basis points and shall continue to increase by an additional 50
basis points at the end of each subsequent three month period until the First
Anniversary.
Commencing on the First Anniversary, interest shall be payable at the
greater of the following as of the beginning of each quarterly period: (i) the
Prime Rate plus 400 basis points, increasing by an additional 50 basis points
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at the end of each subsequent three month period for so long as the Notes are
outstanding; (ii) the Treasury Rate (as defined below) plus 750 basis points,
increasing by an additional 50 basis points at the end of each subsequent three
month period for so long as the Notes are outstanding; (iii) the DLJ High Yield
Index Rate plus 150 basis points, increasing by an additional 50 basis points at
the end of each subsequent three month period for so long as the Notes are
outstanding; and (iv) the rate in effect on the day immediately preceding the
First Anniversary plus 50 basis points, increasing by an additional 50 basis
points at the end of each subsequent three month period for so long as the Notes
are outstanding. "Treasury Rate" means the rate applicable to the most recent
auction of direct obligations of the United States having a maturity closest to
the Notes, as published by the Board of Governors of the Federal Reserve System.
Notwithstanding anything to the contrary set forth above, at no time
shall the per annum interest rate on the Notes exceed seventeen percent (17%).
Interest on each Note will be calculated on the basis of a 365-day year and paid
for the actual number of days elapsed.
Section 2.4. Maturity of Notes, Prepayment of Notes. (a) Maturity
Date. The Notes shall mature on the Maturity Date.
(b) Ontional Redemption. The Notes may be redeemed, in whole or in
part, upon not less than 10 days written notice, at the option of the Company,
at any time at par plus accrued interest to the redemption date, without premium
or penalty.
(c) Intentionally omitted.
(d) Mandatory Prepayments. (i) The Company shall, within five days of
receipt by any Credit Party of the Net Cash Proceeds of any Asset Sale, Debt
Incurrence or Equity Issuance, prepay, (i) a principal amount of the Senior
Notes equal to the amount of such Net Cash Proceeds (less any amounts not
required to be paid as a result of the requirement in subsection (e) of this
Section 2.4 that all such prepayments be made in multiples of $1,000), at the
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redemption price set forth in the Senior Securities Purchase Agreement, as in
effect on the date hereof, and (ii) to the extent available funds remain after
the prepayment of all amounts owing with respect to the Senior Notes pursuant to
the terms of the Senior Securities Purchase Agreement, as in effect on the date
hereof, a principal amount of the Notes equal to the amount of such remaining
Net Cash Proceeds, at a redemption price equal to one hundred percent (100%) of
the principal amount of the Notes so prepaid together with accrued interest to
the date of prepayment; provided, however, the proceeds of the $25 Million
Takedown (as defined in the Senior Securities Purchase Agreement, as in effect
on the date hereof) shall be applied in accordance with clause (ii) above (and
not clause (i)).
(ii) The Company shall, within five (5) days of receipt by any Credit
Party of the proceeds (net of legal fees) of the Packer Avenue Proceeding,
prepay (i) a principal amount of the Senior Notes equal to the amount of such
proceeds, at a redemption price equal to one hundred percent (100%) of the
principal amount of the Senior Notes so prepaid together with accrued interest
to the date of prepayment and then (ii) to the extent available funds remain, a
principal amount of the Notes equal to the amount of such proceeds, at a
redemption price equal to one hundred percent (100%) of the principal amount of
the Notes so prepaid together with accrued interest to the date of prepayment.
(e) Minimum Amount. Any prepayment of the Notes pursuant to Section
2.4(b) shall be in a minimum amount of at least $1,000,000, unless less than
$1,000,000 of the Notes remain outstanding, in which case all of the Notes must
be prepaid. Any prepayment of the Senior Notes or Notes pursuant to Section
2.4(d) shall be in a minimum amount which is a multiple of $1,000 times the
number of holders of Senior Notes or Holders, as the case may be, at the time of
such prepayment.
(f) Partial Prepayments. Any partial prepayment shall be made so that
the Notes then held by each Holder shall be prepaid in a principal amount which
shall bear the same ratio, as nearly as may be, to the total principal
-20-
amount being prepaid as the principal amount of such Notes held by such Holder
shall bear to the aggregate principal amount of all Notes then outstanding. In
the event of a partial prepayment, upon presentation of any Note the Company
shall execute and deliver to or on the order of the Holder, at the expense of
the Company, a new Note in principal amount equal to the remaining outstanding
portion of such Note.
Section 2.5. Taxes. (a) For the purposes of this Section, the following
terms have the following meanings:
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by any
Credit Party pursuant to this Agreement or under any Note or any other Financing
Document, and all liabilities with respect thereto, excluding, in the case of a
Purchaser or any other Holder, taxes imposed on the net income of such Purchaser
or such Holder and franchise or similar taxes imposed on such Purchaser or such
Holder, by a jurisdiction under the laws of which such Purchaser or such Holder
is organized or in which its principal executive office, or the office which
holds the Notes or other Financing Document, is located (all such excluded taxes
being hereinafter referred to as "Domestic Taxes").
"Other Taxes" means any present or future stamp or documentary taxes
and any other excise or property taxes, or similar charges or levies, which
arise from any payment made pursuant to this Agreement or under any Note or any
other Financing Document or from the execution, delivery, registration,
recordation or enforcement of, or otherwise with respect to, this Agreement or
any Note or any other Financing Document.
(b) All payments by any Credit Party to or for the account of a
Purchaser or any other Holder under any Financing Document shall be made without
deduction for any Taxes or Other Taxes; provided that, if any Credit Party shall
be required by law to deduct any Taxes or Other Taxes from any such payment, the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section), such Purchaser or such Holder (as the
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case may be) receives an amount equal to the sum it would have received had no
such deductions been made, the Credit Party shall make such deductions, the
Credit Party shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law and the Company
shall promptly furnish to such Purchaser or such Holder (as the case may be) the
original or a certified copy of a receipt evidencing payment thereof.
(c) The Company agrees to indemnify each Purchaser and each other
Holder for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section) paid by such Purchaser or such Holder (as
the case may be) and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto.
(d) The Company shall have no obligations for Taxes under Section
2.5(a) or Section 2.5 (b) for or on account of:
(i) any Taxes (other than Other Taxes) imposed by way of deduction
or withholding that would not have been so imposed but for the existence of any
present or former connection between such Holder and the jurisdiction imposing
the Tax other than merely holding such Note or any Financing Document, or the
receipt of payments in respect thereof, including, without limitation, such
Holder being or having been a citizen or resident thereof, or being or having
been engaged in a trade or business or having a permanent establishment or other
fixed base therein, or making or having made an election to the effect of which
is to subject such Holder to such Tax;
(ii) any Taxes (other than (A) Other Taxes or (B) any Taxes imposed
by way of deduction or withholding) that would not have been so imposed but for
the existence of any present or former connection between such Holder or the
beneficial owner (or between a fiduciary, settlor, beneficiary, member or
shareholder of, or possessor of a power over, such Holder or beneficial owner,
if such Holder
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or beneficial owner is an estate, a trust, a partnership or corporation) and the
jurisdiction imposing the Tax other than merely holding such Note or any
Financing Document, or the receipt of payments in respect thereof, including,
without limitation, such Holder or beneficial owner (or such fiduciary, settlor,
beneficiary, member, shareholder, or possessor) being or having been a citizen
or resident thereof, or being or having been engaged in a trade or business or
having a permanent establishment or other fixed base therein, or making or
having made an election to the effect of which is to subject such Holder or
beneficial owner (or such fiduciary, settlor, beneficiary, member, shareholder
or possessor) to such Tax;
(iii) any Taxes in the nature of estate, inheritance or gift taxes;
(iv) any Tax that is imposed or withheld by reason of the failure
of the Holder or beneficial owner of a Note to comply with a written request by
the Company addressed to such Holder or beneficial owner to provide (A)
information concerning the nationality, residence or identity of such Holder or
beneficial owner that is required under a statute, treaty, regulation or
administrative practice of the jurisdiction imposing such Tax as a precondition
to exemption from all or part of such Tax or (B) the applicable signed form
required to be received by the Credit Parties to qualify for an exemption or
reduction of such Tax;
(v) in the case of a Holder other than a Purchaser or a person
described in Section 8.3 (a) (ii) , any Taxes imposed on any payment on a Note
to a Holder that is a fiduciary or partnership or other than sole beneficial
owner of such payment to the extent a beneficiary or settlor with respect to
such fiduciary or a member of such partnership or a beneficial owner would not
have been entitled to the payment of taxes had such beneficiary, settlor, member
or beneficial owner directly received its beneficial or distributive share of
such payment;
(vi) any Tax that is imposed or withheld, to the extent that the
Holder would have been subject to such
-23-
Tax at the time of the original purchase of the Notes upon their original
issuance if the Holder had purchased the Note at that time; and
(vii) any combination of items (i) through (vi) above.
(e) Notwithstanding anything in Section 2.5 (d) to the contrary, the
Company agrees to indemnify each Purchaser and each other Holder for all
Domestic Taxes of such Purchaser or such other Holder (calculated based on a
hypothetical basis at the maximum marginal rate for a corporation) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, in each case to the extent that such Domestic Taxes result from
any payment or indemnification pursuant to this Section 2.5. This
indemnification shall be paid within 15 days after such Purchaser or such Holder
(as the case may be) makes demand therefor.
(f) The Company agrees that the provisions of this Section shall inure
to the benefit of any transferee of any Note.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to each Purchaser (both before and
after giving effect to the Acquisition) as set forth below; provided, however,
the Company shall not be deemed to be making any representations with respect to
the NPR Companies; and provided further however, any reference to Credit Parties
shall be deemed to be a reference to the Xxxx Companies (taken as a whole):
Section 3.1. Corporate Existence and Power. Each Credit Party is a
corporation duly incorporated, validly existing and in good standing under the
laws of the state of its incorporation, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted and as proposed to be conducted after the
Acquisition except for such governmental licenses, authorizations, consents and
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approvals as to which the failure to so maintain could not reasonably be
expected to have a Material Adverse Effect.
Section 3.2. Authorization. Execution and Enforceability. The
execution, delivery and performance by each Credit Party who is party to each of
the Financing Documents and the Material Acquisition Documents and the issuance
of the Notes by the Company have been duly and validly authorized and are within
each such Credit Party's corporate powers. Each of the Financing Documents and
Material Acquisition Documents has been duly executed and delivered by the
Credit Parties party thereto and constitutes their valid and binding agreement,
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency and other similar laws affecting creditors' rights generally and
equitable principles of general applicability. When executed and delivered by
the Company, the Notes issuable in connection with the interest payable pursuant
to the terms of this Agreement, will constitute valid and binding obligations of
the Company, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency and other similar laws affecting creditors' rights
generally and equitable principles of general applicability.
Section 3.3. Governmental Authorization. The execution and delivery by
the Credit Parties party to each of the Financing Documents and Material
Acquisition Documents did not and will not, the issuance and sale of the Notes
by the Company did not and will not, and the consummation of the transactions
contemplated hereby and thereby will not, require any action by or in respect
of, or filing with, any governmental body, agency or governmental official
except actions and filings which, if not taken or made, will not affect in any
manner the validity or enforceability of the Financing Documents or the Material
Acquisition Documents or could reasonably be expected to have a Material Adverse
Effect.
Section 3.4. Contravention. The execution and delivery by the Credit
Parties party to each of the Financing Documents and the Material Acquisition
Documents did not and will not, and the issuance and sale of the Notes by the
Company did not and will not, and the consummation of the transactions
contemplated hereby and thereby will not,
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contravene or constitute a default under or violation of any provision of
applicable law or regulation, any Company Corporate Documents or any agreement,
judgment, injunction, order, decree or other instrument binding upon any Credit
Party or any of its assets, or result in the creation or imposition of any Lien
on any asset of any Credit Party.
Section 3.5. Financial Information.
(a) The Xxxx Companies' (i) unaudited financial statements for the Xxxx
Companies for the three years ended December 31, 1994, 1995 and 1996 (to include
two balances sheets as of December 31, 1995 and 1996, and income statements and
cash flow statements for the three years); and (ii) unaudited financial
statements for the 9 months ended September 30, 1997 and 1996 (to include
balance sheets as of September 30, 1997 and September 30, 1996, and income
statements and cash flow statements for the two 9-month periods) fairly present
in conformity with GAAP, the consolidated financial position of such entities as
of each such date and their consolidated results of operations, changes in
stockholders' equity and cash flows for each period.
(b) The unaudited pro forma financial statements as of September 30,
1997 (to include 1 balance sheet as of September 30, 1997, and three income
statements for the year ended December 31, 1996, and the nine months ended
September 30, 1996 and 1997 as adjusted for the issuance and sale of the Notes
and Senior Notes and the consummation of the Acquisition, fairly present the pro
forma consolidated financial condition of the Company as of such date.
(c) There has occurred no material adverse change, or development that
could reasonably be expected to result in a material adverse change, in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company, the Xxxx Companies or the Company and
its Subsidiaries, in each case taken as a whole, since September 30, 1997 or in
the facts and information supplied to the Purchasers through November _, 1997
with respect thereto.
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Section 3.6. Litigation. Except as set forth on Schedule 3.6, there is
no action, suit or proceeding pending or, to the knowledge of any Credit Party,
threatened against any Credit Party before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable possibility
of an adverse decision which could have a Material Adverse Effect or which
challenges the validity of any Financing Document or of the Acquisition;
provided however that except as noted on such Schedule 3.6, all matters listed
therein are covered by adequate insurance. One or more of the Credit Parties is
a named plaintiff to the Packer Avenue Proceeding and has a direct right to
receive any proceeds of the litigation or any settlement thereof.
Section 3.7. Environmental Matters. Except as provided on Schedule 3.7:
(a) Except to the extent the following would not result in a Material
Adverse Effect, other than the generation, use and storage of Hazardous
Materials in compliance with all applicable Environmental Laws: (i) no Hazardous
Materials are located on any properties owned, leased or operated by any Credit
Party; (ii) no Hazardous Materials have been released into the environment or
deposited, discharged, placed or disposed of, at, on, under or near any of such
properties; (iii) no portion of any such property is being used for the
disposal, storage, treatment, processing or other handling of Hazardous
Materials; (iv) no such property is affected by Hazardous Materials
Contamination; (v) to the best of any Credit Party's knowledge, no previous
owner or occupant of such properties has used any portion of the properties for
the treatment, storage, disposal, processing or other handling of Hazardous
Materials; (vi) with respect to properties previously owned, leased or operated
by any Credit Party, to the best of any Credit Party's knowledge, no Hazardous
Materials have been released into the environment, or deposited, discharged,
placed or disposed of, at, on, under or near any such properties during the time
of any Credit Party's ownership, lease or operation thereof.
(b) Except to the extent the following would not result in a Material
Adverse Effect, no asbestos or asbestos-
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containing materials are present on any of the properties now or previously
owned, leased or operated by any Credit Party.
(c) Except to the extent the following would not result in a Material
Adverse Effect no polychlorinated biphenyls are located on or in any properties
now or previously owned, leased or operated by any Credit Party, in the form of
electrical transformers, fluorescent light fixtures with ballasts, cooling oils
or any other device or form.
(d) Except to the extent the following would result in a Material
Adverse Effect, no underground storage tanks are located on any properties now
or previously owned, leased or operated by any Credit Party, or were located on
any such property and subsequently removed or filled.
(e) Except as to the extent the following (or the matters referred to
in any of the following) would not result in a Material Adverse Effect, no
notice, notification, demand, request for information, complaint, citation,
summons, investigation, administrative order, consent order and agreement,
litigation or settlement directed at any Credit Party or any property owned,
leased or operated by any Credit Party with respect to Hazardous Materials or
Hazardous Materials Contamination is in existence or, to any Credit Party's
knowledge, proposed, threatened or anticipated with respect to or in connection
with the operation of any properties now or previously owned, leased or operated
by any Credit Party. Except as to the extent the following would not result in a
Material Adverse Effect, all such properties and their existing and prior uses
comply and at all time have complied with any applicable governmental
requirements relating to environmental matters of Hazardous Materials and there
is no condition on any of such properties which is in violation of any
applicable governmental requirements relating to Hazardous Materials, and no
Credit Party has received any communication from or on behalf of any
governmental authority that any such condition exists.
(f) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which any Credit Party has knowledge in
relation to the current or prior business of any Credit Party or any property
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or facility now or previously owned, leased or operated by any Credit Party
which has not been delivered to the Purchaser at least five days prior to the
date hereof.
(g) For purposes of this Section 3.7, the term "Credit Party" shall
include any business or business entity (including a corporation) which is, in
whole or in part, a predecessor of any Credit Party.
Section 3.8. Taxes. (a) Except as set forth on Schedule 3.8, all income
tax returns and all other material tax returns which are required to be filed by
or on behalf of any Credit Party have been filed and all taxes shown as due on
such returns have been paid or adequate reserves have been established on the
books of the applicable Credit Party. The charges, accruals and reserves on the
books of the applicable Credit Party and in respect of taxes or other
governmental charges have been established in accordance with GAAP.
(b) There is no tax, levy, impost, deduction, charge or withholding
imposed by any governmental instrumentality either (i) on or by virtue of the
execution, delivery, performance, enforcement or admissibility into evidence of
any Financing Document or (ii) on any payment to be made by the Company pursuant
to any Financing Document. The Company is permitted under applicable laws to pay
any additional amounts payable by it under Section 2.8.
Section 3.9. Subsidiaries. The only Subsidiaries of the Company are the
Xxxx Companies and the NPR Companies.
Section 3.10. Not an Investment Company. No Credit Party is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 3.11. Full Disclosure. The information heretofore furnished by
the Credit Parties to the Purchasers for purposes of or in connection with the
Financing Documents or any transaction contemplated hereby does not, and all
such information hereafter furnished by the Credit Parties to the Purchasers
will not (in each case taken together and on the date as of which such
information is furnished), contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
-29-
contained therein, in the light of the circumstances under which they are made,
not misleading. The Credit Parties have disclosed to the Purchasers any and all
facts which materially and adversely affect or may affect (to the extent the
Company can now reasonably foresee), the business, operations or financial
condition of the Company and its Subsidiaries, taken as a whole, or the ability
of the Company and its Subsidiaries, taken as a whole, to perform the
obligations under the Financing Documents or to complete the Permanent
Financing.
Section 3.12. Capitalization. At the date of the Issuance and after
giving effect to the Acquisition, the capitalization of each Credit Party will
be as set forth on Schedule 3,12. All of the issued and outstanding shares of
capital stock of each Credit Party are validly issued, fully paid and
nonassessable and free and clear of any Lien or other right or claim and the
holders thereof are not entitled to any preemptive or other similar rights.
Other than as set forth on Schedule 3,12, there are no subscriptions, options,
warrants, rights, convertible securities, exchangeable securities or other
agreements or commitments of any character pursuant to which any Credit Party is
required to issue any shares of its capital stock.
Section 3.13. Solicitation; Access to Information. No form of general
solicitation or general advertising was used by any Credit Party or, to the best
of its knowledge, any other Person acting on behalf of any Credit Party, in
connection with the offer and sale of the Notes. Neither any Credit Party nor
any Person acting on behalf of any Credit Party has, either directly or
indirectly, sold or offered for sale to any Person any of the Notes or any other
similar security of any Credit Party except as contemplated by this Agreement,
and the Company represents that neither it nor any Credit Party nor any person
acting on its behalf other than Purchaser and its Affiliates will sell or offer
for sale to any Person any such security to, or solicit any offers to buy any
such security from, or otherwise approach or negotiate in respect thereof with,
any Person or Persons so as thereby to bring the issuance or sale of any of the
Notes within the provisions of Section 5 of the Securities Act.
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Section 3.14. Non-fungibility. When the Notes are issued and delivered
pursuant to this Agreement, the Notes will not be of the same class (within the
meaning of Rule 144A) as securities which are (i) listed on a national
securities exchange registered under Section 6 of the Exchange Act or (ii)
quoted in a U.S. automated inter-dealer quotation system.
Section 3.15. Permits. Except to the extent any of the following would
not result in a Material Adverse Effect: (a) each Credit Party has all Permits
as are necessary for the conduct of their respective businesses as it has been
carried on; (b) all such Permits are in full force and effect, and each Credit
Party has fulfilled and performed all material obligations with respect to such
Permits; (c) no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination by the issuer thereof or which
results in any other impairment of the rights of the holder of any such Permit;
and (d) each Credit Party has no reason to believe that any governmental body or
agency is considering limiting, suspending or revoking any such Permit.
Section 3.16. Representations in Other Financial Documents and in
Material Acquisition Documents. (a) Each of the representations and warranties
of the Credit Parties set forth in any of the Financing Documents is true and
correct in all material respects.
(b) Each of the representations and warranties of the Credit Parties
set forth in any of the Material Acquisition Documents is true and correct in
all material respects.
Section 3.17. Compliance with ERISA. Except as set forth on Schedule
3.17, each member of the ERISA Group has fulfilled its obligations under the
minimum funding standards of ERISA and the Internal Revenue Code with respect to
each Plan and is in compliance in all material respects with the presently
applicable provisions of ERISA and the Internal Revenue Code with respect to
each Plan. No member of the ERISA Group has (i) sought a waiver of the minimum
funding standard under Section 412 of the Internal Revenue Code in respect of
any Plan, (ii) failed to make any contribution or
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payment to any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has
resulted or could result in the imposition of a Lien or the posting of a bond or
other security under ERISA or the Internal Revenue Code or (iii) incurred any
liability under Title IV or ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA.
Section 3.18. Labor Matters. Except as set forth on Schedule 3,18, (x)
there are no collective bargaining agreements or Multiemployer Plans covering
the employees of any Credit Party and (y) none of such Persons has suffered any
strikes, walkouts, work stoppages or other material labor difficulty within the
last five years and none of the foregoing is now threatened or imminent.
Section 3.19. Leases. Except as disclosed on Schedule 3.19 hereto, no
Credit Party is a party to any lease.
Section 3.20. Absence of Any Undisclosed Liabilities or Capital Calls.
There are no liabilities of any Credit Party of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, and there
is no existing condition, situation or set of circumstances which could
reasonably be expected to result in such a liability, other than (i) those
liabilities provided for in the financial statements delivered pursuant to
Section 3.5 hereof and (ii) other undisclosed liabilities which, individually or
in the aggregate, are not material to any Credit Party.
Section 3.21. Governmental Regulation. No Credit Party is, or will be
upon the issuance and sale of the Notes and the use of the proceeds described
herein, subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act (each, as amended) or to any federal or state
statute or regulation in a manner which would limit its ability to issue the
Notes and perform its obligations under any Financing Document.
Section 3.22. Solvency. On the date of the Closing and after giving
effect to the transactions under the Stock Purchase Agreement, each Credit Party
will be Solvent.
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Section 3.23. Company Business. The Company conducts no business other
than the direct or indirect ownership of 100% of the capital stock of the Xxxx
Companies and the NPR Companies and has no assets or liabilities other than
those reflected in the financial statements delivered pursuant to this
Agreement. At any time after Closing, the Company will conduct no business other
than that expressly permitted hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Section 4.1. Investment Intent; Authority; Binding Agreement. Each
Purchaser, jointly but not severally, represents and warrants to the Company
that:
(a) the execution, delivery and performance of this Agreement and the
holding of the Notes pursuant hereto are within each Purchaser's corporate
powers, if applicable, and have been duly and validly authorized by all
requisite corporate action, if applicable;
(b) this Agreement has been duly executed and delivered by each
Purchaser; and
(c) this Agreement constitutes a valid and binding agreement of each
Purchaser enforceable in accordance with its terms subject to applicable
bankruptcy, insolvency and other similar laws affecting creditors' rights
generally and equitable principles of general applicability.
ARTICLE V
CLOSING DELIVERIES
Section 5.1. Closing Deliveries. Simultaneously with the Issuance, the
Company shall deliver the following to the Purchasers:
(a) The Purchasers shall have received satisfactory opinions of counsel
to the Company as to the transactions contemplated hereby (including without
limitation the tax aspects thereof and compliance with all applicable securities
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laws), and such corporate resolutions, certificates and other documents as the
Purchasers shall reasonably request;
(b) The Purchasers shall have received a solvency certificate
substantially in the form of Exhibit B hereto executed by the Chief Financial
Officer of the Company dated as of the Closing; and
(c) The Purchasers shall have received a Subsidiary Guaranty in the
form of Exhibit C executed by each Credit Party other than the Company.
ARTICLE VI
COVENANTS
The Company agrees (and agrees that it shall cause each Credit Party to
agree) that, from and after the date of the Issuance and so long as any Notes
remain outstanding and unpaid or any other amount is owing to the Purchasers or
the Holders, and for the benefit of the Purchasers and the Holders:
Section 6.1. Information. The Company will deliver to each Purchaser
holding 10% or more of the Notes:
(a) as soon as available and in any event within 120 days after the end
of each fiscal year of the Company, a consolidated balance sheet of the Company
and its Consolidated Subsidiaries as of the end of such fiscal year and the
related statements of income and cash flows and stockholders' equity (deficit)
for such fiscal year, setting forth in each case in comparative form the figures
for the previous fiscal year, all reported on in a manner acceptable to the
Commission by BDO Xxxxxxx or other independent public accountants of nationally
recognized standing;
(b) as soon as available and in any event within 60 days after the end
of each of the first three quarters of each fiscal year of the Company, a
consolidated balance sheet of the Company and its Consolidated Subsidiaries as
of the end of such quarter and the related consolidated statements of income and
cash flows and stockholders' equity (deficit) for each quarter and for the
portion of the fiscal year ended
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at the end of such quarter, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion of the
previous fiscal year, all certified (subject to footnote presentation and normal
year-end adjustments) as to fairness of presentation, GAAP and consistency by
the chief financial officer or the chief accounting officer of the Company;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the chief
financial officer or the chief accounting officer of the Company (i) setting
forth in reasonable detail the calculations required to establish whether the
Company was in compliance with the requirements of Sections 6.8 through 6.11,
inclusive, on the date of such financial statements and (ii) stating whether any
Default exists on the date of such certificate and, if any Default then exists,
setting forth the details thereof and the action which the Company or any of the
Credit Parties are taking or propose to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements confirming the
calculations set forth in the officer's certificate delivered simultaneously
therewith pursuant to clause (c) above;
(e) within five days after any officer of any Credit Party obtains
knowledge of a Default or a default under the Securities Purchase Agreement, a
certificate of the chief financial officer or the chief accounting officer of
such Credit Party setting forth the details thereof and the action which such
Credit Party is taking or proposes to take with respect thereto;
(f) promptly upon the filing thereof, copies of all applications,
registration statements or reports which any Credit Party shall have filed with
the Commission or any other national stock exchange;
(g) promptly following the occurrence thereof, notice and a description
in reasonable detail of any material adverse change in the business, operations,
property,
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condition (financial or otherwise) or prospects of the Company and its
Subsidiaries, taken as a whole;
(h) to the extent material, if and when any member of the ERISA Group
(i) gives or is required to give notice to the PBGC of any "reportable event"
(as defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA or notice that
any Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate, impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv) applies for a waiver of the
minimum funding standard under Section 412 of the Internal Revenue Code, a copy
of such application; (v) gives notice of intent to terminate any Plan under
Section 4041(c) of ERISA, a copy of such notice and other information filed
with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section
4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or
contribution to any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or Benefit Arrangement which has
resulted or could result in the imposition of a Lien or the posting of a bond or
other security, a certificate of the chief financial officer or the chief
accounting officer of the relevant Credit Party setting forth details as to such
occurrence and action, if any, which the relevant Credit Party or applicable
member of the ERISA Group is required or proposes to take;
(i) promptly following the commencement thereof, notice and a
description in reasonable detail of any litigation or proceeding to which any
Credit Party is a party in which the amount involved is $1,000,000 or more;
(j) as soon as available and in any event within 45 days after the date
of the Issuance, a combined pro forma
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balance sheet of the Company and its Subsidiaries, dated as of September 30,
1997, prepared by BDO Xxxxxxx LLP in conformity with GAAP, adjusted to give
effect to (i) the transactions contemplated by the Material Acquisition
Documents, (ii) the purchase of the Notes purchased on the date of the Issuance
and (iii) the payment of all legal, accounting and other fees related thereto;
and
(k) from time to time such additional information regarding the
financial position or business of any Credit Party, as the Majority Holders may
reasonably request.
Section 6.2. Payments of Oblgations. The Company will pay and
discharge, and will cause each Credit Party to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where the same may be contested in
good faith by appropriate proceedings, and will maintain, and will cause each
Credit Party to maintain, in accordance with GAAP, appropriate reserves for the
accrual of any of the same.
Section 6.3. Insurance. The Company shall, and shall cause each Credit
Party to, keep its insurable properties adequately insured at all times by
financially sound and reputable insurers, maintain such other insurance, to such
extent and against such risks, including fire and other risks insured against by
extended coverage, as is customary with companies in the same or similar
businesses operating in the same or similar locations, including (i) public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about in connection with the use of any properties
owned, occupied or controlled by it and (ii) business interruption insurance and
such other insurance as may be required by law.
Section 6.4. Conduct of Business and Maintenance of Existence. The
Company will continue, and will cause each Credit Party to continue, to engage
in business of the same general type as now conducted, and will preserve, renew
and keep in full force and effect, and will cause each Subsidiary to preserve,
renew and keep in full force and effect their respective corporate existence and
their respective rights, privileges and franchises necessary or desirable in the
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normal conduct of business, except that a Credit Party may discontinue any
immaterial line of business if the Board of Directors of such Credit Party
determines that such discontinuation is in the best interest of the Company and
its Subsidiaries, taken as a whole, and could not cause a Material Adverse
Effect.
Section 6.5. Compliance with Laws. The Company will comply, and cause
each Credit Party to comply, in all respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitations, Environmental Laws and ERISA and the rules and
regulations thereunder) except where the failure to so comply could not cause a
Material Adverse Effect.
Section 6.6. Inspection of Property, Books and Records. The Company
will keep, and will cause each Credit Party to keep, proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions in relation to its business and activities, and will permit,
and will cause each Subsidiary to permit representatives of the Majority
Holders, at the expense of the Holders, to visit and inspect any of their
respective properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective affairs, finances
and accounts with their respective executive officers and independent public
accountants at such reasonable times and as often as may reasonably be desired.
Section 6.7. Investment Company Act. No Credit Party is or will become
an open-end investment trust, unit investment trust or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act of 1940, as amended.
Section 6.8. Limitation on Debt. No Credit Party will create, incur,
assume or suffer to exist any Debt, except:
(a) Debt evidenced by the Notes;
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(b) the Debt described on Schedule 5.1(e) including refinancings
thereof effected within 30 days of the final maturity of the Debt being
refinanced;
(c) other Debt incurred after the date hereof, in an aggregate
principal amount not to exceed $11,000,000;
(d) other Debt the terms and conditions of which shall have been
approved by the Majority Holders and the Net Cash Proceeds of which are applied
in accordance with Section 2.4;
(e) Debt evidenced by the Senior Notes in an aggregate principal amount
not to exceed $100 million; and
(f) Debt evidenced by additional Senior Notes issued as pay-in-kind
interest on Senior Notes; and
(g) Additional Debt evidenced by the Senior Notes in an aggregate
principal amount not to exceed $25 million and refinancings of the Senior Notes
in aggregate principal amount not to exceed the amount of Senior Notes
outstanding immediately prior to such refinancing.
Section 6.9. Restricted Payments; Voluntary Prepayments. (a) No Credit
Party will (i) declare or make any Restricted Payment or (ii) make any capital
expenditures not contained on Schedule 6.9 other than with respect to each tax
year that a Credit Party qualifies as an S Corporation under the Internal
Revenue Code, or any similar provision of state or local law, distributions of
Tax Amounts (as defined below); provided however, that prior to any distribution
of Tax Amounts a knowledgeable and duly authorized officer of the Credit Party
making such distribution certifies, and counsel reasonably acceptable to the
Majority Holders opines, that such Credit Party qualifies as an S Corporation
for Federal income tax purposes and for the states in respect of which such
distributions are being made and that at the time of such distributions, the
most recent audited financial statements of such Credit Party provide that such
Credit Party was treated as an S Corporation for Federal income tax purposes for
the period of such financial statements.
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"Tax Amounts" with respect to any year means (a) an amount equal to the
higher of (i) the product of (A) the taxable income of the relevant Credit Party
for such year as determined in good faith by its Board of Directors; and (B) the
Tax Percentage (as defined below), and (ii) the product of (A) the alternative
minimum taxable income attributable to such Credit Party for such year as
determined in good faith by its Board of Directors; and (B) the Tax Percentage,
in either case, reduced by (b) to the extent not previously taken into account,
any income tax benefit attributable to such Credit Party solely as a result of
its investment in the Credit Parties (including without limitation, tax losses,
alternative minimum tax credits, other tax credits and carryforwards and
carrybacks thereof) (to the extent such benefit is realized in the year for
which the Tax Amount is being determined); provide, however, that in no event
shall such Tax Percentage exceed the greater of (1) the highest aggregate
applicable statutory marginal rate of Federal, state and local income tax or,
when applicable, alternative minimum tax, to which a corporation doing business
in New York City would be subject in the relevant year of determination (as
certified to the Purchasers by a nationally recognized tax accounting firm); and
(2) 50%. Any part of the Tax Amount not distributed in respect of a tax period
for which it is calculated shall be available for distribution in subsequent tax
periods. The term "Tax Percentage" is the highest aggregate applicable effective
marginal rate of Federal, state and local income tax or, when applicable,
alternative minimum tax, to which an individual shareholder of the Credit Party
would be subject in the relevant year of determination (calculated in good faith
by the Credit Party and certified to the Purchaser by a nationally recognized
tax accounting firm). Distributions of Tax Amounts may be made from time to time
with respect to a tax year based on reasonable estimates, with a reconciliation
within 40 days of the earlier of (i) the Credit Party's filing of the Internal
Revenue Service Form 1120S for the applicable taxable year; and (ii) the last
date such form is required to be filed (without regard to any extensions). The
stockholders of each Credit Party will enter into a binding agreement with each
Credit Party to reimburse the applicable Credit Party for certain positive
differences between the distributed amount and the Tax Amount, which difference
must be paid at the time of such reconciliation.
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(b) No Credit Party will directly or indirectly, optionally redeem,
retire, purchase, acquire, defease or otherwise make any payment other than
required interest payments in respect of any Debt other than (i) the Notes or
the Senior Notes, (ii) existing Debt described on Schedule 5.1(e) and (iii)
payments in respect of Debt owing to any other Credit Party.
Section 6.10. Investments. The Company will not, nor will it permit any
Credit Party to, make or acquire any Investment in any Person other than (i)
Investments in direct or indirect wholly-owned Subsidiaries and (ii) Investments
in Cash Equivalents.
Section 6.11. Negative Pledge. No Credit Party will create, assume or
suffer to exist any Lien on any asset now owned or hereafter acquired by it,
except:
(a) existing Liens listed on Schedule 6.11;
(b) (i) inchoate mechanics, workmen's and carriers' liens for charges
not delinquent, incident to current construction, (ii) mechanics,
warehousemen's, unpaid vendors' and carriers' liens incident to such
construction, (iii) statutory and common law Liens of landlords under leases to
which any Credit Party is party and (iv) Liens of carriers, warehousemen,
mechanics and materialmen or other similar statutory Liens, in each case
incurred in the ordinary course of business for sums the payment of which is not
delinquent or which are the subject of good faith proceedings by any Credit
Party;
(c) Liens incurred on deposits made in the ordinary course of business
in connection with workers, compensation, performance bonds, unemployment
insurance and other types of social security, other than any Lien imposed by or
under ERISA;
(d) Liens for taxes not yet due;
(e) easements, rights of way, permits, licenses, zoning ordinances,
covenants, restrictions, defects, minor irregularities of title and other
similar Liens on property which in the case of any particular parcel of real
property
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do not materially detract from the value or utilization of such real property;
(f) Liens incurred in connection with Debt permitted pursuant to
Section 6.8(c); and
(g) Liens arising in the ordinary course of its business which (i) do
not secure Debt, (ii) do not secure any obligation in an amount exceeding
$100,000 and (iii) do not in the aggregate materially detract from the value of
the assets of the Company and its Subsidiaries, taken as a whole, or materially
impair the use thereof in the operation of its business.
Section 6.12. Transactions with Affiliates. The Company will not, nor
will it permit any Credit Party to, directly or indirectly, pay any funds to or
for the account of, make any investment (whether by acquisition of stock or
indebtedness, by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or indirectly, any Debt, or
otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement with, any
Affiliate, except (a) on terms no less favorable than terms that could be
obtained from a Person that is not an Affiliate, as determined in good faith by
the Board of Directors of the relevant Credit Party; provided that no
determination of the Board of Directors shall be required with respect to any
such transactions entered into (i) in the ordinary course of business, (ii) if
such transaction, together with all related transactions, does not involve
property, funds, investments or services with a fair market value in excess of
$100,000 or (iii) in connection with the execution or performance of the
Company's obligations under the Engagement Letter; and (b) transactions with
Affiliates in effect on the date hereof and set forth on Schedule 6.12 hereof.
Section 6.13. Consolidations. Mergers and Sales of Assets; Ownership of
Subsidiaries. Except as set forth on Schedule 6.13 attached hereto:
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(a) No Credit Party will consolidate or merge with or into any other
Person unless the surviving entity is a Credit Party. No Credit Party will sell,
lease or otherwise transfer, directly or indirectly, any substantial part of the
assets of any Credit Party to any other Person which is not a Credit Party.
(b) Each Credit Party will at all times continue to own, directly or
indirectly, 100% of the capital stock of each Person which is currently, or
hereafter becomes a Subsidiary of such Credit Party. No new Subsidiaries will be
created after the Closing unless the same execute and deliver the Subsidiary
Guaranty and any other documents the Majority Holders reasonably request in
connection therewith; provided, however, if the holders of the Senior Notes do
not require a Subsidiary to guaranty the Senior Notes or if the holders of the
Senior Notes release a Subsidiary from its obligations under the guaranty then
the Subsidiary shall also not be required to enter into the Subsidiary Guaranty
or shall be released from its obligations under the Subsidiary Guaranty.
Section 6.14. Restrictions on Additional Subordinated Indebtedness. The
Company will not, nor will it permit any Credit Party to, create or suffer to
exist any Indebtedness for borrowed money which (i) provides that it is
subordinate in right of payment to any Senior Indebtedness and (ii) is senior in
right of payment to or pari passu with the Notes.
Section 6.15. Permanent Financing. (a) The Company will, and will cause
each Credit Party to, take all the actions which are necessary or desirable to
obtain Permanent Financing as soon as practicable through issuance of securities
at such interest rates and other terms as are prevailing for new issues of
securities of comparable size and credit rating in the capital markets at the
time such Permanent Financing is consummated and obtained in comparable
transactions made on an arm's length basis between unaffiliated parties. The
amount to be financed shall be in an amount at least sufficient to repay or
redeem, in the aggregate, the Senior Notes and the Notes (including all Notes
issued as interest on the Notes), in full in accordance with their terms. The
Company hereby covenants and agrees that the proceeds from the Permanent
Financing shall be used to redeem
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in full the Senior Notes and the Notes in accordance with their terms.
(b) The Company covenants that it will, and will cause each Credit
Party to, enter into such agreements as are customary in connection with the
Permanent Financing, make such filings under the Securities Act, the Exchange
Act, the Trust Indenture Act of 1939, as amended, and state securities laws as
shall be required to permit consummation of the Permanent Financing and take
such steps as are necessary or desirable to cause such filings to become
effective or are otherwise required to consummate the Permanent Financing.
Section 6.16. Business Activities. The Company will not, and it will
not permit any Credit Party to, enter into any business, either directly or
through any Subsidiary or joint venture, except for those businesses of the same
type as or related to those in which the Credit Parties are engaged on the date
of this Agreement.
Section 6.17. Tax Consolidation. The Company will not consent to or
permit the filing of or be a party to any consolidated income tax return on
behalf of itself or any of its Subsidiaries with any Person (other than a
consolidated return of the Company and its own Subsidiaries).
Section 6.18. Maintenance of Corporate Separateness. The Company will,
and will cause each of its Subsidiaries to, satisfy customary corporate
formalities, including the holding of regular board of directors' and
shareholders' meetings or action by directors or shareholders without a meeting
and the maintenance of corporate offices and records. Other than pursuant to any
Subsidiary Guaranty entered into pursuant to this Agreement or pursuant to any
subsidiary guarantee entered into pursuant to the Senior Securities Purchase
Agreement, neither the Company nor any of its Subsidiaries shall make any
payment to a creditor of any other Subsidiary in respect of any liability of any
such Subsidiary. Any financial statements distributed to any creditors of any
Subsidiary shall clearly establish or indicate the corporate separateness of
such Subsidiary from the Company and its other Subsidiaries. Neither the Company
nor any of its Subsidiaries shall take any action, or conduct its affairs in a
manner, which is likely to result in the
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corporate existence of the Company or any of its Subsidiaries being ignored, or
in the assets and liabilities of the Company or any of its Subsidiaries being
substantively consolidated with those of any other such Person in a bankruptcy,
reorganization or other insolvency proceeding.
Section 6.19. Packer Avenue Proceeding. Each of Xxxx Cargo and Xxxx
Hauling & Warehousing System, Inc. shall cause all Packer Avenue Proceeds to be
payable directly solely to them and not to Astro Holding, Inc.
Section 6.20. Financial Statements. The Company shall deliver audited
financial statements covering the items in Section 3.05(a) no later than fifteen
(15) Business Days after the date of Closing.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1. Events of Default Defined; Acceleration of Maturity;
Waiver of Default. In case one or more of the following (each, an "Event of
Default"), whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation or any
administrative or governmental body, shall have occurred and be continuing:
(a) default in the payment of all or any part of the principal on any
of the Notes as and when the same shall become due and payable either at
maturity, upon any redemption, by declaration or otherwise; or
(b) default in the payment of any installment of interest upon any of
the Notes under this Agreement as and when the same shall become due and
payable, and continuance of such default for a period of 5 days; or
(c) failure on the part of the Company duly to observe or perform any
of the covenants contained in Sections 6.4 and 6.7 through 6.16 of the
Agreement; or
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(d) failure on the part of any Credit Party duly to observe or perform
any other of the covenants or agreements contained in the Financing Documents,
if such failure shall continue for a period of 30 days after the date on which
written notice thereof shall have been given to the Company at the option of and
by a holder of a Note; or
(e) any Credit Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect in any jurisdiction or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing; or
(f) an involuntary case or other proceeding shall be commenced against
any Credit Party seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or an order for relief shall
be entered against any Credit Party under the bankruptcy laws as now or
hereafter in effect in any jurisdiction; or
(g) there shall be a default in respect of any Debt of any Credit Party
in an aggregate principal amount in excess of $1,000,000 whether such Debt now
exists or shall hereafter be created (excluding the Notes but including Debt
owing to any Credit Party) if such default results in acceleration of the
maturity of such Debt or enables the holder of such Debt to accelerate the
maturity thereof; or any Credit Party shall fail to pay at maturity any such
Debt whether such debt now exists or shall hereafter be created; or
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(h) final judgments for the payment of money which in the aggregate at
any one time exceed $1,000,000 shall be rendered against any Credit Party by a
court of competent jurisdiction and shall remain undischarged for a period
(during which execution shall not be effectively stayed) of 60 days after such
judgment becomes final; or
(i) any representation, warranty, certification or statement made or
deemed made by any Credit Party in any Financing Document or which is contained
in any certificate, document or financial or other statement furnished at any
time under or in connection with any Financing Document shall prove to have been
untrue in any material respect when made or deemed made; or
(j) any member of the ERISA Group has failed to pay when due an amount
or amounts aggregating in excess of $100,000 which it shall have become liable
to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan
has been filed under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing; or the PBGC has
instituted proceedings under Title IV of ERISA to terminate, to impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer any Material Plan; or a condition has
existed by reason of which the PBGC is entitled to obtain a decree adjudicating
that any Material Plan must be terminated; or there has occurred a complete or
partial withdrawal from, or a default, within the meaning of Section 4219(c)(5)
of ERISA, with respect to, one or more Multiemployer Plans which could cause one
or more members of the ERISA Group to incur a current payment obligation in
excess of $100,000; or
(k) a Change of Control has occurred;
then, and in each and every such case (other than under clauses (e) and (f) with
respect to any Credit Party), unless the principal of all the Notes shall have
already become due and payable, the Majority Holders (or, if at such time the
Purchasers together with their respective Affiliates no longer hold at least 50%
of the aggregate outstanding principal amount of the Notes, Holders of at least
33 1/3% of the aggregate outstanding principal amount of the Notes), by
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notice in writing to the Company, may, subject to Section 9.3, declare the
entire principal amount of the Notes together with accrued interest thereon to
be, and upon the Company's receipt of such notice the entire principal amount of
the Notes together with accrued interest thereon shall become, immediately due
and payable. If an Event of Default specified in clauses (e) or (f) with respect
to any Credit Party occurs, the principal of and accrued interest on the Notes
will be immediately due and payable without any declaration or other act on the
part of the Holders. If an Event of Default shall occur and for as long as such
Event of Default shall be continuing, the majority Holders shall have the right
to appoint one representative to sit on the Board of Directors of the Company;
provided, however, that such right shall terminate if the Purchasers together
with their respective Affiliates no longer retain at least 50% of the
outstanding Notes.
ARTICLE VIII
LIMITATION ON TRANSFERS
Section 8.1. Restrictions on Transfer. From and after the date of the
Issuance, none of the Notes shall be transferable except upon the conditions
specified in Sections 8.2 and 8.3, which conditions are intended to ensure
compliance with the provisions of the Securities Act in respect of the Transfer
of any of such Notes or any interest therein. The Purchasers will cause any
proposed transferee of any Notes (or any interest therein) held by it to agree
to take and hold such Notes (or any interest therein) subject to the provisions
and upon the conditions specified in this Section 8.1 and in Sections 8.2 and
8.3.
Section 8.2. Restrictive Legends. (a) Each Note issued to the
Purchasers or to a subsequent transferee shall (unless otherwise permitted by
the provisions of Section 8.2(b) or Section 8.3) include a legend in
substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED
OR SOLD, UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES
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LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE AND THEN
ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN THE
SECURITIES PURCHASE AGREEMENT DATED AS OF NOVEMBER -, 1997, A COPY OF
WHICH MAY BE OBTAINED FROM THE ISSUER OF THIS SECURITY AT ITS PRINCIPAL
EXECUTIVE OFFICE.
(b) Any Holders of Notes registered pursuant to the Securities Act and
qualified under applicable state securities laws may exchange such Notes on
transfer for new securities that shall not bear the legend set forth in
paragraph (a) of this Section 8.2.
Section 8.3. Notice of Proposed Transfers. (a) Five Business Days prior
to any proposed Transfer (other than Transfers of Notes (i) registered under the
Securities Act, (ii) to an Affiliate of a Purchaser or (iii) to be made in
reliance on Rule 144A) of any Notes, the holder thereof shall give written
notice to the Company of such holder's intention to effect such Transfer,
setting forth the manner and circumstances of the proposed Transfer, and shall
be accompanied by (i) an opinion of counsel reasonably satisfactory to the
Company addressed to the Company to the effect that the proposed Transfer of
such Notes may be effected without registration under the Securities Act, (ii)
such representation letters in form and substance reasonably satisfactory to the
Company to ensure compliance with the provisions of the Securities Act and (iii)
such letters in form and substance reasonably satisfactory to the Company from
each such transferee stating such transferee's agreement to be bound by the
terms of this Agreement. Such proposed Transfer may be effected only if the
Company shall have received such notice of transfer, opinion of counsel,
representation letters and other letters referred to in the immediately
preceding sentence, whereupon the holder of such Notes shall be entitled to
Transfer such Notes in accordance with the terms of the notice delivered by the
holder. Each Note transferred as above provided shall bear the legend set forth
in Section 8.2(a) except that such Note shall not bear such legend if the
opinion of counsel referred to above is to the further effect that neither such
legend nor the restrictions on Transfer in Sections 8.1 through 8.3 are required
in order to ensure compliance with the provisions of the Securities Act.
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Five Business Days prior to any proposed Transfer of any Notes to be
made in reliance on Rule 144A under the Securities Act ("Rule 144A"), the holder
thereof shall give written notice to the Company of such holder's intention to
effect such Transfer, setting forth the manner and circumstances of the proposed
Transfer and certifying that such Transfer will be made (i) in full compliance
with Rule 144A and (ii) to a transferee that (A) such holder reasonably believes
to be a "qualified institutional buyer" within the meaning of Rule 144A and (B)
is aware that such Transfer will be made in reliance on Rule 144A. Such proposed
Transfer may be effected only if the Company shall have received such notice of
transfer, whereupon the holder of such Notes shall be entitled to Transfer such
Notes in accordance with the terms of the notice delivered by the holder. Each
Note transferred as above provided shall bear the legend set forth in Section
8.2(a).
ARTICLE IX
SUBORDINATION
Section 9.1. Notes Subordinate to Senior Notes. The Company covenants
and agrees, and each Purchaser and each other Holder of any Note, if any,
likewise covenants and agrees, that, (a) to the extent and in the manner
hereinafter set forth in this Section 9, the payment of the Obligations,
including pursuant to any amendment, modification, restatement or renewal
thereof (the "Subordinated Obligations"), is hereby expressly made subordinated
and subject in right of payment to the prior payment in full of all Senior
Indebtedness and (b) the terms and conditions of such subordination is for the
benefit of the holders of the Senior Indebtedness and each such holder may
enforce such subordination; provided, however, on the Maturity Date (so long as
the Maturity Date is not extended in accordance with either of the provisos
contained in the definition thereof) the Obligations shall no longer be
subordinated to the Senior Indebtedness and this Article IX shall have no
further force or effect.
Section 9.2. Payment Over of Proceeds Upon Dissolution. In the event of
(i) any insolvency or bankruptcy case or proceeding, or any receivership,
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liquidation, reorganization or other similar case or proceeding in connection
therewith, relative to the Company or to its assets, or (ii) any liquidation,
dissolution or other winding up of the Company, whether voluntary or involuntary
and whether or not involving insolvency or bankruptcy, or (iii) any assignment
for the benefit of creditors or any other marshalling of assets and liabilities
of the Company (collectively, "Bankruptcy Events"), then and in any such event:
(a) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash or Cash Equivalents of all amounts due or to become due
on or in respect of all Senior Indebtedness (including interest after the
commencement of a Bankruptcy Event at the rate specified in the documentation
for such Senior Indebtedness, whether or not allowed), before any Holder is
entitled to receive any direct or indirect payment or distribution on account of
the Subordinated Obligations (other than in the form of securities permitted to
be paid in accordance with the first parenthetical in clause (b) below)
including, without limitation, by exercise of set-off and any payment which may
be payable or deliverable by reason of any other indebtedness being subordinated
in right of payment to the Subordinated Obligations;
(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, by set-off or otherwise, to
which any Holder would be entitled but for the provisions of this Section 9,
including any such payment or distribution which may be payable or deliverable
by reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Subordinated Obligations (except for any such
payment or distribution of securities which, if debt securities, are unsecured
and subordinated to at least the same extent as the Subordinated Obligations are
to (A) such Senior Indebtedness or (B) any securities issued in exchange for
Senior Indebtedness and mature no earlier than six months after such Senior
Indebtedness or securities issued in exchange) shall be paid by the liquidating
trustee or agent or other Person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly
to the holders of all Senior Indebtedness or their
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representative or representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of such Senior Indebtedness
may have been issued, ratably according to the aggregate amounts remaining
unpaid on account of the principal of, and interest on, such Senior Indebtedness
held or represented by each, to the extent necessary to make payment in full of
all such Senior Indebtedness remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior Indebtedness;
and
(c) in the event that, notwithstanding the foregoing provisions of this
Section 9, any Holder shall have received any such payment or distribution of
assets of the Company of any kind or character, whether property or securities,
including any such payment or distribution which may be payable or deliverable
by reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Subordinated Obligations (but excluding any
payment of the character described in the parenthetical clause in the foregoing
paragraph (b)) before all Senior Indebtedness is paid in full, then and in such
event such payment or distribution shall be paid over or delivered forthwith to
the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee,
agent or other Person making payment or distribution of assets of the Company
for application to the payment of all such Senior Indebtedness remaining unpaid,
to the extent necessary to pay such Senior Indebtedness in full, after giving
effect to any concurrent payment or distribution to or for the holders of such
Senior Indebtedness.
If, notwithstanding the provisions of this Agreement, there shall occur
any consolidation of the Company with, or any merger of the Company into,
another corporation or the liquidation or dissolution of the Company following
any conveyance, transfer or lease of its properties and assets substantially as
an entirety to another corporation, such consolidation, merger or liquidation
shall not be deemed a Bankruptcy Event; provided, that no other Bankruptcy Event
shall have occurred and be continuing at the time of such consolidation, merger
or liquidation. DLJSC is hereby authorized to file an appropriate claim on
behalf of the Holders if the Holders do not file such claim or there is not
filed on behalf of the Holders a proper proof of claim in the
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form required in any Bankruptcy Event prior to thirty (30) days before the
expiration of the time to file such claim or claims.
Section 9.3. Acceleration Rights; Remedies; No Payment in Certain
circumstances. (a) So long as at least $20 million of Senior Notes shall remain
outstanding, prior to the Maturity Date, no Holder shall take any action,
judicial or otherwise, to accelerate or collect payment on the Subordinated
Obligations or to pursue any other remedy with respect to the Subordinated
Obligations, prior to the earlier of (i) the occurrence or commencement of a
Bankruptcy Event or an Event of Default under Section 7.1(a) or 7.1(k),
(ii) acceleration of any Senior Indebtedness or (iii) the failure of the Company
or any Credit Party to comply with Sections 2.4(d), 6.9, 6.12, the second
sentence of Section 6.13(b), 6.14 or 6.15 and such failure to comply shall
continue unremedied for 10 Business Days after notice from any Holder to the
Company and DLJSC.
(b) In the event that (i) the Company shall fail to pay when due (after
giving effect to any applicable grace periods), upon acceleration or otherwise,
any amount or obligation with respect to Senior Indebtedness under the
Securities Purchase Agreement (a "Payment Default") which Payment Default shall
not have been cured or waived, or (ii) an Event of Default (other than a Payment
Default) under the Securities Purchase Agreement shall occur and be continuing,
which shall not have been cured or waived (a "Non-Payment Default"), and the
Company and the Majority Holders receive written notice of such Non-Payment
Default from a holder of Senior Notes (a "Non-Payment Blockage Notice"), no
payment pursuant to Section 2.4(b) or on the Maturity Date on account of the
Subordinated Obligations shall be made by the Company (x) in the case of any
Payment Default, unless and until such Senior Indebtedness shall have been paid
in full in cash or until such Payment Default shall have been cured or waived,
or (y) in the case of any Non-Payment Default, from the earlier of the date on
which the Company and Pyramid Ventures, Inc. (or such other person as may be
designated in writing by the Majority Holders) receive such Non-Payment Blockage
Notice until the earlier of (1) 179 days after such date and (2) the date, if
any, on which such Senior Indebtedness is paid in full or such Non-Payment
Default is
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waived by the holders of such Senior Indebtedness or otherwise cured (a
"Blockage Period"); provided, that (x) only one Non-Payment Blockage Notice may
be given in any 360-day period and (y) no Blockage Period may be imposed as a
result of a covenant default that served as the basis for, or was (to the
knowledge of the holder delivering such notice) continuing during any previous
Blockage Period unless such covenant default giving rise to such Blockage Period
was cured or waived in accordance with the applicable provisions of such Senior
Indebtedness for at least 90 consecutive days subsequent to the commencement of
such initial Blockage Period.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to any Holder prohibited by the foregoing provisions of this
Section, then and in such event such payment shall be paid over and delivered
forthwith to the holders (or their agent or trustee) of the relevant Senior
Indebtedness.
Section 9.4. Payment Otherwise Permitted. Nothing contained in this
Section 9 or elsewhere in this Agreement or in the Notes shall prevent the
Company, at any time except as set forth in Section 9.2, from making payments at
any time of principal of and interest on the Notes or any other amount payable
by the Company under the Notes or this Agreement.
Section 9.5. Subrogation to Rights of Holders of Senior Notes. Subject
to, and solely effective following, the final payment in full of all Senior
Indebtedness, the Holders shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments and distributions of cash, property and
securities applicable to such Senior Indebtedness to the extent of the payments
or distributions made to or otherwise applied to payment of, the Senior
Indebtedness pursuant to the provisions of this Section 9 until the obligations
shall be paid in full. For purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness of any cash, property or
securities to which the Holders would be entitled except for the provisions of
this Section 9, and no payments pursuant to the provisions of this Section 9 to
the holders of Senior Indebtedness by the Holders shall, as among the Company,
its creditors (other than holders of Senior Indebtedness) and the Holders, be
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deemed to be a payment or distribution by the Company to or on account of the
Subordinated Obligations.
Section 9.6. Provisions Solely to Define Relative Riahts. The
provisions of this Section 9 are and are intended solely for the purpose of
defining the relative rights of the Holders of the Notes on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Section 9 or elsewhere in this Agreement or in the Notes is intended to or shall
(i) impair, as among the Company, its creditors (other than holders of Senior
Indebtedness) and the Holders, the obligation of the Company, which is absolute
and unconditional, to pay to the Holders the principal of, and premium and
interest on, and any other amount payable by the Company under, the Notes or
this Agreement as and when the same shall become due and payable in accordance
with their terms; or (ii) affect the relative rights against the Company of the
Holders and its creditors (other than the holders of Senior Indebtedness); or
(iii) except as expressly provided in Section 9.3, prevent the Holders from
accelerating the Notes and exercising all other remedies otherwise permitted by
applicable law upon default under this Agreement, subject to the rights, if any,
under this Section 9 of the holders of Senior Indebtedness under and in
accordance with the provisions of this Section 9, to receive, cash, property and
securities otherwise payable or deliverable to the Holders.
Section 9.7. No Waiver of Subordination Provisions; Amendment. No right
of any present or future holder of any Senior Indebtedness to enforce
subordination or other terms and provisions as herein provided shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any non-compliance by the Company with the terms, provisions, and
covenants of this Agreement, regardless of any knowledge thereof any such holder
may have or be otherwise charged with. Without in any way limiting the
generality of the foregoing, the holders of Senior Indebtedness may at any time
and from time to time, without the consent of or notice to the Purchasers or any
other Holder of the Notes, without incurring responsibility to the Holders and
without impairing or releasing the subordination provided in this Section 9 or
the obligations
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hereunder of such Holders to the holders of Senior Indebtedness, do any one or
more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing the Senior Indebtedness; (iii) release
any Person liable in any manner for the collection of the Senior Indebtedness;
and (iv) exercise or refrain from exercising any rights or remedies against the
Company and any other Person.
Section 9.8. Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Company referred to in
this Section 9, the Holders shall be entitled to rely upon any unstayed, final,
nonappealable order or decree entered by any court of competent jurisdiction in
which a Bankruptcy Event is pending (so long as such order appears on its face
to give effect to these subordination provisions), for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior 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 9.
ARTICLE X
MISCELLANEOUS
Section 10.1. Notice. All notices, demands and other communications to
any party hereunder shall be in writing (including telecopier or similar
writing) and shall be given to such party at its address set forth on the
signature pages hereof, or such other address as such party may hereinafter
specify for the purpose. Each such notice, demand or other communication shall
be effective (i) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified on the signature page hereof, or (ii) if given by
overnight courier, addressed as aforesaid or by any other means, when delivered
at the address specified in this Section.
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Section 10.2. No Waivers; Amendments. (a) No failure or delay on the
part of any party in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to any party at law or in equity or otherwise.
(b) Any provision of this Agreement may be amended, supplemented or
waived if, but only if, such agreement, supplement or waiver is in writing and
is signed by the Company and the Majority Holders; provided, that without the
consent of each Holder of any Note affected thereby, an amendment, supplement or
waiver may not (a) reduce the aggregate principal amount of Notes whose Holders
must consent to an amendment, supplement or waiver, (b) reduce the rate or
extend the time for payment of interest on any Note, (c) reduce the principal
amount of or extend the stated maturity of any Note or alter the redemption
provisions with respect thereto or (d) make any Note payable in money or
property other than as stated in the Notes. In determining whether the Holders
of the requisite principal amount of Notes have concurred in any direction,
consent, or waiver as provided in this Agreement or in the Notes, Notes which
are owned by the Company or any other obligor on or guarantor of the Notes, or,
by any Person controlling, controlled by, or under common control with any of
the foregoing, shall be disregarded and deemed not to be outstanding for the
purpose of any such determination; and provided further that no such amendment,
supplement or waiver which affects the rights of each Purchaser and its
Affiliates otherwise than solely in their capacities as Holders of Notes shall
be effective with respect to them without their prior written consent.
Section 10.3. Indemnification. The Company (the "Indemnifying Party")
agrees to indemnify and hold harmless each Purchaser, its Affiliates, and each
Person, if any, who controls such Purchaser, or any of its affiliates, within
the meaning of the Securities Act or the Exchange Act (a "Controlling Person"),
and the respective partners, agents, employees, officers and directors of each
Purchaser, its Affiliates and any such Controlling Person (each an
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"Indemnified Party" and collectively, the "Indemnified Parties"), from and
against any and all losses, claims, damages, liabilities and expenses
(including, without limitation and as incurred, reasonable costs of
investigating, preparing or defending any such claim or action, whether or not
such Indemnified Party is a party thereto) arising out of, or in connection with
any activities contemplated by this Agreement, provided that the Indemnifying
Party will not be responsible for any claims, liabilities, losses, damages or
expenses that are determined by final judgment of court of competent
jurisdiction to result from such Indemnified Party's gross negligence, willful
misconduct or bad faith. The Indemnifying Party also agrees that each Purchaser
shall have no liability (except for breach of provisions of this Agreement) for
claims, liabilities, damages, losses or expenses, including legal fees, incurred
by the Indemnifying Party in connection with this Agreement unless they are
determined by final judgment of a court of competent jurisdiction to result from
such Purchaser's gross negligence, willful misconduct or bad faith.
If any action shall be brought against an Indemnified Party with
respect to which indemnity may be sought against the Indemnifying Party under
this Agreement, such Indemnified Party shall promptly notify the Indemnifying
Party in writing and the Indemnifying Party shall, if requested by such
Indemnified Party or if the Indemnifying Party desires to do so, assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such Indemnified Party and payment of all reasonable fees and expenses. The
failure to so notify the Indemnifying Party shall not affect any obligations the
Indemnifying Party may have to such Indemnified Party under this Agreement or
otherwise unless the Indemnifying Party is materially adversely affected by such
failure. Such Indemnified Party shall have the right to employ separate counsel
in such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party, unless: (i)
the Indemnifying Party has failed to assume the defense and employ counsel or
(ii) the named parties to any such action (including any impleaded parties)
include such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised by counsel that
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there may be one or more legal defenses available to it which are different from
or additional to those available to the Indemnifying Party, in which case, if
such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of such action
or proceeding on behalf of such Indemnified Party; provided, however, that the
Indemnifying Party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be responsible hereunder for the reasonable fees and expenses
of more than one such firm of separate counsel, in addition to any local
counsel, which counsel shall be designated by the Majority Holders. The
Indemnifying Party shall not be liable for any settlement of any such action
effected without the written consent of the Indemnifying Party (which shall not
be unreasonably withheld) and the Indemnifying Party agrees to indemnify and
hold harmless each Indemnified Party from and against any loss or liability by
reasons of settlement of any action effected with the consent of the
Indemnifying Party. In addition, the Indemnifying Party will not, without the
prior written consent of the Majority Holders, settle or compromise or consent
to the entry of any judgment in or otherwise seek to terminate any pending or
threatened action, claim, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not any Indemnified Party is
a party thereto) unless such settlement, compromise, consent, or termination
includes an express unconditional release of the Purchasers and the other
Indemnified Parties, reasonably satisfactory in form and substance to the
Purchasers, from all liability arising out of such action, claim, suit or
proceeding.
The indemnification and expense reimbursement obligations set forth in
this Section 10.3 (i) shall be in addition to any liability the Indemnifying
Party may have to any Indemnified Party at common law or otherwise, (ii) shall
survive the termination of this Agreement and the payment in full of the Notes
and (iii) shall remain operative and in full force and effect regardless of any
investigation made by
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or on behalf of the Purchasers or any other Indemnified Party.
Section 10.4. Expenses. The Company agrees to pay, if an Event of
Default occurs, all reasonable out-of-pocket expenses incurred by the Purchasers
and each holder of Notes, including reasonable fees and disbursements of a
single counsel (which counsel shall be selected by a majority in interest of the
Notes held by the Purchasers when such Event of Default occurs), in connection
with such Event of Default and collection, bankruptcy, insolvency and other
enforcement proceedings resulting therefrom.
Section 10.5. Payment. The Company agrees that, so long as any
Purchaser shall own any Notes issued to it from the Company hereunder, the
Company will make payments to each Purchaser of all amounts due thereon by wire
transfer by 1:00 PM (New York City time) on the date of payment to such account
as is specified beneath each Purchaser's name on the signature page hereof or to
such other account or in such other similar manner as each Purchaser may
designate to the Company in writing.
Section 10.6. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the Company and each Purchaser and their
respective successors and assigns; provided that the Company may not assign or
otherwise transfer its rights or obligations under this Agreement to any other
Person without the prior written consent of the Majority Holders.
Section 10.7. Brokers. The Company represents and warrants that neither
it nor any Credit Party has employed any broker, finder, financial advisor or
investment banker who might be entitled to any brokerage, finder's or other fee
or commission in connection with the Acquisition or the issuance of the Notes.
Section 10.8. New York Law; Submission to Jurisdiction; Waiver of
Jury Trial. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK
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STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section 10.9. Severability. If any term, provision, covenant or
restriction of the Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 10.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original with the same effect
as if the signatures thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers, as of the date first
above written.
PYRAMID VENTURES, INC.
By /s/ Xxxxxx Xxxx
-------------------------------------
Name:
Title:
Wiring Instructions: Address:
Bankers Trust Company x/x XX Xxxxxxx Xxxxxxxx, Xxx.
Xxx Xxxx, Xxx Xxxx 000 Xxxxxxx Xxxxxx
XXX #000000000 Xxx Xxxx, XX 00000
Pyramid Ventures, Inc. Attention: Xxxxx Xxxxxxx
Acct #00-000-000 Telephone: 000-000-0000
Attn: Xxxxx Xxxxxxxxxxx Facsimile: 000-000-0000
BERKSHIRE FUND III
By /s/ Xxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Managing Director
Wiring Instructions: Address
Fleet Bank of Massachusetts c/o Berkshire Partners LLC
One Federal Street Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000 Suite 3300
Attn: Xxxxxx Xxxxxxx Xxxxxx, XX 00000
ABA #000-000-000 Attention: Xxxxx Xxxxxxxxx
Acct #93630-48039 Telephone: 000-000-0000
Facsimile: 000-000-0000
BERKSHIRE INVESTORS LLC
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Managing Director
Wiring Instructions: Address:
Boston Safe Deposit & Trust c/o Berkshire Partners LLC
One Boston Place One Boston Place
Boston, MA 02108 Suite 3300
Attn: Xxxxx X. Xxxxxx Xxxxxx, XX 00000
ABA #000-000-000 Attention: Xxxxx Xxxxxxxxx
Acct #06-569-2 Telephone: 000-000-0000
Facsimile: 000-000-0000
XXXXXX X. XXXXXXX
/s/ Xxxxxx X. Xxxxxxx
---------------------------------
Wiring Instructions: Address:
Bank of N.Y. x/x Xxxxx & Xxxxxxx
Xxxxxxx Xxx., Xxxxxx, XX Xxxxxxxx Xxxxxx
XXX #02100018 000 00xx Xxxxxx, XX
Credit Xxxxxx X. Xxxxxxx Washington, D.C. 20004-1109
Acct #6104824321 Attention: Xxxxxx Xxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
XXXXXX XXXX DEL XXXXX
/s/ Xxxxxx Xxxx Del Xxxxx
---------------------------------
Wiring Instructions: Address:
Federal Reserve Bank of N.Y. Calle Cerezo #6
Banco Popular Urbanization San Xxxxxxxx
ABA #000000000 Xxxxxxxx, XX 00000
Further Credit Telephone: 000-000-0000
Acct #000-000000 Facsimile: 000-000-0000
XXXX XXXXXX XXX
/s/ Xxxx Xxxxxx Xxx
-------------------------------
Wiring Instructions: Address:
Chase Manhattan Bank, NYC c/x Xxxxx & Xxxxxxx
ABA #000000000 Columbia Square
FBO Xxxxx Xxxxxx Inc. 000 00xx Xxxxxx, XX
Acct #066-198038 Washington, D.C. 20004-1109
Further credit Xxxx X. Xxx Attention: Xxxxxx Xxxxxxx, Esq.
& Xxxxxxx Xxx Telephone: 000-000-0000
Acct #000-00000-00-000 Facsimile: 000-000-0000
XXXXXX X. XXXXXX
/s/ Xxxxxx X. Xxxxxx
------------------------------
Wiring Instructions: Address:
Chase Manhattan Bank c/x Xxxxx & Xxxxxxx
ABA #000000000 Columbia Square
FBO Xxxxx Xxxxxx Inc. 000 00xx Xxxxxx, XX
Acct #066-198038 Washington, D.C. 20004-1109
Further credit Xxxxxx & Attention: Xxxxxx Xxxxxxx, Esq.
Xxxxxxxx Xxxxxx Telephone: 000-000-0000
Acct #000-00000-00-000 Facsimile: 000-000-0000
XXXXXX XXXXXXXX
/s/ Xxxxxx XxXxxxxx
------------------------
Wiring Instructions: Address:
Sovereign Bank-Covered x/x Xxxxx & Xxxxxxx
Xxxxxx Xxxxxx Xxxxxxxx Xxxxxx
XXX #000000000 000 00xx Xxxxxx, XX
Credit Xxxxxx XxXxxxxx Washington, D.C. 20O04-1109
Acct #118-301-7480 Attention; Xxxxxx Xxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
XXXXXX X. X'XXXXXXX
/s/ Xxxxxx X. X'Xxxxxxx
------------------------------
Wiring Instructions: Address:
Chase Manhattan Bank c/x Xxxxx & Xxxxxxx
000 Xxxxxxxxx Xxxxxx Xxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000 000 00xx Xxxxxx, XX
Bank Mgr - Wm. Capuwano Washington, D.C. 20004-1109
Branch #127 Attention: Xxxxxx Xxxxxxx, Esq.
ABA #000000000 Telephone: 000-000-0000
Xxxxxx X. X'Xxxxxxx and Facsimile: 000-000-0000
Xxxxxx X'Xxxxxxx
Acct #127-060-595-501 (savings)
XXXXXX XXXXX
/s/ Xxxxxx Xxxxx
--------------------------------
Wiring Instructions: Address:
Northern Trust Co. Chicago Wisconsin Central Transportation
ABA #000-000-000 Xxx X'Xxxx Xxxxxx
Xxxxxx Xxxxx Xxxxxxxx, XX 00000
Acct #4262581 Telephone: 000-000-0000
Facsimile: 000-000-0000
XXXXX XXXXXXXX
/s/ Xxxxx Xxxxxxxx
-----------------------------
Wiring Instructions: Address:
Northern Trust International c/o NPR, Inc.
Banking Corp. 000 00xx Xxxxxx, X.X., Xxxxx 000
One World Trade Center Washington, D.C. 20005
STE 3941 Telephone: 000-000-0000
New York, NY Facsimile: 000-000-0000
ABA #000-000000
FBO Xxxxxxx Xxxxx
Acct #000-000-00000
Further Credit Acct #141-55879
By order Xxxxx X. Xxxxxxxx
XXXX XXXXXX XXXXXXXX
CUSTODIAN FOR XXXXX XXXXXXXX
XXX ROLLOVER
By /s/ Xxxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President and
Branch Manager
Wiring Instructions: Address:
Citibank, New York Xxxx Xxxxxx Xxxxxxxx
ABA #000000000 000 X. Xxxxx Xxxxx Xxxx
Xxxx Xxxxxx # 406-11172 Xxxxx Xxxxx, XX 00000
f/b/o Xxxx Xxxxxx Xxxxxxxx Attention: Xxxxx Xxxxxxxxxx
Cust. for Xxxxx X. Xxxxxxxx XXX RO Telephone: 000-000-0000
Acct #000-000000-000 Facsimile: 000-000-0000
XXXX X. XXXXXX
/s/ Xxxx X. Xxxxxx
----------------------------
Wiring Instructions: Address:
The Bank of New York x/x Xxxxx & Xxxxxxx
XXX #000000000 Xxxxxxxx Xxxxxx
Xxxx X. Xxxxxx 000 00xx Xxxxxx, XX
Acct #000-000-0000 Washington, D.C. 20004-1109
Attention: Xxxxxx Xxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
XXXX XXXXXX XXXXXXXX
CUSTODIAN FOR XXXX XXXXXX
XXX ROLLOVER
By /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President and
Branch Manager
Wiring Instructions; Address:
Xxxx Xxxxxx Xxxxxxxx, Xxxx Xxxxxx Xxxxxxxx
Inc. C/F 000 X. Xxxxx Xxxxx Xxxx
Xxxx Xxxxxx XXX Xxxxx Xxxxx, XX 00000
A/C 000-000000-000 Attention: Xxxxx Xxxxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
XXXX X. XXXXXX
/s/ Xxxx X. Xxxxxx
--------------------------------
Wiring instructions: Address:
Chase Manhattan c/o Xxxxx Xxxxxxx
ABA #000000000 Columbia Square
Credit to Xxxxxxx Xxxxx 000 00xx Xxxxxx, XX
Acct #000-0-000000 Washington, D.C. 20004-1109
Further credit to Xxxx Xxxxxx Attention: Xxxxxx Xxxxxxx, Esq.
Acct #825-42B32 Telephone: 000-000-0000
Facsimile: 000-000-0000
XXXXXXX X. XXXXX, XX.
/s/ Xxxxxxx X. Xxxxx, Xx.
--------------------------------
Wiring Instructions: Address:
Xxxxx Capital Advisors, Inc.
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx #0000
Xxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
THE XXXX GROUP, INC.
By /s/ Xxxxxx X. Xxxx, Xx.
--------------------------------
Name: Xxxxxx X. Xxxx, Xx.
Title:
Address:
X.X. Xxx 0000
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxx, Xx.
Facsimile: 000-000-0000
NPR HOLDING CORPORATION
By /s/ Xxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxx
Title:
Address:
c/x Xxxx Cargo Systems, Inc.
000 X. Xxxxxxxx
King & Xxxxx Xxxxxx
Xxxxxxxxxx Xxxx, XX 00000
Facsimile: 000-000-0000
Attn: Xxxxxx X. Xxxx-CONFIDENTIAL
Attn: Xxxx X. Xxxxx-CONFIDENTIAL
EXHIBIT A
FORM OF
NOTE
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD, UNLESS IT
HAS BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE AND THEN ONLY IN COMPLIANCE
WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN THE SECURITIES PURCHASE AGREEMENT
DATED AS OF NOVEMBER __, 1997, A COPY OF WHICH MAY BE OBTAINED FROM THE XXXX
GROUP, INC. AT ITS PRINCIPAL EXECUTIVE OFFICE.
No. __________ $_________
THE XXXX GROUP, INC.
Subordinated Unsecured Increasing Rate Note
THE XXXX GROUP, INC. (the "Company"), for value received hereby
promises to pay to [List Purchasers] (the "Holder"), the principal sum of
[Amount in words] dollars ($[Amount in numbers]), in lawful money of the United
States of America and in immediately available funds, on the Maturity Date (as
defined in the Agreement referred to below), and to pay interest on the unpaid
principal amount, in kind, for the period commencing on the date of this Note
until payment in full of the principal sum hereof has been made, at the rates
per annum and on the dates provided in the Agreement (as defined below).
This Subordinated Unsecured Increasing Rate Note is one of a duly
authorized issue of Subordinated Unsecured Increasing Rate Notes of the Company
(the "Notes") referred to in the Securities Purchase Agreement dated as of
November _, 1997 between the Company and each of the Persons listed on the
signature pages thereto (as the same may be amended, restated or otherwise
modified from time to time in accordance with its terms, the "Agreement") and is
A-1
subordinated to Senior Indebtedness to the extent and in the manner provided for
in the Agreement. Capitalized terms used in this Note have the respective
meanings assigned to them in the Agreement.
The Notes are transferable and assignable to one or more purchasers in
accordance with the limitations set forth in the Agreement. The Company agrees
to issue from time to time replacement Notes in the form hereof to facilitate
such transfers and assignments.
The Company shall keep at its principal office a register (the
"Register") in which shall be entered the names and addresses of the registered
holders of the Notes and particulars of the respective Notes held by them and of
all transfers of such Notes. References to the "Holder" or "Holders" shall mean
the Person listed in the Register as the payee of any Note. The ownership of the
Notes shall be proven by the Register.
Upon the occurrence of an Event of Default, the principal hereof and
accrued interest hereon shall become, or may be declared to be, forthwith due
and payable in the manner, upon the conditions and with the effect provided in
the Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAW). THE COMPANY HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS NOTE.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: ________________, 199_
THE XXXX GROUP, INC.
By:
--------------------------------
Name:
A-2
Title:
A-3
EXHIBIT B
FORM OF
SOLVENCY CERTIFICATE
This Solvency Certificate (this "Certificate") is delivered to the
Persons listed on the signature pages (except the Company) (the "Purchasers")
pursuant to the Securities Purchase Agreement dated as of November __,1997 (the
"Agreement") between The Xxxx Group, Inc. and the Purchasers. Capitalized terms
used herein without definition have the meanings provided in the Agreement.
I hereby certify to the Purchasers, in good faith and to the best of my
knowledge and belief, as follows:
1. I am the duly qualified and acting Chief Financial officer of each
Credit Party and have been employed in positions involving responsibility for
the management of the financial affairs and the preparation of financial
statements of each Credit Party. I have, together with other officers of each
Credit Party, acted on behalf of each Credit Party in connection with the
transactions contemplated by the Agreement, the other Financing Documents and
the Material Acquisition Documents.
2. I have carefully reviewed the contents of this Certificate and have
conferred with legal counsel for each Credit Party for the purpose of discussing
the meaning of its contents.
3. In connection with preparing for the transactions contemplated by
the Agreement, the other Financing Documents and the Material Acquisition
Documents, I have assisted in the preparation of and I have reviewed the pro
forma combined balance sheet of the Company and its Subsidiaries as of June 30,
1997 (the "Pro Forma Balance Sheet"), a copy of which is attached hereto as
Annex I. The Pro Forma Balance Sheet was prepared on the basis of the historical
financial statements delivered pursuant to Section 3.5 of the Agreement.
B-1
4. In connection with the issuance of this Certificate and the
preparation of the Pro Forma Balance Sheet, I have assisted in the preparation
of and have reviewed the historical financial statements described in Section
3.5 of the Agreement. I have no reason to believe that the Pro Forma Balance
Sheet is not a fair and reasonable presentation as of the date hereof of the
consolidated pro forma financial condition of the Company and its Subsidiaries,
after giving effect to the consummation of the transactions contemplated by the
Agreement, the other Financing Documents and the Material Acquisition Documents.
Based upon the foregoing, I have concluded, in good faith and to the
best of my knowledge and belief, that as of the date hereof and after giving
effect to the transactions contemplated by the Agreement, the other Financing
Documents and the Material Acquisition Documents:
(a) The fair saleable value (as defined below) of each Credit
Party's assets exceeds the total amount of liabilities (including
contingent (including full utilization of the Commitment under the
Agreement), subordinated, unmatured and unliquidated liabilities, in
each case valued at the probable liability of each such Credit Party
with respect thereto) of each Credit Party as they become absolute and
mature and, therefore, each Credit Party is not "insolvent".
(b) The present fair saleable value of the assets of each
Credit Party is not less than the amount that will be required to pay
its probable liabilities as they become absolute and matured.
(c) Each Credit Party will be able to realize upon its assets
and will have sufficient cash flow from operations to enable it to pay
its debts, other liabilities and contingent obligations as they mature
in the ordinary course of its business.
(d) Each Credit Party does not have unreasonably small capital
with which to engage in its anticipated businesses. In reaching this
conclusion, I understand
B-2
that "unreasonably small capital" depends upon the nature of the
particular business or businesses conducted or to be conducted, and I
have reached my conclusion based on the needs and anticipated needs for
capital of the business conducted or anticipated to be conducted by
each Credit Party.
(e) Each Credit Party has not incurred any obligation under
the Agreement or any other Financing Document or made any conveyance
pursuant to or in connection therewith, with actual intent to hinder,
delay or defraud either present or future creditors of such Credit
Party.
For purposes of this Certificate, the "fair saleable value" of each
Credit Party's assets and investments has been determined on the basis of the
amount which I have concluded, in good faith and to the best of my knowledge and
belief, may be realized within a reasonable time, either through collection or
sale of such investments and other assets at the regular market value,
conceiving the latter as the amount which could be obtained for the property in
question within such period by a capable and diligent business person from an
interested buyer who is willing to purchase under ordinary selling conditions.
Because the sale of any business enterprise involves numerous assumptions and
uncertainties, not all of which can be quantified or ascertained prior to
engaging in an actual selling effort, I make no representation as to whether the
aggregate assets of each Credit Party would actually be sold for the amount I
believe to be their fair saleable value.
I understand that the Purchasers are relying on the truth and accuracy
of this Certificate and that the delivery of this Certificate is a material
inducement for the Purchasers to enter into the Agreement and consummate the
transactions contemplated thereby, and the undersigned hereby consents to such
reliance.
I am delivering this Certificate in my capacity as the Chief Financial
Officer of each Credit Party and not in any way in my individual capacity.
B-3
I represent the foregoing information to be, in good faith and to the
best of my knowledge and belief, true and correct and have executed this
Certificate this ___ day of ______________, 1997.
------------------------------------
Name:
Title: Chief Financial Officer
B-4
Annex I
to Exhibit B
Pro Forma
[to be attached]
B-5
EXHIBIT C
FORM OF
SUBSIDIARY GUARANTY
SUBSIDIARY GUARANTY dated as of November _, 1997 made by each of the
corporations listed on Annex A attached hereto (each, a "Subsidiary Guarantor").
W I T N E S S E T H :
WHEREAS, The Xxxx Group, Inc. (the "Company") has entered into a
Securities Purchase Agreement (as amended from time to time, the "Subordinated
Securities Purchase Agreement") with the Persons listed on the signature pages
thereto (except the Company) pursuant to which the Company has agreed, subject
to the terms and conditions set forth therein, to issue $25,000,000 principal
amount of the Company's promissory notes;
WHEREAS, each Subsidiary Guarantor is a direct or indirect wholly-owned
Subsidiary of the Company and has received, and expects to continue to receive,
financial and other support from the Company;
WHEREAS, it is a condition to the issuance of Notes under the
Subordinated Securities Purchase Agreement that the Subsidiary Guarantors enter
into a Subsidiary Guaranty substantially in the form of this Subsidiary
Guaranty; and
WHEREAS, the Subsidiary Guarantors are willing to enter into this
Subsidiary Guaranty;
NOW, THEREFORE, the Subsidiary Guarantors jointly and severally agree
as follows:
C-1
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions; References.
Terms used herein which are defined in the Subordinated Securities
Purchase Agreement and not otherwise defined herein are used herein as therein
defined. The following additional term, as used herein, has the following
meaning:
"Guaranteed Obligations" means (i) all obligations of the Company in
respect of principal of and interest on the Notes, (ii) all other sums payable
by the Company under the Subordinated Securities Purchase Agreement or the
Notes, (iii) all sums payable by the Company under any Financing Document and
(iv) all renewals or extensions of the foregoing, in each case whether now
outstanding or hereafter arising. The Guaranteed obligations shall include,
without limitation, any interest, costs, fees and expenses which accrue on or
with respect to any of the foregoing, whether before or after the commencement
of any case, proceeding or other action relating to the bankruptcy, insolvency
or reorganization of the Company, and any such interest, costs, fees and
expenses that would have accrued thereon or with respect thereto but for the
commencement of such case, proceeding or other action.
ARTICLE II
GUARANTIES
SECTION 2.01. The Guaranties. Subject to Section 2.03, the Subsidiary
Guarantors hereby jointly and severally unconditionally and irrevocably
guarantee to each Purchaser and each holder from time to time of any Note, and
to each of them, the due and punctual payment of all Guaranteed obligations as
and when the same shall become due and payable, whether at maturity, by
declaration or otherwise, according to the terms thereof. In case of failure by
the Company punctually to pay the obligations guaranteed hereby, the Subsidiary
Guarantors, subject to Section 2.03, hereby
C-2
jointly and severally unconditionally agree to pay such obligations punctually
as and when the same shall become due and payable, whether at maturity or by
declaration or otherwise, at the place and in the manner specified in the
applicable Financing Document, and as if such payment were made by the Company.
SECTION 2.02. Guaranties unconditional. Subject to Section 2.03, the
obligations of the Subsidiary Guarantors under this Article II shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by, and the
Subsidiary Guarantors, to the extent permitted by law, hereby waive any defense
to any of the obligations hereunder that might otherwise be available on account
of:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Company under any Financing
Document, by operation of law or otherwise;
(b) any modification or amendment of or supplement to any
Financing Document;
(c) any modification, amendment, waiver, release,
non-perfection or invalidity of any direct or indirect security, or of
any guarantee or other liability of any third party, for any obligation
of the Company under any Financing Document;
(d) any change in the corporate existence, structure or
ownership of the Company or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting the Company or any of its assets
or any release or discharge of any obligation of the Company contained
in any Financing Document;
(e) the existence of any claim, set-off or other rights which
the Subsidiary Guarantors may have at any time against the Company, a
Purchaser, any holder of any Note or any other Person, whether or not
arising in connection with any Financing Document; provided that
C-3
nothing herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against
the Company for any reason of any Financing Document or any provision
of applicable law or regulation purporting to prohibit the payment by
the Company of the principal or interest on any Note or other amount
payable by the Company under any Financing Document; or
(g) any other act or omission to act or delay of any kind by
the Company, a Purchaser, any holder from time to time of any Note or
any other Person or any other circumstance whatsoever that might, but
for the provisions of this paragraph, constitute a legal or equitable
discharge of the obligations of the Subsidiary Guarantors under this
Article II.
SECTION 2.03. Limit of Liability. The obligations of each Subsidiary
Guarantor hereunder shall be limited to an aggregate amount equal to the largest
amount that would not render its obligations hereunder subject to avoidance
under Section 548 of the Bankruptcy Code of 1978, as amended, or any comparable
provisions of applicable state law.
SECTION 2.04. Discharge; Reinstatement in Certain Circumstances. (a)
Subject to Section 2.03, the Subsidiary Guarantors, obligations under this
Article II shall remain in full force and effect until the principal of and
interest on the Notes and other amounts payable by the Company under any
Financing Document shall have been paid in full. If at any time any payment of
the principal of or interest on any Note or any other amount payable by the
Company under any Financing Document is rescinded or must be otherwise restored
or returned upon the insolvency, bankruptcy or reorganization of the Company or
otherwise, the Subsidiary Guarantors' obligations under this Article II with
respect to such payment shall be reinstated at such time as though such payment
had become due but had not been made at such time.
SECTION 2.05. Waiver. The Subsidiary Guarantors irrevocably waive
acceptance hereof, presentment, demand,
C-4
protest and any notice not provided for herein, as well as any requirement that
at any time any action be taken by any Person against the Company or any other
Person or any property subject to any Lien securing any obligations of the
Company or any of its Subsidiaries.
SECTION 2.06. Subrogation. Each Subsidiary Guarantor hereby irrevocably
agrees to subordinate any Subrogation Rights (as defined below) to the rights of
any Purchaser or any holder from time to time of any Note to recover from the
Company or any Credit Party with respect to such payment. "Subrogation Rights"
shall mean any and all rights of subrogation, reimbursement, exoneration,
contribution or indemnification, any right to participate in any claim or remedy
of payee now has or hereafter acquires in connection with the payment,
performance or enforcement of such Subsidiary Guarantor's obligations under this
Subsidiary Guaranty or any Financing Document, whether or not such claim, remedy
or right arises in equity, or under contract, statute or common law, including
the right to take or receive, directly or indirectly, in cash or other property
or by set-of or in any other manner, payment or security on account of such
claim or other rights. To effectuate such subordination, each Subsidiary
Guarantor hereby agrees that it shall not be entitled to any payment by the
Company or any Credit Party in respect of any Subrogation Right until all of the
Guaranteed Obligations have been indefeasibly paid in full. If any amount shall
be paid to any Subsidiary Guarantor in violation of the preceding sentence and
the Guaranteed Obligations shall not have been paid in full, such amount shall
be deemed to have been paid to such Subsidiary Guarantor for the benefit of, and
held in trust for, the Purchasers or any holder from time to time of any Note,
and shall forthwith be paid to such Purchasers or any holder from time to time
of any Note to be credited and applied to the Guaranteed Obligations, whether
matured or unmatured. Each Subsidiary Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated by the Securities Purchase Agreement and that the subordination set
forth in this Section is knowingly made in contemplation of such benefits.
C-5
SECTION 2.07. Stay of Acceleration. If acceleration of the time for
payment of any Guaranteed Obligation payable by the Company under any Financing
Document is stayed upon the insolvency, bankruptcy or reorganization of the
Company, all such Guaranteed Obligations otherwise subject to acceleration under
the terms of the Financing Documents shall nonetheless be payable by the
Subsidiary Guarantor hereunder forthwith on demand by the Agent.
Section 2.08 Right of Contribution. Each Subsidiary Guarantor hereby
agrees that to the extent that a Subsidiary Guarantor shall have paid more than
its proportionate share of any payment made hereunder, such Subsidiary Guarantor
shall be entitled to seek and receive contribution from and against any other
Subsidiary Guarantor hereunder which has not paid its proportionate share of
such payment. Each Guarantor's right of contribution shall be subject to the
terms and conditions of Section 2.06. The provisions of this Section 2.08 shall
in no respect limit the obligations and liabilities of any Subsidiary Guarantor
and each Subsidiary Guarantor shall remain liable for the full amount guaranteed
by such Subsidiary Guarantor hereunder.
Section 2.09. Guarantee Subordinate to Senior Indebtedness. Each
Subsidiary Guarantor hereby covenants and agrees, and the Purchasers, by
acceptance of this Subsidiary Guarantee likewise covenant and agree, that, (a)
to the extent and in the manner hereinafter set forth in this Section 2.09,
this Subsidiary Guarantee, including pursuant to any amendment, modification,
restatement or renewal hereof, is hereby expressly made subordinated and subject
in right of payment to the prior payment in full of all Senior Indebtedness and
(b) the terms and conditions of such subordination is for the benefit of the
holders of the Senior Indebtedness (including the beneficiaries of any guaranty
of the Senior Indebtedness) and each such holder may enforce such subordination;
provided, however, on the Maturity Date (so long as the Maturity Date is not
extended in accordance with either of the provisos contained in the definition
thereof) the obligations (which for all purposes of this Section 2.09 shall
include the Obligations under this guaranty) shall no longer be subordinated to
the Senior
C-6
Indebtedness and this Section 2.09 shall have no further force or effect.
Section 2.09.1 Payment Over of Proceeds Upon Dissolution. In the
event of a Bankruptcy Event, then and in any such event:
(a) the holders of Senior Indebtedness (which for all purposes of this
Section 2.09 shall include the beneficiaries of any guaranty of the Senior
Indebtedness which guaranty shall also constitute Senior Indebtedness) shall be
entitled to receive payment in full in cash or Cash Equivalents of all amounts
due or to become due on or in respect of all Senior Indebtedness (including
interest after the commencement of a Bankruptcy Event at the rate specified in
the documentation for such Senior Indebtedness, whether or not allowed), before
any Holder is entitled to receive any direct or indirect payment or distribution
on account of the Subordinated Obligations (other than in the form of securities
permitted to be paid in accordance with the first parenthetical in clause (b)
below) including, without limitation, by exercise of set-off and any payment
which may be payable or deliverable by reason of any other indebtedness being
subordinated in right of payment to the Subordinated Obligations (which for all
purposes of this Section 2.09 include the Obligations under this guaranty);
(b) any payment or distribution of assets of the Subsidiary Guarantor
of any kind or character, whether in cash, property or securities, by set-off or
otherwise, to which any Holder would be entitled but for the provisions of this
Section 2.09, including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the Subsidiary
Guarantor being subordinated to the payment of the Subordinated Obligations
(except for any such payment or distribution of securities which, if debt
securities, are unsecured and subordinated to at least the same extent as the
Subordinated Obligations are to (A) such Senior Indebtedness or (B) any
securities issued in exchange for Senior Indebtedness and mature no earlier than
six months after such Senior Indebtedness or securities issued in exchange)
shall be paid by the liquidating trustee or agent or other Person making such
payment or distribution,
C-7
whether a trustee in bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the holders of all Senior Indebtedness or their
representative or representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the principal of, and interest on, such Senior
Indebtedness held or represented by each, to the extent necessary to make
payment in full of all such Senior Indebtedness remaining unpaid, after giving
effect to any concurrent payment or distribution to the holders of such Senior
Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of this
Section 2.09, any Holder shall have received any such payment or distribution of
assets of the Subsidiary Guarantor of any kind or character, whether property or
securities, including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the Subsidiary
Guarantor being subordinated to the payment of the Subordinated Obligations (but
excluding any payment of the character described in the parenthetical clause in
the foregoing paragraph (b)) before all Senior Indebtedness is paid in full,
then and in such event such payment or distribution shall be paid over or
delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution of
assets of the Subsidiary Guarantor for application to the payment of all such
Senior Indebtedness remaining unpaid, to the extent necessary to pay such Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.
If, notwithstanding the provisions of this Agreement, there shall occur
any consolidation of the Subsidiary Guarantor with, or any merger of the
Subsidiary Guarantor into, another corporation or the liquidation or dissolution
of the Subsidiary Guarantor following any conveyance, transfer or lease of its
properties and assets substantially as an entirety to another corporation, such
consolidation, merger or liquidation shall not be deemed a
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Bankruptcy Event; provided, that no other Bankruptcy Event shall have occurred
and be continuing at the time of such consolidation, merger or liquidation.
DLJSC is hereby authorized to file an appropriate claim on behalf of the
Holders if the Holders do not file such claim or there is not filed on behalf
of the Holders a proper proof of claim in the form required in any Bankruptcy
Event prior to thirty (30) days before the expiration of the time to file such
claim or claims.
Section 2.09.2 Acceleration Rights: Remedies; No Payment in Certain
Circumstances.
(a) So long as at least $25 million of Senior Notes shall remain
outstanding, prior to the Maturity Date, no Holder shall take any action,
judicial or otherwise, to accelerate or collect payment on the Subordinated
Obligations or to pursue any other remedy with respect to the Subordinated
Obligations, prior to the earlier of (i) the occurrence or commencement of a
Bankruptcy Event or an Event of Default under Section 7.1(a) or 7.1(k) of the
Securities Purchase Agreement, (ii) acceleration of any Senior Indebtedness or
(iii) the failure of the Company or any Credit Party to comply with Sections
2.4(d), 6.9, 6.12, the second sentence of Section 6.13(b), 6.14 or 6.15 of the
Subordinated Securities Purchase Agreement and such failure to comply shall
continue unremedied for 10 Business Days after notice from any Holder to the
Subsidiary Guarantor and DLJSC.
(b) In the event that (i) the Subsidiary Guarantor shall fail to pay
when due (after giving effect to any applicable grace periods), upon
acceleration or otherwise, any amount or obligation with respect to Senior
Indebtedness under the Securities Purchase Agreement (a "Payment Default") which
Payment Default shall not have been cured or waived, or (ii) an Event of Default
(other than a Payment Default) under the Securities Purchase Agreement shall
occur and be continuing, which shall not have been cured or waived (a
"Non-Payment Default"), and the Subsidiary Guarantor and the Majority Holders
receive written notice of such Non-Payment Default from a holder of Senior
Notes (a "Non-Payment Blockage Notice"), then no payment pursuant to Section
2.4(b) or on the Maturity Date on account of the Subordinated
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Obligations shall be made by the Subsidiary Guarantor (x) in the case of any
Payment Default, unless and until such Senior Indebtedness shall have been paid
in full in cash or until such Payment Default shall have been cured or waived,
or (y) in the case of any Non-Payment Default, from the earlier of the date on
which the Subsidiary Guarantor and Pyramid Ventures, Inc. (or such other person
as may be designated in writing by the majority Holders) receive such
Non-Payment Blockage Notice until the earlier of (1) 179 days after such date
and (2) the date, if any, on which such Senior Indebtedness is paid in full or
such Non-Payment Default is waived by the holders of such Senior Indebtedness or
otherwise cured (a "Blockage Period"); provided, that (x) only one Non-Payment
Blockage Notice may be given in any 360-day period and (y) no Blockage Period
may be imposed as a result of a covenant default that served as the basis for,
or was (to the knowledge of the holder delivering such notice) continuing during
any previous Blockage Period unless such covenant default giving rise to such
Blockage Period was cured or waived in accordance with the applicable provisions
of such Senior Indebtedness for at least 90 consecutive days subsequent to the
commencement of such initial Blockage Period.
In the event that, notwithstanding the foregoing, the Subsidiary
Guarantor shall make any payment to any Holder prohibited by the foregoing
provisions of this Section, then and in such event such payment shall be paid
over and delivered forthwith to the holders (or their agent or trustee) of the
relevant Senior Indebtedness.
Section 2.09.3 Payment Otherwise Permitted. Nothing contained in this
Section 2.09 or elsewhere in this Agreement or in the Notes shall prevent the
Subsidiary Guarantor, at any time except as set forth in Section 2.09.2, from
making payments at any time of principal of and interest on the Notes or any
other amount payable by the Subsidiary Guarantor under the Notes or this
Guaranty.
Section 2.09.4 Subrogation to Rights of Holders of Senior Notes.
Subject to, and solely effective following, the final payment in full of all
Senior Indebtedness, the Holders shall be subrogated to the rights of the
holders of
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Senior Indebtedness to receive payments and distributions of cash, property and
securities applicable to such Senior Indebtedness to the extent of the payments
or distributions made to or otherwise applied to payment of, the Senior
Indebtedness pursuant to the provisions of this Section 2.09 until the
Obligations shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of Senior Indebtedness of any cash, property or
securities to which the Holders would be entitled except for the provisions of
this Section 2.09, and no payments pursuant to the provisions of this Section
2.09 to the holders of Senior Indebtedness by the Holders shall, as among the
Subsidiary Guarantor, its creditors (other than holders of Senior Indebtedness)
and the Holders, be deemed to be a payment or distribution by the Subsidiary
Guarantor to or on account of the Subordinated Obligations.
Section 2.09.5 Provisions Solely to Define Relative Rights. The
provisions of this Section 2.09 are and are intended solely for the purpose of
defining the relative rights of the Holders of the Notes on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Section 2.09 or elsewhere in this Agreement or in the Notes is intended to or
shall (i) impair, as among the Subsidiary Guarantor, its creditors (other than
holders of Senior Indebtedness) and the Holders, the obligation of the
Subsidiary Guarantor, which is absolute and unconditional, to pay to the Holders
the principal of, and premium and interest on, and any other amount payable by
the Subsidiary Guarantor under, the Notes or this Agreement as and when the same
shall become due and payable in accordance with their terms; or (ii) affect the
relative rights against the Subsidiary Guarantor of the Holders and its
creditors (other than the holders of Senior Indebtedness); or (iii) except as
expressly provided in Section 2.09.2, prevent the Holders from accelerating the
Notes and exercising all other remedies otherwise permitted by applicable law
upon default under this Agreement, subject to the rights, if any, under this
Section 2.09 of the holders of Senior Indebtedness under and in accordance with
the provisions of this Section 2.09.1, to receive, cash, property and securities
otherwise payable or deliverable to the Holders.
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Section 2.09.6 No Waiver of Subordination Provisions; Amendment. No
right of any present or future holder of any Senior Indebtedness to enforce
subordination or other terms and provisions as herein provided shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Subsidiary Guarantor or by any act or failure to act, in good faith, by any
such holder, or by any non-compliance by the Subsidiary Guarantor with the
terms, provisions, and covenants of this Agreement, regardless of any knowledge
thereof any such holder may have or be otherwise charged with. Without in any
way limiting the generality of the foregoing, the holders of Senior Indebtedness
may at any time and from time to time, without the consent of or notice to the
Purchasers or any other Holder of the Notes, without incurring responsibility to
the Holders and without impairing or releasing the subordination provided in
this Section 2.09 or the obligations hereunder of such Holders to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
Senior Indebtedness or any instrument evidencing the same or any agreement under
which Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing the
Senior Indebtedness; (iii) release any Person liable in any manner for the
collection of the Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights or remedies against the Subsidiary Guarantor and any other
Person.
Section 2.09.7 Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Subsidiary Guarantor
referred to in this Section 2.09, the Holders shall be entitled to rely upon any
unstayed, final, nonappealable order or decree entered by any court of competent
jurisdiction in which a Bankruptcy Event is pending (so long as such order
appears on its face to give effect to these subordination provisions), for the
purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness of the Subsidiary Guarantor,
the amount thereof or payable thereon, the amount or amounts paid or
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distributed thereon and all other facts pertinent thereto or to this
Section 2.09.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. Notices. Unless otherwise specified herein, all notices,
requests and other communications to any party hereunder shall be in writing
(including bank wire, telex, facsimile transmission or similar writing) and
shall be given in care of the Company at the Company's address or telex or
facsimile transmission number specified in or pursuant to Section 10.1 of the
Securities Purchase Agreement. Each such notice, request or other communication
shall be effective (i) if given by telex, when such telex is transmitted to the
telex number specified in or pursuant to this Section 3.01 and the appropriate
answerback is received, (ii) if given by mail, 72 hours after such communication
is deposited in the mail with first class postage prepaid, addressed as
aforesaid, or (iii) if given by any other means, when delivered at the address
specified in or pursuant to this Section 3.01.
SECTION 3.02. No Waiver. No failure or delay by any Purchaser or any
holder of any Note in exercising any right, power or privilege under any
Financing Document shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 3.03. Amendments and Waivers. Any provision of this Subsidiary
Guaranty may be amended or waived if, and only if, such amendment or waiver is
in writing and is signed by the Subsidiary Guarantors and is consented to in
writing by the Majority Holders.
SECTION 3.04. Successors and Assigns. This Subsidiary Guaranty is for
the benefit of the Purchaser, the holders from time to time of the Notes and
their respective successors and assigns and in the event of an assignment of
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the Notes or other amounts payable under the Financing Documents, the rights
hereunder, to the extent applicable to the indebtedness so assigned, shall be
transferred with such indebtedness. All of the provisions of this Subsidiary
Guaranty shall be binding upon the parties hereto and their respective
successors and assigns except that the Subsidiary Guarantors may not assign or
transfer any of their rights or obligations under this Subsidiary Guaranty.
SECTION 3.05. Governing Law: Submission to Jurisdiction; Waiver of Jury
Trial. THIS SUBSIDIARY GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. THE SUBSIDIARY GUARANTORS HEREBY SUBMIT
TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING
TO THIS SUBSIDIARY GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE
SUBSIDIARY GUARANTORS IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE SUBSIDIARY GUARANTORS
HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS SUBSIDIARY GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the Subsidiary Guarantors have caused this
Subsidiary Guaranty to be duly executed as of the date first above written.
[SUBSIDIARY GUARANTORS]
By:
-----------------------------------
Name:
Title:
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Annex A
to Exhibit C
ADDITIONAL SUBSIDIARY GUARANTOR
The undersigned hereby acknowledges that it has read this Subsidiary
Guaranty and agrees to be liable pursuant to Section 1 of this Subsidiary
Guaranty and to be bound by the terms and provisions thereof.
IN WITNESS WHEREOF, the undersigned has caused this Subsidiary Guaranty
to be duly executed and delivered by its officer thereunto duly authorized as of
the ___ day of _________, 19__.
Notice Address: [Name of Subsidiary Guarantor], a
[State of Incorporation]
corporation
By:
-------------------------
Name:
Title:
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